My Short bias got rewarded this week – but my nerve got severly tested leading up to the 4 July weekend! Since then the Emini has dropped 50 points.

As the Emini dropped through 880 today, we had large volume coming into the market and the Better Volume indicator started signaling High Volume Churn in a number of timeframes. This indicates profit taking by the Professionals and new buyers entering the market. We're also at a significant support level, around 874.

My best guess is that we might get a bounce here. The TRIN Indicator is also confirming a possilbe turning point with a Bullish Divergence signal.

Bullish Divergence on TRIN Indicator (Emini daily)

The TRIN Indicator signals Bullish Divergence when price makes a lower low but the adjusted TRIN indicator reading makes a higher low. The Bullish Divergence signals are marked with Red dots and the Bearish Divergence signals are marked with White dots.

When these signals appear when the TRIN Oscillator is over-sold or over-bought, it gives an early warning signal that the short term trend might be changing. The chart above shows the last 2 bearish and last 2 bullish divergence signals. Sometimes they're right on the mark, sometimes they're a little early.

Time for me to take profits on my Short trade. Good luck with your Emini trading.

First of all, a huge apology. The last update, asking for a password to access the article, was a technical glitch. I was overwhelmed with emails from confused readers. I couldn't respond to everyone, but would just like to say sorry and I won't do that again.

So, now to the markets. Cover story on the weekend Business Section of the Sydney Morning Herald (my local newspaper) reads "Ben Bernanke and his central bank heads off a depression … the US Federal Reserve has, so far, saved the American economy from a precipitous collapse."

So that's alright then – equity markets down 50% and 5.7 million jobs lost, but disaster averted. Ha – main stream media coverage of what is going on and their lack of insight continues to astound me. I'm sure your local business news is equally upbeat.

But here's the point – the media coverage and general mood right now is universally bullish. Our job as Speculators is to forecast changes in the psychology of the market. Here is what my charts are saying:

TRIN Indicator and Oscillator (Emini daily)

Friday's adjusted TRIN value was -26. Although the market was up, this was a weak day with more selling volume than buying. The TRIN Oscillator has now turned down.

TRIN, Put Call Ratio and Smart Money Oscillators (Emini daily)

The Put Call Ratio and Smart Money Oscillators have also turned down.

TRIN Indicator System (Emini daily)

And the Better TRIN Systems have signalled short. These can occur in clusters, so this might be the first in a cluster of Short signals.

Hilbert Sine Wave (Emini weekly)

My longer term charts show we're at a critical junction. We're about to have a Hilbert Sine Wave cyclical cross on the Emini weekly chart. This will signal a PullBack and the resumption of the down trend. This might happpen this week or the next – the critical Emini level to watch is 879.

Hilbert Sine Wave (NASDAQ weekly)

We've already had a crossover on the NASDAQ weekly chart – which appears to be the weakest market. The weekly bar also looks like a Doji candlestick pattern – which is typically an indication of market indecision and possible turning point.

Declining Upward Volume Momentum (Emini 135 minute)

Lastly, a new chart of the Better Momentum indicator (not released yet). This is an updated version of the traditional Momentum indicator that is based on Volume not price. It shows this advance is being made on successively weaker Buying volume.

Next week will be critical. Good luck with your Emini trading.

The Emini closed down 11.75 points at 676 on Monday. However, the TRIN indicator shows there was underlying buying – the Better TRIN reading was +75 (positive numbers show buying). If you check out a volume chart, you'll see that the afternoon's decline was on low volume.

TRIN Indicator System Signals (Emini daily)

The Better TRIN Oscillator turned up today, our signal to take profits on a Short trade from 7 days ago. I must admit this trade felt pretty strange, shorting on the close after a strong down day. But that's often the way it is – the trades that feel wrong often work out best. The trade ended up making 76 points or $3,800 per contract traded.

TRIN Indicator System Equity Curve

The system equity curve is looking healthy and we're just sitting under new equity highs. The TRIN indicator system has now been public for 13 months (since trade number 530) with no changes to the system code.

TRIN Indicator System Performance

Read more about how to adjust the raw TRIN data to make it easier to interpret in this TRIN Indicator feature article or check out the TRIN Indicator Systems here.

Good luck with your Emini trading.

Emini closed up 3 points at 930.50 today and the uptrend continues. Trends always last longer than you expect but we're starting to see some warning signals.

