What a disappointment. I was having a lot of fun tracking the system. Just when everything is set up for it to begin buying the double long ETFs, the “healthy pullback” has morphed into something that is beginning to look like a 50 foot slide covered in baby oil, which bottoms in a pool full of severed, sharp, bull horns.
The system will trade again. Honestly, I need to put more time into developing the trend component. I can probably make the system more responsive to the trend, which means it would be trading more often during a somewhat sideways market. However, getting more opportunities could be a double-edged sword. What should be considered is that the Bamboo went almost a month being unable to discern a clear trend. When it finally became bullish, it did not get the pullback it was looking for, and so it never made a trade. While I intend to tweak the trend component over the next few weeks, the system may be doing exactly what it supposed to do, which is to keep us out of the market when there is no edge.
The Big Bamboo is currently looking for several up days (basically, it wants to see a tepid dead cat bounce) before going long the diETFs.
As for me, I’m long SSO. Another day like today and my position will be stopped out.
Anyone using oversold oscillators (RSI, Stochastics, CCI, %R) for entries should be prepared to exit their current positions due to impending abnormally oversold conditions. As much as I don’t want to sound alarmist, I am a tad bit worried about another repeat of October and November. While it is always tempting to buy oversold markets, what has been working has been to skip the long side entirely and just short the market when it gets overbought.
I went long BGU and QLD at the close, gonna get clown raped on QLD tomorrow. Bah!
Happens to the best of us Boom. Time to put the laptop up in the bedroom at night so I can wake up and check the futes.
I don’t know Wood – perhaps the Big Bamboo is telling you something, like stay out of the market
Just a thought.
I’m tracking both Qsinators and the Agosto and they’ve all gone green in the last week. Two signals I sort of trust and the third was a red herring.
Net result? Could be a big up day by the end of the week.
I think we need a month or so of every other day like today to generate early October fun.
But, I am learning to trust the numbers and not my instincts.
Cramer highlighting TA on his show, jinxed Big Bamboo. When the last person jumps on a bandwagon, the wheels fall off from overload.
Temporarily, until adjustments are made.
Wood,
I have really enjoyed your posts and have been following your stuff for a while.
Just so I am clear on your post:
“Anyone using oversold oscillators (RSI, Stochastics
, CCI, %R) for entries should be prepared to exit their current positions due to impending abnormally oversold conditions.”
Are you saying if your already short you should exit now?
Thanks for all you great advice !
I think you could reversal today from down futures…
Cuervo, yes, the system has done a good job of keeping us out of the market. However, Opportunity x Expectancy = Profit. If I can tweak the system to provide more opportunity, without a large decrease in expectancy, that would be a bonus.
As far as trusting the systems and subjugating the emotions, that is the hardest part of all. I’m doing much better with that. I have a feeling that it will be a Zen moment when I can reduce the affect of my emotions/instinct to where I take every trade, honor every stop, close out at pre-defined points, etc.
Trader Wannabe, I’m not saying that if you are short, to exit now.
Since the oscillators have been oversold for several days now, my assumption is that traders may have jumped in on the long side, expecting the markets to bounce. My point is that we may be seeing another example of where the oscillators get oversold, and stay oversold, resulting in a big drawdown for those who are long. October and November should teach us that a bear market can stay oversold for a long time, and should we continue sliding, it might be better to exit with losses and look for a better re-entry than to stomach the increasing drawdown while waiting for the inevitable bounce.
As far as being short, Bulls have the short term edge.
Nice post Woody.