Wednesday, July 6, 2011

Animal Spirit Forecasts

This blog is superceded by the Animal Spirit Forecasts website, which includes a forum for subscribers.

Animal Spirit Forecasts is about gauging sentiment forward in time. This forecasting methodology is based on a data source which I devised starting 20 years ago. It began with research into correlations between environment and human behavior as measured in the financial markets. What began as research became conviction and then realization. I started making money with this data source 10 years ago and have been refining the analysis and improving returns ever since. The newsletter tracks my actual trades in the stock market, precious metals, and currencies (Euro and dollar).

Using the tools detailed below every trade that I have made since March, 2010 has been recorded (Trades Link) and the following $100,000 account record compiled (blue line below).

Please observe the amazingly small drawdowns (periods of negative account build) due to small positions and being consistently on the right side of the market.  This is due to my data sources described below.

As a subscriber you will have access to my current positions in an Excel spreadsheet on the website in a subscriber-only forum.

The keys to my success are:

1) an index of environmental data and solar-lunar cycles that I dub I1
2) technical composite indexes using daily and weekly data.

The following links are learning tools for the data series that use day-in and day-out:

I1 for Investors

Learn about I1 and it's trading rules

To download I1 history for your own research into this powerful new data source:

I use one of the components of I1 to time trades within the longer I1 moves.  This component is a variable monthly cycle calculated from various solar and lunar relationships.  This short-term timing component helps me pinpoint tradeable moves within longer trends.  This has it's own rule set.

I also use a daily technical composite for the stock market which I have found very useful when it reaches extremes.  It and it's rule set is at:

There are also similar forward gauges for precious metals, bonds, dollar, and crude.
Precious metals:


All of the posts prior to the subscription cutover are available as well as the Excel spreadsheet of every trade that I have posted (and made in my own accounts, delayed by 2 weeks).

I invite you to investigate the accuracy of these data sources which you will find nowhere else.

I offer a 1-week trial if you request it by emailing

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What you will receive are:

Daily Commentary - due to the timing of the various data sources this will be e-mailed twice, once shortly after market close and again with complete data 7:30pm, while ARCA trading is still going on.

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Tuesday, July 5, 2011

7/5 Daily Commentary

Daily Commentary - Word doc, click here.
                                PDF, click here.

This is the last commentary available via the blog.  Please subscribe per the Sign-Up page to continue receiving Animal Spirit Forecasts.  My thanks to the many readers that have signed up for subscription.  Your support has genuinely touched me. if you want to subscribe.  Just indicate that you want to subscribe and intend to send payment.  For details see the Sign-Up page.

7/5 3:40

SP futures 30-minute M/A has held the first test.   SPX and DJI have topped.  Nasdaq is filling out it's 5th of c.  I don't hold any Nasdaq shorts and will attempt to enter futures short on break of 2353.25.  I'll short SP futures on a rally after a 30-minute close below 1326.

The stock market is making a head-and-shoulders top. Although the smoothed I1 declines into late August the ensuing I1 advance stays well below 3.25 which, according to the rule set in the Intro and Concepts page, means that longer-term traders can stay short.  I intend to keep a small core short position but will go primarily to cash on these swings. On an even longer time frame the market declines into 2nd quarter 2012.

I want to invite readers to subscribe.  If paypal then email at and I will start your subscription pending mail or bank billpay payment.

7/5 2:05

SPX and DJI have completed their c wave up.  I have no exposure to Nasdaq and had a stop order at 2353.25 which never got filled.  Meanwhile the SP 30-minute M/A crept up to the current price range.  Selling 1% ES  futures at 30-minute, 92-unit M/A minus .5% on a 30-minute close.  Currently any 30-minute close below 1326.

7/5 9:50

The stock market is finding support at SP futures 30-minute M/A. 
There are 2 M/A support break points:
SP futures 30-minute,92-unit M/A breaks at any 30-minute close below 1324.50
The closer one is NQ futures 15-minute, 86-unit which breaks at 2353.25.  I have an order in shorting here on a stop.

7/5 6:10am

Last Friday I got the go-ahead to short the stock market.  Currently we have 6%SDS, 4%DXD, 1%UCPIX (a long-term core), and 3% EUO.
SP, NQ, and DJ futures have broken their trend channels and are declining to support M/As.

NQ futures 15-minute, 86-unit M/A indicates 2353.25 as the break point.  I have a short order at this level on a stop. SP futures 30-minute, 92-minute M/A is at 1330.75 and the break point is 1324.

The SP futures M/A should provide temporary support.

