Sunday, November 7, 2010

Primary Signal Update & Updated Odds/Trajectory

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

This method saved people in long positions from exiting too soon. It's still all clear for bulls. This trend is quite mature, so I wouldn't expect this to last much longer. Now that everyone is using trend indicators and wishing they had stayed in the whole time, we will probably face a period of a pull back or consolidation in the near future which will FRUSTRATE trend traders. I've seen it all too often.

Conclusion: Stay Long

CPCE Trading

With the 20 day slope back below zero, the trend is confirmed to be up again after the many days of consolidation. The 5 day EMA is very low, which could be consistent with another kind of short-term top which will produce sideways trading or a pull-back. However, there's no warning that would indicate longs should exit.

Conclusion: Stay long

VIX Trading

With the VIX below the bollinger band mid-line, bulls are now safe again for the time being. Until it trades above it, there is no concern about a trend change. Two hollow red bars in a row could hint at a bounce in the VIX, which could produce at least an intraday pull-back.

Conclusion: Stay long

As for the new odds table and trajectory. This is the picture it paints for next week. The next 5 days are expected, as of now, to be positive, but the next few days (probably the most important to check) are flat. Taking this information, I'd be holding a long position for a few days. As long as the trajectory remains positive, I'd stay long, but if the outlook shifts, I'd consider selling.

Updated odds table including the 2-5 period returns.

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