Some morning thoughts…

I see that John mentioned the trend following entry in to USO in the last post. Typically all of the major equity indexes are out of the markets now after the big down day on February 27th. The way I now look at the markets will require any trend type entries to be non-equity correlated until these equity indices begin to trigger trend entries to the upside again. This is not picking bottoms. Just brute force trend following. In the chart below we can see what part of the 2006 up move was captured.

Not too bad. During that window of time when the trend systems are turned on it is a clear signal to me to turn “on” other modules of the portfolio. This allows me to trade in my equity ETF systems. It allows me to use my system that trades in IBD type stocks. But right now those portions of the portfolio are turned “off”. I had given a rough breakdown in how I assemble my portfolio modules in a post on the old blog from October 2005.

But Oil John? I like it. Also I should note that as well as oil triggering so are all of the Bond type ETF’s such as IEF and TLT . These types of trend following trades can be very frustrating because you will have many false signals before you actually catch a good ride. But having worked with thee Fuzzy script John created, it is one of the best out there. It will surely give us a heads up as to what is moving and we’ll be following those triggers here on the blog.

Here’s to a having a good trading week. And if you want a good grasp at what the week has in store the Minyanville Trading Radar is a good tool.

Have a Great Week!

Dave Johnson (I have to remember to sign these - with 2 of us writing the blog)