"works most of the time"....much too vague....how much is most of the time......the old 50% manage the trade stuff is a beginner's trap....very few traders have the emotional to daytrade the low percentage coin flip...1/2 of time is a sick little system not even qualifying as a system for me...get 80% min and u have a chance.....takes years......emini daytrading speaking only....all emini's.........no offense intended just facts that if u don't know that u will if u trade long enough......
timsk
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Common Ground . . .
Split,
"It comes down to the fact that any popular way of calculating how the markets are going to react will be acted upon, not only by those that believe in them, but by those who do not believe in them but do believe that there is an advantage to be gained by knowing what the majority are going to do. This not only refers to pivot points, but to every other pattern under the sun."
Thank you for adding this, I couldn't agree more and should, perhaps, have made this point in my post. In fact, I'd go so far as to say that the charting packages that most of us enjoy these days allow us to add any number of trend lines, S/R lines, demand / supply lines and so on and so forth. All of them come under the category that you describe. Clearly, if used judiciously, they can be a valuable aid to a trader, but if too much significance is placed upon them and if they are adhered to slavishly, then the consequences are likely to be dire.
Mr_Nasdaq,
I think we too are in broad agreement. Certainly, I was not criticising your use of pivots but, equally, I am aware that some members may read your comments and think you're leading them to the Holy Grail. Your follow up post makes it clear that this is not the case. Thanks for the tip about Douglas. Curiously, of the 'biggies' in the trading world, he's one that i've not yet read. However, he's been on my 'wish list' at Amazon for some time now!
Tim.
Split,
"It comes down to the fact that any popular way of calculating how the markets are going to react will be acted upon, not only by those that believe in them, but by those who do not believe in them but do believe that there is an advantage to be gained by knowing what the majority are going to do. This not only refers to pivot points, but to every other pattern under the sun."
Thank you for adding this, I couldn't agree more and should, perhaps, have made this point in my post. In fact, I'd go so far as to say that the charting packages that most of us enjoy these days allow us to add any number of trend lines, S/R lines, demand / supply lines and so on and so forth. All of them come under the category that you describe. Clearly, if used judiciously, they can be a valuable aid to a trader, but if too much significance is placed upon them and if they are adhered to slavishly, then the consequences are likely to be dire.
Mr_Nasdaq,
I think we too are in broad agreement. Certainly, I was not criticising your use of pivots but, equally, I am aware that some members may read your comments and think you're leading them to the Holy Grail. Your follow up post makes it clear that this is not the case. Thanks for the tip about Douglas. Curiously, of the 'biggies' in the trading world, he's one that i've not yet read. However, he's been on my 'wish list' at Amazon for some time now!
Tim.
Symmetrical Triangle (Follow Up to Post #8)
The QQQQ performed "according to Hoyle" on Friday by continuing its rally up and out of the Symmetrical Triangle, a "continuation pattern", that had formed on the 5-Minute Chart.
Only an area of Gathering Resistance was able to stop its progress.
Friday's area of "Gathering Resistance" was composed of the following 3 individual aspects of Resistance:
1) $39.14 - the late June peak
2) $39.16 - the Daily "R2" Pivot Point
3) $39.24 - the Weekly "R2" Pivot Point
The QQQQ penetrated Friday's area of "Gathering Resistance" twice and pulled back both times:
This Post is a follow up to Post #8: http://www.trade2win.com/boards/showpost.php?p=273516&postcount=8
The QQQQ performed "according to Hoyle" on Friday by continuing its rally up and out of the Symmetrical Triangle, a "continuation pattern", that had formed on the 5-Minute Chart.
Only an area of Gathering Resistance was able to stop its progress.
Friday's area of "Gathering Resistance" was composed of the following 3 individual aspects of Resistance:
1) $39.14 - the late June peak
2) $39.16 - the Daily "R2" Pivot Point
3) $39.24 - the Weekly "R2" Pivot Point
The QQQQ penetrated Friday's area of "Gathering Resistance" twice and pulled back both times:
This Post is a follow up to Post #8: http://www.trade2win.com/boards/showpost.php?p=273516&postcount=8
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QQQQ - Observations of the Daily Chart...
For the coming week, the QQQQ still faces an important test of Resistance at its late June peak ($39.14). Peaks that form on the way down, serve as Resistance on the way back up.
