Those of you who are more interested in day trades than longer-term positions should consider that the monthly index biases do translate nicely into some day trading ideas.  I've spent a lot of time of applying rudimentary tools to the monthly direction, and there are positive results coming out of a variety of places.  Some show that it pays to go with momentum in the direction of the monthly.  Conversely, some tests say that buying weakness, selling strength also has potential.  I'll divulge more as I get my head out of the research blender.

The market wants to go down mid month and up around the rollover time.  That's a broad generalization that is going to work better sometimes than others.  Still other times, it will grow teeth as an anti-indicator money loser.  (We are not advocating tight stops, remember.)  On the whole though, the last few years and beyond clearly suggest that a regimented long/short flip-around according to the relevant dates is far superior to just buying and holding.  That's why I'm seeing potential in dip buying ideas as well as momentum, or as Figure 1 demonstrates, in another enter-on-the-open, exit-on-close idea. 

Specifically, buy lower openings in the 22nd through following 6th time frame.  Sell short higher openings from the 7th up through the 21st.  Here's the data from the last five years this new day trading system.

As for the signals we're tracking, the day indicators point down but are contradicted by the majority of the other either-or indicators.  That throws the vote to the monthly, which of course, is at the beginning of its retreat time in the markets.

The Biases

Stay short the mini S&Ps.  Reverse longs to the short side in both the Nasdaq and Russell.

The bottom two rows determine the signal.  Dynamic Day One trumps everythingâ€"you always follow it.  When it's neutral, the Monthly Perpetual provides the direction.

DISCLAIMER: It should not be assumed that the methods, techniques, or indicators presented on 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 on 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. He is currently working on a second volume. E-mail Art at artcollins@ameritech.net.