XHB 2hr - SPDR S&P Homebuilders ETF - Chart Linkhere's an update on XHB, homebuilders ETF that I've been long, remember I pointed out that bullish symmetry break in late February

I'm showing this as an educational because this is a behavior I see sometimes on bullish symmetry breaks. One thing I've noticed is that if you get a slight symmetry break like you have here i.e. 5.7 point bounce vs the previous largest 5.2 bounce, that's only a slightly break, many times instead of a good higher low, you get almost a double bottom retest like you see here. Technically forms a very slight higher low.   

When you get a much stronger bullish symmetry break; for example let's set the bounce off the lows was 8 points instead of simply 5.7, then more than likely you would NOT get a double bottom, but a much higher higher low.

anyway I'm adding this to the educational channel for future reference.

otherwise XHB continues to look good, nice bottom there, looks higher over time still

Compare - SPX vs HYG 60 min - Chart Linkthe HYG gave a bullish divergence at the lows as it leads and it kept leading to the upside, which caused the SPX to play catch up

now short term there's a slight negative divergence with the slight lower high on HYG vs higher high on SPX

no changes....RSI oversold, RSI 40 longs holding, and hi mid lo show holding on MES

QE 3.2 and RSI oversold longs holding on SPY

longs doing fantastic!  clearly hi mid lo short on ES taking a hit, but MORE than offset from the open longs - systems are far more long than they are short. SPY has not shorts either.  

you also see why I still issue trades for all the 22 systems because once in a while you get one that takes some draw down or early entry or whatever, but other systems offset that and counteract it.  

While I like the idea of placing all the systems on one chart so that only one system can ever trigger (it's first come first serve) while that's far simpler to follow because you only ever have 1 system that can be active and only 3 entries total (makes the math easy) by odds once in a while you'll get the 'bugger' system that enters too early or exits too early or whatever, and you then miss the risk management and diversification the other systems will offer. 

The point of having 22 different mean reversion systems is that they are all doing different things, and it's part of the risk management because of the diversification.  We've seen that occur in real time with the systems lately when the RSI 40 went long way too early on MES futures (but the other systems went long later and at better prices to offset that). Now of course the RSI 40 is very profitable, even the first EARLY entry LOL.  And currently we have this 3rd entry short on MES futures taking heat, however we have two open long systems on MES futures that more than offset that. And of course two open longs on SPY

LOL yes and no - sometimes systems make people more emotional. 

and in particular mean reversion systems because of their nature of buying into market selloffs that feel completely unnatural and  scary to folks who's brain is telling them to do the opposite.

the KISS systems, while they can take similar draw downs or even higher ones at times, people seem to get less  emotional because of their nature, they are not buying into a downtrend and they have initial stops, so people tend not to get that emotional with them, even if they take a 5% or 10% drawdown, whereas when mean reversion systems take a similar drawdown people get very emotional and worried as shit

Some of you may have also noticed some changes on the trading community with new buttons for Educational,  Favorites, KISS, Matt's Macro V, I'll be designating posts to those areas over time.

I'm also going to add this to the educational section

anyway as I stated on Friday, in my observations over the years, OPEX Options Expiration on Friday's tends to be quite choppy most of the time. That said, on days when the market has a trend move (one direction) on Friday OPEX like it did on Friday with the market selling off all day in one trend.  Almost always when that happens you will get a decent bounce the last 5 or 10 min of the day that also lasts into the after hrs as all those options expire and contracts settle. We saw this on Friday obviously 

remember the cycle indicator is quite unique for a variety of reasons. 

1. Most indicators you guys use (included me) are all price based and derivatives of the same thing.  MA's, MACD, RSI, Stochastic, all basically derivatives of the same thing

2. The cycle indicator works on a totally different method.  It was also first designed for the audio industry back in the 1970's to measures signal to noise ratio.

