Once a trend exists, a projection of how far the trend will continue can be made. The projections are represented as a series of possible price points. If that price is hit to within a margin of error of usually .02 it is recorded and identified on the screen with a double asterisk. While we cannot predict exactly which price points will be hit, we do know that only those prices that are hit in conjunction with certain other identifying characteristics are the only prices that are important. Furthermore, we know that once a trend is established one or more of our price points is almost guaranteed to be hit. Additionally, if a trend is established on both trin and vix both indices will likely hit projected price points at some time. Therefore we can hold the trades longer until both indices are hitting their respective projections.

The strategy is constantly and automatically monitoring conditions in both trin and vix to determine if any evidence exists that an opposing trend is developing. This can serve several purposes. It can alert the trader to tighten trailing stops, exit the current trade and reverse directions, or close the trade and take profits.

Let us now take a very close examination of a particular historical date and see how this applies to July 17, 2007 the date the Dow hit 14000 for the first time.

Initial asterisks at 9:18 cst show possible start of down trend which would parallel a rally in the spoos. 9:34 down trend confirmed. 9:37 initial projections hit indicating possible end to trend.

Spoos Rally and Short at end of Trend

Initial asterisks starting at 8:53 cst show possible start of an up trend which would parallel a sell off in the spoos. At 9:16 cst the uptrend is established but also initial projections shown as double yellow asterisks are hit indicating a possible end of the uptrend. Beyond 9:16 no evidence of a new down trend exists. If a new trend is not created the old trend is continuing. At 11:22 cst this is further confirmed. At 11:32 and 11:37 cst final projections are hit.

Trades shown are automated and occur in real time.

11:59 cst initial asterisks show possible start of a new down trend which would parallel a rally in the spoos.

Spoos sell off into initial projection, then sell off even more as trend continues

9:53 cst initial asterisks show possible start of new up trend which would parallel a sell off in the spoos.

Spoos sell off as trend becomes more established and sell off again late afternoon.

11:59 cst initial asterisks show possible start of a new down trend which would parallel a rally in the spoos. 12:40 trend confirmed. Projections will be hit

14:27 cst initial asterisk shows possible start of new up trend which would parallel a sell off in the spoos.

14:55 cst up trend projections are hit with corresponding exit of short trade.

Spoos rally in to short at end of down Trend.

Spoos sell off in to long trade or exit of short at end of day