Thursday, January 14, 2016

System Neutral at 1901 but still long for now

Update January 14th 2016 1PM EST:
Oil possibly beginning the bounce back to the upper 30s with SPX following higher, but Friday OPEX can be a wild day in either direction and closes have been bad lately. So, let's see how the dust settles Fri/Mon. I just back-tested my System manually for the past year applying a couple small rule tweaks. I was inspired by the current long position being underwater. It turns out the SPY candle body was actually slightly negative/bearish/red on Tuesday meaning the System would not have gone long if not so focused on SPX which has different opening data that I don't like. Of course, depending on what happens today and tomorrow, the System could end up entering long better or worse than the current SPX 1938 open but it would have avoided some uncertainty regardless and bulls are not in the clear yet. I will lay out the System rules as I have them in a post soon...possibly later today. There were 39 System swings in CY2016 with 30 winners, 9 losers and the 2 worst losses being 36pts and 23pts although the larger loss could have easily been reduced with use of my hourly indicators and weekly/monthly trend for trading size. More coming soon...Good fortune.
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Looks like the market chose the runaway OPEX scenario and the minimum 1950s target. Once SPX fell below 1901, the bullish swing candle was eliminated, but due to that occurring within 3 days of the previous swing, my System goes neutral rather than short. Neutral means trading between extreme oversold and extreme overbought. The hourly score is now +75% so the System stays long for better or worse. Although OPEX is not until Friday, I always say once an obvious peg or runaway is made the Wednesday before a monthly OPEX, that is mission accomplished and the next 2 days can go in any direction. Obviously SPX 1867/1871 looms. A large flat or triangle is possible, but I lean towards SPX 2116/2104 being the final wave top in which case those don't apply. The January 2008 analogy suggests a little more downside is possible before a significant bounce. Wood's cycle work suggests a bottom is imminent time-wise but says nothing about price. There is also a chance this move is a wave 3 with wave 4 expected back up near the 1950s or 1970s. Overall, more downside into Fri/Mon seems very possible, but a rally is coming and bulls need overlap with SPX 2005 to have any chance of avoiding the plunge I expect to 1750/1600 in April +/-. More later. Good fortune.

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