No Dice

After four straight days of upward momentum and a break through resistance on the S&P Friday, the SS still remains on a sell, although it's trying to issue another buy signal. Six of the signals remain on a buy, but $BPCOMPQ remains the sole indicator on a sell.



The signal did curl up off the lower bollinger band, but it's going to take more strength to push back into buy territory.

Now that OPEX is over, we get to see if things change. I'm expecting some selling this coming week, but not necessarily enough to do any damage to the trend. But I think there will be enough selling pressure in the coming days to prevent a full buy signal on the SS.

It's too early to say that the last sell signal will be trumped early. I think all of these signals are valid, but the underlying strength in the market is a direct result of massive liquidity being pumped into the system. This is not a good thing. Far from it in fact. There are plenty of pitfalls in front of this market, and many of them will not be resolved any time soon.

This is a scary chart. Just wait till they try to recover that liquidity.

 

[mdszj]

hi coolhand

If we get a SS buy signal are you planning to go long?

Also, you mentioned a couple mis-steps with regard to the SS, what were they, if you do not mind? I know one of them was a "fals alarm".

thx

 

[coolhand]

I'm out of IFTs until the 1st of September, so I'm in the G fund until that time. However, that's not all that far away. If the SS gives another buy I'll go back into the market. Hopefully that signal won't happen this week.

My first misstep was not commiting my funds on the last buy signal. I waited a couple of days because it seemed to be a false signal and then I only went in 10% for a couple of days more before I commited the rest.

The second misstep was not selling the day after the last sell signal. I waited a couple more days because again, because it seemed to be another false signal.

In the current market environment, some whipsaw is going to happen. Be that as it may, the SS has not been moving in between buys and sells all that often. I believe every signal was valid for its own reason. The difficulty I believe is that the system was designed to be an intermediate term trend indicator. When it moves quickly between a buy and a sell it causes confusion and makes the operator think something is wrong with the system.

Not so. The system is fine. It's the market environment that's changed. This too shall pass eventually.

I will not be ignoring signals again. Had I acted on the last buy and sell signal immediately, I'd be up at least another 10%. I won't catch every upmove or downmove, no one can. But I've learned a valuable lesson in using the SS. That said, I'll be ready for the next severe downleg whenever it finally comes.

 

[Birchtree]

I posted some very nice comments last night that have apparently been deleted. So sorry you missed them. You would have enjoyed the read - maybe next time.

 

[Birchtree]

Perhaps as a courtesy to some I should try again. I was asking which day next week would you capitulate to the uptrend. You've now answered that question regarding your discipline and the IFT limitations. Perhaps what the moderator found objectionable was that some of the data I was using was not complimentary to your strategy - I know you are not that thin skinned. But you did remind me once that people do follow me and they were at serious risk of failure by being aggresive in the buy and hold mode. But anyway here is what I said. The SPX will be up 57% at a close of 1044 from the March low. A close of 1036 would leave you toasted out at 57 points and a close at 1079 would leave you out 100 points. The Heinz 57 strategy leaves you in a difficult situation and I was wondering how you were going to handle the pressure - but that has now been resolved. You'll just eat the lost opportunity for gains and play catch up later. We've all done the same thing. How I wish I had some money to burn off the March 6th lows - but all I could do was put my feet up and let'er roll - I was not going to sell assets to allow me to rotate my positions.

 

[coolhand]

I do not capitulate. I am now following the SS system more closely. You asked me why I wasn't following it not too long ago. After considering the situation, I decided that you and Tom were right. I should be following it and from now on I will. If the system tells me to get back in I'll get in. If not, go on without me. I don't want to slow you down.

Perhaps as a courtesy to some I should try again. I was asking which day next week would you capitulate to the uptrend. You've now answered that question regarding your discipline and the IFT limitations. Perhaps what the moderator found objectionable was that some of the data I was using was not complimentary to your strategy - I know you are not that thin skinned. But you did remind me once that people do follow me and they were at serious risk of failure by being aggresive in the buy and hold mode. But anyway here is what I said. The SPX will be up 57% at a close of 1044 from the March low. A close of 1036 would leave you toasted out at 57 points and a close at 1079 would leave you out 100 points. The Heinz 57 strategy leaves you in a difficult situation and I was wondering how you were going to handle the pressure - but that has now been resolved. You'll just eat the lost opportunity for gains and play catch up later. We've all done the same thing. How I wish I had some money to burn off the March 6th lows - but all I could do was put my feet up and let'er roll - I was not going to sell assets to allow me to rotate my positions.