:: actio-et-reactio ::
amg's market charts and blather
There's quite a bit on this chart, some for targeting, some for learning.
(A) In addition to yesterday's lesson on the Regression Channel to gauge pullbacks, Fibonacci retracements are also helpful. While NOT A RULE, a move off the 38.2 is strong, a move off 50 at times results in sluggish/congestion, and a move below 62 is often weak.
(B) I've arranged the indicators in an order of priority:
(1) Chose a sufficiently long MA (34ema) for direction and a shorter MA (13ema here) for early indication of either trend change or pullback entry opportunity. Other popular combos are 5/25, 9/30, 8/13, etc. Suit your style.
(2) MACD-- This is a trend indicator: strong above Zero, weak below Zero, as I've often written about. 'Divergences' on MACD can be deceptive. When the long (34) MA is UP, the lower MACD 'divergence' is often a 'wind-up', ie, a pullback.
(3) STO -- Not always my favorite as it is very misused and misinterpreted. Best to USE IT WITH THE TREND, ie, a reversal out of oversold when the long (34) MA is UP is a decent buy. One could use it reversing out of overbot in an uptrend as an exit, but you may leave $$ on the table or churn up commissions. Experiment and find your own comfort zone.
(4) RSI -- A favorite of mine, used largely for setting price targets from divergences. The channel zones indicated (45-80 and 35-60) are only rough, draw them in for each market and time.
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Complete Charts Update (MANY MANY of them)
There's quite a bit on this chart, some for targeting, some for learning.
(1) LEARNING: In an idea from Ron Wheeler, 'mini' Regression Channels are used to gauge when (and if) a rebound off a pullback low is buyable. The channel is complete on the first higher low off a pullback. SCC's % is a bit wide for this purpose, so I've sketched in tighter bands using hi/lo's within the band. The orange arrows mark the Buy Signal (first closing bar outside the band).
(2) This move was very geometric, the high being within a hair of an AB=CD off the low. A comparable AB=CD pullback is -1.3%, or 1135.5.
(3) This 1135.5 is also confluent with two Andrews crossing, an just above the 'pullback mini-fork' (the black one) at 1136. That the low price was 1136.85 is a bit troublesome (a tail touch of 1136 would have been more ideal), suggesting perhaps a test of that 1136 before a move back up.
SUMMARY: A break of 1144 (with a corresponding break of the RSI overhead trendline) is a buy, however, with diminishing returns as there is now resistance at the recent highs. A break of 1136 confirms a deeper pullback.
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The purpose of this chart is to show that a cross ABOVE the Zero line is a more powerful indicator of a SUSTAINABLE rally. Much is being made of this run to the mid-1990s run. Aside from fundamentals, of which there are more than a few differences, this one difference is, IMO, considerable. Note that the current run was off a cross BELOW Zero, where PPRO (a percentage-based MACD) remains. A reversal below that crucial zero cross would validate the view that this has been a so-called "bear market rally". On the other hand, a continued climb up, of course, sets up a bullish Zero cross, from which continued bullish gains can be made. This already happened on a PPRO using shorter MA settings, where a hook at this point would also signal a correction, albeit on a relatively glacial monthly scale.
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The RSI Reversal set-up follows-through, with a rebound @1115 (projected 1112-1117) The next barrier is 1128, which the blue 60m fork easily projects with a target of ~1132.
HOWEVER, should price not break the 1128 and reverse, a Negative Reversal is set up, which would feed Part 2 of my favored scenario: a double top set up with a Negative Divergence on that rebound. This creates a good setup for a tradeable *correction*, ie, something greater than the 1-2% pullbacks of late. This would allow the market to regain strength for another run at more highs, or at worst, further consolidation at relative highs, both of which are constructive in the longer run.
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Friday sets up a potential RSI Reversal, but only after a trip to 1112-1117, where price would have to rebound, ie, my favored scenario, but with a break of the 34ma factored in. Part 2 of that scenario is a double top set up with a Negative Divergence on that rebound. This creates a good setup for a tradeable *correction*, ie, something greater than the 1-2% pullbacks of late. This would allow the market to regain strength for another run at more highs, or at worst, further consolidation at relative highs, both of which are constructive in the longer run.
My favored scenario has been a pullback to the 34ma under a Positive RSI Reversal condition. With today's last 60m bar closing positive on mild pullback, such a condition is possible IF Monday is positive. Having said that, a rebound might then create a double top. Since we're talking potential, how a Negative Divergence on that rebound? That might make a good setup for a tradeable correction , which is simply a scarier pullback.
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|
moon phases |
At last, over the rim
of the waiting earth
the moon lifted with
slow majesty
till it swung clear of the horizon and rode off,
free of moorings
- Kenneth Grahame,
The Wind in the Willows
blather: nonsensical talk.
At times my analysis log, at times sharing what I've learned. Always my own work and views.
Content: amg
Basis: glish & bluerobot
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