THE TICK DOESN’T QUIT!! Part 1

The TICK indicator is just too good at everything.

How did this help me make money today?

First, and least importantly, I felt encouraged that the positions I had were still showing resiliency, and that if this was the approximate low, I could have a strong day P&L wise.**

Second, and more importantly, I had my eye on two potential longs, and was able to pull the trigger.

I am UP in both new positions by 65 – 75 bps and this is ONLY BECAUSE of my effort to get better execution, nothing else, because my trading plan in the most literal sense always calls for setups to be bought on the close.

There is a warning:  Occasionally, you buy a stock a, say, 3pm, only to see it reverse, negating the trigger that prompted you to buy in the first place.  This is unfortunate, but in my experience it’s best to sell right away.

THE SETUP FAILED. More on this later

The trades are typically losers, but the good news is twofold:

  1. The positive $ benefits of this execution technique far outweigh the negatives
    1. …yesterday’s post on how this technique saves me (you) THOUSANDS per year?
  2. You typically are only selling at a fraction of your risk amount.  You risk 1%, but end up losing 10 bps.  In other words, you would have to do this “early dismissal” quite a number of times for it to really impact your performance

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**You really shouldn’t be judging ANYTHING based on your P&L on a tick by tick level, unless you are a very active day trader.  How well you execute your strategy is what matters.  If after 50 or 100 perfect executions you have a bad P&L, critically review the foundational elements of your strategy.

You know how after EVER GAME pro athletes watch hours of tapes replaying the game so they can learn from their mistakes (double for when they lose)?  Exactly.

They are positively reinforcing what they do well, and removing bad habits from their decision making.

Only with the same critical focus can you do the same.

What are your trading strengths and weaknesses?

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How Today’s TICK Helped Your Execution…AGAIN

I’ve probably written  20 articles on the TICK, why I like it, how I use it, what the numbers mean, etc ad infinitum.

The majority of my best TICK work can be found in this post Today’s TICK, Helping Your Execution

I’m working on changing the organization of this site (among other things) so that it will be easy for me to reference ALL of my work on some subject without subjecting you to 50 links, or me to questions/concepts I’ve already answered many times.  Everybody wins!

Anyway, here is today’s TICK with signals circled.  A signal is both MAs above the center line and the shorter MA hitting the outer boundary MA.

Again, like with most days, timing your trades per this SIMPLE AND EFFECTIVE indicator (my favorite type) saved you cents off your execution.  Whether 5 cents or 10, these numbers really add up.

5 cents savings?  How about TWO CENTS SAVINGS per execution.  Surely I jest, you mistakenly assume.

Well, using very conservative assumptions for an active trader…

(300 shares as an average trade size (low end guess) * .02 cents savings on executions x 15 trades a week * 40 weeks in a year) =

wait for it….

wait for it….

THIRTY-SIX HUNDRED DOLLARS 

in savings.

Whatever numbers you pick, it’s a couple thousand that’s added to your P&L at year’s end.

I strongly rec’d incorporating this indicator into your trading.

Constructive Action Makes Data Feel Good

One week ago today the TradeTimer turned bullish, as upward momentum was detected and sell pressure began to dry up.

Despite several attempts at a sell-off since that post, the selling pressure has been low and bears have unable to follow through on what should have been easy places to step on the gas (like this past Friday where we closed at the lows and below 1270.) The onus was on them and they were unable to do it.

It was a tough call to make, because my FEELINGS based on looks, and etc felt bearish, but the data, per the TT was still showing a dearth of any strong selling.  It was my strict adherence to my system, understanding what my data is measuring, and adherence to that which prevented me from impulsively acting on that feeling.

Since that call, that market has been choppy / sideways, but MANY more breakouts are holding and following through constructively than they had been in recent weeks.

Tough Price Action But Not Bearish Yet….

Much like yesterday’s sharp sell-off and subsequent rebound, there is not strong selling on this move lower.

