4 replies to this topic

[ogm]

There are a couple important pieces of information to get from this chart.

1. NAAD is forming a bullish wedge with positive divergence on MACD.
2. If since the start of this bull market you only took MACD crossover signals after significant NAAD declines and exited when momentum started slowing down... here if what you'd get.
3. MACD has just crossed over and is showing no signs of slowdown just yet. It is what it is. You can speculate as much as you want that its about to roll over any day now for whatever reason, but it will all be just speculation. The technical signal is on BUY. And considering the falling wedge with bullish divergence it maybe hazardous for your own health and wallet to countertrend it.

Edited by ogm, 08 October 2007 - 06:41 PM.

[denleo]

Dude, how do you find time to post charts between buy orders? You could have bought more instead of showing something to bears. Don't show them anything. They will give us money anyway. And not because we want them to; because this is thier destiny. Denleo

[Echo]

NAAD does what secondary stocks do on average, go down.

If you look, the cumulative naad was basically at the same level at the July 07 nasdaq highs as it was at the March 07 lows while the nasdaq was considerably higher! You would have missed the entire March-July rally if you relied solely on this metric.

The most logical deduction one can make about the NAAD at this point in time based on the internals and the McSum is to expect a snapback to the 5% trend (40ema) or the 10% trend (20ema) before making an assault on the 1% trend (200ema).

http://stockcharts.com/c-sc/sc?s=$NAAD&p=D&yr=1&mn=6&dy=0&i=p18150039417&r=8187.png



Echo

[ogm]

Or you can look at it differently. Select only the periods when MACD on the A/D is going up. Thats basicaly the point of that chart. Has nothing to do with what A/D does the rest of the time. If you were long the market during the times A/D had improving momentum.. as in improving internals.. you would've made money. Will it pull back here ? could be could be not. Doesn't matter. MACD setup says it will bounce up from whatever pullback there may be. A logical conclusion IMO here is ... buy secondary stocks. Nasdaq small caps. Seems like a very counterintuitive trade here and doesn't mean that any junk with 4 letter symbol will go up. But selectively they should start picking up steam shortly.

Edited by ogm, 08 October 2007 - 08:19 PM.

[Echo]

I don't disagree and your point is well taken. Secondaries do well when $NAUD is in an uptrend. Secondaries do best when $NAAD is also in an uptrend. Higher highs also in store for RUT. Echo

Edited by Echo, 08 October 2007 - 11:52 PM.