Last Thursday night I thought the market would go up on Friday. Instead, it went down - big. Last night I thought the market would go down today and that's right, it went up - big. With today's gain virtually equaling Friday's loss, I don't see any predictive power in the daily charts at all right now.When we get into states like this, I like to back out to the weekly chart. This paints a much more clear picture and a very bullish one as this Dow weekly chart shows.
On the weekly chart, all the daily lines kind of just merge together, but what emerges is a picture of support forming around the 12,000 level. But the most prominent feature is the stochastic (bottom indicator) which is currently highly oversold and has just executed a bullish crossover. This is a very reliable indicator and right now it's more oversold than I've ever seen it, including at any point in the Great Recession.. The current weekly candle has also already exited the descending RTC channel from the beginning of May, and that's also bullish.
On the other hand, the monthly Dow chart still looks weak. So at this point about all I can say is that on a weekly basis, things are looking up, in the longer term, say a month or two, not so hot, and I have no idea where we're going tomorrow.
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Hello,
ReplyDeleteThe 60 minute chart can give you a better idea of turning points on the larger time frames, when the daily chart its forming a bottom, if the end of the quarter nears and the weekly chart on the SPY, IWM and Qs are on support the 15 and 60 minute charts will signal the exact entry point IMO. Analyzing pivots can give you an idea where the trend its about to change on the smaller (15 and 60 minute) time frame confirmed by the larger time frame.
Cheers.
Thanks for writing. That's an excellent point. I in fact do have a one hour chart on my display but I'm short on screen real estate so it usually ends up being mostly covered by my daily chart and 5 minute chart. Your comment is a great reminder for me to bring the hourly chart to the front a little more often.
ReplyDeleteI meant that instead of relying so much on all the indicators that are always sending conflicting signals at tops and bottoms if you try to find from where the reversal its coming from, some times it only takes one ETF to get the speculators exited about going long or short the other two.
ReplyDeleteYesterday the Qs traded and closed above its 60 minute base (not the end of day just over that resistance at 55.40$ with the 5th 60 minute candle that was coming from a higher low of 54.20$, so the downtrend its in question with that higher low and now with the close over 55.40$ now with the higher high close the sideways trend is in question so the pullback if controlled its buy able while the SPY and IWM where forming a 60 sideways base but both close near the top of that base and also coming from a higher low and broke out today.
I personally only use bar by bar and pivot analysis, no indicators and it works.
the Qs had a void to mover higher on the daily chart once out of congestion hence the hard bounce today on pathetic volume.
Good luck.
Thanks for the clarification. This is great advice and very much appreciated. I will have to take some time to study this.
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Thanks for the kind words. I find that writing at least a little every day gives some discipline to my trading. I'll admit I didn't even know of the TNA/TZA pair. It looks like a great way to play the small caps, though it's a bit pricey for a small account of my size (mid 5 figures).
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