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Bill L.
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Methodology: setups require certain criteria to be met before trades can be executed, which include weighted statistical studies on several indicators of price, breadth, volume, and sentiment . Amount of risk taken is proportional to how many indicators are aligned. I mainly trade market... More
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  • Thursday, January 5, 2012 - Update and December Performance 7 comments
    Jan 5, 2012 10:21 AM | about stocks: SPY, TLT, FXE, DIA, QQQ, UUP, VXX
    December Performance Report:
    Trades generate from the blog generated a return of 6.4% for the month of December vs .08% return on the S&P 500 index. Since trading began in August 2011 the proprietary trading based from the blog analysis has generated a 49.9% return.

    Long Term Trend Model:

    My Long Term Trend Model moved to sell in after the sharply negative monthly close in September 2011. Until the SPY proves we are no longer in a bear market with a monthly close over 133, we should assume we are in a bear market and temper our expectations accordingly. It is not unusual for a very sharp rebound once a bear market begins as those on the sidelines feel they finally have an opportunity to jump in at depressed prices. I believe this is what is happening now; I recently had a conversation with an associate at one of the major discount brokerages, he mentioned that after September '11 they had the largest jump in new accounts ever. It seems to me that after the S&P doubled in a just a year, retail investors could not resist buying stocks at exactly the time that a bear market has started. Ironically typical.

    Swing Indicators
    McClellan Oscillator:

    Notes: The McClellan is definitely indicating we are closer to a top than a continuation point of a trend. Possibly a double top non-confirmation in the indicator.

    Put/Call Ratio:

    Notes: The 5 day moving average has swung strongly to the "call side," indicating that options traders have responded to the rally in that it has made them very optimistic regarding the near term future. This tends to be a strongly contrarian sign.

    I'm not totally convinced yet that this morning sell off marks "the top," but in my opinion we are clearly closer to some sort of a top rather than a continuation point in a trend. The short term indicators I follow aren't quite as high as I would like them to be when going short, but are high enough that when taken all together I am interested. With the Euro/USD getting absolutely destroyed, bulls should be concerned that stocks will suddenly "re-correlate." If the Euro/USD is any indication, the Euro-zone is going off a cliff.

    I hope everyone had a good holiday season, and I'm looking forward to the new trading year. Good hunting!

    -Bill L.
    Stocks: SPY, TLT, FXE, DIA, QQQ, UUP, VXX
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Comments (7)
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  • Native Texan
    , contributor
    Comments (-724) | Send Message
    Great stuff as always Bill!
    5 Jan 2012, 10:52 AM Reply Like
  • cheme
    , contributor
    Comments (7) | Send Message
    Bill, could you please disclose your positions on the Stocks listed? i.e. long or short
    5 Jan 2012, 11:01 AM Reply Like
  • Bill L.
    , contributor
    Comments (682) | Send Message
    Author’s reply » No positions as of that the publication time, though I'm using this current intra-day bounce to put out a small test short. I'm currently short the SPY @127.50 with a stop at 128; so I'm testing the waters here with only .50 risk.


    If I get stopped out at 128 this is most likely a small consolidation that would lead to another run at the highs, which would at the same time make the indicators I watch even more extreme. It can be difficult to get stopped out, only to put the same trade on immediately after, sometimes at the same prices, but profitability often equals acting consistently according to a plan.
    5 Jan 2012, 12:43 PM Reply Like
  • Ricardo Espinosa
    , contributor
    Comments (459) | Send Message
    Excellent, I follow $NYMO too, what´s the difference with $NYMOT?
    5 Jan 2012, 12:36 PM Reply Like
  • Bill L.
    , contributor
    Comments (682) | Send Message
    Author’s reply » NYMOT is the raw number, the NYMO is ratio adjusted. Since the number stocks on the NYSE has changed over time, by adjusting as a ratio, one can make a better apples to apples comparison if looking at two different time periods. For my trading time horizon, it make no difference.
    5 Jan 2012, 12:50 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9964) | Send Message
    Good stuff. Seems like markets always want to go up into earnings, but earnings and guidance might not be so great this time around.
    5 Jan 2012, 05:31 PM Reply Like
  • TangoOscar
    , contributor
    Comments (377) | Send Message
    I tend to agree with the article.


    Using a basic rate of change tool on the Nasdaq I am seeing lower peaks where their should be ones of equal size. To me this indicates a red flag that the market will correct soon as the buying seems to be weakening.


    It's also obvious that the market is pretty high right now and there is a greater risk to the downside than upside.
    6 Jan 2012, 07:22 PM Reply Like
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