The System just went 100% short at 1399.56. Although I stated a neutral S2 recommends a half-position, we got such a good entry point and an SOS signal (which I might incorporate into my Turn Score) that a full-position is warranted with stop at 1415 being 0.5% above this week's high. So, we are risking a maximum 1% loss assuming no large gap. My first successful System trade was not mentioned in a timely manner and the last 2 long trade triggers were canceled due to the huge 20pt SPX gap-ups, so this is the first official trade of record. Good luck.
P.S. USD has bounced off the key $81-82 support level and is now at $82.77 between its 20dSMA and 50dSMA. Breaking above those key moving averages and the $83 level would likely solidify the SPX downtrend and a retest of USD $84 where we'd find out the market's intentions for the next 2-4 weeks.
P.P.S. Real-time consumer discretionary spending (see Weighted Composite Index at side link) has now steadily declined for a full month. There was some deterioration in June which eventually showed up in retail numbers. Since then, July and early August have been worse. That will also show up in the reported numbers soon. The only thing that might hide the spending problem for a few more weeks is back-to-school spending and the bounce in retail gas prices but expect some negative surprises into Sep/Oct at a minimum.
| Date-Time | Thu 8/9/12 10:30AM EST |
| Active SPX Trade | None. |
| System Score (S2) | 5 = Trend Score + Turn Score = 10 - 5 = bullish |
| Trade Trigger (T2) | Go 50% short if 1399.56 support is broken. |
| Commentary | The turn indicators are now at their most extreme levels in over a month. 1407 may get surpassed and T2 rise, but the risk/reward no longer favors bulls...at least for the next few days or week. Good luck. |
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