Introducing the ParTrend momentum oscillator

As you may have gathered by now, ParTrend measures momentum from the flatline condition of a moving average. Like any other indicator, it can be useful to look for extremes, channels, divergences and such. Here's an example of my ParTrend momo chart. For this example proofing, I've chosen what I refer to as "23.6%" par-trend slope reference for the "flatline" (FL) price. I'm looking at the 20ma for this example. Note that "flatline" also means "straightline" or "tilted flatline", as the fictitious pricing inside the blue box at the right side of the chart demonstrates. Those last 20 prices are a perfect fractal of the previous 20 prices, and they are equidistant on a percentage basis from the FL price. Also notice the encircled areas... when price (BLACK) touches flatline price (THIN PURPLE), momentum (DASHED RED) goes to 1.00. The "1.00" level is where this moving average would flatline (actually in this case, the flatline would be tilted downward as shown by the (THICK PURPLE) 20ma line. "1.05" would mean that closing price is 1.05 times the moving average flatline price, "0.95" would mean that closing price is 0.95 times the moving average flatline price. This simply converts my Stockcharts ParTrend charting into a more familiar, standard-format oscillator chart. Here's a quick TA assessment of this chart... the pink lines show a positive momo divergence within a negative momo channel for the 20ma. Also, even at a perfect 23.6% par-trend as I have shown for the next 20 days, the (+) divergence remains intact (see the straight/horizontal red dashed line). This is poweful short-term medicine administered to a very sick patient, as you'll see in the last chart.



In the following charts, I'm looking at momentum summations of 1 thru 50 day and 1 thru 200 day moving averages. Rather than show you 50 or 200 individual charts, why not just summarize them in a single chart? Presto! in the ParTrend charts below, equal weighted sums of momentums for each and every individual daily moving average within the given time frame is compiled into a running summation line. Here's ParTrend moving average momo summarized for 1 thru 50 days.



I think there's a point of interest here in comparison with 1990, what with the similar (+) divergence formations. However, the 2008 momentum "bottom" (so far) is higher than 1990.



That is, "bottomed" higher for the 1 thru 50 range (at 0.91 vs. 0.875). Stepping way back with a summary of 1ma thru 200ma momentums, we are in fact at the same momentum level by the 200ma summation measure. BTW, no positive divergence here even on a very short-term level. This one "bottomed" on 3/10/08.



Interpretation: Fed intervention has the shorter term momo compensating for 2008's weaker longer term momo. No suprise there, I guess. Here's what they're fighting...


The 233ema (BLUE LINE) is of the 1-50 summation (the same one with the current short-term positive divergences) and is at mid-channel right now. Guess what? That 233ema channel begins its definition in 1990. Hmmmm. Bust below that green line (1990 200day summation level) and the next thing you know, the bottom will be thinking pink. Bounce or bust = do or die. EOQ grand finale.

And that's my take on the importance of Monday. Trend collides with support collides with short term (+) divergence collides with long term (-) divergence. The very core of the coming market direction is right here, right now. Good trading to you.

Spielchekr,

Excellent piece of work. Am I correct that what your work is indicating is that if we rally from here that it could be a significant rally. Or, if we sell off from here that we could see much lower prices. In other words, we could be at a significant turning point one way or the other. This may be a dumb question, but I'm still learning.

Thanks in advance.

UBW

Nice work. The move out of the "box" is going to big large in my opinion when it happens. I hate to see this thread get lost, maybe ADMIN will PIN it our move it to Swing Waves. mss

This should give some measure of the positive divergence. That price line is static, meaning that a close on that line on the given day (regardless of all prior closing prices) achieves the threshold to pull the indicator line down to the January low for the indicator line.



underabigw: Big inflection point here is what I think I see. Opposite crosscurrents between completely different time frames. 1990 was perhaps the most shallow and brief of bonifide bear markets, so its benchmarks as a waypoint into deep bear terrirory are important. But keep this in mind. If all of the technical damage is perhaps already over with, what harm would it be now for Da Beneficiaries to drop price (say halfway) into the positive divergence void, to accumulate more before attending to the Fed's intended outcome?

mss: I might also refer to these as "moving average breadths".

excellent charts and excellent point - Da Beneficiaries to drop price (say halfway) into the positive divergence void, to accumulate more before attending to the Fed's intended outcome? the wolfe wave we were talking about now projects down around 1200...i suggested 1280 last week as I felt the fed injections would make the lower thrust fail. At this point, I am neutral.