MSW Configuration and Changes

I'm changing the MSW (Magic SoftWare) from the Russell 1000, to the Russell 3000. I'm changing mainly to include a larger universe of stocks, as it add's a lot of the Mid and Small caps to the scan. But I'm also changing it in order to get a more comprehensive view of what the MSW thinks of the over all market. This change take's a lot longer to run the analysis, about 20 minutes, so I may not be doing it every day. I'm actually amazed that it only takes 20 minutes, when I consider that it run's through all 3000+ stocks, and test's out each one of the 59 technical trading "systems" that it use's to come up with the "Default System", which then generates the signals. I have the Default System set so that the software has to generate a signal in one direction, with at least 60% of the 59 trading system's firing in one direction.

A couple of things, number one, I'm amazed that out of over 3000 stocks, it could only come up with 9 new buys and 12 new shorts. When I think about that, I can't comprehend how anyone can come up with trading candidate's, without some form of scanning software.

I have ERES on the chart, I used to trade this thing a lot, I know what it is, it actually kind of fit's in with the Obama medical idea's, but it's a wild little thing, I have no idea what the current fundamentals are on it. I like the chart because your risk is only 70 cents, as I would definitely dump it if it get's under the 52 week low just to the left, about 4.60. It's got a lot of immediate resistance to the left here, but it "could" grind back up to the 7.40 "area".

I want to bring up a couple of item's about the software, if you look at the blue high lighted area on the focus list, on ERES, there are some columns on the right. BTHR stands for "Back Test Hit Rate", on this stock 53% of the trades are winners, the next column is BTAPR, "Back Test Apreciation" rate, so the annual percentage return on this stock is -3%, "Bars" is the next column, or the number of bar's it has been in the trade, and "BTPr" stands for "Back Test Percentage", in this case it has a -6% rate of return on the back tested trades. The bottom line, is it dosen't trade this stock very well, OR, it's just a hard stock to trade (I found that out for myself, it works a lot better if this thing has some thing working for it on a funnymental basis). If you look on down the list, you will see that it trades TER and YRCW REALLY well, as all the metric's are really good.

On a sentiment basis, on the weekly charts, the MSW is on buys on 1371 stocks, and short's on 1326 stocks, so it's very split on the long term outlook for the market. On a daily basis, it's on a buy on 1482 stocks, and on a short on 860 stocks, so the MSW consider's the short term very bullish. Remeber, this thing is a brainless peice of software, and has no opinion on the economy, politic's, or the rest of the BS, it only spit's out what it's currently seeing.

Gentle Ben and some Weekend "stuff"

I was late in reading Jeff Saut's column this week, read this thing, http://www.raymondjames.com/inv_strat.htm , it probably lay's out my strategy to a gnat's ass. I exited every thing last friday, as the regular's know, partly because it was convenient to do so on expiration friday, and partly because of exactly what Jeff is talking about. I laid out exactly how I felt last weekend, http://cluelessqtrader.blogspot.com/2009/04/weekend-stuff-part-doce.html , and frankly, nothing has changed my mind after another week, other than the power's that be have made life a little miserable trying to hold this thing up as long as they can.

Starting with the two charts at the top, the A20 (stocks above their 20dma) has been diverging against price since late March, which confirms the slowing momentum. On the other hand, the A50 continues to hover in a very over bought condition, which could add fuel to the fire should we decide to cough it up at some point. I put the charts of the NYSE up there, as they have the largest number of stock's in the index, but the other index's look EXACTLY the same.

The chart's of the three tradeable index's are pretty much the same, but have some interesting difference's, the DIA is clearly the "cleanest" chart, as far as what Jeff is talking about. They have not been able to get over that upper trend line that goes back to October, and are bumping right up against it as of friday. Just like the other two, the RSI5 and MACD Histogram have been diverging against price since late March. Now, the SPY actually closed ABOVE that line on friday, and of course the NasDog's (some time's called the Q's) are just off the chart with bullshitissness, and I laid out my thought's last night about the amount of resistance they are running into right now. I included the rising bearish wedge on the SPY chart, just to show how we broke it with the gap down on monday, but both the Q's and DIA did the same thing.

