Posts Tagged
‘Divergences’
by Chart School - October 6th, 2010 7:01 pm
Divergences
Courtesy of Allan
I want everyone to be aware of a developing divergence in the market. Attached is a chart of the SPX with our Trend Model, Fibonacci levels and at the bottom of the chart, the Elliott Oscillator. The Elliott Oscillator measures momentum and its most potent use is to identify divergences between prices and momentum.
On the attached SPX chart I’ve labeled three areas of divergences between SPX prices and the Elliott Oscillator, i.e. new highs or lows in the SPX that are unaccompanied by new highs or new lows in the Elliott Oscillator. In each case the market reversed within days of the divergence. (Although the chart is only showing divergences from the past six months, this particular pattern goes back at least to 1995 when I first became aware of this indicator.) Let’s take a closer look:
(1) The first divergence on the chart occurred in late April and within days the SPX topped and fell from a high of 1212 to a low in early July of 1027.
(2) The second divergence occurred at that early July low at 1027. The market bottomed within days and has now risen to 1160.
(3) The third divergence is occurring now.
This is no guarantee of an imminent top as divergences are not an exact science and as you can see from the previous two divergences, it sometimes takes days for the market to reverse. But I look at a lot of indicators and patterns and because this one has been so reliable in the past, I wanted to pass it along.
We are still trend followers, but it doesn’t hurt to look at what could be coming down the road and cause our models to reverse. We have been waiting a long time for a tradable SELL Signal and have endured a few false alarms, but this is one more sign that a change in direction is lurking in the shadows.
Past performance is not a guarantee of future results.
…
Tags: charts, Divergences, Stock Market
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by Chart School - April 13th, 2010 1:18 pm
The VXX, an indicator of market volatility, is making new lows as the market goes higher. A reversal in the VXX should correspond to a reversal in the stock market. Notably, there’s a divergence forming between price and the bottom oscillator (a momentum oscillator), which means the next blip up in the index will be a (potentially tradable) buy signal. Divergences between prices and momentum oscillators precede reversals, and the technical indicators shown here are warning of a pending reversal. - Ilene
Courtesy of Allan
VXX Daily
VXX (ETF for VIX) is a measure of market volatility, when it rises, stocks go down, when it falls, as shown on this chart, the market rises.
The above chart is set up for an Advanced GET, EW "Mechanical Buy Signal" with the bottom oscillator failing to confirm the new lows in the index. The trigger will be a rise in the VXX sufficient to trigger a Trend Model Buy Signal. A prior occurrence of this set up is seen on the chart in late January and it captured a brief, but tradable rise in the VXX with a corresponding decline in the markets.
You can trade the VXX directly, or trade the underlying market indexes. Should this signal be triggered and in light of the severely overbought market conditions, I will be looking for leverage to Short one or more major market averages.
*****
Allan’s newly launched newsletter, “Trend Following Trading Model,” goes along with the trading system he’s been working on for years. Most trades last for weeks to months. A special 25% discount is available for PSW readers. Click here. For a more detailed introduction to Allan’s methods, read this introductory article.
Tags: buy signal, Divergences, indicator, momentum oscillator, prices, Stock Market, trading, trading signals, volatility, VXX
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by ilene - July 3rd, 2009 2:53 pm
Courtesy of Corey Rosenbloom at Afraid to Trade
It’s being broadly circulated around the analysis circles, but there appears to be a distinct Head and Shoulders forming on the daily chart of the S&P 500. I’m picking up volume and momentum divergences as well, hinting that lower prices are yet to come but let’s take a look at these structures and what they might mean for traders.
With today’s 3% free-fall (Trend Day Down) in the broader stock market, it appears now that the dominant technical pattern is the developing Head and Shoulders on the S&P 500.
It’s not guaranteed, of course, but according to classical technical analysis patterns, we would expect the next move in price to be a ‘magnet trade’ down to test key support about the 885 level in the index.
