Wednesday, August 3, 2011

BUY TNA - $64.95 (pre-market) ... More TNA - $63.80

Click on the chart to ENLARGE
Following up on my post last evening of the relative 'oversold' True Strength Index (TSI) indicator reading of yesterday's close, I made this purchase of Direxion Small Cap Bull 3X (TNA) at $64.95.

I will be the first to admit that an incredibly oversold TSI reading does not necessarily identify the absolute bottom of price movement. Often, it does nail the bottom. But when it does not, price will have bounced thereby causing the reading to rebound - then a swift drop in price ensues which makes a lower low that is not confirmed by a lower low TSI reading, thus creating the familiar 'positive divergence' BUY signal.
My TSI Trading record has been updated.

Well, the TSI dropped even further (to -0.81) after the market opened. So I bought more TNA at $63.80.


  1. Hi John, this may be a very novice question, but if gold is hitting new highs, why isn't DUST hitting new lows? Thanks, Greg

  2. DUST is a gold MINERS bear, not a gold bear.

  3. Hey Greg - not a novice question at all. A lot of people would like to know the answer to that question, including myself.

    To rephrase your thought, why is the mining index (HUI) not at new highs along with gold? I am aware of numerous theories but will not pretend to know which to believe. fwiw, the mining index is less than 8% off its all-time highs and closing in fast.

  4. John,
    Good to see you back again and swing away.
    A couple of questions; on your charting, what is the timeframe for the ticks, daily, weekly or other?
    Why do you use the 4,7 setting on the TSI? 10 on the MFI?


  5. MrMiyagi - I can always count on you to make insightful observations and ask interesting questions.

    Usually I use the daily chart. In any event, I always identify on the chart I post the time frame used.

    Wm. Blau, the inventor of the True Strength Index, was fond of setting the TSI to (25,13). It was his default setting. I liked what I saw and 'fell in love' with the indicator. This was about 5 years ago when it cost me money every month to have access to the indicator.

    After a while I wondered what would happen if I cut both numbers in half (13,7). WOW! I got the same signals, for the most part, only faster. Encouraged by that revelation, I cut that in half again (7,4). DOUBLE WOW!! Even faster signals.

    MoneyFlowIndex (10) - I have tinkered with this a lot but there does not seem a better number to use than 10. A couple years ago I noticed that MFI (10) had a fascinating way of identifying each daily cycle low for gold.

    PS - if I am not mistaken, the stock market is now sporting a bullish reversal candle on the daily chart - good news for me and I hope many others.

  6. Thanks for the quick response John, I guess when school is back in I can forget about that!
    Your TNA is already in the money, congratulations. It does appear a reversal candle might be forming today, probably until the jobs report kills it...
    How do you decide what stock to buy, do you have a list of familiars?

  7. MrM - yeah, school extremely shortens my leash.

    I'm 'hoping' a bad jobs number is already baked into the cake. But who knows?

    Last evening I selected three stocks based on historical TSI extreme - TNA, TMV and URE - and decided to play whichever looked best at the this morning.

    But otherwise, I have a folder with 200+ mining stocks that I go through all the time, another folder with about 100 ETFs. I make notes and draw trend lines directly on the charts and they are saved for another day when I go through the fire drill again.

    Do you have any special way of deciding which stocks to buy?

  8. I have a list of stocks that I am familiar with; far shorter than yours.
    It's a mix of banks, consumer products, miners, oil industry, ETF and casinos.
    Generally I will stick to about a dozen or so because it's easier to keep track. Some people make a living trading a single stock!

  9. Hammer Doji at the close here on SPY. Possible bullish reversal candlestick. GLD seems undecided.
    We'll see tomorrow.

  10. MrMiyagi said:

    "Generally I will stick to about a dozen or so because it's easier to keep track. Some people make a living trading a single stock!"

    Amen to that . . . to mis-quote the Beatles: all you need is . . . (a few stocks, some inverses, and) volatility!