Looked like a Rally....06.09.15

But SPY ended almost dead on yesterday's close...which was actually below the pivot (see below).
The closing Ergodics/ADX divergence reflects continued market uncertainty.
The bulls just couldn't get the momo going but Wednesday might hold better promise.  We shall see.
The VIX was surprisingly DOWN at the close...which should bode well for the bulls but we've been hoodwinked by the market before so caution is still the watchword.
Going forward we REALLY need to keep in mind the dreaded Trap Door pattern wherein what looks like a one day rally turns into an opportunity for the bears to ramp up selling and swamp the bulls, It's happened before many times so forewarned is forearmed.
We also have the updated SPY PONZO forecast and the skew short term remains bearish.
NYSE announced margin debt is now $500 billion...the last time the markets crashed it was $400 billion, just to give you a sense of  how fragile this market is.

Looking for a Hairy Bottom....06.08.15

Indications are that the current "correction" may not be over yet.  Here's a 2 hour bar chart of SPY looking back to late April and if history repeats itself then 207.30 is the real test of SPY support.
Despite the lousy NYAD readings of late and the dominance of the TICK below the zero line what WE HAVE NOT SEEN is a sustained NYAD reading around 10 or the very low teens and a high volume wash out day.  Those are the parameters that typically set up a "hairy bottom" such as around May 1 and May 7.  Tuesday's are occasionally dubbed "turnaround Tuesdays" due to the historical penchant to be key reversal days.  Such an event may or may not ensue tomorrow.  If such does come to past just be aware that new lows tend to revisit within 30 days.  It's summertime and the momentum is negative.

3 Day Low Studies Show Promise.....06.05.15

Here's a few more examples of the 3 day low system I mentioned yesterday.  One attractive feature of the algorithm is that it just examines a single stock or ETF so you're either in or out.... no relative strength to muddy the waters. Of course, if the market decides to go down 4, 5 or 10 days in a row then this model is going to falter badly like almost any Martingale system.  I'm working on that.
The VIX model is a bit over the top and please note that the limit stop is 3.6%...not .6% as applied to SPY, IWM, XLE and IBM.
Keep in mind VIX can only be traded as options....this is NOT an ETN or ETF.
Ideally I'd come up with a select long /short diversified portfolio and let the algorithm sort through and find potential new Longs.  I'm working on that too.
These are the signals as of Friday's close for Monday........................

S3 Kind of Day + IWM 3 day low study...06.04.15

Yikes! That was bad. Dow down 170 and VIX up 11.5%.  The Ergodics/ADX were out of sync most of the day and the volume was about 7% above average.  Friday looms tomorrow and the expectations are bearish although we may see some early session recovery based on after hours action today.
Below not a study of the IWM (Russell 200) using the 3 Day Low model posted yesterday.  I'd be lying if I didn't admit frustration with recent LM performance and the 3 day low model is in the running as a possible replacement.  We'll look at a couple other target ETFs on Friday and/or over the weekend but the signals so far have demonstrated some attractive metrics.

SPY 3 Day Low Model....06.03.15

As we continue to be whipsawed by the fickle markets here's a study model that has some attractive features including little time in the market, minimal drawdowns and a nice linearity. The model buys the 3 day low in SPY within the constraints of the M3 momentum/ relative strength algorithm.  In order words the M3 modeling creates a momentum model and based on that ranking the 3 day low filter either stands back or signals a trade.  You're only in it for a day or 2 so exposure time is limited and we have a .5% limit stop to further reduce risk.  I'll post the 3 day low model signal henceforth in the daily pre-close update FYI since, like all the other models , based on buying or closing pre-close.

Freaky Tuesday...06.03.15

Here's today's 3 minute bar SPY chart.   Now scroll down and look at yesterday's post.  Pretty interesting? Basically we're going nowhere fast...a lot of intradady swing range but with heavy gravitation to the pivot.  We will see some momentum shortly....we just don't know if the break will be up or down.  Based on reader questions tomorrow we'll look at an alternative butterfly setup for the Qs and one for SPY.
Yes..I did not post the SPY VDX chart this weekend, so based on reader feedback, here it is.

We are clearly at BUY threshold levels but the current skew is bearish and the VDI+ slope is negative so there may be a better entry coming as we get closer to the 40% band,

A Tentative Bounce...06.01.15

First trading day of the month and a Monday so we were expecting a bounce.  After a volatile open and considerable stagnation at the pivot we finally got some buying in the afternoon session but over 50% of the bullish momentum evaporated into the last hour and we were left with a NYAD reading of just 1.08 (neutral) and a TICK of -200 (bearish).  We can see the Ergodic/ADX divergence in the last 30 minutes and Tuesday's forecast is not at all clear.  The last hour selloff doesn't bode well.