3. It sort of works like an Elliot Wave indicator.  It identifies chop abc abc abc's very well, and trending conditions

here's some examples

BOIL 2hr nat gas - ProShares Ultra Bloomberg Natural Gas - Chart Link

this wedge was perfect here's why:  

1. had 5 clear waves, true wedge patterns have 5 waves

2. had MACD divergence, true 5 wave wedge patterns have MACD divergence, if no MACD divergence then most likely you are still in a wave 3 NOT a 5

3. breakaway gap out of the wedge - breakaway gaps are very bullish

that said a wedge like this I would always buy in the wedge vs waiting for a break because many times you will get a breakaway gap out of the pattern vs a clean break of the trendline where you might want to buy but can't

I have been participating in the market since 1995 and joined BPT as a member in 2010.  Then a couple of years later I completely left trading and went into real estate investing.  I got in touch with Matt again a couple of years ago because I was interested in the KISS Systems.  This weekend I looked at my chart templates and re-analyzed what I should include in that template in terms of indicators.  I have had many chart templates throughout the years but it is good to reflect and re-question things once in a while.  One concept that I learned when I briefly interned for John Bollinger (inventor of the Bollinger Bands) is this concept called collinearity.  I searched this site and no one has ever brought it up so let me throw this out there (apologies if people already know this).

This is how AI describes it and I tweaked it a bit here also:

Collinearity...using multiple indicators that are derived from the same underlying data and therefore tell you the same thing.
Most commonly, this happens when several indicators are all built from price and time. They may look different on the chart, but mathematically they are highly related. When that happens, one is not getting confirmation, they are getting echoes.  Collinearity doesn’t make a chart template stronger — it makes it louder.

A simple example: Using MACD and RSI together feels like strong confirmation. In reality, all three are derived from price. If price turns, they all turn.

Collinearity is a problem because it creates three major issues:
    1.    False confidence – multiple indicators agree because they share the same input
    2.    Overweighting one variable – usually price momentum
    3.    Fragile decision-making – signals look robust in hindsight but fail live
If removing one indicator doesn’t change your decision, it wasn’t adding information.  

To avoid collinearity, each indicator should answer a different market question, ideally using a different data dimension.  Another example: A lot of times you'll see that people will have a Sentiment indicator added to their analysis...that is because they Sentiment comings from a completely different type of data.

Non-collinear indicator examples:
    •    Trend: Moving average or Ichimoku (price over time)
    •    Volatility: Bollinger %B or Ulcer Index (price dispersion or drawdown)
    •    Participation: Volume or money flow (CMF, OBV)
    •    Leadership: Relative strength (RRG)
Each adds new information, not repetition.  Confirmation only matters when it comes from independent data.  Different visuals do not mean different information.

So I went to my chart template set of indicators and used AI to help me determine what I should keep/add/remove.  I will have a weekly template and a daily template.  I am still working on the daily template, but I have a weekly one.

This is the weekly template that I am using to analyze MOH, Molina Healthcare, and a description of the indicators and what AI said about them:

[Inference] There’s no universally accepted numeric “collinearity score” for TA indicators across all markets/timeframes, but we can judge non-collinearity by what data they use, what question they answer, and what layer of the decision process they occupy. Using that standard, your stack is not collinear because each tool targets a different informational axis.

Your stack, with one-line “why it’s not collinear” reasons
    1.    RRG (Relative Rotation Graphs) — cross-sectional relative strength/momentum vs a benchmark; it ranks assets vs each other, not just the asset’s own price series.
    2.    Bollinger %B (50, 2.1) — position of price within a volatility envelope around a long MA; it’s a regime/location measure, not momentum speed or participation.
    3.    Chande Trend Meter (CTM) — trend persistence/quality composite; it answers “is this trending strongly enough?” rather than “where is price” or “how fast is it moving.”
    4.    MACD histogram (25,170,25) — very slow cycle-level momentum differential; it’s long-horizon alignment, not short-term timing or drawdown damage.
    5.    Chaikin Money Flow (CMF 20/21) — uses volume + close location to infer accumulation/distribution; it adds a participation dimension that price-only oscillators don’t contain.
    6.    BBWidth (50, 2.1) weekly — volatility regime/energy state (compression vs expansion) over a ~1-year horizon; it’s dispersion, not direction or momentum.
    7.    Ulcer Index (weekly) — drawdown depth + duration (“pain” path risk); it’s about the equity curve’s damage profile, not volatility width or momentum.
    8.    KST (default Pring) — smoothed composite momentum “health” across multiple ROC horizons; it filters broad momentum integrity rather than short-term acceleration.
    9.    ROC (12) — momentum speed/acceleration (fast thrust) over a short horizon; it catches early deceleration that slower composites (KST/MACD) miss.
    10.    BBWidth (20, 2.0) daily — short-horizon entry readiness (early vs late volatility expansion); it’s timing-quality via volatility state, not a trigger.
    11.    RSI (7) — bounded momentum exhaustion/stabilization for micro-timing; it’s about pullback “breathing,” not trend persistence or volatility regime.
    12.    5-EMA crossing the Chandelier Exit — execution/structure reclaim using an ATR-based trailing level; it’s a price/volatility structural trigger, not a momentum oscillator.