Monday, July 4, 2011

7/4 midnight

The thing about moving averages is that they creep up on you.  I'm looking at NQ 15-minute,82-unit M/A minus .32% or 2351.25 stop currently.  Nasdaq looks like it completed a very small 5th wave up.
Since I'm expecting sentiment to turn from positive to negative I want to get as short as possible at this point.

7/4 10:00

Order in shorting YM futures at 12,512 stop.  1-minute, 163-unit M/A -.23%.

7/4 5:15pm

Futures markets re-open at 6pm EDT. 
European markets fell off of their highs to dramatically underperform Friday's U.S. trading.  Friday-Monday DAX was up 125 points or 1.7% with SPX Thursday-Friday was up 2.4%.  I like to use the DAX to estimate trading sentiment going into the nightly futures session.  DAX closed up .23% but 23 points off of it's high.
Since SP and DJ have complete wave counts I'm short Sept YM futures at 12,519 stop.  SP futures closed the morning down 1 point, while NQ closed up 10 points in a 5th up.

7/4 11:30am

I covered the NQ short at 2361 on a new high.  SP is -1, DJ +21.  SP  and DJ have completed counts up but NQ is in 5th wave now, breaking out of a rectangle wave 4.  I was short from 2357.50 and will use the 15-minute, 82-unit M/A less .2% as confirmation of trend break and re-entry.

I'm currently 6% SDS, 4% DXD, 3% EUO, and 1% UCPIX.

DAX is underperforming, advancing .7% Friday closing at 10am EDT, 6 hours ahead of New York.  With U.S. markets up 1.4% Friday the DAX will only keep up if it closes up .7% instead of .32% currently. 
Jul 1, 2011 7,374.49 7,443.20 7,357.03 7,419.44 32,625,500 7,419.44

Jun 30, 2011 7,310.34 7,378.35 7,285.44 7,376.24 32,845,500 7,376.24

Jun 29, 2011 7,230.95 7,320.30 7,230.95 7,294.14 38,853,400 7,294.14

Jun 28, 2011 7,138.50 7,187.08 7,075.19 7,170.43 37,509,000 7,170.43

Jun 27, 2011 7,101.15 7,144.44 7,079.11 7,107.90 28,088,600 7,107.90

Jun 24, 2011 7,231.73 7,273.32 7,099.22 7,121.38 40,547,100 7,121.38

In Asia, all of the markets rallied less than Friday's U.S. except for Shanghai and Hong Kong which are playing catch-up.  Nikkei up .98% underperformed U.S. Friday tape.

Saturday, July 2, 2011

7/2 Weekly Commentary

Here is the link to the Weekly Commentary:
Click here.

Tuesday evening will be the cutover to the newsletter subscription format. 
The details for signing up for e-mail delivery are at the Sign-up Page.

It's only $10 a month, $100 a year and signing up now will freeze the rate for 3 years.  Charging for the newsletter, while not making me rich, keeps me motivated to produce the communications that go along with my trading method.  Hope to see you there.

Steve Koteles

Friday, July 1, 2011

7/1 Daily Commentary Flash

The daily technical composite is now in weak sell signal, cancelling the buy signal in effect for the past several weeks.
I put the details into a PDF and I guarantee that you can access via this link.  ARCA is open until 8pm if you want to buy some short ETFs.

7/1 Daily Commentary

I wanted to get out the Daily early.  When all of the market date is available I'll update the post with the daily technical composite and other markets.
When the daily technical composite registers a strong buy, as it did 13 trading days ago, everything else takes a back seat.  I1 takes a back seat to a rally from 2 weeks of congestion on a +24 buy signal in the daily technical composite.  I was disappointed that yesterday's rally did not take more out of the sails of the momentum, taking it only from +10 to +6.  As stated then I expected today to be another up day to complete the work of neutralizing the oversold condition.  I nibbled at NQ shorts today but got out with tiny losses twice because the count kept extending.  I am short now from 2357.50.
I have kept positions small until I see the composite this evening.  I'll post it 7:30EDT in time for ARCA.  If the composite declines below +4, which I expect, then I'll add more short ETFs.  The combination of an oversold condition, pre-holiday with light trade, and end-of-quarter.
The market completed it's abc from last week's lows this afternoon.  SP futures count it best.  I have to use futures because most of this rally happened overnight.  Cash counts with huge opening moves don't make sense in a strong trending environment. 

Zeroing in on wave (v) the final wave in the abc shows that all waves are complete.
In spite of the huge rally over the past 2 days the dollar has stayed above the bottom made on Wednesday.  I consider this important market information.

7/1 3:55

SP futures rallied to resistance as seen by the range bars.  It looks to be putting in a head-and-shoulders.
Range is 1334.50 to 1336.50.

7/1 2:50

Shorted 1% NQ at 2357.50 on what looks like a completed wave structure.

