11-15-11 Comments

[Mike]

Yesterday was the lightest volume of the entire year. Sometimes I read light volume as complacency. This time I read it as a light news day in the middle of a news hurricane season. The market is dithering at the 200-day moving average. Most bear markets unfold with three or more waves down and the first rally after the first wave down most often fails at the 200-day moving average. If the current bear market is finished it would be very unusual. So I am guessing that Mr. Market will be informing us soon about its next move. Seasonality may suggest that Mr. Market could wait to see what Santa Claus has in his sack.

Portfolio is: SWI, SBH, GLD, ISRG, UA, PCLN, SPRD

Market School Market Exposure Count is +5, 100% in.
The distribution count is 4. One more day of distribution or stalling would give us an S3 market sell signal reducing the count.
Yesterday's NASDAQ lows penetrated the 21-day ema. A close 0.2% or more below would issue a S5 market sell signal. It isn't impossible that both Sell Signals could fire if we have a bad day today.

The prior S5 sell signal on 11/1/11 had the effect of forcing me to weed the garden. I sold DLTR as it was my poorest performing stock in the portfolio and its earnings date is approaching.

[Riskslayer]

Hi Mike,

Thanks for the update.

In order to track the Market Exposure Model and develop my understanding, I decided I needed to break things down very granularly and put it into a spreadsheet, interpreting and judging each criteria day-by-day.

For now, I am focused on confirming the rules as applied to $COMPQ. Once, I have some confidence that I understand and am applying the rules properly; I will look to apply them across the other major indexes shown on the other tabs. For each rule, I have inserted comments in the .xls that cite to your previous notes on the model.

I am attaching my work-in-progress .xls spreadsheet that I am using for tracking the Market Exposure Model. If anyone in this community is trying to follow along, please feel free to use it. My hope is that others will help quality assure (QA) this model and correct any errors that I have made. Please let me know if anyone finds errors or has Q’s.

Here are a few areas where I am confused/uncertainty:

1. The Power Trend day count can start before the FTD, right? Your thoughts on a Power Trend Day following Nov 15 close? I count Oct 12 to Nov 15 as 25 days of 21ema over 50d sma? Your description on Nov 11: "We make most of our money in Power Trends and this switch is designed to maximize your ability to withstand the volatile nature of the market when the money making possibilities are the greatest"
a. Can you confirm that we are in Power Trend mode on $COMPQ?
b. If so, can you comment further on “we make most of our money in Power Trends”

2. Can B6 happen repeatedly during an advance? Is it reset by any S signals during an advance?

3. In the original description of B10 (Oct 24 post), how do we apply ”When the count drops to 4 as long as the index closes above the 21-day ema and the Buy Switch is On”?

4. In the original description of S11 (Oct 24 post), what does “spread” mean? How is the intraday high determined?


Thanks in advance,

Shawn

[Mike]

Hi Mike,

Thanks for the update.

In order to track the Market Exposure Model and develop my understanding, I decided I needed to break things down very granularly and put it into a spreadsheet, interpreting and judging each criteria day-by-day.

For now, I am focused on confirming the rules as applied to $COMPQ. Once, I have some confidence that I understand and am applying the rules properly; I will look to apply them across the other major indexes shown on the other tabs. For each rule, I have inserted comments in the .xls that cite to your previous notes on the model.

I am attaching my work-in-progress .xls spreadsheet that I am using for tracking the Market Exposure Model. If anyone in this community is trying to follow along, please feel free to use it. My hope is that others will help quality assure (QA) this model and correct any errors that I have made. Please let me know if anyone finds errors or has Q’s.

Here are a few areas where I am confused/uncertainty:

1. The Power Trend day count can start before the FTD, right? Your thoughts on a Power Trend Day following Nov 15 close? I count Oct 12 to Nov 15 as 25 days of 21ema over 50d sma? Your description on Nov 11: "We make most of our money in Power Trends and this switch is designed to maximize your ability to withstand the volatile nature of the market when the money making possibilities are the greatest"
a. Can you confirm that we are in Power Trend mode on $COMPQ?
b. If so, can you comment further on “we make most of our money in Power Trends”

2. Can B6 happen repeatedly during an advance? Is it reset by any S signals during an advance?

3. In the original description of B10 (Oct 24 post), how do we apply ”When the count drops to 4 as long as the index closes above the 21-day ema and the Buy Switch is On”?

4. In the original description of S11 (Oct 24 post), what does “spread” mean? How is the intraday high determined?


Thanks in advance,

Shawn

Shawn,
1. The Power Trend count can start before the FTD. The 21-day needs to be above the 50-day for 8 weeks (40-days). So we are only half wat to the start of a Power Trend.

2. The B6 signal is reset by an S9 signal. So you can only count one B6 unless there has been an intervening S9. On the flip side an S9 is reset by a B6. Additionally the B3,4,5 signals are reset by an S5. The S5,6,7,8 signals are reset by a B3.

3. B10 happens any time the distribution count falls back to (or below) Full Distribution Count minus two (currently a full distribution count is six). Also as you stated the Buy Switch must be on and the close has to be above the 21-day ema. The way distribution falls off is that they either fall out of a 25-day look back window or the intrad-day high of the index exceeds the close of any prior distribution day. The reason I said falls back to or below in the first sentence is that sometimes the market moves up six percent above multiple distribution days and the count moves from full to something less than full minus two.

4. I am not exactly sure my context of the word spread in my prior post but here are the related terms...

Here are some terms and definitions:

Range: (Close-Low)/(High-Low)
In case of a gap down: = (Close-Low)/(prior Close-Low)

Spread = (High-Low)/Low

The values above are usually expressed in percent so a multiplication of 100 is implied.

5. You didn't ask but an S4 signal can actually happen twice in a single day. This is because of how stall days are counted. It is possible to increase the distribution count by two in one day. We count the first stall day and then from there we only include a stall day in the count when the number of distribution days exceeds the number of stall days. The uncounted stall days are "saved" and counted later when additional distribution days are encountered. So if we had two stall days (count is one and one is saved) and then encouter a distribution day the count goes to 2 with one still saved. Then we get another distribution day, the count goes to 3. On the next distribution day the count jumps to 5, using up the prior stall day.

I have attached the current chart...11447

[adam ali]

Reading Scott O'Neil on Twitter after hours, he still sounds quite bullish on market/leading stocks.

"Subtle improvement in action. Tightening on 21DMA & less volatility than we’ve seen in months."