(trivia question, are these teams named for those guys in the Chi-town trading pits?)On 10/10, I pointed out this fib barrier:
The Fibonacci barrier for total slope pitch deviations, DJI since 1929
On 10/19, I revealed quite a bit more about that barrier day: the test of a rare, coordinated price convergence for the 61.8% barriers of moving average summations for 20days/50days/100days/200days:
The "Good" Crash
Here is where those charts stand now.
I think the majority of technicians tend to look for divergences between tails/wicks and indicators that are computed from the candle body (candle closing price). That's always seemed to me like comparing apples to oranges, and if you happen to look these charts that way, you will not see the divergences. But I'll leave it up to you to view them as you prefer.
Oscillator charts like those above are fine and dandy for getting a sense of diverging action, but they don't give me enough information. I want to know the upcoming prices where benchmark lines will be hit by the indicator, and what the price structure actually looks like. So in this weekend issue, I'm going to show them to you this one time.
In the chart below, keep in mind that these horizontal lines fluctuate from one day to the next. In other words, this chart is good for Monday only. The blue horizontals show the prices where 61.8% momentum retracement of the 1929 crash exist for Monday. In decending and respective order, they are for the moving average slope summations 200, 100, 50 and 20. The gold horizontals show where 38.2% momentum retracement of the 1929 crash exist for Monday. Once again, in decending and respective order, they are for the moving average slope summations 200, 100, 50 and 20. What you can see here is the strata of two fib levels (61.8% and 38.2%) for the four conventional time frames (the 3 base-runners and the batter if you didn't get that by now). The rest are the other fib levels for moving average summations caught in the scuffle. And for the ultra-bears, I've taken the horizontals all the way down to where the highest 100% retracement of 1929 momentum resides: the 20-day moving average summation at 6535... too low to show on this chart, but now you know where 1929 crash redux lives on Monday.
Consider for a moment that exactly two Fridays ago, the blue horizontals for 20/50/100/200 were all bunched together at essentially the same price, which was for all intents and purposes the price of that Friday's close. So here we are two Fridays later, and price is back to where it was (well, less than 1% lower anyway). So why are certain indicators ascending (including mine)? Because the lower strata (blue horizontals) has decompressed and expanded downward. Sometimes this phenomenon manifests itself as a consolidation before a continued move. Other times, it manifests itself as a confirmation of an inflection point (change from convex to concave or visa versa) on a curve. This is perhaps a very good point in time and price to ponder the implications of rejecting one circumstance to accept the other.
So let's zoom in a little for a better look (note: the zoomed chart drops the lowest blue horizontal due to sizing format). A retest of that 61.8% unified barrier (20/50/100/200) from two weeks ago now requires price to stretch all the way down to the last bear market lows to take them all out. Two weeks ago, it could have taken them all out in one fell swoop. Had it done so then, what would your expectations have been for the outcome? Now that those cards have been reshuffled and we have a new hand, how does it compare to the last one? Notice the recognition of this particular strata transition zone in the final candle by the tests it made. And keep in mind that until each blue horizontal gets taken out, there is a price divergence for the respective time period each one represents. Of course, the final verdict is left to the jury, and it has adjourned until Monday. But one thing is very clear to me here... we have arrived at a spectacular pivot point. Some will accept it, others will reject it. I can't say who will win, because I don't have divine info. But newly enriched bears have fresh coffers of money. And sidelined cash has had its buying power re-inflated to a level well above that of the market double-top. Two well-equipped armies. Interesting times.
And again I repeat, this chart represents Monday only. My summations include all moving averages within a time period, so these lines expand and contract (they are dynamic) from one day to the next. The exact prices become obsolete for Tuesday (consider the expansion over the past two weeks to understand what I mean). And in closing, even if you think that my particular oscillators are bullcrap (or bearcrap if you prefer), you may now at least gained another perspective of how your typical oscillators work. My intent is to present the situation, your job is to choose. Best of trading to you.
