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The Chill Pill


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#1 Harapa

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Posted 11 October 2019 - 08:05 PM

When SPY makes a new high while indicators are lagging, watch out below...watch is in effect...

 

VXX to all time low...nearly guaranteed...what a safety net?


My comments are for entertainment/educational purpose only. All posted trades are fake (aka. paper) trades.


#2 Waver

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Posted 11 October 2019 - 08:40 PM

SPY hasnt made a new high as of yet.

The watch is in effect after the new high, if it reaches it?

#3 Harapa

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Posted 11 October 2019 - 08:51 PM

True, but we are so close to the top so it is important to be aware of it.

Let's say on Monday/Tuesday SPY makes a ATH, in all likelihood indicators will manifest a divergence. For the past year+ SPX looses 2-3% in a blink...So if you are not conditioned it is very difficult to make money on the downside or take a defense.


Edited by Harapa, 11 October 2019 - 08:57 PM.

My comments are for entertainment/educational purpose only. All posted trades are fake (aka. paper) trades.


#4 Waver

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Posted 11 October 2019 - 09:17 PM

I do agree the price/momentum bearish divergences are huge, especially on a weekly basis.

The real huge positive is the breadth is super strong. Making new all time highs while price is not.

This is a big positive, possibly offsetting the price/momentum bearish divergences.

#5 Harapa

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Posted 11 October 2019 - 09:47 PM

The real huge positive is the breadth is super strong

This is a big positive, possibly offsetting the price/momentum bearish divergences.

AD line made a new ATH before April 2010 flash crash, Aug 2011 mini crash & Jan 2018 mini crash (to name the few)...AD line is not a good timing tool. Actually most corrections ensue from a high AD line.

 

BTW, 10% Model uses AD and UDV as a variable.


Edited by Harapa, 11 October 2019 - 09:49 PM.

My comments are for entertainment/educational purpose only. All posted trades are fake (aka. paper) trades.


#6 Waver

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Posted 12 October 2019 - 06:02 AM

Those are rare events, but yea they do happen.

In 2010 and in 2018 the market price was really trending higher and higher along with the AD line going higher. However the final highs in price happen a few days After the all time high in cumulative breadth. Technically some bearish breath divergence in the cumulative breadth.

In August 2011, cumulative breadth made an all time high when the market price made a secondary price high. Then it crashed. Yea this right here was a definite bullish setup (at least imo bullish) that turned out bearish.

I dont know if context matters?
In the current market environment there has been a long 18 month price consolidation while the cumulative breadth continues higher and higher. This is in contrast to 2010 and in 2018 where price and breadth moved up at the same time and fell at the same time (price fell a few days after a cumulative breadth bearish divergence). Price was making more of a blow off top? The results of blow off tops usually do end badly...

Maybe during this price consolidation of 18 months, the strong moves upward in breadth as price has stayed flat is a sign of accumulation?

In 1998-2000 and in 2007, price moved higher while cumulative breadth moved lower. This was more of definite sign of distribution.

Are your indicators (10% model) in the same position as in August 2011? Same as in 2010 and 2018?

At the end of the day, the market will do what the market will do. All of these indicators are just trying to produce some sort of odds/path of least resistance next steps the market Should take.

#7 Harapa

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Posted 12 October 2019 - 06:14 AM

Are your indicators (10% model) in the same position as in August 2011? Same as in 2010 and 2018?
All of these indicators are just trying to produce some sort of odds/path of least resistance next steps the market Should take.

Entire history (since 2004) of the set up is posted for its inspection. Data since 2013 (first published) should be considered out of the box.

True, all forms of TA are probability analysis.


Edited by Harapa, 12 October 2019 - 06:18 AM.

My comments are for entertainment/educational purpose only. All posted trades are fake (aka. paper) trades.


#8 Harapa

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Posted 12 October 2019 - 06:40 AM

This is a very good ( & educational) post on AD line shenanigans.

 

 

In Conclusion...So if you are expecting the A-D line to signal weakness in stocks ahead of a decline in stocks of 5-10%, you're in for a bad surprise

And I agree


Edited by Harapa, 12 October 2019 - 06:42 AM.

My comments are for entertainment/educational purpose only. All posted trades are fake (aka. paper) trades.


#9 Waver

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Posted 12 October 2019 - 12:56 PM

Thanks for the read. Very informative.

Essentially you dont think a major crash or bear market is coming but there is a potential watch for a 5%-10% correction even with cumulative breadth at all time highs?

This I am open to as well, especially since it has been happening for almost the last 22 months.

Not everything I do is based on breadth but yea it is definitely part of it.
Maybe more than your way of looking at things.

Just think it is time for the break out to finally take hold based on price pattern, breadth, daily momentum resetting and cycle lows tend to happen around low.

But yea no doubt, just like the last 22 months, a ~5%+ can happen yet again.

#10 opinionated

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Posted 12 October 2019 - 11:13 PM

It has started now...  I think we have a 5-7% correction in the next 2.5 weeks. I see 2825 in this time frame...

 

Then the rally begins....

 

my 2 cents