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Sunday, August 16, 2009

Sunday morning observations

Not sure if that is any better then Monday morning quarterbacking. I brought this one out of my vault of super-secret and private stash of charts that only Anchak has laid eyes on. This one came about from the both of us playing with different indicators and tweaking them to get the most out of them. The one that caught my eye this morning was the RSI, adjusted just right, it has been a good and reliable indicator for showing trend changes in the SPX, by following the changes of trends in itself. Unbelievable how over-bought it has gotten in the last month, and now showing a definite trend change to the down side. When you couple the RSI with the MACD, and the Histogram, things are starting to point to a change coming soon, if it has not already changed. The Histogram has been in a negative divergence for the last month, and has its first red shoot, breaking below zero last week, while at the same time the MACD has also turned to the downside and crossed over, peaking last week. The MACD, a lagging indicator (used together with the histogram it can be used as a leading indicator) also showing a change is taking place. I am not ready to officially call that the top, I will leave it to you to make your own decisions. I am just sharing my Sunday morning thoughts with you. Hope you are enjoying your week-end!!
PS.-I moved this chart to the public list if you are interested in following it :)

2 comments:

  1. well done!
    fwiw, for last few weeks, I been expecting the S&P to trade in range for Aug between 980-1020, and if it didnt break 1018 after the FOMC meet, figured it would do so for another 2 weeks. We should expect S&P to extend the recent range a little lower below 990 before resuming the uptrend in early Sep & Oct over 1018 to 1050.
    IMVHO, it is the only thing that makes sense when taking into account the longer term trends. Therefore, all we are seeing here is a bunch of squiggles below 1018 before it goes higher next month.

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  2. Jman- That scenario would also burn off that over-bought condition.

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