I am trying to re-create the post I lost last night.
We may have thought that we had escaped the “Sell in May and Go Away” curse. But look at this monthly chart of the SPY that I updated last night. The red arrows designate the month of May. I had written last year that it appeared that the months following May have declined in recent years. The main exception was 2009, when the market was coming back from a huge decline. But in 2010, 2011 and 2012 it held true. And now it looks like we may have hit a peak in May, and June is declining. May had been such a strong month, we thought we had escaped the prediction. Stay tuned…
I have a confession to make. I was trying to minimize the risk of being whip-sawed in my short term trend count. I adopted a new criterion for a change in the short term trend of the QQQ. In doing so, I missed the beginning of the current decline. So I went back to my original method and counted the down trend from where it would have begun. A number of you questioned the D-8 count I posted last night, so I am going to correct things. Using my original short term trend change criterion, the short term up-trend that began on April 23rd ended on June 5th after 31 days (U-31). This was followed by a 2 day down-trend (D-2) and a 2 day up-trend (U-2). On June 12, we started a new short term down-trend which reached day 9 (D-9) on Monday. So I did have two short term trends that lasted for only 2 days. This whip-saw also occurred in IBD’s market call during this period, so I feel a little better. I have always written that I tend to trust a new short term trend more after it reaches day 5. So I am willing to accept more whip-saws in order to not miss the beginning of a real change in trend. I will not change my criteria again without informing all of you who watch me so closely… (thank you)
I use the short term trend to guide my short term trading. The best time for me to go long is when the GMI is on a Buy signal and the QQQ short term trend turns up. The GMI is now on a Sell signal and the short term trend is down, so I will not hold long positions now. When the GMI has flashed a Buy signal, I like to accumulate TQQQ as soon as the short term trend turns up. When the GMI flashes a Sell signal, and the short term trend turns down, I like to start buying SQQQ. It is too late for me to begin buying SQQQ, now that we are in the 9th day of the short term down-trend. Note that the Worden T2108 Indicator is now at 16%, quite low.
My psychiatrist friend says that confession, regardless of why you think you’re doing it, is by itself an effective therapeutic practice. Using that criterion, you must be the picture of mental health tonight.
I do have one question regarding your post, though. In the penultimate paragraph, you say that you typically don’t trust a short-term trend until its fifth day. Yet, in the final paragraph, you say that, for example, when the GMI is on a sell, you will begin accumulating SQQQ as soon (I assume that means the first day) as the short term-trend turns down. Could you explain in a bit more detail how you use short-term trends in conjunction with GMI signals?
I will begin a position in the leveraged index ETF on day 1 or 2 but will wait to day 5 to take a larger position.
Dr. Wish, where can I find more background information on your references to U-x and D-x, I am a new follower. Love your site, thanks very much!
Where do you post the U-(number of days up) and corresponding D days down? So you are changing the methodology in your system. I know you didn’t issue the sell alert June 21. Where do you post the U/D days? Could you also explain the GMI2 readings? This seems to be the true part of the signal to exploit the short end range of trading opportunities.
Every Sunday night when I post the GMI table.