Here we go, the big picture. The divergence and the possibility of a persistent negative divergence which we have only seen in the futures and only a couple of times is what really got me thinking about this and it's quite interesting, I think it also may be illustrative of what trend #2 may actually look like. Again just like with trend #1, take whatever your wildest thoughts within reason are for a target and then apply a multiplier as the market always moves like a pendulum, way too far one way and then way too far the other. Remember, it's an emotional creature and those pulling the levers know that.
SPY Example
OK, using the 15 min chart (a very useful chart in a number of ways), we have:
A) The June 4th bottom that we called in advance, it was a head fake low below a triangle, note the positive divergence as well, which os part of the reason we could call it and buy the lows.
B) The trend higher is confirmed as 3C makes higher highs and higher lows with price.
C) This was one of the hardest calls of 2012 because as many people reminded me, "Don't fight the F_E_D", but we had a negative divergence at the 11/13 announcement of QE3 or 4 (depending on how you want to count)
D) A positive divergence going in to the 11/16 lows which started a new cycle (the 4 stages)
E) The prediction of a pop to the upside, volatile, but short in duration COMPARED to Trend 2's signals. Here we have the worst leading negative divergence in well over a year because the Q1 2012 negative divergence wasn't this big.
So we look for the longer charts to go negative and then the shorter charts to come around for timing, the divergences should migrate out to longer timeframes, the longer the timeframe, the stronger the underlying action.
Looking at a 1 min chart, I'm not impressed or excited, I see yesterday's clear negative in to higher prices and the failure, I see choppiness today, but in a leading negative position.
Zoom in that same 1 min chart so we are looking at intraday moves only, there's a negative on the open and a slight one recently, the rest of the day is in line, no positives, no huge negatives.
No Big deal, maybe this does look a little like a weekly op-ex pin as they tend to be right around the previous day's range and have only slight adjustments throughout the day, then again, maybe not, it doesn't really matter to me.
This however does. I already know that the trend in most of these timeframes is at a deep leading negative divergence, but what I'm looking for is the short term charts to go negative and to get worse until they more or less meet up with the long term chart's indications. A 10 min chart lading negative is interesting to me.
A 15 min chart-especially in the price area we are in (near SPX 1500-we were there yesterday) leading negative is interesting to me.
The 30 min chart is not as sharp, but that's because the divergence is migrating from short to long timeframes so this leading negative looks exactly as it should and is interesting to me.
Here are some others.... Sorry about the randomness, I'm trying to work fast.
DIA 10
DIA 15
DIA 60? Yep
QQQ 15
QQQ 30- already has the head fake move built in (For newer member's we almost always see a head fake move of some sort just before a reversal in trend, there are lot of reasons why-email me and I'll send you my articles on why).
QQQ 60 min?!? Yep
Energy 15-remember I didn't like shorting this sector a few days ago, it's changing.
Financials 15
Tech 10
Tech 15
3x long financials-15 m (just because I like the 3x short-FAZ).
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