Wednesday, August 4, 2010

SOLD ANO @ $1.16 / ZSL @ $32.20

This is Anooraq Resources Corp (ANO).
Not much to say here other than if I think silver is going to take a short breather, perhaps platinum and gold will, as well.
Click on the chart to ENLARGE

This is Proshares Ultrashort Silver (ZSL).  I just sold this at $32.20 for a quick 1.9% gain.  Honestly, I have other things to do today so I just wanted to get my money and go do something else.  Ever had one of those days?

My TSI trading record has been updated. 


  1. John,

    Thank you for taking the time to explain each of your trade-set ups. I note that you use the 4 by 7 TSI along with the Money Flow Index which isn't explained in the TSI overview page. Are the use of these explained somewhere else on the blog? Also, which of the two do you primarily use for trade set-ups the 4 by 7 or the 13,13 by 3 TSI indicator?

    Thank you,

  2. Hi Neil, and thanks for the great questions!

    When I made that little True Strength Index (TSI) Overview page 10 weeks or so ago I don't think I really was using Money Flow Index (MFI) too much. At the time I was using the Bollinger Bands some, and now I am forgetting to use them. Geez, when will I ever get it together?

    An idea impressed upon me a couple years ago when reading the legendary technician John Murphy's book on technical analysis (for the 50th time) was this: set up your indicators so that they measure DIFFERENT things.

    Let me explain. If you use TSI, Stochastic, CCI, RSI, ROC and MACD in some combination - all at the same time - that's nice, but his point was that these are all the same kind of indicator. Momentum indicators. What's the point? They will all, in slightly different ways and degrees of effectiveness, tell you much the SAME thing. That does not help as much as some think - was his point.

    So, my workaround at Mr. Murphy's suggestion, is to use TSI as my momentum indicator. MFI as a volume indicator (also possible Accumulation/Depreciation, On Balance Volume, Chaikin Oscillator, Chaikin Money Flow), and a third indicator to measure something I chose volatility - Bollinger Bands.

    (I need to go add the Bollinger Bands to my screen before I forget - I think I took it off to accommodate making charts people could actually 'read' on the website and shot myself personally right in the foot, huh?.....think CGR :)

    Honestly, the moving average component on the TSI I have completely abandoned. It 'looks' good but just slows down my decision making process as it adds more lag time to the consideration process.

    I am finding that making a crisp decision based on a trend line break out, for example, is all I really need - the moving average just adds noise, for me anyway.

    Yes, I was displaying (13,13) early on when I started this website 8 weeks ago. I spent a few years being a bit intimidated by the raw speed with which the (7,4) does its thing.....and figured initially that others new to the TSI would appreciate a slower, smoother, gentler initiation to the indicator, that being (13,13).

    Again, over time I have thrown that idea out. First because (13,13) does not match the speed that I now like to play the game. And second, because I wish to model what is ultimately possible for those interested, like I just use (7,4).

    You may slow down the TSI to (13,7) and simply use the same techniques that I use or, for a WEEKLY chart, take a good look at (7,7).

    Finally, the techniques I employ, whether you realize it or not, are 7, all simultaneously. My little brain runs all these techniques through its processing CPU on visual inspection before making a trading decision.

    And they are:
    1. trend line break of the TSI indicator
    2. ZERO line crossover
    3. positive divergence
    4. negative divergence
    5. nose bleed high or low
    6. relative distance from ZERO
    7. peaks and troughs of the indicator

    More information, perhaps, than you asked to receive, but there it is for those who want to challenge themselves to further mastery. I hope this information helps you!

  3. John, this is very good. Thank you so much for sharing both your filtered conclusions on indicators and the manor in which you employ the selected few, as well as explaining the fast TSI.

    Since your system is one of going long at key pivots, which is very good in a bull phase, I would appreciate very much if you can comment on how it might perform in a bear enviornment. Would it flip to selling short or is this something, like Darvas, you would not do?

    Thanks and best regards,

  4. Neil, to be honest, I sincerely cannot imagine how the consideration of bull or bear markets would make an ounce of difference.

    The TSI is a momentum indicator. It simply measures momentum. Up and down momentum. Bull and bear momentum. That is one of the things that particularly impresses me about TSI.

    With one of our professional traders in the readership, I had an interesting conversation yesterday about the way professionals break trend lines to scare the retail/technical analysis crowd into selling or buying from them, and in the process they make some sweet trades for themselves.

    And it wasn't until that conversation that I realized (or at least 'I think') that the TSI is immune from this trend line manipulation tactic, as well.

    TSI has no clue in the world where the trend lines are above on the price chart....whether they are being broken or whatever. TSI just measures the momentum and reversal of momentum in a particular direction. In fact, with positive and negative divergences, it is quite possible to game what is really going on under the hood of the engine while price would lead one to an entirely opposite conclusion.

    That quick trade I did yesterday shorting silver is a good case in point, though I apologize for diverging for a moment. The daily TSI said silver was going straight up - do not short. The hourly TSI told me something quite different. It told me the up move was over. So, I shorted and, thank God, it worked. Anyway, the divergence on the hourly chart was the tip-off.

    Again, I say this over and over so as to NOT be misunderstood. NO SYSTEM is perfect - at least none that I know about. Having said that, TSI seems a great alternative in both bull and bear markets and a great way to not get necessarily jerked out of positions due to 'technical' (and temporary LOL) breakdowns.

  5. Thanks, John. Makes sense now. I wasn't clear whether you took the sell signals to short the equity as well as exit longs.