Where there is overlap (and why it’s still not “collinear”)
    •    MACD vs KST vs ROC vs RSI all touch “momentum,” but they’re intentionally separated by time constant and function:
    •    MACD(25,170,25) = macro alignment (slow)
    •    KST = momentum health (smoothed composite)
    •    ROC(12) = thrust/acceleration (fast)
    •    RSI(7) = micro exhaustion/turn (bounded timing)
    •    %B vs BBWidth both come from Bollinger math, but they measure different axes:
    •    %B = location inside bands (direction/regime bias)
    •    BBWidth = band spread (volatility compression/expansion)
    •    Chandelier (ATR) vs BBWidth both relate to volatility, but:
    •    Chandelier = volatility used for structure/stop/trigger
    •    BBWidth = volatility used for state/readiness

Bottom line

Your stack isn’t collinear because it spans distinct, orthogonal dimensions:
    •    Relative leadership (RRG)
    •    Direction/regime (%B)
    •    Trend persistence (CTM)
    •    Macro momentum alignment (slow MACD)
    •    Participation/flow (CMF)
    •    Volatility regime & readiness (BBWidth weekly/daily)
    •    Path-risk / drawdown damage (Ulcer Index)
    •    Momentum health vs speed vs micro timing (KST vs ROC vs RSI)
    •    Execution/structure (EMA ↔ Chandelier)

Would be interested to hear others' thoughts on this topic.

I know quite a few people who have been waiting to get into the market via the KISS indexes but have waited and waited for an opportunity.  It's tough entering when the systems are already long or have been long for months at a time.

One strategy I tell people all the time is to look at the systems you like after a market pullback, if price comes really close to the current STS stop and you were looking for an opportunity to get long into that system, that provides you with a low risk opportunity because the stop is so close

here's the UPRO 30 min, one of my favorites among the index ETFs (SSO 60 min, SPY 79 min, IVV 60 min  QLD 78 min are some of my favorite's out of the HP KISS US Index ETF's. 

On that sell off notice how price sold off and came REALLY close to the STS stop on the UPRO 30 min - if you were one who wanted to be long that system, that presented a low risk opportunity because if you bought that day and the market went lower next week and hit the stop, your loss would have been tiny because the stop was so close.

anyway I point that out because it's something to watch for on the other systems during corrections if price gets really close to the stop and you were wanting to get into that system because you missed getting in when the system originally did, and/or you think the market may bottom out-  this method can be useful

PALL - Chart Link- hell of a launch from the rounded weekly base - and that's one of the tenants of Matt's Macro Vision Plays - not just fundamentals, but they actually start out by me FIRST noticing a weekly or monthly long term basing pattern, or multi year trendline that technically looks to be on the verge of a huge macro trend change that could last for at least months, if not years.  After I see the chart, I'll then look at the fundamentals to see if they confirm - but they all start with me FIRST noticing the weekly and monthly stock pattern potential

$PALL - Chart Link-

PALL - Chart Link-

price bounded where it needed to without hitting the stop

guys when trading systems, the thing you have to think about and this is really hard to juggle, struggle myself sometimes , is how much do you rely and/or subjective technical analysis or trading systems.  when mixing the two you can end up under performing both, I know because I fall into that trap sometimes. like not doing a system trade because my TA chart says something else might be going on. What I've found is that at the end of the day if you decide to trade systems - you have to set aside capital for those systems and just stick to them because otherwise you will second guess all the time.  

like this SQQQ 30 min system - if it's  4th wave, it will stop out for a minor loss. but if it's not a 4th wave, it will be a winner and you will miss it if you close out because you are looking at 4th wave option that has nothing to do with the system. point is on systems you designate a certain amount of capital to them and just stay with those trades. 