This support is strongly established as the February highs along with the May lows. This level also forms the “Neckline” of the expected reversal pattern.
A break (and clean close) below 880 could trigger a flood of short-sell orders (and stop-losses from buyers) which could create a ’self-fulfilling prophecy’ as traders and investors push price lower.
The classic measuring move is the distance from the Head to the Neckline (about 75 points) which is subtracted from the neckline at 885 to give us a target from 800 to 810 for the next level of possible pattern support.
Take a look at Volume, which has been steadily trailing lower as price has creeped its way higher. That serves as a non-confirmation of higher prices and hints at an impending reversal.
Finally, look at the 3/10 Momentum Oscillator – as price has been inching higher, the 3/10 Oscillator has been making lower highs along with price, and has even set-up the dreaded “Three Push” reversal pattern (a triple negative momentum divergence, which you see if you look closely).
As a caveat, there’s no guarantee price has to break these levels, and one astute reader (Michael) even noted in the comments of the prior post, because the Head and Shoulders pattern is so obvious, it might be ‘faded’ or fail to materialize because so many people are watching it. No one said trading had to be easy!
Until we see something different, this is the current price structure of the S&P 500 as we head into…
Tags: Divergences, Head and Shoulders, S&P 500, SPX
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February 11th, 2012 3:44 pm
Courtesy of Jesse's Cafe Americain
Francine McKenna is an ex-auditor from Price, Waterhouse Coopers.
McKenna has a blog called re: The Auditors, and also writes for Forbes.
MF Global is a slowly boiling scandal. It is always the cover up that brings the most damage, rather than the initial criminal acts that are committed by a few.
She provides a very plausible description of what really happened at MF Global, and I find it to be entirely consistent with my own thoughts and extensive reading on the subject.
She does not address the actual cause of the MF Global bankruptcy but that is another matter.
It is a dirty business. And Francine is a highly credible source.
This will start viewing at 13:...
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February 11th, 2012 3:35 pm
Courtesy of Doug Short.
The 2012 rally slowed last week as the average gain of our basket of eight markets dropped from 2.01% the previous week to a flat finish of 0.06%. Geographic rotation was the dominant pattern, with the world leadership moving from Europe to the Asia Pacific. Thus, the top performing Nikkei 225 had been the worst performer at the end of the previous week, while the three European indexes were demoted from stellar to cellar. The S&P 500 again finished near the middle of the pack, but in the spirit of the overall slowdown, a finish near the middle was a week-over-week close (fractionally) in the red.
The adjacent table shows the 2012 year-to-date performance of our gang of eight. Three markets have maintained their double-digit gains at the end of six weeks, with the BSE SENSEX overtaking the DAXK (i.e., the DAX ex dividends) for the lead with the Hang Seng in...
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February 11th, 2012 3:18 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tim Knight from Slope of Hope.
(Note - I got an invitation from Tyler this morning to contribute to ZeroHedge, which completely made my day. I've got a little blog called the Slope of Hope, wrapping up its 7th year. I hope to become a regular here over at ZH; thanks, Tyler!)
Most of you have probably already seen the bullgasm happening over at Barron's. Here's their cover for the week:
...
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February 11th, 2012 12:00 am
Top 5 RisersStockRatingAnalysis
ICABUYThe projected value for Empresas ICA is still rising quickly even though past earnings have already improved significantly.
XBUYThe projected value for US Steel is still rising quickly even though past earnings have already improved significantly.
FEICBUYProjected value continues to rise for FEI while long term increases in earnings growth are also becoming more widely expected.
ASBCBUYMany analysts are expecting higher than previously expected long term growth from Associated Bancorp, and its near-term earnings outlook is also improving....
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February 10th, 2012 6:20 pm
Courtesy of Benzinga.