7/1 2:07

Covered NQ at 2352.75, looking for 1 final high.

7/1 2:05

I shorted NQ at 2351.50.  The final, tiny 5th wave has extended with wave 3 just completed.  I'll buy NQ back at 2352.25 and short again on final high.

7/1 1:45

Today's rally should definitely turn the tech composite neutral.  I shorted at a point 30 points up on the day for NQ futures.  This is a pre-holiday and window-dressing rally so it should level off and not go ballistic like for an unexpected event. 
The dollar has held it's ground and gold/silver have declined, which bodes poorly for the stock market going beyond today. 

7/1 1:10

Shorted 1% NQ 2351.50.  Bought 2% SDS at 20.15. 

7/1 12:45

The SP futures count is almost complete as well.  The counts are clearer after this last rally. 

I'm using a 1-minute, 75-unit M/A of NQ futures with an envelope of .05%, or 1.5 points to signal a break. 
If NQ is in a small wave iv and goes sideways into a rectangle then this M/A will flatten and lose it's effectiveness but by then a longer M/A will catch and be viable.

7/1 12:35

The count for Nasdaq is wave c is close to complete.
It looks like s4 has completed it's 3rd wave up, so I'm expecting some sideways and 1 more high.

7/1 11:45

I covered the NQ short at 2344.50 for a 1 point loss. I'm going to use a 1-minute M/A to re-enter.

7/1 11:30

I shorted NQ at 2343.50.

7/1 11:25

I covered NQ at 2338 and am waiting for 1 more new high above 2344.

7/1 10:50

I shorted NQ futures at 2337.25. 

7/1 10:10

Looking to short 1% NQ Sep Futures at 2340.

7/1 9:50

Here is the reason I decided to give the stock market another day to top out.
Historically, when the technical composite buy signal results in a significant rally then that rally continues until the composite declines to +4 or lower.  I'll run the composite again at 7:20pm EDT to verify it reached +4 today. 

7/1 pre-open

I generated the daily technical composite yesterday at 7:20pm EDT.  Even with yesterday's big rally the composite was not able to retreat to neutral.  This caused me to exit the NQ short and sell 2% SDS and 2% QID.  I'm currently 4%DXD, 2%SDS, and 3%EUO.  Overnight the 15-minute M/A for NQ futures climbed to the current trading range.  So even if I'm wrong about a final pop today I have a re-entry for NQ short nearby.  The green line is the 82-unit M/A.  10 points below is the breakdown.
I'll be shorting on a pop to 2330.
SP, DJ, and NQ futures are at 50-day M/A resistance, so what rally can be mustered should be nominal and short-lived.
Gold and silver broke down overnight.  I should have shorted yesterday but instead took position long dollar.  If stocks break down then precious metals should as well.
The dollar bottom looks like it is in.  It did not break above it's 10-minute M/A by more than .2% (16 ticks) last night so initial confirmation is not in.  I'm using dollar as a primary confirmation for stock trend change.

Thursday, June 30, 2011

7/1 1:30am

I covered ND short when the daily technical composite indicated that technical momentum remained.  I count today's rally as a wave iii out of a triangle and the congestion since as wave iv.  I'll go short again on a final spike that will exhaust the technical momentum.

6/30 Daily Commentary

Today's rally did not neutralize the signal, bringing the technical composite only down to +6. This tells me that there will probably be carry-over into the morning. Consequently, I covered by NQ short at 2320 for a loss of 7.75 points. Also I sold 2% QID and 2% SDS in ARCA.

The technical composite is saying that I will short again tomorrow. While disappointed, this is part of the trade.  On the unexpected decline through the ND 15-minute, 82-minute M/A less 10 points I'll short NQ again.

I have the raw data for I1, the short-term timing component, the PM1 precious metals gauge, the US1 bonds gauge, the dollar gauge, and crude gauge in an Excel spreadsheet forward for next 60 days at this link.

I've been sitting on my hands over the past 12 sessions after covering shorts near the lows and I was eager to short this market (probably a little too eager).

Today played out as a strong rally with technical momentum, on a buy signal in the daily technical composite.  Yesterday I was looking for a spike today strong enough to dissipate the technical strength to neutral.  Today I bought 3% DXD, 2% SDS, 2% QID, and 1% EUO.  I also shorted NQ futures at 2312.25 and have a stop at 2324.25.  I bought 2% SDS at the close yesterday to get a toe-hold position.

The key is the short-term timing component of I1. The following chart removes the 8 day lead for simple comparison with price. As can be seen yesterday was the signal day for this component, declining below 10.5.

Here is the I1 with the 8-day lead removed:

However, the technical condition of the stock market is sufficiently strong to delay the signal until the daily technical composite declines to +4 or lower. 