End of Trend Cycle Pattern (Emini 27 minute)

Trends develop out of "failed" cyclical turning points. The 27 minute Emini chart above shows the break out into trend on 30 December.

Trends typically finish with a final couple of cyclical turns – marked "Pull Back" and "End of Trend" using the Better Sine Wave indicator. We're approaching a cyclical low which should mark the Pull Back point.

TRIN Indicator Bearish Divergence (Emini daily)

On the TRIN indicator we've had a Bearish Divergence warning signal. The Emini is making higher highs, while the Better TRIN is making lower highs. This is also happening while the Better TRIN Oscillator is reaching over-bought levels (+87).

Sometimes these divergence patterns take a few days to work themselves out. The last 2 Bearish Divergence warning signals are also marked on the Emini chart.

Good luck with your Emini trading.

On December 23 I wrote we had a cyclical low approaching on the Emini daily chart.

Cyclical Low (Emini daily)

That cyclical low has held and the Emini has since risen 75 points.

TRIN Indicator System Signals (Emini daily)

At the same time, we had a cluster of Long signals on the TRIN Indicator systems. These are now nicely in the money and waiting for the Better TRIN Oscillator to turn down and take profits.

The chart above also shows the last cluster of Short signals, that turned out to be losers. However, the TRIN Indicator systems are holding up and continue to make new equity highs. The latest equity curve and performance stats are shown below.

TRIN Indicator System Equity Curve

TRIN Indicator System Performance Stats

Good luck with your Emini trading.

First of all I have to make a disclosure. I am not currently trading my Better TRIN Systems. The current volatility in the Emini is generating plenty of day trading opportunities with 10+ point swings almost the norm. The Better TRIN Systems are designed for swing trading and holding positions over-night. For me personally this is just too much volatility and risk, so I'm 100% day trading right now.

Having said that, the Better TRIN Systems are holding up well and making new equity highs. The charts below show the recent signals, equity chart and performance report.

TRIN Oscillator Turns Up (Emini daily)

We had a Bullish Divergence warning signal on the Better TRIN Friday (red dot) and the Better TRIN Oscillator turned up today. We could see the start of a new upswing tomorrow – but we're awfully close to the 830 level. Gunning the stops below 830 might prove too tempting for the Professionals.

The chart above shows the Better TRIN Systems making multiple short entries over the last 2 weeks. These were closed out for a profit at the end of trade today (blue dotted lines are winning trades, red dotted lines are losing trades). These have more than made up for the cluster of mostly losing long trades taken back in September.

Equity Curve Making New Highs (Better TRIN Systems)

I have to say, I'm quite proud that the Better TRIN Systems are continuing to make new equity highs long after their development and release to the public. I attribute this to 2 things:

• There is the minimum of optimization in the system code, with each pattern being a single line for a long or short trade.
   
• All the patterns use the same exit – a turn in the Better TRIN Oscillator. This has proved to be a very robust profit taking signal.

Profit Factor 3.05 (Better TRIN Systems)

Lastly, here's the latest TradeStation Performance Report. The Profit Factor is 3.05 and average trade $788. If you own the Better TRIN and want to check these results, make sure you have all the patterns (TypeA to TypeE) set to True; DoubleUp set to True; and "Allow multiple entry orders in the same direction" ticked.

You can learn more about the TRIN Indicator and systems here. Good luck with your Emini trading.

Two high volume days in a row. Yesterday's Emini trading volume was 2.2 million contracts and today was 2.1 million contracts. My guess is that there was a good deal of Professional buying on these 2 days.

Yesterday's action looked scary – bearish engulfing candlestick pattern with large range, high volume and closing near the lows. However, the Adjusted TRIN reading was only -52. The Adjusted TRIN (my version where positive values show buying and negative selling) normally ranges between -100 and +100. Extreme selling would register -100 but yesterday we only got -52 which shows there was Professional buying going on.

Adjusted TRIN and TRIN Oscillator (Emini daily)

Today we got a Bullish Divergence pattern on the Adjusted TRIN (red dot on chart above). The Emini made lower lows but the Adjusted TRIN was making higher lows. Doji candlestick pattern today too indicating indecision and a possible turning point.

