To answer this question we look at the MKTs behavioral state and the specific price point or inflection pivot where sentiment for the signal is confirmed or denied. Trading at this price point is optimal however aligning your signal acceptance to the sentiment bias in the BULL TREND CORRECTIVE state will enhance your performance.
For today, September 24 2009 - The following MKTs are in a BULL TREND CORRECTIVE state:
ND = ND100 Index Dec'09 – 1706.75 Inflection Pivot
QQQQ = Power shares QQQ Trust – 42.01 Inflection Pivot
SPY = SP500 Index Dep Rcpt – 106.75 Inflection Pivot
SOX = PHLX Semiconductor Sector – 328.90 Inflection Pivot
BTK = Biotechnology Index – 960.33 Inflection Pivot
OSX = PHLX Oil Services Sector – 195.95 Inflection Pivot
XAL = AMEX Airline Index – 28.42 Inflection Pivot
AUDJPY = FOREX – 7962 Inflection Pivot
FUTUREND100 Z'09 – The Index produced a negative signal against a positive trend, which will remain in force above the 1706.75 Inflection Pivot. Above here any weakness is an opportunity to buy. A failure from 1706.75 is needed to confirm the negative signal and sentiment shift.
ETF
QQQQ - The Index produced a negative signal against a positive trend, which will remain in force above the 42.01 Inflection Pivot. Above here any weakness is an opportunity to buy. A failure from 42.01 is needed to confirm the negative signal and sentiment shift.
ETF
SOX - The Semiconductor Index posted a new move high close but settling at the low end of the range produced a negative corrective signal. Above the 328.90 Inflection Pivot it is all noise with the uptrend firmly in command. A break below 328.90 is needed to shift sentiment out of the aggressive buy posture into a neutral or transition posture.
ETF
BTK - The Biotechnology sector produced a negative signal against a positive trend and will remain vulnerable to further losses with all trading below the 960.33 Inflection Pivot. Only above here does the underlying positive momentum engage.
ETF
SPY - The SPYders posted a negative BULL TREND CORRECTION signal and will remain vulnerable to further losses below the 106.75 Inflection Pivot. A rise above 106.75 removes the threat with expectations for a firm neutral trade.
ETF
OSX – The Oil Services Sector Index posted a negative BULL TREND CORRECTION signal and will remain vulnerable to further losses below the 195.95 Inflection Pivot. A rise above 195.95 is needed to put the BULL TREND back in play.
ETF
XAL - The Airline Sector Index produced a negative signal against a positive trend, which will remain in force above the 28.42 Inflection Pivot. Above here any weakness is an opportunity to buy. A failure from 28.42 is needed to confirm the negative signal and sentiment shift.
FOREX
AUDJPY – The Aussie Yen is flirting with a sentiment shift below the 7962 Inflection Pivot. A held trade below here will keep the contract on edge and the BULL TREND CORRECTIVE signal in play. Only above 7962 is the signal negated and the currency set for a digestive trade.
The MKTs presented are "technically" in play, in a BULL TREND CORRECTIVE state, providing opportunity on both sides of the MKT. For MKTs above their Inflection Pivot [ND100, QQQQ, SOX, XAL] look for positive entry opportunities especially a REVERSAL entry strategy off support.
For MKTs below their Inflection Pivot [BTK, SPY, OSX, AUDJPY] all buy signals should use reduced size or not be accepted until the MKT is back above its Inflection Pivot. Once above the Inflection Pivot an aggressive buy position can be resumed with the expectation of the resumption of the positive trend. As long as the MKT is below the Inflection Pivot sell signals can be accepted, however it is a counter trend move so smaller size should be used.
JS
Strategy Based Trading is a methodology that focuses on the applied strategy verses a specific market and looks to align strategies with markets whose current technical behavior matches the strategies criteria. Please review the following CME sponsored tutorial for a complete overview of this approach.STRATEGY BASED TRADING Review http://progressive.powerstream.net/008/00102/edu/interactive/js_services/strategy_based_trading/index.html
For more information please contact me at info@jsservices.com. You can also visit http://www.jsservices.com/.The Inflection Pivot levels are available as a chart overlay on the following platforms; Ninja trader, Strategy Runner and eSignal. Sign up for a Complimentary FREE Trial.