The price action of the indices is definitely negative, but until there is a real fresh burst of selling, the onus is on the bears to show they have the mettle.  I am a little disappointed with the way this bounce has manifested so far. It is obviously tepid.

The indices look scary but stocks themselves are showing more resilience, but all you can do is create a structure to frame trading one day at a time.

Suppose you had 100 stocks.  When the TT was bearish, say that 80 were in downtrends, and 20 were flat.  The TT turned bullish, it’s precisely because positive trend reversal conditions were indicated in more stocks than not.  In order for use to get bearish there has to be a fair amount of selling to flip the trends and price action of so many stocks.  That is illustrative of the process, but not the exact method.

Let’s face it — this close is not desirable.  I do not like to see the market flailing about the 1265 area for so long, the longer we hit it, the weaker that level will be. It’s an ugly close into the weekend.

I am still bullish on momentum here, following the near 6 weeks of negativity.  I am only 30% long though, having sold ANEN, which was sweet trade.

This was the post I made a few day’s ago when I turned bullish.  Reread it.  Everything in that post is still true, and if you look at the rec’d momentum buy list, those stocks are still performing well.  It would be very rare for momo stocks to NOT fall apart when the market is.

In the end, though a tough call to make, the data still supports being bullish on momentum.

Sell-Off Market, What’s The Deal, AN UPDATE!

Whoa!

Huge gap lower today!  A little surprising.  Yesterday’s end of day sell-off was a touch ominous, but did not portend (at least to me) a large gap down.

Here’s the good news though…and there’s a fair amount, all things considered.

I’ve been watching the market since 12 EST.  There has NOT been strong selling. I know the indices made a large move lower, but the amount of selling is not high.

  • At this exact moment, there are 42 Compression Breakouts : 23 Compression BreakDowns.  This is skewed bullish, and neither number is high.
  • To add context to these numbers, look at the last TradeTimer chart when we were negative, and The Bears Uproariously Reclaimed the Summer Sell-off.

If you look in the top-most pane in that chart, you see the sell strength on that day was 320 (!), about 14x higher than today. Today’s sell-off has no vigor behind it.

Next, today’s candle is printing a nice reversal.  You guys know I don’t put stock (no pun) in observations about how things look, but hey.  It is what it is.

The next positive, and meaningless to you people, is that my portfolio is ripping today.  I’m 45% long, and up 1.3%.  That is big, bec it implies if I was 100% long, I’d be up 2.7%, on a down day no less. The way my portfolio’s volatility is (which is very low) this is a big move and a nice surprise.  Since I didn’t disclose my buys explicitly before hand, the return is not important except it contradicts the action.  In case you were wondering, it was CIGX and ANEN doing me the justice (see buy post here, list here).

From experience, when you have momentum stocks in a market that is not rewarding them, they are rarely up on negative days, and more frequently getting chopped by 3-10%.

My stocks might be speaking to the tone of the market, which is that selling is not coming in hot (corroborated by market stats I collect).

The next thing I want to remind everyone is that the BEST period for returns is following a decline, the longer and sharper the better.  My TT has alerted me to strong buying at the start of these cycles every time, which is why I was adamant about staying in cash while the market was poor, so I could be fully mentally ready to slam the gas when necessary. Gotta keep the mind limber, trading is stressful.

Keep in mind I’ve been ALL cash since beginning of May.  I went long only for 1 day at the beginning of June, when my TT suggested it, and immediately sold my positions the next day (see link above about Bears reclaiming) and lost 1%.

Just a shameless TradeTimer plug:  I’ve been in a terrible ~1% drawdown since May 2nd, when the market turned shitty.  LOL. The signal told me to stay out of a bad market, so I did.  Now I’m back.

It’s really easy to bank coin if you buy good stocks in a good market.  The problem is good is VERY subjective to most (but not all).  More on this later.

You may miss a day, but you don’t miss a rally (or sell-off) of any substance with the TT.

The ONLY way to get bearish from here is by strong selling, which we just didn’t have today.  If strong selling comes back in, I will happily be all cash again.  It’s not a concern to me. Until then….