Saturday, October 30, 2010

Primary Signal Update

Every weekend I'll post a primary signal update on the trend signals I use. The signals are listed in order of importance.

Forward MA Trading

Price action is always the most important indicator. You can have all the clever predictors you want, but if price is not confirming them, then who cares what they say? The forward moving average method is one of the cleanest trend indicators I have, and it is refusing to give a short signal at this point. This is one reason why Monday could be a surprise for bears.

Conclusion: Stay Long

CPCE Trading

The next most important indicator is CPCE. I've suggested here that either the EMA is back-testing a wedge breakout (bearish) or I might have to re-draw the channel. The reality is that the 20 EMA has not broken yet, so this is also suggesting that the trend remains up. At this point, I wouldn't necessarily be long since the 20 day slope of CPCE is above zero, but it's not saying to short yet either. The 20 day slope is curling down, which could be bullish if it continues to trend in that direction.

Conclusion: Stay long with caution

VIX Trading

As I've warned, the VIX has been trading above its bollinger band mid-line for 3 days. Normally this is bearish, but when price doesn't go anywhere while it's above the mid-line, it could just be another consolidation before the VIX breaks lower and the market rallies higher once again.

Conclusion: Stay long with caution

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