I believe the dollar low is in.  When the stock market turns then the dollar will rally. 

6/30 3:50

Bought 2% DXD at 17.14
Went short 1% NQ again at 2321.50, stop 2324

6/30 3:40

SPX high 1321.13.  SPX is testing this high.  I stopped out of NQ at 2322.25 and am looking for another short entry.  This rally will turn the tech composite neutral, so at the close is the time to short.

6/30 1:15

There was a data error in my futures data source, which showed a blip to 2323 for NQ futures, but the actual high was 2322 and did not violate my original stop.   The market spiked to a higher level than I thought was necessary to finish the process of neutralizing the oversold condition of the last 2 months, but that's what markets do they go beyond what's necessary.  The rest of the day should be milling around at a high level.  I'll post the Daily as soon as the technical composite is generated.
The short-term timing component plus 8-day lead fell below 10.5 today, indicating yesterday was top day.  However, the technical composite still had not fallen to a +4 to indicate that the technical momentum was used up.  It should do so today.
I'm altering the charting program for the short-term timing display to allow for an input of the number of lead days.  That way the chart as displayed will reflect the 8-day lead aligned directly with prices.

6/30 12:50

Bought another 1% EUO at 16.70

6/30 11:40

I'm still short NQ futures.  There was a 1-minute spike to 2323.  My stop is above this spike.

6/30 11:20

We got the (very) minor new high so the count is complete.  Market should wallow around until the close.

6/30 11:10

Need 1 more minor new high to complete the wave count.

6/30 11:00

Taking a breath.  I've been looking forward to this morning and have been sitting on my hands for 2 weeks. The stock market has bumped into 50-day M/As for DJI, SPX, and NDX.

 I'm now waiting for confirmations of trend change to increase positions.  What I'm looking for are:
In the dollar, 16 cents above the 10-minute M/A, which would currently be a signal at 74.95.
DJ futures 10-minute,76-unit minus 38 points.  This is 100 points away from the market currently.
NQ futures 15-minute,82-unit minus 10 points.  This is also distant from current market.
I'm expecting this market to remain up for the day to allow the daily technical composite to decline to +4 and neutralize the oversold condition of the past 2 months.  Consequently I'm not in a big hurry to add to positions until I verify the technical composite after the close.

6/30 10:30

Confirmations of trend change include the dollar 10-minute,145-unit M/A plus .2%.  It's currently at 74.80, so 74.96 (16 ticks) will signal trend change.  Of course this M/A is moving down over time so the signal will need adjustment.  (Blue line on chart.)

6/30 10:30

This morning I bought 2% SDS, 2% QID, and shorted 1% NQ futures.  I expect the stock market to close up but hopefully I shorted at a spike peak.  The only stop I am putting on is NQ futures at 2322.25.

6/30 10:08

I shorted 1% NQ futures at 2312.25

6/30 10:00

Bought 2% DXD at 17.28

6/30 9:50

I bought 2% SDS at 20.70 and 2% QID at 50.89.

6/30 9:32

My strategy today is to short a spike top.  I expect the market to close on the upside today to get the daily technical composite to +4 or below and relieve the oversold condition.

The weekly technical composite is on a strong sell signal with a -12 trough value.  This signal remains in effect until the composite returns to 0.

Jack Cyrul sent in some trendline charts.  This one shows convergence of trendline and 50-day M/A for the SPX at 1317-1318 which is about the same area I'm looking for with SP futures at 1314.

6/30 9:05am

You will not need to use Google to access the commentary when I cut over to e-mail subscription.   The commentary and intraday posts will be delivered via e-mail.  Your e-mail program should allow you to set up alerts when any of my e-mails arrive.

I have targets of 2312 and 2316 on ND/NQ futures and intend to short futures at 2312 and buy QID at 2316.  

There are 2 fail-safes in case the market does not perform to expectation and declines instead.  First the DJ futures 10-minute, 76-unit M/A has a lower envelope of 37 points, so any trade 38 points below the M/A will be a sell signal.  M/A is currently at 12,233 so the signal would be at 12,195 and lower (blue line on chart).

A larger signal will be issued by ND/NQ futures 15-minute, 82-unit M/A minus 10 points.  Currently at 2294.60, this would generate a signal at 2284.60 or lower (green line on chart below):
The dollar is poised for a 2-month rally once the stock market peaks.  I'll buy another 2% EUO at ND futures 2312.

6/30 pre-open

I resolved the Google access issue.  The commentary is universally accessible via the link in the Daily or this link to daily commentary. 
I apologize for the inconvenience.
I've lowered the short point to ND or NQ futures 2312. 
You can use SP futures 1314 as well.  This is the 50-day M/A.

