LunaticTrader

Investing with the Moon

Key reversal levels for week of July 1, 2013

Posted by Danny on June 29, 2013

Our key reversal levels going into next week:

Status Key (W) Mom (W) Mode Key (D) Mom (D)
Nasdaq BULL S: 3242 Down DECLINE R: 3435 Up
S&P 500 BULL S: 1549 Down DECLINE R: 1629 Up
Nikkei BULL S: 12184 Down RALLY * S: 13307 Up
FTSE 100 BEAR R: 6338 Down DECLINE R: 6402 Up
DAX BEAR R: 8087  Down DECLINE R: 8140  Up
Bonds (TLT) BEAR R: 118.18 Down DECLINE R: 113.20  Up
Gold (spot) BEAR R: 1490 Down DECLINE R: 1330  Down
Euro/US$ BULL S: 1.2964 Up DECLINE * R: 1.3172 Down
Crude Oil(CL) BULL S: 91.84 Up RALLY * S: 94.62  Up

(Legend: W = weekly, D = daily, R = resistance, S = support, Mom = momentum, * = change from previous week/day)

Today I am introducing the third and final element to these key reversal tables. Besides the Status/Mode and Key reversal levels you now see an extra row which shows the current Momentum (Mom).

This momentum tells us where things are currently going, and can be used to buy (or sell) near the bottom (or top).

E.g. when a market is in Declining mode with Momentum down, then at some point the momentum will turn up. When that happens you can do some speculative buying, because once the momentum turns up the market will often rise to its Key reversal level, and possibly exceed it, which would switch it into rally mode.

The Nasdaq, S&P, FTSE 100, DAX and bonds (TLT) are all in declining mode, but have seen momentum turn up last week. This means they are now speculative buys. Initial target is always the given key resistance level, where a partial profit can be taken already. Then wait to see whether the market manages to switch into rally mode or not. If it fails to get above the key reversal and momentum turns down again, then it is a clear sign to get out.

If you are a longer term investor, then you would use the weekly table and the weekly Momentum. A shorter term trader would mainly use the daily table.

***

Major changes since last week.

The Nikkei index has closed above its daily key reversal and is now in rally mode with a daily support/stop-loss at 13307.

The Euro/US$ is again in declining mode and is coming close to bear market status, which would happen if we see a weekly close below 1.2964

Crude oil is in rally mode again, and must hold its daily support at $94.62. Oil has been in a very narrow range recently and has switched mode several times. It will chose a direction eventually and then we will probably get a big profitable move in oil. Currently it is trying the upside again, but wouldn’t be surprised if it switches mode a few more times before finally getting into a trending move.

Good luck,

Danny

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5 Responses to “Key reversal levels for week of July 1, 2013”

  1. Benjamin said

    Hello Danny You previously posted that these key levels were computed using your private formula. Please inform how long you have used your private formula to caculate these levels and arethe calculationsmore than 70% accurate? Thank you Benjamin

    >________________________________ >From: LunaticTrader >To: searchbutton@yahoo.com >Sent: Saturday, June 29, 2013 4:28 AM >Subject: [New post] Key reversal levels for week of July 1, 2013 > >Danny posted: “Our key reversal levels going into next week: Status Key (W) Mom (W) Mode Key (D) Mom (D) Nasdaq BULL S: 3242 Down DECLINE R: 3435 Up S&P 500 BULL S: 1549 Down DECLINE R: 1629 Up Nikkei BULL S: 12184 Down R” >

    • Danny said

      Hi Benjamin,

      Good question.

      I started working on this a few years ago, and did more fine tuning the last year. I do not believe in back testing as it too easy to create systems that look great in the back tests. I prefer forward testing and that’s why I have started sharing these key levels.

      This key reversal system is designed to catch every big move. So, its strength is in producing big wins while taking small losses when the signal is wrong. It will not stand out by very high % winners, but even if it is right only 30% of the time one can come out with nice profits. It aims for a high average win vs average loss.
      For example Oil closed above its daily key level @96.77 last week, putting it in rally mode. As you can see the daily key reversal is now support at $94.62. So, if the signal is wrong the loss is only ~2%. One can afford several such losses as long as the system cranks out a good winner from time to time.
      In choppy sideways markets this system will not excel, and that’s when small ~2% losses occur. But as soon as a trending move happens it will be in for 10-20% profits.

      To give you an idea:
      The weekly Nasdaq went in bull status in first week of January at ~3100, is now at 3400. Similar for most other stock markets.
      The weekly gold has gone into bear status last December when gold was still ~1660, is now around 1200
      Weekly bonds (TLT) went into bear status in the 2nd week of May at ~118.7, and is now down to ~110
      Crude Oil went into bull status at the end of April, at ~$96 and is still hovering around that level. I think this one will fail and thus end in a loss when oil switches into bear again, but we will see.
      Same with Euro, it went into weekly bull status a few weeks ago at 1.32 and is now close to falling below its weekly key support at 1.2964, so could become a small loss as well.

      I will post more info as time permits.

      Regards,
      Danny

  2. misho said

    so sould take the weekly or daily trade ? when the momntum reverse up ?

    • Danny said

      Whether to take the weekly or daily signals depends on personal trading style. Long term investors may only check their stocks once a week, so they would look at the weekly only. Shorter term traders would use the daily.
      Of course, bullish short term trades tend to work better when the weekly status is also bullish or has at least upward momentum, so a short term trader would keep an eye on the weekly as well.
      When momentum turns from down to up, then is generally a good entry point to buy. You then hold until momentum turns back down, or until the reversal resistance level is reached, or until gets stopped out at reversal support. There are a number of approaches that can be taken. I will cover that in a permanent article that is in the pipeline.

      Danny

  3. misho said

    ok tnx i m waiting to article

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