4 replies to this topic

[IYB]

Just a couple of paragraphs from this weekend's report:

This last week was absolutely critical for the market trend. On three occasions, during the first hour of each Tuesday, Wednesday and Friday, the market came to the very edge of the abyss at 1342 -1345 with frenetic trading and palpable fear and instability, and each time had the opportunity to dive headlong into that abyss. But three times it got there, starred into that abyss... then sharply and decidedly reversed upward, each successive time with stronger thrust. And in the process of doing so, over the course of this critical week markets set up a nearly universal set of positive divergences, stochastic buy signals -- AND most importantly, a solid Hourly Trend Tracker BUY signal.

Let's look at some of those divergences, starting with NYMO and NAMO. ... These are all marked below with up arrows: We had talked about this in our May 9, Caution Flags and Contradictions article, but at that time the abyss still loomed large, and most importantly our HTT (hourly) remained then on SELL MODE along with the Seven Sentinels (daily). But the abyss was averted and the HTT's went to BUY mode Friday:


http://stockcharts.com/c-sc/sc?s=$NYMO&p=D&yr=0&mn=5&dy=0&i=p85775040488&a=225436412&r=862.png

Besides these universal positive divergences this week, we note universal stochastic buy signals as well. Just to display a few:

http://stockcharts.com/c-sc/sc?s=$NDX&p=D&yr=0&mn=4&dy=10&i=p93430674977&a=225436417&r=7411.png

But all of the positive divergences and stochastic buys in the world would not convince us that the market were going up if the TREND were still indicating DOWN as it was this last Monday, Tuesday, Wednesday and Thursday. But Friday something extremely important happened. The market defied the abyss for the third time in a week, and the TREND turned positive Friday after that third encounter. We got a valid Hourly Trend Tracker Buy Signal....We will close our remaining short at the open Monday and remain flat until either we get the next HTT sell within SSSS mode for the Intermediate term, at which time we will put on shorts again, OR until the Seven Sentinels themselves catch up to the HTT's and go to Buy mode, in which case of course, we'll go long.

Happy Mother's Day and good trading all, Don

[andiron]

OTOH market may gap up 100+ dow pts on monday

[Lee48]

The bottom in now is still a coin flip. There was no real fear in this move down. It's just holding at support, just like it did in July 2011 when the market promptly started tanking/crashing at more oversold RSI levels than we have right now.

On the other hand this also looks like July 2010 when we would make the low mid next wk per the wkly NYSI. Looks like next wk will be the key for a short term rally or more downside.

http://stockcharts.com/h-sc/ui?s=$NYS...id=p56443677103

[IYB]

Just a quick follow up- we did not cover at open, but did sell TZA at 20.8 at 10:30 taking short position now to just 25%. We continue to see positive divergences in the short term and our hourly trend tracker is on buy mode overall....all within the context, however, of an IT downtrend as we've detailed here for many weeks. Good trading, D

Edited by IYB, 14 May 2012 - 10:06 AM.

[IYB]

Just a quick follow up- we did not cover at open, but did sell TZA at 20.8 at 10:30 taking short position now to just 25%. We continue to see positive divergences in the short term and our hourly trend tracker is on buy mode overall....all within the context, however, of an IT downtrend as we've detailed here for many weeks. Good trading, D

One more follow-up. We remain now 25% short via SDS (equivalent to 50% short overall) as market closes Monday. Looking to flatten very soon as we see ST bottoming...

Edited by IYB, 14 May 2012 - 02:57 PM.