Wednesday, June 29, 2011

6/29 Daily Commentary

The commentary's access issue has been resolved.  I'm temporarily using Google Docs, but the permanent store will be my web site.  When the web site is ready then universal access is guaranteed.  There will be no security, the email I send will contain a link to a document that will be unsecured.  A couple of days.  Sorry for the inconvenience. 

I put tonight's commentary into a Word file that is in the format that I would like to employ when I switch to newsletter.  (Google screwed up the logo but this is a temporary store.)  The storage location does not accept PDFs but I will have this resolved shortly so that PDFs will be e-mailed to subscribers.
The last page contains a table that will contain the raw sentiment gauge data going forward 60 days.  I need to create a program that accesses the various databases to build a table for this purpose.  This should be done within the next few days.
Comments welcome.  Tonight's commentary is available via this link.

6/29 5:50

Bought 2% SDS at 21.01

6/29 3:55

I'm looking at a spike overnight in the stock indexes and metals.  I'll short NQ and gold on the spike tonight and buy the ETFs in the morning.

6/29 3:10

ND futures are forming a triangle in their wave iv of c.

6/29 11:15

Stock futures finished their wave iii highs before the cash market opened.  Probable shapes are triangle or rectangle.

6/29 10:25

It appears that wave iii of c completed.  

6/29 pre-open

DJ futures 52-day M/A is a good target, 12,329.  Short-term timing component declines back under 10.5 tomorrow indicating today at close is the spot.  However, technical momentum is now present and the daily technical composite is in the process of reverting to the mean by declining to +4 or below from +14 as of yesterday's close.  This means that depending on the force of the rally the odds favor some carry-over after the close into tomorrow. 
If we get a strong extension of the rally today I'll go short a small amount near the close.
PM1 bottoms 7/13. Gold rallying to 1520.5 gets me short, silver at 34.70.

Tuesday, June 28, 2011

6/28 Daily Commentary

Today fulfilled the breakout scenario for Nasdaq.  Tomorrow should run some more.  Since the advent of an 8-day lead in the short-term timing component of I1 my focus has been on using this series instead of I1 itself, since the lead is manifested primarily from this component and it measures so precisely.  I've augmented this with my daily technical composite which has a strong history of either interrupting a downtrend for several days on a surge beyond +16 or going full circle to neutral +4.  Since I1 data indicated that the congestion and rally was going to last for 2 weeks, my working assumption is that the technical composite was going to point out the end of the rally.   Here's how I'm putting these together.
First, the short-term timing component declines below 10.5 on Thursday.  I've included a listing of this series since Jan. 1 later in this post.  Ordinarily this would pinpoint Wednesday at the close as the optimal time to short.
However, the daily technical composite remained at +14 today in spite of the rally.  Since all of the technical series within the composite are built around thresholds and are smoothed, very often they signal together after strong moves.  I assume that this will be the case this time.  At +14 it requires a 10 point drop to +4 which is a lot to ask for in a single day (tomorrow).  Therefore I'm expecting carry-over into Thursday morning.
Here is the short-term timing component data with high/low/close of SP futures:
20110103, 3.5705, 127200, 125590, 126530

