Current SPX Position: None
Next Action: Go long at 1443.70
System Score: 8=Bullish=Trend Score + Turn Score=9-1
The new score-based SPX System is now 4 months old. After starting the first month with only 2 wins, 4 losses and 9pts of profit during the historically tight 5-week 2% range, the System has rebounded nicely to a 4-month total of 13 wins, 9 losses (59% win-loss ratio) and 108pts of profit which is approximately 8% unleveraged. That profit level is the high water mark thus far albeit barely above month 3 and still within the backtested average of 25+ pts of profit per month. Month 4 started off with 3 consecutive losing trades for a large loss of 47pts but has since won 4 trades in a row totaling 53pts. Obviously, the System goes through its periods of sideways or negative trades during SPX consolidation or transition phases, but it outweighs any losses during those periods with gains during trends. After my family leaves town next weekend, I will try to officially institute the minor tweaks I've discussed before and add them to the System Review tab.
The current Score is bullish but SPX is not far above the inflection point of 1415-1420. Based on how the scoring works, the System is unlikely to go short until either 4hr support is broken at or below 1415-1420 or we see another 1-2 day failed rally. A small Santa rally is usually anticipated during this coming week, but the fiscal cliff is an unusual event which could accelerate such a rally or even reverse it depending on the outcome.
Here is the recent history for the last 2 weeks of the year which begins this coming week since Monday Dec 31st is lumped with 2012 in weekly charts.
2006 -1.2% +0.6%
2007 -0.5% -4.8% (same calendar setup as 2012)
2008 -1.9% +6.5%
2009 +2.1% -1.0%
2010 +1.0% 0.0%
2011 +3.8% -0.6%
2012 ???? ????
8 of the 12 weeks closed 1% or more away from the previous week and 5 of 12 closed 1.9% or more away from the previous week. So, there would appear to be an approximate 50/50 chance that SPX will close 30pts higher or lower this week near 1400 or 1460 with the hi/lo beyond that. If it doesn't happen this week, it probably will the following week. And, that's without consideration for the fiscal cliff outcome. Having said that, 2004 and 2005 year-ends were a little calmer like 2006, but that was before volatility and economic problems came to the fore. Buckle up for a sleigh ride...just in case. Good luck.
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