If the QQQQ can capture that Resistance, however, then a test of significant Resistance in the vicinity of its early June peak ($39.97) comes into view (see the gray dashed line on the chart below).
Those who are interested in "Elliot Wave Theory" formations, will notice that a "5-Wave-Up" formation has taken shape on the Daily Chart. If the 5th-Wave-Up grows to match the length of the 1st-Wave-Up, as it sometimes does, then the QQQQ will find itself at $40.02.
It must be noted, however, that the only requirement for a valid 5th-Wave-Up is that it rises higher than the top of the 3rd-Wave-Up. Since the 3rd-wave-Up topped out at $38.98, that requirement has already been met.
So, the "5-Wave-Up" Formation may top out in the vicinity of its late June peak ($39.14) or in the vicinity of its early June peak ($39.97) or somewhere in between.
The only thing that can be said at this stage with any degree of certainty is that the Summer Rally is nearer its end that its beginning.
That's because a correction of some degree invariably follows the completion of a "5-Wave-Up" formation. Since the QQQQ is entering the seasonally weak months of September and October, we can count on a nice one.
For the coming week, the QQQQ still faces an important test of Resistance at its late June peak ($39.14). Peaks that form on the way down, serve as Resistance on the way back up.
If the QQQQ can capture that Resistance, however, then a test of significant Resistance in the vicinity of its early June peak ($39.97) comes into view (see the gray dashed line on the chart below).
Those who are interested in "Elliot Wave Theory" formations, will notice that a "5-Wave-Up" formation has taken shape on the Daily Chart. If the 5th-Wave-Up grows to match the length of the 1st-Wave-Up, as it sometimes does, then the QQQQ will find itself at $40.02.
It must be noted, however, that the only requirement for a valid 5th-Wave-Up is that it rises higher than the top of the 3rd-Wave-Up. Since the 3rd-wave-Up topped out at $38.98, that requirement has already been met.
So, the "5-Wave-Up" Formation may top out in the vicinity of its late June peak ($39.14) or in the vicinity of its early June peak ($39.97) or somewhere in between.
The only thing that can be said at this stage with any degree of certainty is that the Summer Rally is nearer its end that its beginning.
That's because a correction of some degree invariably follows the completion of a "5-Wave-Up" formation. Since the QQQQ is entering the seasonally weak months of September and October, we can count on a nice one.
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Definition of a "Swing Trade"...
A "Swing" Trade is defined as a trip from "Gathering Resistance" to "Gathering Support" or vise-versa.
Tuesday's 4-member area of "Gathering Support" (Buy Trigger) is composed of:
1) $38.87 - the previous month's Close
2) $38.82 - the Weekly Pivot
3) $38.75 - the Daily "S2" Pivot Point
4) $38.70 - the "20-Week Moving Average"
These 4 individual aspects of Support going into Tuesday's trade form an area of concentrated Support or "Gathering Support" because each one resides no more than 10 cents from its neighbor:
A "Swing" Trade is defined as a trip from "Gathering Resistance" to "Gathering Support" or vise-versa.
Tuesday's 4-member area of "Gathering Support" (Buy Trigger) is composed of:
1) $38.87 - the previous month's Close
2) $38.82 - the Weekly Pivot
3) $38.75 - the Daily "S2" Pivot Point
4) $38.70 - the "20-Week Moving Average"
These 4 individual aspects of Support going into Tuesday's trade form an area of concentrated Support or "Gathering Support" because each one resides no more than 10 cents from its neighbor:
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Resistance, when captured, becomes Support (Buy Trigger)
A principle of Support & Resistance states, "Gathering Resistance, when captured by a rising price, becomes Gathering Support".
AAPL's 5-Minute Chart demonstrates that principle in action:
1) AAPL rose to Tuesday's area of "Gathering Resistance" ($70 on the nose) and poked at it for an hour between noon and 1:00pm (EST).
2) When AAPL finally broke through that line of Resistance, it was a warning to those holding short positions.
3) A second warning to those holding short positions came when AAPL, having captured Resistance at $70, pulled back to find Support there.
4) "Gathering Resistance" at $70 had been transformed into "Gathering Support" by its capture and "Gathering Support" is a Buy Trigger.
