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After the close on Friday, our mid-term system triggered a signal of buy. As the average gain today was about 1.5% (if you bought at the day's open), you can see the importance of following a signal change immediately. Today's gain in the Semiconductor Index already made up for the loss in the last signal. We will have to wait a little longer before we can make up the loss in QQQQ, although future gains in the other indices should offset the loss in QQQQ in the very near future.
When subscribers become frustrated with the system they tend to not follow it 100%. This always leads to disaster, as you are allowing your emotions to take over the mechanical process of market timing. There will be losses in our system. We know this and we expect this. In a very difficult market, our system has been able to preserve capital well. This is the goal in trendless markets. Even though there will be large losses at times and this can be very discouraging and frustrating, acting out on those emotions by ignoring the system is probably the worst thing you can do. Our system will not always be right, but trading by purely following your emotions will most certainly lead to disaster in the long run.
The first chart below is of SMH divided by DIA. You can see that the chart fell into support today before it rallied strong and had an outside day. Very bullish. The next resistance level is shown on the chart. There is also a chart of SMH at the bottom and you can see how the ETF had an outside day today as well. You can also notice how SMH ran into resistance at the high today.
The next chart is of QQQQ. QQQQ also had an outside day today and ran into resistance at last Thursday's high. Two additional resistance areas are shown on the chart.
IWM has been able to close above both of the trendlines shown on the chart. Future resistance is at last Thursday's high, before a move to the 75 area.
Today's move suggests that the short pullback is over at that the uptrend should continue in the days ahead.
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