20110104, 2.9461, 126990, 125830, 126530

20110105, 0.9860, 127350, 125580, 127180

20110106, 0.0757, 127690, 126650, 127020

20110107, 1.2220, 127380, 125780, 126750

20110110, 2.0659, 126800, 125800, 126550

20110111, 3.1096, 127360, 126420, 127040

20110112, 3.9080, 128420, 126910, 128340

20110113, 5.6046, 128450, 127650, 128130

20110114, 6.6133, 129080, 127430, 128940

20110118, 10.9846, 129500, 128300, 129470

20110119, 11.4699, 129620, 127520, 127850

20110120, 11.8671, 128130, 126770, 127620

20110121, 11.6924, 128800, 127330, 127970

20110124, 10.6822, 128950, 127800, 128850

20110125, 11.3829, 129170, 127750, 128760

20110126, 9.0250, 129630, 128620, 129360

20110127, 7.8168, 129800, 128930, 129580

20110128, 7.8508, 129940, 127000, 127150

20110131, 3.0017, 128360, 126260, 128240

20110201, 4.8176, 130580, 128140, 130270

20110202, 2.4054, 130530, 129790, 130000

20110203, 2.0887, 130580, 129180, 130330

20110204, 3.7916, 130860, 129820, 130720

20110207, 5.4868, 132000, 130610, 131580

20110208, 5.6099, 132230, 131330, 132170

20110209, 6.0918, 132190, 131200, 131920

20110210, 7.4621, 132020, 130880, 131880

20110211, 8.7912, 132850, 131010, 132730

20110214, 14.5707, 133100, 132480, 132770

20110215, 15.3959, 132920, 132230, 132630

20110216, 14.6709, 133600, 132580, 133300

20110217, 16.4807, 133990, 132850, 133780

20110218, 15.8942, 134280, 133520, 134240

20110222, 11.2551, 134240, 131050, 131440

20110223, 9.2196, 132050, 129800, 130550

20110224, 8.7784, 131070, 129300, 130270

20110225, 7.8023, 131980, 130170, 131880

20110228, 0.9379, 132900, 131300, 132610

20110301, 0.1509, 133620, 130050, 130110

20110302, -0.4330, 131350, 129630, 130580

20110303, 0.9696, 133170, 130490, 132970

20110304, 3.0494, 133440, 131150, 132030

20110307, 6.0428, 132720, 130300, 130910

20110308, 8.9701, 132550, 130620, 132010

20110309, 9.1635, 132490, 131170, 131540

20110310, 10.6274, 131710, 129200, 129430

20110311, 10.5974, 130850, 129000, 130610

20110314, 13.9640, 130040, 128130, 129050

20110315, 13.9098, 129310, 125120, 127530

20110316, 13.9924, 128320, 124380, 125390

20110317, 15.2966, 127420, 124150, 126880

20110318, 16.7645, 128750, 126190, 127420

20110321, 19.0837, 129600, 127500, 129310

20110322, 17.8128, 129650, 128770, 128830

20110323, 14.9453, 129550, 127930, 129210

20110324, 11.1106, 130670, 128920, 130520

20110325, 8.9372, 131450, 130420, 131000

20110328, 1.3844, 131500, 130180, 130220

20110329, 1.3347, 131700, 130050, 131650

20110330, -0.3598, 132750, 131480, 132390

20110331, -0.6947, 132570, 132070, 132100

20110401, 0.6364, 133370, 132080, 132770

20110404, 5.4862, 133250, 132460, 132920

20110405, 6.4878, 133400, 132310, 132670

20110406, 7.5741, 133640, 132620, 132890

20110407, 8.4137, 133500, 132250, 132850

20110408, 11.1042, 133570, 131850, 132380

20110411, 14.7365, 132980, 131700, 131960

20110412, 14.9346, 132050, 130550, 130830

20110413, 13.2708, 131870, 130530, 130870

20110414, 11.7776, 131330, 129850, 131020

20110415, 12.9812, 131930, 130580, 131870

20110418, 12.2120, 131850, 129050, 130110

20110419, 10.2732, 131100, 129410, 130860

20110420, 7.0734, 133020, 130890, 132830

20110421, 8.0785, 133770, 132840, 133100

20110425, 1.6065, 133540, 132730, 133080

20110426, 3.1030, 134580, 132830, 134090

20110427, 2.9586, 135400, 134010, 135100

20110428, 2.8089, 135820, 134700, 135490

20110429, 3.2044, 136370, 135280, 135970

20110502, 7.1929, 137280, 135470, 135770

20110503, 7.2395, 135830, 134600, 135210

20110504, 8.9979, 135500, 133780, 134300

20110505, 10.1734, 134870, 132550, 133500

20110506, 12.1398, 135130, 133200, 133460

20110509, 13.6163, 134650, 133440, 134270

20110510, 12.9772, 135630, 133920, 135380

20110511, 13.4434, 135840, 133320, 133870

20110512, 13.0344, 134850, 132900, 134750

20110513, 12.7804, 135250, 133080, 133400

20110516, 7.6321, 134100, 132490, 132560

20110517, 6.8593, 133190, 131620, 132540

20110518, 5.7337, 134020, 132470, 133860

20110519, 2.9878, 134530, 133460, 134170

20110520, 1.6239, 134400, 132700, 132780

20110523, 1.9049, 132670, 131090, 131520

20110524, 3.4322, 132220, 131200, 131360

20110525, 4.0632, 132420, 130250, 131660

20110526, 4.4328, 132730, 131270, 132650

20110527, 4.5943, 133350, 132450, 132990

20110531, 10.4603, 134570, 132860, 134390

20110601, 11.0917, 134770, 131130, 131210

20110602, 13.2322, 131750, 130450, 131240

20110603, 11.9935, 131330, 129460, 129630

20110606, 13.9457, 129900, 128350, 128500

20110607, 13.2273, 129520, 128270, 128480

20110608, 11.7586, 128740, 127630, 127700

20110609, 11.3189, 129370, 127550, 128740

20110610, 11.7079, 128380, 126750, 126920

20110613, 9.5956, 127650, 126550, 127160

20110614, 5.8582, 128690, 126520, 128450

20110615, 3.9927, 128380, 125580, 125990

20110616, 0.0524, 126900, 125250, 126350

20110617, -0.2868, 127730, 125860, 126600

20110620, -0.9603, 127520, 125620, 127380

20110621, 0.3894, 129250, 127170, 128790

20110622, -0.2196, 129330, 127950, 127980

20110623, 0.6621, 128080, 125700, 127700