A principle of Support & Resistance states, "Gathering Resistance, when captured by a rising price, becomes Gathering Support".
AAPL's 5-Minute Chart demonstrates that principle in action:
1) AAPL rose to Tuesday's area of "Gathering Resistance" ($70 on the nose) and poked at it for an hour between noon and 1:00pm (EST).
2) When AAPL finally broke through that line of Resistance, it was a warning to those holding short positions.
3) A second warning to those holding short positions came when AAPL, having captured Resistance at $70, pulled back to find Support there.
4) "Gathering Resistance" at $70 had been transformed into "Gathering Support" by its capture and "Gathering Support" is a Buy Trigger.
Did the Summer Rally peak on Tuesday? ...
The pull back from the peak of the Summer Rally (foreshadowed in Post #25) may have begun on Wednesday.
The QQQQ opened weak on Wednesday and continued down into the close on increasing volume. Only Wednesday's area of "Gathering Support" between $38.57 and $38.63 was able to break its fall.
The following 5-Minute Chart shows the QQQQ falling to Wednesday's area of "Gathering Support" but producing no meaningful bounce.
Wednesday's area of "Gathering Support" (Buy Trigger) was composed of:
1) $38.63 - the Daily "S2" Pivot Point
2) $38.57 - the "20-Month Moving Average"
The pull back from the peak of the Summer Rally (foreshadowed in Post #25) may have begun on Wednesday.
The QQQQ opened weak on Wednesday and continued down into the close on increasing volume. Only Wednesday's area of "Gathering Support" between $38.57 and $38.63 was able to break its fall.
The following 5-Minute Chart shows the QQQQ falling to Wednesday's area of "Gathering Support" but producing no meaningful bounce.
Wednesday's area of "Gathering Support" (Buy Trigger) was composed of:
1) $38.63 - the Daily "S2" Pivot Point
2) $38.57 - the "20-Month Moving Average"
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QQQQ - The Coming Week...
The QQQQ delivered a trend-day-up on Friday. Note, however, that the up trend occurred on lighter volume than did the downdraft of Wednesday and Thursday:
For Monday, a defensive stance is best for the following reasons:
1) The light volume that accompanied Friday's rally detracts from that rally and suggests that the rally may very well have been a trap for uninformed and unwary bulls.
2) The MACD Indicator on the Daily Chart issued a short-term "Sell" Signal on Friday when its thick black line crossed below the thin red line (This can better be seen through the MACD Histogram bars in that Friday's bar crossed below the 0-Line.)
3) Monday is the beginning of Options Expiration Week. Volatility increases, as a rule, during Options Expiration Week.
4) September is historically one of the weakest months for the market.
September, as we have already noted, is a month in which volume begins to increase as traders return to their stations from summer vacation. Declining prices on increasing volume, as the QQQQ experienced on Wednesday and Thursday, is an additional warning sign that the overall market trend has changed from up to down.
The QQQQ delivered a trend-day-up on Friday. Note, however, that the up trend occurred on lighter volume than did the downdraft of Wednesday and Thursday:
For Monday, a defensive stance is best for the following reasons:
1) The light volume that accompanied Friday's rally detracts from that rally and suggests that the rally may very well have been a trap for uninformed and unwary bulls.
2) The MACD Indicator on the Daily Chart issued a short-term "Sell" Signal on Friday when its thick black line crossed below the thin red line (This can better be seen through the MACD Histogram bars in that Friday's bar crossed below the 0-Line.)
3) Monday is the beginning of Options Expiration Week. Volatility increases, as a rule, during Options Expiration Week.
4) September is historically one of the weakest months for the market.
September, as we have already noted, is a month in which volume begins to increase as traders return to their stations from summer vacation. Declining prices on increasing volume, as the QQQQ experienced on Wednesday and Thursday, is an additional warning sign that the overall market trend has changed from up to down.
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timsk
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Hi Mr_Nasdaq,Mr_Nasdaq said:
You may be correct in your assessment of the QQQQ, but I'm not convinced by the implied logic of your comments quoted above. If we examine the 'downdraft' (nice phrase, BTW) on Wednesday and Thursday, it suggests a rather different story to me than it does to you!