Now, a couple of points about Jeff's article, he point's out that since he started in the 1970's, there's only been FIVE instance's when the "buying stampede", as he call's it, has lasted more than 30 session's, before we get a pull back of any substance, meaning a pull back of 5-7%. We differ a little in our count, as he had a 29 count going into monday, meaning he is on day 34, I have us as of yesterday on day 33, meaning he must have counted the March 9th bottom as the start of the current rally, wad ever, the count is high.

Where I find it get's REALLY interesting, is the typical 3-5 day pull back, that drop's the normal 5-7%. Number one, a 3-5 day pull back is a perfect PBS (Pristine buy setup), and if you use 7% as the pull back, we pull back to some very interesting area's, as shown in the red circles on the SPY and DIA. The pull back would take us back to the 50dma on the DIA, which also lines up with the November low's, the 7% also lines up with the 50dma on the SPY, which also lines up with that first little two day pull back we had in late March when it initially tested the 50dma, but is above the November low, which bring's up a senario I could see happening. We rarely get such a clean pull back, and it would be to cute, on a sentiment basis, to make it that easy. I could see the SPY test that circle area, maybe wallow around a little, and then go down through it, to really scare the shit out of the bull's, and shake out the weak hands, like going down to the November lows at the lower horizontal line, before turning around and getting them chasing it again. That would fit fairly well, as the DIA, which is the weakest of the three, would break the November low's, adding to a little panic. This would also fit with the Q's, for as they've run further than the other two, it would make sense for them to fall more, and a 10%+ pull back would take them down to the April low, right at 30, which is "whole number" support, and also at the 50dma.

I am NOT bearish, I may try to pick up some change by taking a swing short, if we set up some kind of decent short setup on the daily, or maybe 60min chart, but my ultimate strategy is to get longer than hell if we can get the pull back down to the "area's" I'm looking for. I still think this will be the wave 2 pull back, in a 5 wave rally, meaning once wave 2 is complete, we "should" get the big wave 3, that take's us back over the current highs for the rally, and maybe up to the 50% retracement area's I've noted on some of the charts, which is around the 40 level on the Q's. Another way to look at a target, would be to take the run up off the March 9th low to where ever the high ends up, say it's 34 in the Q's, which is currently about 8.5 points, and add that to where the pull back low ends up being, so if it end's up being 30, and initial target would be 38.50, where we might get a wave 4 pull back, that lead's to the final wave 5 high, which could then end up being in the 40-43 "area".

A couple of closing note's here, life is never easy, and I fully expect the "market" to make it much more difficult than the rosy senario I'm looking for, my worst case senario would be that we continue to grind higher, in which case I'm going to continue to sit it out, trying to pick up some pocket change day trading. Also, I plan on exiting the McClellan trade, that I've been bitching about because of the amount of time it's been taking to take out the sell point, above +100. It make's perfect sense as to why it hasn't made the official exit yet, the stupid Dog's, despite continuing to grind higher, are doing it with less and less stock's participating, as the McClellan is predicated on the A/D lines, so in reality, this thing has been saying some thing to me, like, hey, dumb shit, can't you see what's going on here, hahahahaha!!

Good luck to you.

MSW 4/24/09

6:15pm: I don't keep track of the SPX or the INDU (obviously, I get a little, aaaaahhh, involved, with da Q's), but both of them put a "hanging man" candle on the weekly charts. This is really good, honest, for sure, I wouldn't kid you. With a hanging man candle the important thing is the context of where it is in a move, you get them at the bottom of a move some times, and can act as the end of a bottom, much like a long tailed doji, OR, you can get them at the TOP of a move, where they can signal the, aaaaaahhhh, end of a move. I wouldn't even fathom a guess as to where I might think we are in the "context" of the move right now, hahahahaha!!! Hey, nothing is for sure, just because the thing show's up here, dosen't mean we are necessarily going to dump, BUT, it does give some food for thought.

On the weekly ETF screen, the MSW has DXO has a new weekly short, just for reference it has had the USO on a weekly short for the last 32 bars. It hates the bonds, TLT and BND, and hates natural gas, UNG.

