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I heard people complaining about contradictory signals provided in my daily market recap. Well, it’s actually the reality of the technical analysis. I don’t want to go deep into this kind of reality. Here’s a simple way to understand what I talk every day – USE THE TABLE! – you don’t even need to read what I blah blah everyday.
See chart below, it’s the table I put above everyday of my report, if you don’t understand the meaning of TREND INDICATOR, MOMENTUM INDICATOR and N of N are BUY/SELL etc etc, then they’re not for you, forget about them, concentrate on “SPY ST Model is in XXX mode” marked by red cycle. Generally, I try my best not to trade against this model. No matter what I say everyday, my main trade will follow SPY ST Model. The reason I mention this is because my report is focused on providing info, so when the market is up, I’ll try to collect top signals, while the market is down, I’ll try to collect bottom signals, therefore it sometimes may seem that the bias is against the current trend. Now about the contradictory signals, since it’s a reality, I can do nothing about it, but I organize all the important signals triggered into BULLISH and BEARISH row. Whenever certain signals, say bearish signals are too many, I may put a speculation trade (meaning it’s not a fixed trading setup) in the CONCLUSION row and state the risk level, like now marked by blue cycle. Normally, I just keep throwing stuff into BULLISH and BEARISH rows without any comments until either side are accumulated too many signals. Got it?
Here’s the back test results since 2002 saying why I don’t generally want to bet against my SPY ST Model unless as mentioned above the other side of signals are too many listed in the table. This model by the way, didn’t perform well in 90s and that’s actually is a good news because it means you still need me to maintain this model because there’s no guarantee in the future. LOL
Now the SPY SETUP, this is actually the most important part of my daily report but people kept saying they don’t understand the signals. Hope the following chart helps, see red cycles. I give signal the day before it could be triggered, then once it triggered I put it into the table and give the stop loss and then I keep updating the stop loss everyday if it needs to be adjusted. There’s no sell signals, the position once entered will be there until the stop loss is triggered.
One thing you should know is that my SPY ST Model has no design for partial profit taking so please don’t expect it to give “take profit” signal. You have to find an appropriate time to take partial profits by yourself. Nothing is perfect, taking profit too soon, sometimes you may miss a big run but taking profit too late sometimes you loss everything, the model is designed to stay in a trend as long as possible so the solution for trying to ride the trend as long as possible while risk of losing everything is to take partial profit in the middle. And when to take partial profit? Well, the table I mentioned at the very beginning could help – again if you see the other side of signals keep piling up then it may be the time to take a partial profit.