Wednesday is clearly in the negative, but the H/L range is average and the volume, although on the rise, is still below the MA. Nothing really exceptional about Wednesday. If Wednesday's P/V action was to preface an assertive move down, we might expect to see strong follow through on Thursday, with a larger bear candle on higher volume, testing support at $38.00. This didn't happen. The volume, although bigger than Wednesday, isn't all connected to downward pressure. Due to the sizeable upper and lower shadows, it's reasonable to attribute a hefty proportion of the volume to the bulls pushing the price up at various times in the day. If we could draw a 'net' volume bar to reflect this, it would be much smaller than Wednesday's. In light of this, Friday's volume is, by comparison, very positive indeed. True, Friday's candle isn't large but, importantly, price never really tested Thursday's close, let alone the low (thereby creating a new Higher swing low).
On balance, I would describe this chart as being pretty bullish. The green 20 day MA describes the trend throughout the chart very well and, clearly, it is very positive. Many swing traders will be looking to go long on the breach of Friday's high around $38.90. The more conservative will wait for the breach of the round number at $39.00. If this occurs, I would look for a big increase in volume on a par with the early August levels and for price to test resistance at Tuesday's higher swing high at $39.50. The next obvious area of resistance for price to attack is the decade number at $40.00 which roughly coincides with the 200 day MA.
Tim.
The Rising "20-Day Moving Average"
timsk,
Your points on volume and the "20-Day Moving Average" are well taken.
I especially like your observation on the "20-Day Moving Average". The QQQQ found Support there on Thursday and again on Friday. As long as Support continues at that line, traders must view the recent pull back in the QQQQ as a short-term correction only.
It's difficult to say for sure, of course, what the QQQQ is going to do next week. It is, after all, Options Expiration Week, a week in which the market ordinarily experiences increased volatitility, both to the upside and to the downside.
I notice that you did not address the bearish looking MACD Indicator or the fact that September is historically one of the market's weakest months.
It seems, then, that we may have a mixed bag going into Options Expiration Week.
*******
The trader who convinces himself that he knows with 100% certainty the next move of the market; that there is no way he can possibly be wrong; and that, therefore, he has no need to pre-define his risk by establishing a maximum amount that he is willing to lose on any one trade, more often than not has just dug his own grave.
The only thing that we as traders know for sure is the location of areas of Gathering Support (Buy Triggers) and Gathering Resistance (Sell Triggers) at which we can venture trades. (See Post #2 for the definition of Gathering Support and Gathering Resistance.
Gathering Resistance for the QQQQ going into Monday's trade comes in two parts:
Gathering Resistance I:
1) $38.85 - the Weekly Pivot
2) $38.87 - the Previous Month's Close
Gathering Resistance II:
1) $39.02 - the "20-Month Moving Average"
2) $39.03 - the Daily "R2" Pivot Point
3) $39.03 - the Previous Month's High
Gathering Resistance II is a more imposing area of Resistance than Gathering Resistance I.
Let's mark these areas on our 5-Minute Charts and observe what effect Gathering Resistnace has on the price action of the QQQQ.
timsk,
Your points on volume and the "20-Day Moving Average" are well taken.
I especially like your observation on the "20-Day Moving Average". The QQQQ found Support there on Thursday and again on Friday. As long as Support continues at that line, traders must view the recent pull back in the QQQQ as a short-term correction only.
It's difficult to say for sure, of course, what the QQQQ is going to do next week. It is, after all, Options Expiration Week, a week in which the market ordinarily experiences increased volatitility, both to the upside and to the downside.
I notice that you did not address the bearish looking MACD Indicator or the fact that September is historically one of the market's weakest months.
It seems, then, that we may have a mixed bag going into Options Expiration Week.
*******
The trader who convinces himself that he knows with 100% certainty the next move of the market; that there is no way he can possibly be wrong; and that, therefore, he has no need to pre-define his risk by establishing a maximum amount that he is willing to lose on any one trade, more often than not has just dug his own grave.
The only thing that we as traders know for sure is the location of areas of Gathering Support (Buy Triggers) and Gathering Resistance (Sell Triggers) at which we can venture trades. (See Post #2 for the definition of Gathering Support and Gathering Resistance.
