Oct 20,2010 - swing cycles

I will focus primarily on shorter cycles suitable for swing trades.  From time to time I will discuss longer cycles that will allow you to adjust you swing trades to the environment.  This environment will affect to a degree how the shorter cycles react.  For example the longer trend may be up if you have a longer cycles is pushing toward a top (smaller drops). Or, the longer trend may be down if longer cycle is falling into a bottom  (smaller pops).

I will add 2 charts that show these shorter cycles (with annotations and comments).

Added Oct 21:

How do we use cycles to swing trade in a major uptrend?

• First we will use the CCI. The Commodity Channel Index (CCI) was designed to identify cyclical turns in commodities. The assumption behind the indicator is that commodities (or stocks or bonds) move in cycles, with highs and lows coming at periodic intervals. For short term swing trades in an uptrending market when the CCI is above 100 and drops below 100 we consider that a sell signal.
• Second we will also use envelope channels to try enclose data within the channel (best fit). We use a bigger channel to enclose the narrower channel. In an uptrending market if the upper inner channel line touches the outer upper channel line we consider that a sell signal. We will buy dips down to the inner channel lower line (uptrending market).
• Third we will try and identify shorter cycles so we can (hopefully) anticipate dips to buy and peaks to sell. I am including a chart of the SPY to illustrate. You decide if this sytem looks useful in your swing trading.

Hopefully later we can look at rules for a downtrending market and provide an illustrative example

I have included a chart of the SPY to illustrate. You decide if this sytem looks useful in your swing trading.