20110624, 2.6651, 128600, 126130, 126390

20110627, 8.9891, 128000, 125540, 127630

20110628, 9.3093, 129500, 127160, 129450
Silver and gold rallied today but not proportionally to the stock indexes.  Silver futures at 34.60 and gold at 1520 remain my action points for shorting.  They may not make these levels. Here is PM1:
With the extended formatting capabilities of the newsletter in PDF format I will daily carry the following series' raw data for 30 days forward:
Short-term timing component 
PM1 Silver/gold sentiment gauge 
US1 Long bond sentiment gauge 
If markets are compelling I'll include the dollar gauge and crude.
All gauge charts weekly and some daily/intraday depending on the trade.
So the switch to PDF will really yield a lot more usable information without a lot of increase work on my part.  The blogger is a crude tool.
As part of my trading rules I took a 1% position in DXD when the DJI was 5 points away from breaking the upper envelope of the critical M/A.  This was broken today and 4 tick loss was taken.  This is a routine trade with tiny risk and sometimes surprising payoffs.  However, the efficacy of the critical M/A and the SP futures 30-minute M/A is reduced in extended trading ranges.

6/28 3:45

Targeting DJI 12,150 or the close, whichever comes first.

6/28 3:20

My buy of DXD is a day trade with any DJI above 12185.25 getting me out.

6/28 2:38

The count for wave iii looks complete, still in DXD, high 12188.

6/28 2:27

A 10-point risk on DJI, bought DXD at 17.85 when DJI hit 12174, with stop at 12185.  This is a play on the critical M/A, odds are less than 50/50 but if DJI turns down it scores much bigger than risk.

6/28 1:45

End-of-quarter window-dressing in progress.  Thursday is my target top.  The count looks like iii of c in progress, but 3rd waves often take longer than you think.
DX futures hit 75.26 and ricocheted upward.  I already own EUO so I'm waiting for the stock rally to wind up, but if you have no long dollar then look to get in on a return to the low.
Looking to short silver on a return to 34.60 (basis July) and expecting the stock market to kick it there.  Gold on return to 1520.

6/28 10:40

Friday is the first day that the lead-adjusted short-term timing component returns back under 10.5 (after a relatively high peak of +16).  That makes Thursday afternoon my action time for shorting this market.

  The daily technical composite is still at +14 so with only 3 trading days remaining they need to be strong up to get the composite back to a neutral +4.

The dollar is declining in sympathy with the stock rally.  Daily M/As converge at 75.25, which offers a good buying opportunity (currently 75.31).

6/28 10:00

Sitting on our hands is no fun, just like generals waiting for the time to execute an offensive.  No wonder they smoke cigars!  I have to let the bulls have their fun and chum it up at the watering holes after the close.  Their feel-good time lasts through Thursday and until then I get to practice my panther pounce. 
The Nasdaq is breaking out, so wave iv is not a rectangle but a zigzag up.  See the head-and-shoulders?
I have liberty to go long but I won't because I want to keep perspective on the upcoming shorting opportunity.  I won't let charts guide me, I'll let the clock do the job.  I'm working on software in the interim, but keeping an eye on the indexes.

6/28 pre-open

My ideal rally top is Thursday.  I bought 1% QID after the close and SP futures did not exceed 1280 so I currently hold 1% UCPIX, 1% QID, and 2% EUO.  We did not have weakness overnight so I sold QID at 53.75. 

Monday, June 27, 2011

6/27 Daily Commentary

I bought 2% QID in ARCA trading but narrowed it to 1%.   The stock market is at the outer limits of the SP futures 30-minute M/A, but the short-term timing component at minimum tops tomorrow or ideally on Wednesday.  I'm getting in early and will buy NQ futures if SP futures have a 30-minute close above 1280.
The daily technical composite established a buy signal 2 weeks ago and moved down a notch today to +14.  +4 will negate this signal and shift the short-term technicals back to neutral. 
My main focus has been on the short-term timing component of I1 with an 8-day lead.  The 2 hash marks on the chart below are the secondary peak at +16 and 8 days earlier (tomorrow).  So the earliest the peak will occur is tomorrow and my purchase of QID is premature.  The ideal time window is the decline below 10.5 which will occur Thursday, so the time window is adjusting as we get closer to it.  My bet is on Thursday, which implies an upside breakout until then.
I bought QID at the upper end of it's trading range and NQ futures are at their 18-day M/A.  A breakout will confirm that the market has 3 days to it's Thursday peak.
The only reason that I started to short a bit early is that the market is at an inflection point with either a breakout or breakdown iminent and the longer-term backdrop is bearish, with the weekly technical composite on a sell signal and smoothed I1 on a downtrend until late August.

