those nasty tops! roadmap for mon., 2013/01/28 featuring: standard_and_poor

i am currently 10% long tna from friday’s close of 77.21 based on a very short term signal and supported by an uptick in the qqq system to +7 from +5, +6 is usually a buy signal. i am also long the march 2013 spy 149 puts from 3.14, a 1% allocation. much vital information in this post, please proceed.

the last week of 2012 was a pivotal week as i did not heed my own advice:
standard_and_poor | January 1, 2013 at 2:29 am :

“closed out the 15% allocation of the short folio of 8 stocks, started 2012/12/24, on mon. 20102/12/31 for a 2.50% loss vs its qqq benchmark gain of 0%.
closed out 20% allocation of tza longs from 2012/12/28 from 14.38 at at closing bell at avg. of 13.48 for a 6.25% loss.
it is now possible we will see spx highs above those seen in sept. 2012 but this wave is in its final stages and a 5% correction at minimum awaits. i don’t expect to allocate more than 50% to longs, holdings will be almost exclusively in tna to avoid higher commissions and avoid slippage if quick exits are required.
we will possibly add a 20% allocation of tna long on a pull back on wed. 2013/01/03.
happy new year!”

and:
standard_and_poor | January 2, 2013 at 11:38 pm:
“extremely back to back bullish days. i have no choice but to await a pullback for long re-entry; pullback didn’t occur today as i had hoped but it will occur. 1474 spx is a foregone conclusion.”

at the time my smart money indicator pointed to a possible short term top when it hit -9 during the end of dec., 2012, and continues to be stuck in that band. it is usually a reliable indicator even in a wave 3 . it is for this poor response on my part to return to the long side in early january that i developed the “2 faced ” trading system. a new set of 10 longs and 10 shorts is selected every month and held for 30 days unless my long term crash indicator signals an impending crash. this system is under construction and is being tested live here prior to actual investment.

here are the details as presented in the comments: section
” January 9, 2013 at 9:08 pm
many new heroic feats are under way to improve my little blog’s offerings, such as a new stock picking system that picks super hero momo stocks to hold for one month and another system that finds 90 pound weakling stocks to short during that same month. i will be testing these two new systems here live prior to doling out actual cash.
the list of 10 new longs would have made 1.61% today while the spy was up only 0.25%.
the list of 10 new shorts would have made +0.63% today.

the goal is to always hold equal number of longs and shorts, with a fresh list every month. no complicated timing will be necessary with this combination of stock picking systems; the only timing is a rarely occurring signal that is used for predicting severe market down turns, i.e. crashes.
under a crash scenario no longs will be suggested for that month or a percentage stop loss for total long folio will be given . currently there is no crash foreseen within the coming month.
again, this system is only an experiment.
the longs are: $RAX, $CYOU, $CVLT, $FLT, $BMA, $IPGP, $SWI, $BKJ, $LKQ AND $RLOC.
the shorts are:$ESI, $BTH, $QCOR, $MAKO, $SKUL, $BV, $RUSS, $STRA, $GORO, AND $ALTT.
profits and losses will be updated for this system as usual.”

the system was tweaked a few days later:
“January 11, 2013 at 2:13 pm
changed requirements for 2 faced system, the new longs are $AEGR, $FB, $ASCA, $ARMH, $RBS, $F, $TXI, $THC, $NFKX, and $RAIL; all reflecting today’s prices. as previously stated, the 2 faced system is a work in progress.”

i know i am rehashing old information but this new trading feature, the 2 faced system, along with several other new features will be the crucible of trading for the next year. the “about” section of the blog has been updated to inform you of the new indicators and their proper use. the crash indicator from this point on will only be updated in the comments section every friday or end of trading week.

here are the trading results, so far the 2 faced longs selected on 2013/01/13 show an 8.68& profit vs. spy’s +2.34%.
the 2 faced shorts selected on 2031/01/09 shows a 1.04% profit vs. spy’s +2.97%.
the combined system, the way it should be traded, shows a 9.72% profit versus spy’s +2.97%. quite a good start for this experiment.
2 faced longs:

2 faced shorts:

here are the current readings for some vital proprietary indicators:

for fri., 2031/01/25:
short term elliott PSTT still on buy signal.
smart money still at -9., still on cash signal.
qqq system has ticked up to +7 to from +5, still on buy signal, +6 is a buy.
long term crash signal at +8, unchanged, no crash in sight.
2 faced longs +.2.81% profit, 2 faced shorts +0.03% profit today, spy + 0.56%.

here is the pertinent section of the updated “about” which details all the new indicators:
2013/01/15:
Beginning this year I will post profits and losses in a dollar amount in addition to a percentage basis, the starting equity is $1mm. The trading funds will be allocated to the following folios: mid cap, large cap, small cap, nano cap ( under 50mm), high risk momentum, long-term large cap, long-term small cap and the tna folio. all folios will be allocated 100k except for the tna/tza folio which will trade as much as 300k – UNLESS OTHERWISE NOTED.

The following proprietary trading systems will be monitored: the elliott proprietary system for trend tendency, PSTT, the Heaven/Hell Crash system, the 2 Faced Trading System and the short-term Smart Money Indicator.
1. The elliott PSTT Trading Indicator (Proprietary System for Trend Tendency) has both a short-term version and a long-term version, the elliott PSTT predicts changes in trend and is used to keep me allocated appropriately in either long or short positions and sometimes in cash.
2. The Heaven/Hell Crash Indicator varies from a scale of -10 to +10, -10 is the crash signal, a +10 is used to stay long or perhaps go to cash even if the short-term PSTT triggers a sell signal. This system is definitely of a long-term nature and rarely signals a -10 , in fact, it only signals crashes about once every three to four years but when it does I definitely heed its call. This indicator will be monitored once a week.
3. The 2 Faced Trading System is a hypothetical portfolio that is always in the market with twenty new stocks once every month. Ten long stocks are selected on the basis of their momentum and other financial indicators, ten short stocks are also selected based on momentum and other indicators. The only time the longs are closed out or not selected is when the Heaven/Hell Crash indicator is at -10. Similarly, the only time short stocks are not selected for the month or closed out is when the Heaven/Hell Crash indicator is at +10.
4. 2013/01/19: The short-term qqq system is a new mechanical system in progress for the qqq’s that signals between +10 and -10, buy at +6, short at -6. The middle area of -5 to +5 is the gray area where trading skills come to play by possibly closing out either a long or short trade at 0.
Again, I reiterate that this system is a work in progress.
The qqq system is under construction and is currently used by me as a market guidance system for measuring future market strength or market infirmity more than as an actual trading system; I, for example, will not initiate more than an inkling of new shorts if the system is at +6 or higher. i will track its buy and sell signals for possible use as a trading system in the future or for possible alteration if need be.
5. The short-term Smart Money Indicator for longs is a sentiment indicator with data distributed over a scale of -10 to +10, although it rarely registers the extreme scores of -10 or +10. A smart money score of -9 signals an occurrence where the smart money has deemed the current up trend to be unstable and has begun to sell long positions, at this point I definitely wouldn’t want to add longs and typically it would be a sound policy to commence closing long positions, especially the weaker holdings. The short-term smart money indicator provides sell signals about three to four times per year on average.

continue to watch the comments section for indicator updates and trades; many short trades may be triggered in the near future.

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