RULES FOR FOLLOWING THE SEVEN SENTINELS

The concurrent alignment of all seven signals under specific conditions constitutes a signal and defines the context or prevailing trend of the market. Here are the individual buy/sell triggers:

TRINQ and TRIN: Daily reading below the 13 Day Exponential Moving Average (EMA) is buy mode, a reading above the 13 Day EMA is sell mode.

For NAMO, NYMO, NAHL, NYHL, a daily reading above the 6 Day EMA is buy mode, and reading below the 6 Day EMA is sell mode.

For BPCOMPQ, A positive crossing though the lower or upper bollinger band constitutes buy mode. A negative crossing through the lower or upper Bolinger Band constitutes sell mode. It stays in buy mode or in sell mode until it re-crosses in the opposite direction.

All seven must be in a sell or buy condition simultaneously to complete the signal.

In this highly volatile market one other condition must be met in order to reduce the chance of whipsaws. A buy or sell signal needs to be confirmed by a NYMO 28 trading day high or low depending on the nature of the signal. If this occurs then the signal is considered valid.

1. 	Bias remains Up Stuck half and half until monday. G might be the place to be as the market struggles to move up further.
   	Posted Today at 05:07 PM by WorkFE

2. Relentless Still in a downtrend since April. Higher highs in the short term and everybody is a short term trader these days. I remember last year the day after labor day had a comeback in volume so maybe this up down volatility will be tamed some soon. Sentiment works at extremes and trying to guess short term directions based on sentiment is a coin toss. We are not at an extreme right now either way. I think the whole 'everyone is short' thing is written by those who have an agenda. There will always be some indicator somewhere that one can use to grasp their agenda.

   Posted 09-04-2010 at 08:53 PM by Bullitt

3. Relentless Quote: Originally Posted by Boghie CH, The S&P only bumped a little over 3% last week. We were down a little over 15% from the recent highs. September is generally a lousy month to invest, but this past summer was worse than normal. Usually we just set the spin cycle and go away. This year, however, we lost 6.25% - which includes this past weeks gain. So, da'Boyz may use that space to make some short term gains. They probably already have. One can never be sure when a turn is upon us, or of its measure. Last year we had some whipsaws that flipped the SS on and off like switch. That doesn't happen often, but happens. And it ain't pleasant when you expect one thing and get another. I was reading an article the other day about how so many investors have left the market specifically because of the volatility. Yep. That's probably a smart move. Especially when one looks at the longer term picture.

   Posted 09-04-2010 at 05:58 PM by coolhand

4. Relentless CH, The S&P only bumped a little over 3% last week. We were down a little over 15% from the recent highs. September is generally a lousy month to invest, but this past summer was worse than normal. Usually we just set the spin cycle and go away. This year, however, we lost 6.25% - which includes this past weeks gain. So, da'Boyz may use that space to make some short term gains. They probably already have.

   Posted 09-04-2010 at 04:30 PM by Boghie

5. 	Relentless Quote: Originally Posted by Birchtree So many people moved to the F fund today that I'm thinking one of the premium services must be touting bonds. Way to go. I'll be waiting for you to capitulate back to the bullish side and then your followers will be buyers helping the bull along the trajectory upward. Are you on point?
   	Posted 09-04-2010 at 04:51 AM by crws

6. 	Relentless F fund So many people moved to the F fund today that I'm thinking one of the premium services must be touting bonds. Way to go. I'll be waiting for you to capitulate back to the bullish side and then your followers will be buyers helping the bull along the trajectory upward.
   	Posted 09-04-2010 at 12:04 AM by Birchtree

7. 	Impressive, But Too Far, Too Fast CH, Next week tells the tale... But, there has been increased volume this week. That is a very good sign. And, I don't think da'Boyz can make money by selling. They really can't take too much in the way of profits as a result of August. They have to let the market float before they can take profit.
   	Posted 09-03-2010 at 05:18 PM by Boghie

