It's starting to look like we might get October fireworks.  We're guessing that the major trend will be down.  (Check out this month's issue of Futures Magazine.  I lay out a bearish case.)  This is not to say that the counter-trend rallies are not going to also be rip-roaring and hard to stay with. 

I would be astounded if anyone out there is actually trading the Dynamic Monthly indicator as a 100 percent mechanical system.  I haven't advocated that anyone should.  I have offered precious little in the area of money management or stops, for example, that would make such a system practical.  This system is and always was intended to be a mere guideâ€"a recounting of what historical biases have indicated.  That is, on a monthly basis, sell in the middle of the month, buy near the rollovers.  Fade the biggest open to closes during the week except Monday, which figures to move in Friday's direction.

This is all a decidedly rough snapshot of a numbers game we believe should continue to have validity.  If you look at the performance lately, things have definitely been out of synch.  I will, however, be happy to send anyone the individual elements of why we make the bias claims we doâ€"the formulas for our convictions.  You'll find my e-mail address at the bottom of the page.

I guess I'm laying this out today because it is getting a little frothy out there.  We have urged theoretical longs through the last few days, watching a previous open profit evaporate.  The monthly time frame is now urging a short after three days of wrong-way longs.  Could I be crazy enough to advocate reversing engines?

In theory, yes I couldâ€"and have done so in actual trading.  You never know how far too high, too low, too much or too long actually is.  We're system tradersâ€"if we were following this program 100 percent mechanically, we'd follow our signals like robots.

As it turns out, Friday's overall signals remain bullish.  The Day-of-the-Week indicators say to be longâ€"to not jump on the falling market bandwagon just yet.  They are not contradicted by the other daily indicators, so Friday is still a buy bias.

We'll see what happens from here.
    
Dynamic Monthly Biases for October 7

Hold all three index longs.

Daily CzarChart for October 7

The bottom row provides the direction of the bias at the open: long (L) or short (S).  When it's neutral, it will read zero (0).  Click here for a more in-depth explanation of the rules.

DISCLAIMER: It should not be assumed that the methods, techniques, or indicators presented in this column will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented in this column are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The author, Tiger Shark Publishing LLC, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

Art Collins is the author of Market Beaters, a collection of interviews with renowned mechanical traders. Art is speaking at the Las Vegas Traders Expo in December. E-mail him at artcollins@ameritech.net.