6/27 6:00pm

I just bought 2% QID at 53.63.  Although I'm 2 days early from optimal sell point, today marked the nominal high of the short-term timing component.  I want to have more hide in this market going forward.  I'll increase again Wednesday.  The stop is SP futures trading above today's high (1280) on a 30-minute close.  I'll cover the salient points in the Daily.

6/27 11:30

Stock market rallied to DJI critical M/A and SP futures 30-minute M/A.  Since the trading range has lasted for a period longer than these M/As I am not placing the weights on them that I ordinarily would.  I remain in passive mode.  Wednesday will transform me into a man of action, a man of steel.

6/27 pre-open

End-of-quarter week.  In a bull or trendless market this would add a bullish bias.  Short-term timing component indicates Wednesday as peak day.  Trend is then down until late August.  I hold 1% UCPIX and 2% EUO.

Overnight trading saw SP futures test last week's lows before rallying.  SP and ND futures are testing their 200-day M/As.  It's looking like Wednesday will only see a rally to the top of the trading range.  If the past 2 weeks are only a rectangle then this will have implications for a wave count.  The only clear count of the decline since March has been Nasdaq, with the Composite counting (iv) in progress.  A rectangle would make be appropriate for this count and, when complete, make this count almost a certainty.  My tactics are to go short at top-of-range sometime Wednesday.

As expected, the dollar met stiff resistance at 76.50, but I believe that the dollar is in an uptrend.  Stock strength going into Wednesday should offer a buying opportunity.

Silver traded down with stock overnight and has not rallied back with them.  I'm reluctant to short silver until Wednesday, hoping it will recover back to the daily M/A or higher and give me a short point for the "risk-off" trade.

Friday, June 24, 2011

6/24 Weekly Commentary

The stock market started a broad trading range 10 days ago and I've been playing defense since then.  I've been using the short-term timing component of I1 over the past several weeks because the 8-day lead is easier to visualize with this series.  I1 also has an 8-day lead.  In the past leads have temporarily developed within I1 after traumatic events.  World sentiment is "risk-off" and the markets have not fully reflected that reality. 
I'm pinpointing Wednesday as the final day for this respite from an ongoing bear market.

The stock market is supported by SPX and Nasdaq 200-day M/As. 

NDX and ND futures are forming a potential H&S bottom.  If so then the breakout and rally needs to begin pronto to make my Wednesday top day.  With no breakout then there will be a 13-day trading range with distribution throughout to propel the next down move.

Gold and silver fell on the crude news.  Today silver closed on it's key daily M/A:

Gold broke it's short daily M/A and if silver and stocks recover into Wednesday then a re-test of this M/A is likely.

Ben delivered a downbeat economic assessment and is mystified why the ocean of stimulus is not bringing jobs back to our shores. Ben, the plants are gone and polishing each other's shoes is not a long-term economic strategy. The next day Obama released 30mil barrels from the Strategic Petroleum Reserve and twisted the arms of other IEA member countries to do the same amount. They have now thrown the kitchen sink at the U.S. economic rot and, like fish fighting the Keynsian hook, are being drawn inexorably to the waiting net. I'm still betting that the U.S. will change in time to avoid street riots by the left. The Tea Party members of congress are holding fast and the dems are ramping up their blame campaign. Personally, I think that holding the line at no tax increases is an economic mistake as well as a political one. A plausible debt plan is needed to prevent the market taking over. This needs to include revenue increases as well as spending cuts. We need to stop relying on supply-side economics, specifically the Laffer Curve and stim via the military. We are beyond the point where party economic voodoo will get us out of this mess. Supply-side (Reagan) economics is not Austrian economics. I think some or many of the Tea Party congressmen understand this but the rest of the Republican party is stuck in Reaganist doctrine. Draconian cuts in government spending at all levels are required, including entire departments being eliminated and the military slashed to the bone in order to implement the Austrian solution. So while Boehner is supporting Tea Party members at this point but that support has not faced the ultimate test.

There are 2 separate fights going on. One the Dem/Keynes vs. GOP/Reagan has been going on for decades. Now we have TeaParty/Austrian vs. GOP/Reagan. The American public still believes in the power of government so the Austrian school is not politic and may swing votes back to the Dems next year. If GOP retains control of the House then the American political spectrum will shift away from belief in big government.

Converting to a newsletter next month in PDF format and e-mailed.  Comments welcome.