8. Not for the Faint of Heart So judging by your analogies you believe the bulls are going to have a myocardial infarction in the not-too-distant future? That's what I'm betting on too. Quote: Originally Posted by paradocs The rally yesterday was not a surprize to me. The market had to rise significantly, albeit an illusionary rise. The bigger they are, the harder they fall. The market will look more like cardiac arrythmias for a time now; yesterday was only a strong ventricular contraction. What is yet to come is ventricular tachycardia, then Ventricular/atrial fibrillation. The latter being the BIG fall. August ISM was a major factor in the rise yesterday. People seem to be grasping for any positive news and cant see the forest for the trees. The trees are the little "positive" news blurbs; the forest is the overall economic picture. For example, today's pending home sales for July was +5.2% (up from -2.8% for June and up from the -1.5% concensus). These are "pending", not actual sales. What would be interesting is how many of these "pending" home sales include, foreclosure, refinancing, and how many will never make it to a sale.

   Posted 09-02-2010 at 08:20 PM by coolhand

9. Not for the Faint of Heart The rally yesterday was not a surprize to me. The market had to rise significantly, albeit an illusionary rise. The bigger they are, the harder they fall. The market will look more like cardiac arrythmias for a time now; yesterday was only a strong ventricular contraction. What is yet to come is ventricular tachycardia, then Ventricular/atrial fibrillation. The latter being the BIG fall. August ISM was a major factor in the rise yesterday. People seem to be grasping for any positive news and cant see the forest for the trees. The trees are the little "positive" news blurbs; the forest is the overall economic picture. For example, today's pending home sales for July was +5.2% (up from -2.8% for June and up from the -1.5% concensus). These are "pending", not actual sales. What would be interesting is how many of these "pending" home sales include, foreclosure, refinancing, and how many will never make it to a sale.

   Posted 09-02-2010 at 02:56 PM by paradocs

10. 	Not for the Faint of Heart Bond's away! you keep one eye on the bonds, my friend. Let us know when you're about to catch up so we can keep company.
    	Posted 09-02-2010 at 03:00 AM by crws

11. 	Not for the Faint of Heart Back to Back Would you find a set of back to back Dow 250's enticing? Well it certainly can happen if bond money starts to run for home.
    	Posted 09-02-2010 at 12:25 AM by Birchtree

12. We Bounced Thanks for the post paradocs. I'm glad you like the charts. I try to keep it simple and I agree with your fundamental outlook. Your targets could certainly be hit too. I suspect I'll be doing a lot of shorting in the months ahead. Quote: Originally Posted by paradocs These are good TA's Coolhand!! I enjoy charts. I agree that we will see a pop or two this week. Watch out for the end of the week! The TA's and indicators all show a definite downward trend. All the "small" traders are sitting on the side-lines watching the "big boys" and govt manipulate the market, thereby creating an illusion that things are fine. Quite the contrary. I fear a significant downturn by mid-Sept and not because of the customary "black september" reasons. Political issues with China, growing japanese yen, mideast issues, iran, the two wars (yes we are still in Iraq...just not many), etc. all add to the market TAs. While I cant "see" clearly, my prediction is that by mid-Sept 2010, we will see up to a 2-4% drop in the market followed by an attempt to rebound. a bear market will reign through the first quarter in 2011. the market will move laterally for most of 2011, albeit, some pops here and there. I see the S&P down to around 640 (+/- 12%)within the next 6-8 months.

    Posted 09-01-2010 at 08:10 PM by coolhand

13. We Bounced These are good TA's Coolhand!! I enjoy charts. I agree that we will see a pop or two this week. Watch out for the end of the week! The TA's and indicators all show a definite downward trend. All the "small" traders are sitting on the side-lines watching the "big boys" and govt manipulate the market, thereby creating an illusion that things are fine. Quite the contrary. I fear a significant downturn by mid-Sept and not because of the customary "black september" reasons. Political issues with China, growing japanese yen, mideast issues, iran, the two wars (yes we are still in Iraq...just not many), etc. all add to the market TAs. While I cant "see" clearly, my prediction is that by mid-Sept 2010, we will see up to a 2-4% drop in the market followed by an attempt to rebound. a bear market will reign through the first quarter in 2011. the market will move laterally for most of 2011, albeit, some pops here and there. I see the S&P down to around 640 (+/- 12%)within the next 6-8 months.