I'm not wild about anything on the Russell 1000 screen, of modest interest is that it came up with a buy on MRK and AMGN, in my mind all this means is that maybe the pharma's are a buy next week.

4/24/09

2:30PM: This was basically a wasted week for me, I did get a fairly decent short going into the close on wednesday, I picked up a dime on a mickey mouse short this morning, that HAD no reason to be taken, I mean, that's how I was working this week, IE, not to hot.

Anyway, next week is a new week, so there's hope. I'm still in the original long on the McClellan, as it just refuse's to get over that +100 level, which reminds me that was another decent thing I did this week, was the second unit I closed out, I guess that was on wednesday, anyway, this is one of the longer trades I've been in on that strategy (I hate it).

I anticipate next week we will test the November highs at 34.01, the horizontal black line just above the bar today, in conjunction with that, we will be hitting the declining 200 dma, so we got two points of serious resistance when we get there. Now, whether we reverse there or not, may be a different question, I would need to see some kind of setup to really short this thing, an example would be the highs we made January and February, when we had those two narrow range doji's that closed outside the bollinger's, and then were followed by a gap down on both of those times. Anyway, I'll deal with it, when we get there.

The weekly's kind of interesting, we ruined my short setup I mentioned a couple of days ago, but what happen's now, is "if" we can clear that area I mentioned above, the weekly has virtually clear air above it, up to at least the 50% retracement level at 40, and possibly all the

way up to about 43, those three huge red bar's left a very large void, between here and there.

This is what I mean, we are coming up on an obvious critical area, we either fail to get above it, in which a short might be the way to go, or we get through this area, and I'll be piling in on the long side, obviously with hedge's and stuff like that in place. I gotta feel that it's gonna be a long, as there's just NO short setup on that weekly chart.

Have a good weekend.

MSW 4/23/09

6:05pm: Geeze, I was going through the fly's site, http://www.ibankcoin.com/flyblog/ , and went over the stock's he claims he's buying, if you like basically penny stocks, the following have terrific looking charts, I'm not going to post them all, check them out for yourself: PCX, LVLT, CROX, CAVM, OVTI, ASX, ARUN, CDNS, and JDSU.

5:15pm: SIGH!! When you live in a one horse town, out in the middle of now where, shit happens, I lost my Internet about 5:30am, and "they" ("they", of course, being Goldman, the MM's, and da Government, IT'S A CONSPIRACY MAAAAAAAAAAN!!) just allowed me to get back on line.

No changes in the ETF scan.

The sofware came up with 4 new buys and 3 new shorts on the Russell 1000, as I have stated before, I have a "tendency" to go back to "things" I've had success with in the past, therefore, I kind of like TER for a buy. The chart I have up there is SPN, it's a new short, and HEY, I like it, it's made a cool double top, the candle yesterday would have been a BOF, break out failure, accept for the fact that it finished green, but it did take out the previous January highs, and failed to hold that break out, and today basically coughed it up, very tight stop over either today's highs, or yesterday's highs.

I haven't opened TS so I have no intraday data, but it look's like we tried to test yesterday's lows, and get a continuation, but unless I miss my guess, we probably had another magical late day save, to finish us in the green. TSV broke the 10 dma to the upside, but that won't matter until we make another new high, and TSV fails to confirm, by turning lower. The last three day's have seen increasing volume, we are up around 33.22 in the after hours after all the earnings after the close, so unless I miss my guess, we may try to make a new rally high tomorrow.

Hopefully my Inet will be working, so I can enjoy the fun.

Honor thy stops, and trade well.

MSW 4/22/09

One change on the ETF screen, for some reason the software want's to be an oil barron, and has decided it like's USO, as it put a new buy on it. I've been out of DXO for awhile now, but I've been watching it, and may be getting back in. It seems to like the material sector as well, as it put a confirmed buy on the UYM.