Gathering Resistance for the QQQQ going into Monday's trade comes in two parts:
Gathering Resistance I:
1) $38.85 - the Weekly Pivot
2) $38.87 - the Previous Month's Close
Gathering Resistance II:
1) $39.02 - the "20-Month Moving Average"
2) $39.03 - the Daily "R2" Pivot Point
3) $39.03 - the Previous Month's High
Gathering Resistance II is a more imposing area of Resistance than Gathering Resistance I.
Let's mark these areas on our 5-Minute Charts and observe what effect Gathering Resistnace has on the price action of the QQQQ.
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QQQQ Rises to Monday's area of "Gathering Resistance"
The QQQQ rose to kiss Monday's initial area of Gathering Resistance a moment ago and is pulling back a bit as is usually the case with "Gathering Resistance", at least upon first approach.
Before it rose to Gathering Resistance, however, it fell in early trade to Monday's area of Gathering Support (Buy Trigger):
Mr Nasdaq said:
Mr Nasdaq said:
The QQQQ rose to kiss Monday's initial area of Gathering Resistance a moment ago and is pulling back a bit as is usually the case with "Gathering Resistance", at least upon first approach.
Before it rose to Gathering Resistance, however, it fell in early trade to Monday's area of Gathering Support (Buy Trigger):
Monday's area of "Gathering Support"...
Monday's area of Gathering Support (Buy Trigger) was composed of the following 3 individual aspects of Support:
1) $38.31 - the Daily "S2" Pivot Point
2) $38.36 - the Previous Week's Low
3) $38.41 - the "20-Day Moving Average"
Areas of Gathering Support and Gathering Resistance form much more reliable trading opportunities than do indivdual aspects of Support or Resistance that are standing alone.
Monday's area of Gathering Support (Buy Trigger) was composed of the following 3 individual aspects of Support:
1) $38.31 - the Daily "S2" Pivot Point
2) $38.36 - the Previous Week's Low
3) $38.41 - the "20-Day Moving Average"
Areas of Gathering Support and Gathering Resistance form much more reliable trading opportunities than do indivdual aspects of Support or Resistance that are standing alone.
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QQQQ - Tuesday's Double-Play...
Consistently Successful Traders buy at areas of Gathering Support and sell at areas of Gathering Resistance. Knowing where these areas are located helps them to determine when to buy and when to sell.
The 5-Minute Chart below shows Tuesday's trip from "Gathering Resistance" (Sell Trigger) to "Gathering Support" (Buy Trigger):
Areas of Gathering Support and Gathering Resistance form much more reliable trading opportunities that do indivdual aspects of Support or Resistance that are standing alone.
Consistently Successful Traders buy at areas of Gathering Support and sell at areas of Gathering Resistance. Knowing where these areas are located helps them to determine when to buy and when to sell.
The 5-Minute Chart below shows Tuesday's trip from "Gathering Resistance" (Sell Trigger) to "Gathering Support" (Buy Trigger):
Areas of Gathering Support and Gathering Resistance form much more reliable trading opportunities that do indivdual aspects of Support or Resistance that are standing alone.
A Successful "Swing" Trade...
A "Swing" Trade is a trip from "Gathering Support" to "Gathering Resistance" or vise versa.
The following 5-Minute Chart shows the trip from Tuesday's area of "Gathering Support" (Buy Trigger) to Wednesday's area of "Gathering Resistance" (Sell Trigger).
Areas of Gathering Support and Gathering Resistance form much more reliable trading opportunities that do indivdual aspects of Support or Resistance that are standing alone.
See Post #2 of this thread for a definition of Gathering Support and Gathering Resistance.
A "Swing" Trade is a trip from "Gathering Support" to "Gathering Resistance" or vise versa.
The following 5-Minute Chart shows the trip from Tuesday's area of "Gathering Support" (Buy Trigger) to Wednesday's area of "Gathering Resistance" (Sell Trigger).
Areas of Gathering Support and Gathering Resistance form much more reliable trading opportunities that do indivdual aspects of Support or Resistance that are standing alone.
See Post #2 of this thread for a definition of Gathering Support and Gathering Resistance.
Thursday's area of "Gathering Resistance"...
