Allan’s Weekend Update

New Signals

VXX Hourly ————>SHORT (note – this is a very short term signal)

NASDAQ Weekly——->LONG

CME Daily—————–>LONG

KOG Daily—————–>LONG

(click on charts to enlarge)

The Big Picture

DJIA Weekly Trend Model

A common feature of these April-May TOP’s is that the LONG signals immediately following the TOP’s were all very profitable signals. The current Long signal is already profitable, but based on the past 4 years, this one should have a way to go before the next Sell signal. All major stock market indexes are now LONG in their Weekly models, with the exception of Value Line:

Value Line Weekly Index

Note the performance of the market during the last Presidential election year, 2008. Also note the “big picture” pattern of the past year, starting with the April-May TOP of 2011. This observation suggests the polar opposite of the Weekly stock index models all turning up, but the past year looks like the formation of a MAJOR TOP to me. If so, the ground given up waiting for the Daily Trend Models to reverse SHORT will pale in comparison to the gains that could be made if the 2008-2009 lows are eventually taken out.

The Smaller Picture

DJIA 30 Minute

There is one case that can be made for the market turning down next week, suggested in the Dow 30 minute chart. This is an almost perfect example of a “terminal” wave, the final wave of a larger pattern. I’ve annotated the elements on the chart.  We don’t trade these things, lest we all go insane, but it’s there and it looks too perfect not to mention. It would take the Hourly Trend Models to turn down for this pattern to presage a meaningful turn of events.

Strategy Corner: Better Returns

Above is a year-to-date chart of Nasdaq showing an uptrend, a downtrend and now another uptrend.  The, “Buy & Hold,” Nasdaq is up about 20% in 2012. Below are some charts of the new “high growth” stocks which were recently added to our monitored stocks portfolio. Note the year-to-date percentage returns:

SWHC +100%

 SAVE +33%

ELLI +450%

BRLI +100%

RNF +100%

STK +120%

ALGN +50%

TJX +40%

RGR +33%

None of these stocks were being followed in the portfolios at the beginning of 2012. But my point is that as good as the market index models are at getting intermediate trends right, that for every trend, picking the right stock or the right basket of stocks can reap substantial rewards; better returns than leveraged ETF’s and a lot less aggravating or risky than buying options on the indexes.

My next feature will be to find some smaller cap, “junior” mining companies that will likely outperform gold and silver in their respective uptrends. We should have some, “high growth” gold and silver stocks to buy while these metals are on Buy signals. This new twist on strategy will be a great enhancement to our trend following, i.e. lighting fires under the returns being generated by each underlying trading model.

Weekly Trend Models

Allan Trends provides trading ideas based on Technical Analysis. Allan covers about 30 stocks, indexes and ETF’s, in multiple time frames, including Hourly Models in SPX and QQQQ for shorter-term analysis.

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