Will the trend ever be our friend again?

I have worked with my mentors, my colleagues and dedicated members of the Trading Trainer community on my findings in this post, so read it carefully.

I recently asked, more than once, about when our directional strategies will be as reliable as they ever when they were returned back profits more than 100% ROIC.

Of course, know those of you who have followed my blog posts and Trading Trainer probably already for some time what my knee jerk reaction to that question always will be. that is to say, we will know when the trend is once again our friend when the charts tell us so.

So, let's take a moment and parse what "milestones" I'm looking for in the charts before I trust 100% in our directional trend following strategies would feel.

At this point, I have to mention that in the past month, I've actually traded validated and confirmed trend following templates with-in-the-money far-outbound-in-time options, and seen as high as 113% with average returns above 40%.

But I'm still using a trailing stop loss strategy from the moment I open my position to lock in profits and at the first sign of a reversal to abandon the use of these "nimble" type of output from the get go is a proof of my current lack of confidence in trend followers.

First things first. because we know that bulls in general want to trap and bears usually to jump from Windows, I'm going to keep my guns when I say that I most certainly will be in our trend following templates only if the major indexes are moving up.

Speaking of the major indexes, which are what I'm looking at the broad market assessment, and more importantly I am looking for the major indexes to determine when the trend will once again be our friend.

Now, here are the steps of the baby that I'm looking for in the Dow:

The Dow to close above $ 8,315.07, completion of the retracement began on 9 February, 2009. The DOW 50 day SMA clear. trend up to The DOW close up above $ 9,000. The DOW to close-up above its 200 day SMA.

And the NASDAQ:

The NASDAQ to close-up above its 200 day SMA.

And the s & P 500:

The S & P 500 close above $ 875.01, completion of the retracement began on 9 February, 2009. The S & P 500 close up above $ 920. The S & P 500 close up above its 200 day SMA.

And other miscellaneous milestones:

The S & P 100 chart leads our major indexes in daily and weekly gains. Most importantly for me, the VIX fall under 25.

Now, understanding that this is not an on-off switch. as I noted earlier in this post, directional trend following plays are all pans out for investors (not just me). as each milestone is reached, will I have more confidence in the trend are our friend rebuild. but it won't be until all of them could be satisfied that the trend is my friend.

With you know that all my thoughts as of now, I want to share with you a screen cast I found interesting., Adam of Ino shows that his interpretation of what the S & P 500 chart told him back on 14 april (10 trading days ago).

Please note: his use of the MACD indicator and its long and short term trend indicators.Its long and short term trend indicators accurately matches the indicators that we daily for our members of the site of the Member of Trading Trainer produce. Adam's screen cast shows an interesting perspective. definitely worth taking 7 minutes to watch it now ...

== > Click here now to Adams Video

Please, after reading this post and perhaps look at Adams screen cast, comment below with your thoughts.What you are looking for before you jump on board with directional trend following strategies? I'm interested in what you can add. Thanks!

Best regards always.

A.J. Brown

A.J.,

Two points to make confirm Adams assessment of a market downturn:

1-Previous recessions has proved to be a technical photo with 3 different soils. we've got two so far. can the third are right around the corner?

2-The March uptrend that Adam hinting at was explained by Duncan Niederauer, the Chief Executive of NYSE Euronext in an interview with the Financial Times. He felt that the rally was driven by short-term traders take advantage of market volatility and concentraded in only a handful of stocks. The "real money" held by institutional investors is still on the sidelines and will not be released until these players convinced of the stability of the market fundamentals. He predicted a summer rally in June/July.

This gives us both fundamental and technical reasons to invest with extreme caution and might favor I-T-M strikes.

My best for everyone,
Alan

Thanks for the informative post, specific and clear.

Important info and thanks for posting. adding your blog to my rss feeder. Rainey