The following are the M&A deals, rumors and chatter circulating on Wall Street for Friday February 10, 2012:
Actuant Acquires Jeyco Pty
The Deal:
Actuant (NYSE: ATU) announced Friday that it has acquired Jeyco Pty Ltd (“Jeyco”). Headquartered near Perth, Australia, Jeyco designs and provides specialized mooring, rigging and towing systems and services to the offshore oil & gas industry in Australia and other international markets. Additionally, its highly engineered products are used in a variety of applications for other markets including cyclone mooring and marine, defense and mining tow systems. Jeyco generates annual revenues of approximately $20 million.
Actuant shares closed at $27.33 Friday, a loss of 0.18% on average volume.
...
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February 10th, 2012 4:14 pm
Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
A little flurry of buying in the closing 5 minutes tacked on 2 S&P points and took the major indexes off the lows. Only the Russell 2000 finished with a greater than 1% loss (1.4%) as it has been relatively weak versus the senior indexes for the past few sessions. While today was the "worst day of the year" – it was quite a low bar as the previous biggest loss on the S&P 500 was -0.57%.
The S&P 500 held well above the 10 day moving average (didn't even really touch it) and did not even attempt to fill the gap from last Friday's employment report. The teflon market rolls on for now. Specul...
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February 10th, 2012 4:11 pm
Courtesy of John Nyaradi.
Greece was “saved” for less than 24 hours but now major ETFs around the world skid into the weekend on Greek fears
After wangling for a week or more, Greek took their new deal to the European Ministers meeting, only to have it promptly rejected and so as we go into the weekend, major global markets and ETFs have again hit the skids on Greece.
After two years of wangling, the European zone is demanding yet more and deeper cuts for Greece to qualify for the next round of bailout loans that will keep the country from going bankrupt on March 20th.
Major European and United States ETF responded negatively to the new developments:
SPDR Dow Jones Industrial ETF (NYSEARCA:...
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February 10th, 2012 1:40 pm
Reminder: David is available to chat with Members, comments are found below each post.
Click here for the full report.
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free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. -
Ilene...
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February 10th, 2012 1:22 pm
Today’s tickers: TRLG, KR & IGT
...
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February 6th, 2012 9:02 am
Reminder: OpTrader is available to chat with Members, comments are found below each post.
This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.
To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here
Optrader
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February 5th, 2012 5:19 am
NEW: Elliott and Ilene are available to chat with Members regarding topics presented in SWW, comments are found below each post.
Here's the latest Stock World Weekly, called "The Relentless Pursuit of Meaningless Metrics."
...
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January 30th, 2012 7:22 am
Here is a quick update of past trades and our current position.
AA Money
No trade this week as we wait for AA to settle. Phil remarked last week that AA seemed overvalued. In the meantime, it looks like we might have to roll our Feb 9 calls. Good thing we sold only 5 of them against our position.
Last week P&L - 310.00
We lost ground last week, but we still have 11 months to sell premium!
FAS Money
Very good week for FAS Money as we benefited from the large amount of premium sold the previous week. We covered most of the shorts in advance of the Fed speech, but sold another set of options on Wednesday after the speech - 2 FAS calls that expired worthless on Friday, 2 FAS put that we are still holding and 2 FAZ put that we bought back for a profit on Friday. A late stick comparable to last week's almost gave us problems at the end of the day though!
Last week P&L - $4277.00
IWM Money
A decent week in this virtual portfo...
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January 18th, 2012 1:09 am
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Finding new and exciting Biotech companies that target novel mechanisms is like trying to find a needle in a haystack. Sure there are many companies working on cutting edge science, but investing in those companies to reap the rewards of their work is a very dangerous game. More often than not, companies fail because the mechanism does not pan out, the compound(s) do not have pharmacokinetics (get into the body or last very long in the body), or an adverse event happens that knocks years off a development timeline. In addition, the stock can be manipulated by market makers so investors don't know which way is up. I approach investing in biotechs as a long term prospect. I continue to like our current portfolio of biotech companies (join in chat for many of those plays), and we continually add/subtract shares and sell/buy options on ...
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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