Your subjective trades and analysis should be completely separate from systems trades.  Do not mix the two

have two different brokerage accounts if that helps do systems in one and subjective trades in the other account

patellee - discussed many years and it's discussed in that section - again I know it's not fun, these 'pucker trades' never are, as I said when the markets do this, these mean reversion systems are not fun feel good systems, hard on psychology - which is why I always suggest never swing for the fences for these - because if you go too big, you can't stand heat. Now where I'll tend to go big is on 3rd entries because they are rare

mean reversion systems do not have initial stops - they stop out on bounces - I tested that 100 ways from Sunday and you would always tend to stop out at the lows -was always better to stop out on bounces

that said one option is to use a stop that is slightly wider than the max historical DD - again, doesn't guarantee that price doesn't slightly exceed the max DD and stop you out at lows but it is an option

on SPY CCI divergencethe MAX historical DD was 16.5% on the 1st entry - and what's funny is that trade still made money- here's an image of it - this is 2008 so moves were more exaggerated  - see attached image showing this max DD trade

SPY Trend/Pullbackmax historical DD was 11.4% on 1st entry

SPY QE BTSmax historical DD was 13.6% on 1st entry

one could use those as guides for stops - but we are not even close to those and HOPEFULLY we do not get close to those

I received this question  about the KISS systems, why did the standard KISS SPX daily go back long while the HP version did not. I am posting my response here because others may have had the same questions. I blocked out the name

Obviously very nice long entry and trade by the SPY QE BTS. 

As you know, following the mean reversion move close above the 8 day SMA, the MOMO trend told condition triggered where the system held the trade off to the MOMO hold condition like a runner passing the baton.

However, on the the chart, note the 34 length Stochastic - should that get above 80% while the trade is still long, the MOMO condition will pass the baton off to the 34 Stochastic hold condition and will hold the trade as long as the 34 Stochastic holds above 80%

Good example of how some oft these systems have multiple conditions/rules that can come  into play

I always tell people - the mean reversion systems are difficult to trade at first because of emotions - these systems buy when it feels the worst, when news is the worst, when it feels like death, when you are scared, these systems are buying in.   Most people are not used to that, which will come with practice and why I always tell people when starting these, do them small and make a plan (how much capital you will put into them) so that you can just do them and let them work vs over thinking them

I still get the questions: Matt why do you run the 22 systems on both SPY and ES futures? It's because even though two are the same index , they are different prices and indicators will be at slightly different areas - thus while you will get many of the same trades, at times you get different trades, where a system triggers on SPY but not on ES and vice versa. A system may trigger on both but sometimes will enter better on one verse the other etc, and sometimes a system will trigger on one but not the other - therefore you get this 'averaging' effect

The current SPY Breakout trade that has been long almost 30 days now is a good example:  the breakout system triggered a 1 day earlier on SPY than it did on ES, thus the SPY had a better entry. Secondly - the SPY breakout is still long and is very profitable, while the ES version sold out 2 weeks ago after a short bounce off the lows, see the chart.  So if I was only running the systems on ES - you wouldn't have this nice breakout trade. And again, this goes back and forth - next time maybe the ES will catch the better price

here's a 2 min chart of NQ futures, you can see trade entries and exits from that 60 Stochastic momo - one could easily scalp trade all day with futures doing that on short time frames

I'll be making a tradingview chart that I'll share, 

again I don't know what rules are fully best so here's what I've been doing:

when one of the 3 indicators gets oversold I go long. If you want it more stringent you can wait for two that have to confirm at once, or you could scale in, for example you have one long entry if one of the indicators gets oversold, and if another one gets oversold enter a second contract

selling/exits: one could simply exit when one of the fast indicators gets overbought again, or one could do a combo where if you were in more than one contract you exit 1/2 when the indicators get overbought, then trail a stop at each candle low, which can sometimes keep you in a trend for a while, but you have a tight exit

https://www.wsj.com/articles/us-inflation-wages-employment-cost-index-q3-2022-11666925660  

Matt/Steve - ACMR - Please  revisit this one for the weekend newsletter.  One of those gifts that keep on giving.