It came up with 7 new buys and 10 new shorts on the Russell 1000, of the buys I have put the chart of SFD up, it's amazing ain't it, how you always go back to things you've made money on before, I mentioned this stock quite a while back, when it made that triple - quadruple bottom in March. I mean, this is a decent pull back, looks nice, it may stall in a double top at the previous high 8 days ago, but if it can get through that, this thing could see 13, followed by 15. Another buy that looks pretty good, weirdly enough, is F, hahahaha, it actually looks like it want's to break out, it's just barely more than an option at 4 bucks, who knows. All the shorts look decent to me, but I especially like DD and UNH.

4/22/09

8:00pm: I was going through some other "stuff" tonight, looking, and I just happened to leaf through a weekly chart of the Q's, hmmmmm, I mean, personally, that's an ugly looking chart. I realize we had a lot of bullshitishness going on after hours, but surprisingly, we only closed up like 9 cents. I also realize we still have two days left in the week, so this could change, a lot, but, hmmmm. With the BOF, break out failure, today, it's also a break out failure on the weekly chart, with the "possibility", of setting up a BOF candle on it, if we can't finish the week with a green candle. We are clearly over bought on the RSI5, and breaking under the 70 signal line, and the STOCH is in imminent danger of doing a bearish cross. All I'm saying, is that I consider the greatest risk, right now, to be to the down side.

2:30pm: Actually, I thought it was a pretty cool day, to start it off, I had NO play out of the blast off on the open, I hate it when they do that, gap down and then just blast off, what I did do, though, was take that second unit off this morning on the McClellan trade, as I mentioned in the room, that was against the rule's of the strategy, as it waits until it get's above +100 before you exit the long, BUT, taking the second unit yesterday is also not in the strategy, SO, with the big dumb bar the first hour, I went early on it. I'm glad I did, as it never made it over the +100 level before the dump into the close, so it's back in draw down mode.

The five minute shows the huge blast off this morning, the ultimate high stopped just 4 cents short of the high for the bear market rally, we had a pull back into 11am, a little pop, and then a kind of modified double bottom, that actually made a higher low. We then took off after the highs again, came within 2 cents of the rally highs, had a little pull back, then blasted off, THEN, the fun started, hahahahaha! Sysin and I both caught it in the room, he was on a 3 minute time frame, I was on the 5 min, we had a BOF, Break out Failure bar, high lighted in the red circle. We took out the rally highs on that bar, hitting a high of 33.53, that blue horizontal line represent's the rally high at 33.50, and then immediately REEEEEEEEEJECTED, my take was under the close of that bar, and we just absolutely dumped into the close. I left to early, taking the first half at 33.12, the rest at the whole number, besides, I had no intention of holding into AAPL earnings tonight.

Speaking of earnings, EBAY and FFIV reported and the Q's dumped down to 32.46, about 35 cents, AAPL just reported, and we are trying to climb back above the close, as they beat by quite a bit.

MSW 4/21/09

Two changes to the ETF's today, the software spit out new short's on TAN and MDY.

There's six new buys and six new short's on the Russell 1000, I'm not to wild about any of them, but if I had to pick, I'd say the buy signal on PG is not tooooo bad. It's sitting right under a shelf from February, if it get's over that it goes right to about 54.50, then after wallowing there for a while, if, or when it get's over that level, it's got clear air up to 59.

This is a new chart of the Q's, it's my setup on my Telechart platform, the white arrows point to a divergence that's been going on in TSV, that's Time Segmented Volume, used quite a bit by Peter Worden, as you can see it's been going lower on the last three highs we've made, I mean, the signal in and of itself is not a short signal or any thing, it's just saying, that things may not be as great as they seem.

My 60min McClellan, after leaving me stranded by not triggering my sell on friday, and then dumping yesterday, triggered a new buy this morning by passing up through the -100 level, so I bought another unit of calls, long, I may get lucky as the Q's are up in the after hours, and we may get a gap up in the morning, which might trigger my sell, when it cross's over the +100 level.

The Market Rewind room did all right today, although there was some bitching about some of the whip arounds, hahahaha, I contributed my share by starting off with a loser this morning, such is life.

MSW 4/20/09

Just one change on the ETF scan, the software gave a new sell to DBC, which you might expect. Personally, I don't like it as the march low's are not that far off, and it would "probably" be a buy at that point anyway.

