Trend Exhaustion Market Timing Excel Spreadsheet

They say "The Trend is your Friend - until the End".  But how do you know when a trend is over?  

You will know by looking at Setup, Sequential and Combo Signals.  Some traders speak of these as the ‘Holy Grail’ of investing.  Said to be close to 90% reliable, these indicators show you when to buy into weakness and sell into strength - identifying when a trend (both Bull and Bear) is becoming, or has become, exhausted.  The indicators have an impressive record of identifying and anticipating turning points across the stock, bond, commodity and currency markets. 

In this article I'll show you some amazing bull/bear market turning points signaled to the very day!  Utilizing an Excel financial Add-In, I've created a spreadsheet that provides Setup, Sequential and Combo signals on a daily, weekly and monthly timeframe. 

You can order this Excel (.xls) spreadsheet from the Research Offers page.  You'll also need to install a free Excel Add-In to retrieve financial data from Yahoo Finance historical quotes - see instructions and the attachment at end of this article.

These indicators are discussed on my Demark page.  For more detailed information, I recommend reading Demark Indicators by Jason Perl. 

As a bonus,
in the spreadsheet I included several lesser-known aspects of the signals.  One is the 'Aggressive' versions of Sequential and Combo (comparing Highs and Lows, instead of Closes).  The other is a special rule about the 13th count, where the Open can be substituted for the Close.  These end up being vitally important.

Video Tutorial

Trend Exhaustion Stock Market Timing Video Tutorial




Trading rules:

-If a Setup breaks thru resistance, then look for continuation to Combo or Sequential

-If a Setup comes in close proximity to resistance but does not break thru, then the Setup can be traded.

-A Setup that continues to 18 bars is cancelled (called Recycling)


Let's take a look at some calls:

S&P 500 (SPY) on a Monthly basis (enter ‘m’ in cell c11):

February 2003 – end of bear market signaled by the ‘Aggressive Sequential’ (cell AE127)



May 2007 –end of bull market signaled by a 9-month Sell Setup (cell M78)


February 2009 – end of bear market signaled by 9-month Buy Setup (cell L199)

 


Now let's look at the same symbol (SPY) on a Weekly basis-

S&P 500 (SPY) on a Weekly basis: (enter ‘w’ in cell c11)

Note: You check the Monthly basis to see the larger trend, generally don’t bet against the larger trend until its well extended – has at least reached Setup phase. 

July 10, 2000 –end of bull market called by Aggressive Sequential (cell BH395)

(click image to enlarge)


Oct 1, 2001 – short term buy (Aggressive Sequential) cell AE58



Jan 27, 2003 – end of bear market (note this is in coordination with Monthly therefore stronger signal) cell AE127


 Oct 15, 2007 – end of bull market called by Aggressive Sequential

(click image to enlarge)

 

March 2, 2009 – end of Bear market called by Aggressive Sequential


On a Daily basis you’ll get even more signals.  Plenty of nice short-term trading signals.  This works on individual stock, ETF's and mutual funds.   It will work on any financial symbol within Yahoo Finance (the spreadsheet pulls in data from Yahoo Finance)A reader recently emailed me about his success with an Australian bond fund of all things.


Trading - I’ll mention that there are 3 ways I have found to trade:

1)      Trend Exhaustion:  Enter a stock symbol (cell c4) and either (m)onthly, (w)eekly, or (d)aily in cell c11.   From there, you can trade Setups, Combo and Sequential signals as given in the spreadsheet.

2)      Trade with the Trend: Look at the Monthly signal to see what the Bull/Bear trend is.  Knowing what the primary trend is, look for a Daily signal in the Opposite direction.  This is often a great entry point into the primary trend.

3)      Short-Term Weakness: Simply looking to buy a new stock?   Take advantage of short-term weakness to get yourself a better price.  Look for a completed Setup, Combo or Sequential on a daily timeframe for a great entry point.

Spend some time with the spreadsheet and you will be amazed as I am.  Remember not to trade every Setup, you have to look at Resistance and Recycling. 


You’ll need Excel and a free ‘Add-In’ called “Stock Market Functions.”

Stock Market Functions Add-In Overview

The Stock Market Functions (SMF) add-in is an Excel Add-In that allows you to retrieve financial data from web pages such as the Yahoo Historical quotes database. To use an add-in, you need to download it to your computer and install it (a simple process).

This Add-In is available for free as a .ZIP attached to this article.  Click on the download link at the end of this article.  It is supported by an active Yahoo Group at:

http://finance.groups.yahoo.com/group/smf_addin/

This is a Yahoo Group created to support this Add-In.

How do I install the add-in? 


First step would be to create this directory on your computer:

   C:\Program Files\SMF Add-in 

    [It is important to create this exact location and spelling of the directory - the spreadsheet will be searching for this exact folder]

Next you extract all of the files from the downloaded '.zip' file into the above folder (can right-click and choose 'Extract files' in Windows).  There will now be about a dozen files in your 'C:\Program Files\SMF Add-in' directory.

Next you 'load' the SMF Add-in into Excel.  Open a blank Excel workbook.  Then -

In Excel 2007, click on the Windows Button (top left) then click 'Excel Options' (on the bottom bar next to 'Exit Excel')
[In Excel 2003 and Excel 2010, click File -Options]
From the next menu, choose 'Add-ins'
You will see a list of 'Active' and a list of 'Inactive' Application Add-ins
Under the list of 'Active Application Add-ins' should be "Stock Market Functions Add-in"

If you do not see it in the list as described above, then we need to add it to the Active Application Add-ins.  To do that, below the list will be a button that says:   Manage: Excel Add-Ins.  Click  “Go”, and select ‘Stock Market Functions Add-In’ if in the list, or browse to the 'C:\Program Files\SMF Add-in' directory and pick the .XLA file that was extracted from the ZIP archive and double-click on it.

From there you can test whether it's working.  Type =RCHGetElementNumber("Version")
into a cell and it should return the current Version of the Add-in.  It will say something like: 'Version 2.1.2010.08.02'

Once you get this working you can go to my Research Offers page and order the 'Trend Exhaustion' Spreadsheet.

Some notes:
*The Add-in uses Internet Explorer to pull in data so you need a copy of that on your computer.  It's ok to use a different web browser - like I use Firefox - for everything else you do.
*The Add-in works on Excel versions since 2003 (ie. 2003, 2007 and 2010).
* People often email me to ask if the spreadsheet is simple to use.  To answer this question, I have to give a 'Zen' answer.  It is simple to use, difficult to master.  All you have to input is the ticker symbol and whether you wish to analyze (d)aily, (w)eekly, or (m)onthly signals.  The spreadsheet will pull in as much historical price data that Yahoo Finance has.  For example I can analyze a stock like Wal-Mart back to the early 1990's - which is really cool, you can see the bull/bear trends rise and fall over many years.  This will help you to understand these powerful indicators.   Again, for more detailed information on Setup, Sequential and Combo, I recommend reading Demark Indicators by Jason Perl and visiting my Demark page which has additional articles to read and download. 
*There's a reason that major hedge funds watch these indicators - they work.  Your efforts on this will be rewarded.

 

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David W,
Jul 19, 2012, 8:51 PM