9 replies to this topic

[hiker]

posted here at my TT blog this a.m. few here by my count at this TT site seem to be talking NOW about high odds of a trend change in the works. Dave, at TW, challenges traders in last week's chat session to prove that the bull market has changed to a bear market...no evidence of such YET. how does a trader recognize the early stages of a trend change, before the evidence is fully visible in the charts? I am taking a simple approach: 1. does price continue to fail to advance over time? I am looking for at least a weekly close above the SPX 1476 to 1488 level to negate the current weakening price pattern. 2. lower lows continue?...in this case, SPX 1432 level will need to be taken out on a closing basis, followed by 1370 major horizontal support (and near where long-term weekly t/l support resides on a 20+ year log chart). the 20-month moving average may measure the downside potential below 1370, if such a move occurs. I believe it is possible that traders are denying the potential trend change that may be in the works, and the potential double top for the SPX price pattern (2000 to 2007 price highs near 1555, where the most recent rally failed at resistance). one common subscription service this a.m. is citing a simple trend indicator as evidence the trend change may be in the works NOW: the configuration of the 8week ema and 20week ema for SPX, which have converged...a bearish cross of the two MA's is visible evidence of early stage trend change.

Edited by hiker, 13 August 2007 - 08:40 AM.

[NAV]

posted here at my TT blog this a.m.

few here by my count at this TT site seem to be talking NOW about high odds of a trend change in the works.

Dave, at TW, challenges traders in last week's chat session to prove that the bull market has changed to a bear market...no evidence of such YET.

how does a trader recognize the early stages of a trend change, before the evidence is fully visible in the charts?

I am taking a simple approach:

1. does price continue to fail to advance over time? I am looking for at least a weekly close above the SPX 1476 to 1488 level to negate the current weakening price pattern.

2. lower lows continue?...in this case, SPX 1432 level will need to be taken out on a closing basis, followed by 1370 major horizontal support (and near where long-term weekly t/l support resides on a 20+ year log chart).

the 20-month moving average may measure the downside potential below 1370, if such a move occurs.

I believe it is possible that traders are denying the potential trend change that may be in the works, and the potential double top for the SPX price pattern (2000 to 2007 price highs near 1555, where the most recent rally failed at resistance).

one common subscription service this a.m. is citing a simple trend indicator as evidence the trend change may be in the works NOW:

the configuration of the 8week ema and 20week ema for SPX, which have converged...a bearish cross of the two MA's is visible evidence of early stage trend change.

8/20 weekly EMA has crossed over 5 times since 2003. That means they would have been 5 times wrong in calling a top. Not a reliable methodology IMO.


SPX was a double top. What about DOW ? Something to think about...

[greenie]

good post hiker. i like how you keep things simple and objective. some key sectors like retail, bank, broker, reit are already in downtrend for a while.

[hiker]

the 2005 and 2006 bearish cross instances were later approx. bounded at the following lows by the 80week ema, FWIW...which at the moment is above the 1370 major horizontal.

[calmcookie]

Doesn't extreme volatility also point toward a trend change? I think we're heading into a bear trend. But I'm a tiny peanut player ... not even enough for airline snack ... so what do I know?

[hiker]

how is the current decline different than the Feb/March decline? 1. the prior decline experienced no weekly closes below the 34week ema...3 successive weekly closes below it now 2. the current 34week ema is nearly pointing down...it only flattened in the prior decline 3. the prior decline was during a narrower weekly BB width than the current decline CC - the weekly BB width measures the price range expansion to which you are referring , and has the largest BB width since 2005 on the weekly chart when price action is in correction mode

Edited by hiker, 13 August 2007 - 09:58 AM.

[NAV]

how is the current decline different than the Feb/March decline?

Largest monthly red candle since the rally begun in 2003.

[mss]

Cross overs are very useful. It all depends on the time frame you are watching. Below is an 8 year chart with ratio's indicating how different cross overs, at "0" line, suggest different trend changes per time reference. The 21/34 cross indicates a major trend time wise. Also EMAs in relationship to price.



mss

[traderpaul]

You can see the trend changes here......(neg ticks since May)...
http://stockcharts.com/c-sc/sc?s=$TICK&p=D&yr=1&mn=6&dy=0&i=p01541064450&r=3126.png

[ogm]

Yes, lets say the strong uptrend is over... the question is.. now what ? Does it mean this is going down like a rock ? No f-ing way. Trend can change from strongly up to slightly up, to flat.... trend change doesn't mean its going down non stop. Look at the EMA structurte on weekly.. We had a major momentum burst and now long term eMA's are spread pretty far apart. That means to me there will be a tonn of support and volatility. Even IF, and thats a huge IF this bull market is coming to an end, then we will make another major rally attempt to the old highs. At least one, maybe 2. As I said before, I wouldn't rush to a conclusion the bull market is over. Too much going on in the world, so that few subprime stinkers ruined the big party. But I do think that we'll be stuck in a wide consolidating type range here for quite a while.

Edited by ogm, 13 August 2007 - 10:32 AM.