AS YOU MIGHT EXPECT, after a day like this, it came up with only two buys and 13 shorts on the daily charts on the Russell 1000, the buys were COCO and IBOC, the shorts were WSC,

MGM,GLBL,G,BJS,SCHN,KBH,SM,NFX,MI,WSM,ISRG, and RF. Now, accept for the two buys, which I obviously don't care for, most of the shorts look interesting. But, what I did, was go to the weekly signals, and the results are about the same, with the new buys and sells on the list at the left, two buys and 14 new shorts. What I found, that I like, is the chart, ENR, it's a new sell on the weekly chart, but is still a buy on this daily chart. What I like is the double top at 58, from January, boy, it hit that thing and reeeeeeeeeejected, right off the bat, I could easily see this thing drop to 50 in the next couple of days, and maybe go after 48, before it regains it's support. As always, check to see when earnings are expected.

4/20/09

2:30Pm: Not much to say, we opened DOWN, we WENT DOWN, WE FINISHED DOWN!!!! The banks got pretty well crushed, anyway, nice start to my weekend senario I laid out, I won't get really excited until we set up some thing like I was talking about, hell, tomrrow, being turn around tuesday, will probably be UP just as big as this was down, we shall see. I don't remember how long it has been, but I closed out the day in the TradeStation account with ZERO positions in it, very unusual for me.
Anyway, the 60min McClellan strategy at the bottom is getting crushed, the ROACH, missing the exit trigger on friday by a knat's ass was a baaaaaaad omen, such is life with "systems", it has had eight straight winners in a row, and twelve of the last 13 were winners, I guess it was due for a draw down.

Speaking of systems, I was talking with BZ before the close (in the Market Rewind chat room), about whether a lot of his systems would fire off buy's at the close, it did, the one on the chart is the Cucca Popper, it also fired off buys on the Grand Slam and the Kop Q's, maybe it's time for his systems to draw down as well, hahahahaha.

A logical thing to happen on that SPY chart at the top, would be to pull back and "test" that down trend line under it, around the 81 "area", they do that kind of stuff a lot.

Anyway, this day could be a trap day, as we have a lot of earnings in the Dog's this week, YHOO, AAPL, BRCM and AMZN, they've been loving most of the Doggie earnings so far, it will be interesting to see if "they", have had a change in heart, and start selling them instead. We shall see.

6:45am: This may be the new's I was wondering about below, http://zerohedge.blogspot.com/2009/04/stress-test-results-leaked.html , or, non news, if it proves to be false.

6:30am: Really a weird market this morning, futures continue to draft down, currently down almost 2%, and taking out friday's low's, on really, no news that I could find. OBVIOUSLY, there is some baaaaaaad news some where, but they won't let us normal folks know, until it suits their purpose's. Asia was actually up quite a bit this morning, but Europe was down quite a bit, but why shouldn't it be, with those socialist governments they don't have a stinking prayer for any growth, oops, excuse me, I was thinking of the US, but I guess Europe is just about as bad.
The weakness certainly can't be blamed on the banks, as BAC beat the hell out of earnings,

Bank of America net income tops $4 billion , as the RAPE of America continues, for even as tent cities and bread and water lines form, we continue to pump trillions (UNACCOUNTED for trillions I might add) of corporate welfare into these shyster's, even while they report almost record earnings (those earnings of course, being ripped off from the very same people providing that welfare), it's just disgusting.

I thought this was a shocker,

Oracle agrees to acquire Sun Microsystems in $5.6 billion deal, at a 42% premium , HAH, and I was worried that IBM was going to screw with my Java platforms, that skunk Larry Elleson will undoubtedly try and make me pay for it.

It's kind of worrisome, to me at least, when the main mouth peice for the Wall Street shrill's, MarketWatch, is throwing out so many head lines yelling about how the great depression II is all over, it's safe to get in now:

MARSH ON MONDAYNo more crisis to kick around?

Familiar groundIt's still a recession, but the good news is that the U.S. economy is looking a little more familiar.

Great Depression's silver lining

Summers: Recovery a 'long road