There are 2 separate areas of Gathering Resistance (Sell Triggers) for the QQQQ going into Thursday's trade:
The first is between $40.74 and $40.82 and is composed of:
1) $40.74 - the Daily "R2" Pivot Point
2) $40.82 - the Monthly "R2" Pivot Point
The second area of Resistance is nearby, between $41.00 and $41.04 and is composed of:
1) $41.00 - the high end of the "10-Week Trading Band"
2) $41.04 - Weekly Bollinger Band Resistance
If the QQQQ rises to these areas of Gathering Resistance during the trading day, their effects on the price action of the QQQQ will best be observed from a 5-Minute Chart.
The individual aspects of Resistance that compose the second area of Gathering Resistance are extreme "intermediate-term" aspects of Resistance.
If the QQQQ rises that high, it may mark the end of the Summer Rally and the beginning of the decent into the customary October low.
There are 2 separate areas of Gathering Resistance (Sell Triggers) for the QQQQ going into Thursday's trade:
The first is between $40.74 and $40.82 and is composed of:
1) $40.74 - the Daily "R2" Pivot Point
2) $40.82 - the Monthly "R2" Pivot Point
The second area of Resistance is nearby, between $41.00 and $41.04 and is composed of:
1) $41.00 - the high end of the "10-Week Trading Band"
2) $41.04 - Weekly Bollinger Band Resistance
If the QQQQ rises to these areas of Gathering Resistance during the trading day, their effects on the price action of the QQQQ will best be observed from a 5-Minute Chart.
The individual aspects of Resistance that compose the second area of Gathering Resistance are extreme "intermediate-term" aspects of Resistance.
If the QQQQ rises that high, it may mark the end of the Summer Rally and the beginning of the decent into the customary October low.
QQQQ Observations...
The QQQQ printed a new high for the Summer Rally on Thursday when it rose in early trade to $40.67.
Thursday's 5-Minute Chart shows that the QQQQ honored its "Cup & Handle" Pattern with a continuation of Wednesday's rally; that the continued rally fell 7 cents shy of Thursday's area of Gathering Resistance between $40.74 and $40.82; and that a subsequent pull back dropped the QQQQ to Thursday's area of Gathering Support from which the QQQQ bounced a bit into the close:
For Friday, traders are wondering if Thursday's pullback from its early morning peak is the beginning of the larger "October Low" pull back.
A violation of Friday's area of Gathering Support would increase the odds that it is, indeed, the beginning.
The QQQQ printed a new high for the Summer Rally on Thursday when it rose in early trade to $40.67.
Thursday's 5-Minute Chart shows that the QQQQ honored its "Cup & Handle" Pattern with a continuation of Wednesday's rally; that the continued rally fell 7 cents shy of Thursday's area of Gathering Resistance between $40.74 and $40.82; and that a subsequent pull back dropped the QQQQ to Thursday's area of Gathering Support from which the QQQQ bounced a bit into the close:
For Friday, traders are wondering if Thursday's pullback from its early morning peak is the beginning of the larger "October Low" pull back.
A violation of Friday's area of Gathering Support would increase the odds that it is, indeed, the beginning.
QQQQ - Observations of Friday's Action and What It May Mean for Monday's Trade...
The QQQQ continued its pullback from Thursday morning's high on Friday, this time closing below key Support at its "200-Day Moving Average".
Friday's 5-Minute Chart shows the QQQQ violating its initial area of "Gathering Support" (the one that contained the "200-Day Moving Average"), thereby, issuing a warning to longs, but, finding Support at its second area of "Gathering Support" from which it bounced into the close:
On Monday, continued Resistance at the "200-Day Moving Average" would be an additional sign that the QQQQ may now be in the process of delivering that seasonal phenomenon known as the "October Low".
The Summer Rally, which ordinarily begins in July and ends in August, extended itself this year into the first 3 weeks of September. In one part of the US of A, that 3 week extension would be referred to as "postponing the future".
If the future is now unwilling to be postponed any longer and the QQQQ is now ready for its traditional decent into an October Low, then it is not a time to be brave on the long side. It is a time, instead, for areas of "Gathering Support" to provide Support only temporarily and for "back-side-bounces" to former areas of "Gathering Support" to be used as selling opportunities ("Gathering Support, when violated by a falling price, becomes Gathering Resistance".)
The QQQQ continued its pullback from Thursday morning's high on Friday, this time closing below key Support at its "200-Day Moving Average".
