Come Together (9/2)

New Signals

SPX Hourly———> SHORT

Weekend Market Analysis

Thank goodness August is over. The low participation in both European and American markets led to a lethargic trading environment. That will change in September, historically the weakest month of the year. Because everyone knows this, it is far from certain. September has been the host of major lows in each of the past two years, both of which were followed by robust rallies into the end of the year.

 

DJIA – 2010

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DJIA – 2011

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DJIA – 2012

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Precious metals continue to trend as well as we can hope for, especially SLV. Both the Daily and Weekly Trend Models have been very effective for both Long-term and Shorter-term traders:

 

SLV Daily Trend Model

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SLV Weekly Trend Model

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Note how close the SLV Weekly Trend Model is to its overhead trend line @ $32.38. If SLV breaks through the trend line and reverses Long, it could begin a long ride up. The Daily Trend Model is already Long. However, if the trend line holds and SLV reverses lower, the Daily will follow with its own Sell Signal, which will be in sync with the Weekly. In either case, both the Weekly and the Daily Trend Models are close to being on the same side of a trend, providing an excellent high probability trade. Be ready.

VXX gave us some great Short trades this past year and some not so great Long trades. The leveraged Long, “UVXY” is going through a reverse split on September 6:

ProShares, the Bethesda, Md.-based fund provider known for its extensive roster of leveraged and inverse funds, said it will serve up a 1-for-10 reverse split on the ProShares Ultra VIX Short-Term Futures ETF (UVXY) in September.

Shorting and trading options on UVXY is problematic. For traders, it makes sense to use VXX and options on VXX for additional leverage.

VXX Daily

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The drama surrounding Federal Reserve policy is starting to make DBC an attractive ETF to follow. We have been following it in the Premium Service and as the chart below shows, it has been in an excellent Long trend since late June. It is not a dynamic trading stock, but a way to gain exposure to a broad basket of commodities:

The index commodities are light, Sweet Crude Oil (WTI), Heating Oil, RBOB Gasoline, Natural Gas, Brent Crude, Gold, Silver, Aluminum, Zinc, Copper Grade A, Corn, Wheat, Soybeans, and Sugar. The index is composed of notional amounts of each of the index commodities. View More

 

DBC Daily Trend Model

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I’m adding DBC to the Commodity ETF portfolio this weekend as a replacement for IYR. I would rather offer a broader basket ETF as a compliment to precious metals, oil and interest rates.

As for the stocks portfolio, should September mark the beginning of a rally into the end of the year, the new high growth stocks should be leading the pack. But don’t forget the behemoths, AAPL & GOOG. Although pricey, these two are both up about 10% since their current Long signals were triggered August 3 and July 19, respectively. Remember, it doesn’t matter how high the price of a stock; percentage returns do not discriminate when it comes to the base price of the stock.

 

GOOG Daily Trend Model

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If you are trading individual stocks based on the trend models, try to diversify between high technology, financials and the new high growth stocks.

Speaking of individual stocks, I have been hoping to add Facebook (FB) to the individual stocks portfolio once it had enough daily bars for a reliable trend model. However, it keeps going down and although we have been taking advantage in the Premium Service (shorting), the Daily trend has yet to generate a Long.

 

FB Hourly Trend Model

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TREND MODELS

 

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Premium-Expanded Service

The Premium-Expanded Trading Service has been outstanding. Roughly 20% of the subscriber based signed up for it and so far, only three Premium subscribers have cancelled. That is a renewal rate in excess of 90%, about the same renewal rate of the standard service. Even though it is a more active trading service, the trades have been lasting about 1-2 weeks each. That’s feasable for even end-of-day traders. The last Short trade on FB lasted two weeks and has generated a 10% gain on the underlying stock.

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Allan’s Trend Following Model is based on his trend-following trading system for buying and selling stocks and ETFs. Most trades last for weeks to months. Learn more about Allan Trends here. 

Click this link for a risk-free trial to Allan’s standard service.

For the premium service (for active traders) click here.