The S2 Trading System is my own custom S&P 500 trend-trading system that methodically aims to hit singles and doubles in the 1-3% profit range while reducing risk during potential trend reversals and trendless periods. Without giving away all the details (which are evolving anyway), every trade entry begins with an hourly trend reversal, which is based on price candles and stochastics, in the direction of the daily trend which is based on price candles, key moving averages, gaps and a limited set of reversal indicators. Trade exits are driven by systematic profit targets and trailing stops which are based on price candles, key moving averages and stochastics. Currently, I am trying to lightly incorporate my RSI-based Elliott Wave (EW) rules into the system, and each market scenario provides learning lessons for system evolution.
I will typically update my intermediate-to-long term views on weekends and my system trades and short-term views during the week as time allows. Of course, my short-term views are primarily colored by the S2 Trading System, but EW, Fibonacci and other technical tools can improve the timing and level of profit targets as well as the price path to get there.
System: Previous sell signal from 1087 was reactivated at 1020 with a stop just above 1033. However, this is a learning signal for my system since hourly stoch crossed just below 50, not above it, and I normally require 50+ for reloading, but I’m trying to incorporate my RSI rules and consider that the system’s previous sell signal never got stopped out (stop currently 1048). I merely recommended profit-taking due to numerous technical indicators as SPX approached 1011. Hourly, daily and weekly trends are still down.
Long-term Opinion: I expect SPX to fall below the March 2009 low of 667 based on my 3-year RSI-based EW count and my study of everything economic. I expect the US economy to bottom around 2012-2016 based on demographic, credit/debt, real estate, energy, business and technology cycles. Stock market lows do not always correspond with economic lows, but I think 2010 and 2011 will be bad for starters and then I'll re-evaluate.
Intermediate-term Opinion: I expect SPX to test 850-925 by late July +/- with a 2-3 week 20-40% retrace well into August followed by a drop to 750-850 in Sep/Oct after which SPX will rally to 1000-1100 for 2-4 months.
Short-term Opinion: I expect SPX to complete Minuette (v) of Minute [i] of Minor 3 of Intermediate (3) of Primary [3/C] early this week. Minute [ii] should bounce back to 1040-1075 or maybe a little higher in a matter of a few days depending on how SPX holds up this week.
Good luck!
Hello S2,
ReplyDeletegood work. do you incorporate any time element in your analysis? I have been reading your posts on Tony's for a while and I was wondering if you are interested in timing as well. (my favourite approach).
all the best
Nice blog start. Good luck!
ReplyDeleteS2--
ReplyDeleteGood to see you are up and running. Been a fan of your analysis (via Tony's blog) for quite some time. Best of luck.
reflex
S2, congrats on your new blog. I've been following your work for some time now, and am really impressed by your analysis. Keep up the good work, thanks.
ReplyDeletesame as above. of all the posts on tony's site (including tony's) i sense yours are the most objective and most useful. i am not a short trader so i am trying to glean what i can from your approach for a more middle and long-term strategy. thanks again
ReplyDeletegabriele, I always enjoy exploring new ideas. I do often refer to timing in terms of symmetry with recent swings and recent bear markets and backtested scenarios like I raised on the flash crash with 4 closes below the lower BB20. However, my trend turn indicators usually catch pivots within a few hours or worst case days which is better than most cycles I've looked at. Having said that, if you have a backtested timing indicator to share, go ahead and I'll keep my eye on it for a few months to see if it helps avoid failed signals by my system or improves profit-taking timing. Thanks.
ReplyDeleteThanks for all the kind comments. Current SPX daily RSI5 is above its level from SPX 1084 (June 25th). By my RSI-based EW guidelines, that would make today's rally unlikely to be a minuette wave 4 IF IF IF SPX can retain most of its gains at the close. Hourly RSI14 already confirmed today's rally is not likely a minuette wave 4. This will be a good test of my RSI guidelines. If SPX reverses back down, the possibility that last week's bounces were just wave 2s is real. I hate to feed into the crash talk, but my indicators would support a bunch of nested 1-2s in that case. If SPX closes high, then 1011 marked the end of a wave structure possibly with a truncated wave 5 or another alternate. I'll worry about that if SPX closes well.
ReplyDeleteHourly stoch has crossed down. Given that the system sell signal generated at 1087 with stop at 1048 was never officially closed, the hourly trend never turned up from 1011 in my system although I recommended profit taking just above 1011.
ReplyDeleteSo, the weekly, daily and hourly trends are still down and now we have a stoch bear cross from above 50 unless SPX can bounce near the highs by 1PM. So, the system is likely to issue another re-sell signal at 1PM. I mentioned that Friday's stoch cross below 50 caused a learning sell signal based on my attempt at incorporating RSI. Well, I learned not to do that again, although I issued that signal after the Friday close, so only futures traders could have traded it and they would have made money since my system recommends profit-taking at 1% intervals and key areas like 1007/1011 and then not letting a positive trade turn negative.
Hi S2, just wondering what parameters do you use on you stoch? Thanks.
ReplyDeleteOne thing you may want to do is post a disclaimer. I'd hate to see someone sue you or create other legal troubles for taking action based on your posts.
ReplyDeleteJust dotting I's and crossing T's.
You achieved a great setup and your analisys are very clear and easy to understand. Congratulations
ReplyDeleteS2, congratulations,nice blog.
ReplyDeleteNow I hope to read every day
Vince