Better Signals

Yesterday as mentioned there weren't very many good signals, you may recall I wanted to see the market pullback to see how 3C would react since we did violate the pennant (a possible head fake move), although not by much and we didn't close below it. In any case, on a head fake move you have to be able to confirm it as being such and not the real deal. In a situation like today with a strong break below that pennant (which is what traders are looking for and is what gives them price confirmation to enter positions), you want to see good signals like we saw on the GLD head fake trade or BIDU, AAPL (before earnings) and others. Yesterday's lack of signals was downright frustrating, again that's why I wanted to see that pullback but the Euro formed a consolidation and halted it.

Just browsing around today, the signals are much better, I'll probably be posting different ones as I run across them, but Tech has been of particular interest to me. Here's what Tech looks like today vs yesterday.

 XLK 1 min didn't show a trend yesterday, it gave good intraday signals, but no trend was apparent. Thus far today a trend is apparent. The leading divergence is much stronger than yesterday's relative divergences, this is why you don't see any intraday indications like yesterday, there's one thing dominating this time frame.

 The 3 min chart yesterday was similar, less detail, but it showed the positive divergence at the a.m. lows, confirmation through most of the afternoon and a negative divergence at the close. Now the 1 min chart's strength  is bleeding to the 3 min chart which is near vertical is a leading positive divergence.

The 5 min chart overall shows a few key events, the confirmation of the head fake move on the 29th, price pretty much in confirmation after that but most importantly the leading positive position that developed yesterday afternoon (although it wouldn't have been completed and wouldn't have looked the same yesterday) and today's refusal to move lower keeping tech in a leading positive position on a big move down.

Last night I was responding to an email and just passed along some things I've learned about the nature of the market over the years. Here are a few of my responses...

"It's always like that, the market moves and surprises the most people at one time and catches them off guard. I think I told you, from experience I've learned that however long I think it will take for a move to occur, double that and you are probably closer to correct."


"The market always swings in extremes, way further in both directions than you think is probable, kind of like the time element."


"Yeah, it'll probably come when you least expect it, this is an extreme market, it wasn't like this in March when we could predict a reversal to the day, but the market was reversing every 3 days."


Remember this was last night, I think we have the answer that I alluded to in my response...


"Almost nothing happened today, I was looking around everywhere and there just wasn't anything going on, days like this happen infrequently, we had one not too long ago, I think it was right before the AAPL earnings when there wasn't a good or bad signal anywhere, it's like Wall St. is in hibernation, I'm sure we'll find out why soon enough."