A TUTORIAL ON ALL MAIN MODEL APPLICATIONS

A TUTORIAL OF MAIN MODEL APPLICATIONS:
 
The SP confirmation close ALWAYS refers to the large contract 4:15 pm futures closing price...
The Confirmation Price
 
The confirmation price is a specific market price beyond which the market must close in order to confirm a new main model buy or sell signal...  the confirmation price is not a top or bottom picker, it is not designed to get you into a new position right at, or near, the top or bottom tick...  but rather, it tells you that the trend has more than likely changed direction with a high degree of reliability...  as has been demonstrated with better than a 98% reliability, the confirmation price confirms that the market trend has legitimately changed direction and that a new trend has just begun...  very often, a buy confirmation price may seem so far above the market that taking a new long position at that high level seems risky...  the same can be said for taking a new short position at a sell confirmation price...  but factually, these price points are the most ideal place to enter a new position since these confirmation prices occur where most people are likely to take new erroneous positions in the trend that is just ending...  this is why the market moves so explosively after the price is confirmed, e.g., the new short holders are scrambling to cover or the new dip buyers are selling out rapidly...
 
The NT Indicator
 

The NT indicator is a near term (NT) indicator and is included in the evening briefings for the benefit of those who make counter trend trades... the NT buy and sell spikes are not main model buy and sell signals, these spikes are only very near term, although they could always develop into something more significant over the next few days...  using a weather analogy, the buy/sell spikes are much like a developing low pressure area or a tropical wave, they do not indicate a fully blown hurricane, although it could eventually develop...  if a fully blown hurricane actually does develop, then the main model signal itself would address that market action...

 
How To Read The NT Indicator
 
The best and safest time to take an NT signal is when the market has already trended for some time and is now approaching a VP price, especially a major VP, then the NT spike would indicate that the trend is likely to reverse since the market is already vulnerable at a VP price, the NT spike provides greater certainty for that counter trend trade...
A sample NT Indicator
 
The VP Price
All VP prices are provided in each and every email briefing each day after the markets have closed for that day...
The VP, or Vertical Price, is NOT a target, the market is not required or expected to reach any VP price...  however, if reached, the VP price represents where the buying/selling has stretched to its maximum exhaustion point, at least temporarily, and a change in trend is very likely... 
 
How To Read The VP Price
 
If the market touches and then moves away from the VP very quickly and doesn't return, then this more than likely indicates a market reversal, but if the market moves away from the VP and then returns within a day or two, maybe sooner, then the move is not over and the market is likely to continue in its current trend... repeated visits to a VP suggests the move is not yet over... 
The Floor/Ceiling Price
 
The floor price is always there in a down trend, the ceiling price is always there in an up trend...  these specific prices are rarely mentioned because the market rarely reaches them...  these are not VP prices but can be treated the same as a VP price except floor and ceiling prices change every day while the VP price does not...  a close beyond the floor/ceiling price should be considered a second buy or sell confirmation price...
 
A Suggestion On How To Enter A Position On A New Main Model Signal
 
One way to enter a new signal trade is to take only 1/3 position only after the market trades through the confirmation price by a few points...  after that initial position is taken, let the market do what it does all day...  then, late in the day, if the market is still confirming the signal, then add the second 1/3 position...  and then, on the close take the final 1/3 position...  your average entry price will be above/below the confirmation price but the whips will be significantly reduced...  this is a method I use for myself very often...
 
Another way to enter a new position is to wait for the actual confirmation on the close, and then take the new position...
 
Rejected Buy/Sell Signals
 
Rejected buy and/or sell signals are typically followed by a sharp market move in the opposite direction the following day, this occurs as a general rule...  a rejected sell signal is typically followed the next day by a sharp rally...  as well, a rejected buy signal is typically followed the next day by a sharp decline...  however, if the sharp rally/decline does not occur, then you can expect to see the market make another attempt at that buy/sell signal...
 
The Long Term (LT) Indicator
 

The long term (LT) indicator is a myriad of indicators that give you an X-ray view of the market internals and trend...

 
Below are two graphs for the longer term (LT) indicator, the SP directly below and for the gold market below that one...  the LT indicator is a complex and sophisticated indicator which gives you a lot of information about the market which cannot be seen or known in any other way...  I think it makes the NT indicator look rather primitive in comparison...
A sample SP LT Indicator
A sample Gold market LT Indicator
It may take some time to learn and grasp, and it may look like a bunch of wiggly lines right now, but there are really only two main lines to consider at first, the green and the red... the purple and blue lines will oscillate around the red line...
 
The green line = the closing price for the SP or gold
 
The red line = the confirmation line
 
The purple line = the early warning line
 
The blue line = the imminent warning line
 
The green price line uses the values on the left side of the graph, the price values, just like any other price chart...  
 
The other three lines use different values, therefore the actual proximity and location of these three lines compared to the green price line is irrelevant... 
A sample SP LT Indicator

 

Consider this graph much like an X-ray picture of the market itself, something you will not see merely by looking at the chart or by crunching volume, advances/declines, or what ever other market internal data you might gather...  this LT indicator measures time and speed of price in a way that gives you a clear picture of where the market is now (green price line), early warning signs that the trend is losing or gathering steam (purple line crossing through the red line), and further final confirmation, an imminent warning, that the trend is about to turn (blue line crossing through the red line)...
 
Therefore, we want to monitor the purple and blue lines for early and imminent warnings of a likely trend change if/when they pass through the red line (the confirmation line)...
 
The current picture of the LT for the SP (seen below) shows that the early warning line has already crossed the red line about a week ago...  this means caution, much like a green traffic light turning amber before turning red...  and today we have the blue line also crossing down through the red line...  this now means a much higher likelihood that a down trend has now begun...  today, we also had a sell signal signal confirmation with the main model...    although we may see the blue line cross the red confirmation line even before a main model signal is confirmed...  this could happen...
 
There are so many additional things to notice with these lines, such as 
 
1)  how the purple line recently crossed below the red line and then came back up to touch the red line before moving lower again... 
 
2)  how the blue line bounced off the red line and then returned to cross it as of today...
 
2)  the purple/blue lines actually spike before the market tops or bottoms, this is an advanced warning ahead of the market, sometimes by days...
 
3)  there are also the traditional divergent patterns among the purple and blue lines...
A sample SP LT Indicator

 

There are several more patterns that can be pointed out, but rather than discussing each and every movement of these lines and what they mean, I'll simply point them out in the daily email briefings when they actually occur in real time...   the LT basic tutorial is found at the bottom of each email briefing for easy reference...
 
Regardless of where the lines may be, the main model signals will ALWAYS take priority although they can easily occur simultaneously, even if the blue line crosses the red line prior to a main model signal...

 

The green line = the closing price for the specific market
 
The red line = the confirmation line
 
The purple line = the early warning line
 
The blue line = the imminent warning line
 
The purple and blue lines crossing the red line gives you early and imminent warning of a change in trend direction...
A sample SP LT Indicator
 
A sample Gold market LT Indicator
 
The email SUGGESTION BOX is always open and invites your ideas for improving and enhancing your email service, I enjoy hearing from you, many thanks...
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