Wednesday, November 2, 2011

Sold RUSS - $40.00

This is a daily chart of the Direxion Russia Bear 3X ETF (RUSS) which I sold yesterday at $40.00 for just shy of a 12% loss. My expectation that the US Dollar daily cycle had bottomed was clearly an attempt to catch a falling knife that failed, as price went considerably against me and immediately after my purchase at $45.38.

For the past couple of weeks I have devoted every free moment to working on programming a Think or Swim (TOS) cutom indicator that I hope will eventually take the shape of a definitive True Strength Index (TSI) indicator application. I have recently figured out a mathematical method for having the platform identify the location of trend line break buy and sell signals. The obstacle I continue to run into is the now annoying 'script too long' error message when trying to define a sufficient number of possible conditions.  The other TSI buy and sell techniques such as the ZERO crossover, positive and negative divergences, nose bleed and so on are not particularily difficult to program.

So while everyone is watching the market and figuring out what it will do next I have my nose down to the keyboard writing code and slowly making progress toward my end goal.

My TSI Trading record has been updated.


  1. great to hear from you john... hope your programming works out!

  2. That is great news John! TSI has been proven useful many times. Which time frames is it going to work on? This also could be done on the currencies/metals on metatrader for 24/7 market access.

  3. Hi: John
    Good to hear from you,at least you didn't got a hair cut lost, you will make it up soon,
    Please advice the SDS for next two weeks , my call option expire Nov-19.
    Happy Trading.

  4. Looking forward to your work, keep us updated.

  5. Hi John!

    Thanks for the updates.

    I wanted to ask if you would share with us the symbols you may be watching this week.

    Hope you're having a great weekend.


  6. Hey John,

    Hope you are doing well... do you have any updates on the pms and miners.. they seem to be rebounding nicely...wondering your thoughts on it.


  7. Hey John, how is life? Still trading?

  8. John
    I hope all is well.
    i have been watching the tsi on my futures platform. I am useing 7,4 settings and observing. While i am following smt and have taken a position based on the cycles, i am a little taken back by a little divergence i am seeing.
    on the 30 minute chart the highs of the tsi are declineing and gold price is going up. I was wondering how meaningfull this is. Could you please comment

    jeffwilm ( jeff the flea )

  9. Hi Jeff - I am doing fine - just pouring a lot of time into programming TOS. Kinda decided to give TSI a rest as the results I was getting were not too inspiring. Now programming the daily/weekly cycles of gold back to 2001 and then plan to do the same with the dollar index and s+p. Putting it all together with the TSI should have very promising results.

    Good eyes on the 30 min chart Jeff. You called a $25 drop in gold futures price right about to the very hour! Looks like we may get a retest of $1687 and then up up and away, imo.

  10. Hey JOHN!!!

    Its great to hear from you. Just wanted to let you know that your blogs are extremely insightful even if you are slightly off the ball.... This market is a tricky one and we all need every piece of information out there.

    Hope your programming works out for you. ALso, do you think the bottom will be in for gold in the near future, and then a blast off?

    Have a happy thanksgiving.

  11. Hi PM - thanks for the compliment. The programming is working out fine - just taking a long long long time. Sometimes I spend days just trying to figure out the simplest of maneuvers. Then when I finally figure it out I spend days and days putting in the data. Then I see how that looks and figure an easier way to have coded the entire thing. So then I go back and somewhat start over again, but with more efficiency. Unfortunately, this TOS platform is not super generous with it's allowable file size - so efficiency counts.

    I'm not particularly watching the markets or trading. I do keep up to date with what Gary is writing, of course. fwiw, the TSI has not given a buy signal for either gold or gdx, though at this point it is finally getting close.

    I'll be curious to see how gold works out in the near term. The intermediate cycle trend line, assuming 9/26 was the last intermediate cycle low, has been broken for each of the past 3 days. That kind of thing does not seem to happen at all in C-Waves, except just days before a new intermediate cycle. But we just had an intermediate cycle begin 8 weeks ago. This kind of thing does happen at the end of the B-wave just before the next C-wave. Hmmmmm ..... Very puzzling and if I had more time I would try to figure it out. OK - back to programming and hopefully you or someone else out there WILL figure it out!

  12. Thanks for the update john..

    Just wondering if you read alf fields latest on gold hitting 4500 for the major three wave.

    If not, here is the link for it.

  13. HMMM..... are you suggesting that gold may be on another rally in terms of up up and away :) It may be along the lines of alf fields work... he has been giving a view of gold going to 4500 and that the major 3 of 3 is underway..

    here is his link:

  14. John,

    I don't know if anybody ever asked you to compare TSI to CCI. Any idea which is better and why?

  15. PMS - The wave theory is over my head but I have no doubt gold will reach $4500 in another two years - probably less. For now though I doubt gold goes very far....maybe $1900 tops. It has long periods of consolidation followed by blasts higher. We just concluded an extended blast higher so it will need some time to consolidate again. That's not to say that gold is not going to be strong this week (and I suspect it will be).

    Anon - I gave the CCI a test drive along with the TSI in a different panel. Very similar, indeed. Years ago I mused at this indicator - not sure what to make of it. Now it is very clear to me. All of these momentum indicators work about the same. The key interpretative techniques are the trend line break and the positive/negative divergences.

  16. Hello Mr. Townsend,

    I started to use Thinkorswim sw to get TSI indicator on hourly basis with your advice and really appreciated.

    It is wonderfull but I have a problem I could not get any ratio chart for example how can I see GSR (Gold silver ratio) or any ratio chart like Dow Gold ratio etc.

    If you know I will appreciate it because I wrote to tos guys but could not get any proper answer.

    By the way I look forward to see your comments on your blog I hope you can start to write again A.S.A.P.

    Thank you so much.
    Have a nice day and tradings sir.

  17. Hi Remzi -

    Hummmm.... ratio chart. Well, TOS has an indicator called Comparison. That is probably not exactly what you had in mind, but heading in the right direction. It seems to plot the ticker symbol of the secondary ticker of interest (eg slv), along with the usual plot of the primary ticker symbol (eg gld).

    I have not played around with this but I would imagine that with this capability it would be fairly easy to write a script that simply divides the price data of one ticker symbol by the price data of the other symbol - and thereby give you a chart of exactly what you are interested in seeing.

    Perhaps this is something you could do, or if not within your skill set let me know and I will give it a try.

    I have one new indicator finished and just days from having it's twin completed - then I will begin posting my fascinating discoveries and hopefully elicit some fascinating feedback and conversation.

    Ps I have not traded anything for quite some time as I have been focused exclusively and intently on the programming challenges of my ideas. Hopefully I will give that a rest soon and try out my new findings/software in the real-time market soon.

  18. Thanks for quick reply. You are wonderful man.
    Unfortunately I don't have any idea how can I write a script on TOS sw to get GSR chart.
    But if you have time or any opportunity to be able to write a script or direct me to follow necessary steps to get it that would be perfect.

    Thank you so much Mr. Townsend, my appreciation goes to you with my admiration.

    I look forward to see your new findings and techniques here a.s.a.p.


  19. Hello John
    Looking forward to see you new posts.
    Have a Great Day