While You Are Waiting

I'm still putting together the pieces and looking for the little sublte signal that will tell us something worthwhile. In the mean time, as I continue to dig through all the charts and indicators, you know that I don't listen to other analysis, especially CNBC-I don't want to color objective analysis with other's opinions.

However, there's one person I respect, Don Worden, behind the Worden Brothers products-TeleChart and StockFinder. Why Don? Don pioneered tick volume and really the use of computers and indicators back in the 1950's. He's written a huge portion of the indicators that the big boys on Wall Street used and he has more experience then almost anyone else with regard to Technical Analysis. If you read his books, you will see he doesn't look at TA like anyone else, it's culture shock to red his writings because this is a man that understands the market and the importance of thinking for yourself rather then letting the talking heads tell you. Still, I rarely read his columns as I use my own indicators and I don't want to taint my objectivity.

Today my objectivity is tainted, or was. Today was a day that struck me a bit on the emotional side, I recognize that and it means that I must work 2x as hard to be objective and check and recheck all of my analysis to make sure it is objective. Emotion creeps in, you are human, but you must recognize it and that is what I'm doing. So in a bid to set my head straight as Don shoots it as straight as they come, I read his column tonight on TeleChart's nightly Worden Report, I was encouraged that he is largely of the same opinion as I am and I'm including his comments with his indicator MoneyStream which is proprietary to Worden (it's in light blue) and my 3C indicator in orange.  Don't tell Don, but I think 3C still works better and I think the chart shows that if you look closely, but MoneyStream is powerful.

Here's the chart...

Here's my 2 cents-I like 3C better as it caught the sell off in January with a negative divergence right at the top at the end of 2009-MS didn't. While both show relative negative divergences from Oct. to the 2010 Q1 high I think 3C's is more pronounced. Both indicators are below price now which means they are in the worst divergence (negative/leading).

Now here are Don's comments tonight, be sure to check back for my analysis-(moving average is not displayed)

  " I think a 3-day chart does the best job of showing the position of the market here. For one thing we have a huge, violent plunge in MoneyStream consuming Q2 of this year, while the market price itself plunges. The market does not drop to the extent MoneyStream does, and the result is a pronounced leading divergence to the downside. TSV is also in a downside leading divergence. The price has so far fallen short of the 198-day MA, and it is now in a logical position to break to the downside and test the Q2-Q3 low. Should that low not hold, we can expect another couple of hundred points on the downside. (I used a 198-day MA, because that was as close to 200 as I could come to the 3-day MA as a multiple of the 50-day MA on the daily. Suffice it to say that 198 is close enough to 200, since 200 itself has no built-in magic.) Notice that this chart depicts the dry up in volume on the bounce. -DW"