Friday's 5-Minute Chart shows the QQQQ violating its initial area of "Gathering Support" (the one that contained the "200-Day Moving Average"), thereby, issuing a warning to longs, but, finding Support at its second area of "Gathering Support" from which it bounced into the close:
On Monday, continued Resistance at the "200-Day Moving Average" would be an additional sign that the QQQQ may now be in the process of delivering that seasonal phenomenon known as the "October Low".
The Summer Rally, which ordinarily begins in July and ends in August, extended itself this year into the first 3 weeks of September. In one part of the US of A, that 3 week extension would be referred to as "postponing the future".
If the future is now unwilling to be postponed any longer and the QQQQ is now ready for its traditional decent into an October Low, then it is not a time to be brave on the long side. It is a time, instead, for areas of "Gathering Support" to provide Support only temporarily and for "back-side-bounces" to former areas of "Gathering Support" to be used as selling opportunities ("Gathering Support, when violated by a falling price, becomes Gathering Resistance".)
Negative Divergences (QQQQ - Daily Chart):
A "Negative Divergence" serves as an early warning that a rally is slowly but surely running out of steam. It occurs when a rising price is accompanied by a falling CCI or a falling MACD Histogram. The Daily Chart shows that a "Negative Divergence" in both the CCI and the MACD Histogram has been developing since mid-August.
The Negative Divergence of the CCI delivered a short-term "Sell" Signal on Friday when it fell below the +100 Line.
The Negative Divergence of the MACD Indicator is on the verge of delivering its own short-term "Sell" Signal but, has not yet done so. The MACD "Sell" Signal will trigger when its thick black line crosses below the thin red line.
A "Negative Divergence" serves as an early warning that a rally is slowly but surely running out of steam. It occurs when a rising price is accompanied by a falling CCI or a falling MACD Histogram. The Daily Chart shows that a "Negative Divergence" in both the CCI and the MACD Histogram has been developing since mid-August.
The Negative Divergence of the CCI delivered a short-term "Sell" Signal on Friday when it fell below the +100 Line.
The Negative Divergence of the MACD Indicator is on the verge of delivering its own short-term "Sell" Signal but, has not yet done so. The MACD "Sell" Signal will trigger when its thick black line crosses below the thin red line.
StockTiger
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...and stochastics
Stochastics can be a good guide as to possible overbought conditions. For automatic trades one can buy on a cross above 20 and sell on a cross back down through 80.Like with negative divergence of MACD the timing (date) is not so super but the longer view is.
On this view of the QQQQ you see it broke above a descending trend line a couple of weeks ago and ran into resistance and is now consolidating. The stochastics are still above 80 and may whipsaw a bit. You see the ascending shorter term trend line and the two trends cross at the 200-day EMA. If they were to cross then it would be very bullish and volatile.
We are getting to a time though of and expected decline into the 4-year cycle low likely to end in November of December. It may be lower or higher then the July low. Before then there is still the possibility that there will be one more rally to bring in the longs. You can see the resistance points. More about that in the future.
Stochastics can be a good guide as to possible overbought conditions. For automatic trades one can buy on a cross above 20 and sell on a cross back down through 80.Like with negative divergence of MACD the timing (date) is not so super but the longer view is.
On this view of the QQQQ you see it broke above a descending trend line a couple of weeks ago and ran into resistance and is now consolidating. The stochastics are still above 80 and may whipsaw a bit. You see the ascending shorter term trend line and the two trends cross at the 200-day EMA. If they were to cross then it would be very bullish and volatile.
We are getting to a time though of and expected decline into the 4-year cycle low likely to end in November of December. It may be lower or higher then the July low. Before then there is still the possibility that there will be one more rally to bring in the longs. You can see the resistance points. More about that in the future.
StockTiger,StockTiger said:
Thank you for your QQQQ Chart and Observations. They are much appreciated here.
I especially liked your observations on the Fast Stochastics Indicator.
I've been using Fast Stochastics on my 5-Minute Charts recently.
As you know from my prior posts, I wait until a stock falls to an area of Gathering Support (Buy Signal) before venturing a purchase. That's my edge.
I've found, as you have, that Fast Stochastics can be used to more precisely identify the point at which a stock is ready to reverse up from an area of Gathering Support.
Note the recent examples on the 5-Minute Chart Below:
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