Hilbert Sine Wave Cyclical Turning Points (Emini 135 minute)

Last chart shows we've got another cyclical turning point on the Hilbert Sine Wave. These turning points on the 135 minute Emini chart (my primary swing trading time frame) have been quite accurate over the last month. We now have cyclical low turning points on the weekly, daily, 135 min, 81 min, 45 min and 27 min Emini charts!

Let's see how this turns out. Good luck with your Emini trading.

Quick post today. The Emini has dropped over 65 points this week and we have the first signs things might be slowing down.

TRIN Oscillator (Emini daily)

The Better TRIN Oscillator has reached -95 and we have a bullish divergence warning signal. The Hilbert sine wave has also crossed on my primary swing trading time frame (135 minute).

Trend Not Over Yet (Emini 45 minute)

However, if we drop down a time frame to the 45 minute chart, the down trend has not finished yet. I'm waiting for an "end of trend" signal and high volume churn.

Good luck with your Emini trading.

As Hannibal from the A-Team used to say: "I love it when a plan comes together." We had coincident turns on the TRIN and Put Call Ratio oscillators on Monday and they caught the top nicely. These really are leading indicators – see the chart below.

TRIN, Put Call Ratio and Smart Money (Emini daily)

This chart is typical and shows the trade-offs between these swing trading oscillators:

• TRIN oscillator usually turns first but there can see small "kinks" in the indicator
• Put Call Ratio oscillator usually turns next and is a smoother indicator
• Smart Money oscillator then turns last but is a much smoother indicator

Now, don't get me wrong – I'm not trying to talk up these indicators. Yes, this was a good signal but nothing is perfect and nothing works all the time. I use these swing trading oscillators because they're the best I've found.

Hilbert Sine Wave (Emini weekly)

Looking forward I think the weekly chart above is significant. It shows a cyclical top forming with the Hilbert Sine Wave. It has shaped my thinking with the medium term cycle analysis. But other markets have yet to confirm another drop:

• Bond oscillator is over-bought but Bonds have been treading water for the last 3 weeks and not broken out of their range – so we don't have a directional signal yet
• Commitment of Traders oscillator has peaked but COT reading has not turned negative – so the Professionals are not signaling a large drop
• US$ versus Japanese Yen is back down to 103 and found support with a cyclical cross on the Hilbert Sine Wave – again no clear signal down

So, those are the longer term charts I'm watching. Final point, today's volume was high at 2.4 million contracts traded. Large exhaustion volume and Professional buying came in around 1,390. We should see lower range, basing action tomorrow.

Good luck with your Emini trading.

Looks like last Friday's post about professional accumulation was on the money. This week's action has lifted the Emini from 1,389 to 1,425.

TRIN Bullish Divergence Pattern (Emini daily)

The 1,425 level has provided resistance 3 times in the last 2 weeks and there are bound to be a "bucket-load" of stops sitting between 1,425 and 1,435. This is way too tempting for the Professionals – if we start higher on Friday morning it will cause a chain reaction catapulting the Emini higher.

What we do not know is whether these higher levels will be supported or whether this will just be exhaustion volume followed by a collapse in the Emini shortly after.

Notice on the chart above how the Better TRIN indicator had a Bullish Divergence warning signal that caught the low of this last move (Friday) beautifully.

TRIN, Put Call Ratio and Smart Money Oscillators (Emini daily)

My swing trading oscillators (TRIN, Put Call Ratio and Smart Money) are all reaching over-bought. So it might be time to start thinking about taking profits.

I'm not a big fan of seasonals but typically the Emini peaks in mid-May and then trends down for the rest of the month. We could be seeing this pattern setting up:

• Stops hit on Friday and short covering causing large volume (exhaustion) move up
• Non-Professionals decide over the weekend to buy on Monday morning
• Professionals take advantage of this buying on Monday to take profits and go short

This scenario would fit nicely with the seasonal pattern and my swing trading oscillators. We'll just have to wait and see.

TRIN Systems (Emini daily)

Lastly, for those who follow my Better TRIN Systems, the chart above shows the activity over the last 3 weeks. The systems continue to make new equity highs but there are, of course, losing trades along the way.

The chart above shows such a cluster of Short signals that didn't work out. They were looking good until the large range up move we had on 1 May. Since then the Systems have caught a couple of nice moves and have been Long since last week.

Note: Winning trades = Blue dotted lines; Losing trades = Red dotted lines.

Good luck with your Emini trading.