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Sunday, April 18, 2010

Elixir of Stock Market

Man has been in this quest to find a system that would let him capture all tops and all bottoms.  Kind of like an Elixir. There isn't one.  The best hitting averages for me are from DOMA 77 and DOMA 172 on FAS. All systems work phenomenally for a short interval of time.   Same thing happened with our envelopes.  They were clobbered Friday.  With DMRM and DOMA I was able to pull out very decent day.  
Friday was one of the most active tradings days in a long time.  Particularly for a options expiration Friday.  I went short at 114.68. DMRM signal to go short was at 115.44.  I sold all my longs at 108.44  as FAS went thru the 60 min  DOMA 77  at 106.82 and gave a tiny bounce to 108.85. Covered my shorts at 101.91 went long at 103.2 (DMRM 3.2% of 100.04) sold long at 106.2  Went short at 105.92 and covered at 105.11 to close shop.  I left before the market closed.  That is 3 trades in a day.  When news breaks like it did on GS and market reacts most will just freeze and watch the news. I will trade when there is big news because my DMRM gives a number of signals on such days. They are high probability trades.  Now I am 100% cash.  
The severity of the hit makes me very suspicious that this down move is for real.   Generally the top is a process and there is a cluster of days 5-7 where the spx just trades and doesn't go any where.  This kind of drop happens near the bottom.  None the less we have a lot of negatives.  FAS is clearly thru the 60 min DOMA 77 The 15 min envelope is useless now and DMRM's signal is to go short.  And after a long time FAS gave a negative KOD signal.  All in all the picture is not good.
I also used to look at DOMA 172 on the 60 min chart.  I hadn't looked at it in a few days.  The bottom 100.04 was on the 172 DOMA.  Oh! Well..I will climb back on the short side the first chance I get meaning a 50 or so point dow rally and follow DMRM.  The trend for now is down. 



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