    Posted 09-01-2010 at 03:39 PM by paradocs

14. We Bounced Quote: Originally Posted by coolhand Sentiment by itself cannot be traded reliably, which is why my primary indicator is technicals as reflected in the Seven Sentinels. I've found that my returns have improved markedly using a combination of sentiment and technical analysis. And when in doubt, it's sentiment over TA--especially at extremes. TA can be made to say whatever I want it to say. E.g., if I'm bearish, the current market looks like a long-term head and shoulders pattern; if I'm bullish, it looks like an intermediate inverse H&S. TA is adequate during large moves, but it has a tough time finding turning points--which usually makes it late to the party.

    Posted 09-01-2010 at 03:15 PM by ContrarianJeff

15. We Bounced Ref Boghie comment on the boys wanting to draw in the goobers....I had the impression that by and large they are already in bond funds or looking for an exit. Also, I heard on CNBC this morning more talk about institutions moving more heavily into bond funds (the comment was that this was the opposite of where long term pension funds need to be.) Despite the Fed, isn't the money available to drive prices up even short term dwindling?

    Posted 09-01-2010 at 11:33 AM by Warrenlm

16. We Bounced da'Boyz are coming back to town... I don't know Boghie. Again, we're now in a bear market, which means the primary trend (longer term) is down. I can only project where the market is headed using the indicators that I post each trading day and right now they don't look healthy. But we can never be sure when that may change. For now, I'm playing the downside, which means I sit in G in the TSP. Quote: Originally Posted by Boghie CH, da'Boyz will be back next week. Just a guess, but... Don't you think they may want to chew on the fear. Yummy I don't think they will want to lock in losses. Most likely they will want to excite the goobers for a while then slowly bail. They have room to do so...

    Posted 09-01-2010 at 06:59 AM by coolhand

17. We Bounced So many main street investors have long since left this market that I wonder just how reliable sentiment can be. Or at least how long we can trade on it. But we have to be very mindful that trading TSP in a bull market is not as difficult as trading it in bear market. These next two months or so leading up to the mid-term elections may be very volatile making trading that much more hazardous too. Sentiment by itself cannot be traded reliably, which is why my primary indicator is technicals as reflected in the Seven Sentinels. Futures are up early this morning, which makes me think da boyz will run up prices leading up to the end of week unemployment report. Quote: Originally Posted by ContrarianJeff Thanks CH. Technically, the market looks terrible. And the economy seems to be going from bad to worse. But if you're a contrarian, you have to be interested in getting long. Sentiment indicators (like the AAII and others) show that virtually everyone is very bearish--total despair. Like March '09 despair. For that reason, I think we may be within a week of an intermediate term bottom. It wouldn't surprise me at all if we began a big-time rally. Then again, if we close below 1030-1040, it could get scary and ugly really fast. But the uncertainty and the risk/reward is why I find markets so fascinating. Thanks for your posts.

    Posted 09-01-2010 at 06:56 AM by coolhand Updated 09-01-2010 at 12:18 PM by coolhand

18. 	We Bounced da'Boyz are coming back to town... CH, da'Boyz will be back next week. Just a guess, but... Don't you think they may want to chew on the fear. Yummy I don't think they will want to lock in losses. Most likely they will want to excite the goobers for a while then slowly bail. They have room to do so...
    	Posted 09-01-2010 at 02:29 AM by Boghie

19. We Bounced Thanks CH. Technically, the market looks terrible. And the economy seems to be going from bad to worse. But if you're a contrarian, you have to be interested in getting long. Sentiment indicators (like the AAII and others) show that virtually everyone is very bearish--total despair. Like March '09 despair. For that reason, I think we may be within a week of an intermediate term bottom. It wouldn't surprise me at all if we began a big-time rally. Then again, if we close below 1030-1040, it could get scary and ugly really fast. But the uncertainty and the risk/reward is why I find markets so fascinating. Thanks for your posts.

    Posted 09-01-2010 at 02:05 AM by ContrarianJeff

20. 	Not Impressed Agree CH. For the next few months I would suggest using your IFT's wisely. I believe you will only get one or two shots a month to make anything and the reward may not be worth it.
    	Posted 08-28-2010 at 12:36 AM by WorkFE