The weekend work of a stock nerd
Ok, so I've been calling a decline in major averages for some time now. I can't deny that the market that has been rallying in my face despite my calls. So, I spent a lot of time this weekend going over some charts identifying some patterns and coming up with fairly accurate short term signals. They supported the most recent continuing rally, and today suggests that the rally isn't quite done.
The RumWave scores continue to decline while the others continue higher. I can't find an instance since 2008 that this pattern continued with a good result for bullish investors... but, nonetheless, the market is the ultimate truth so I'll yield.
Here are charts of the DIA, SPY, and QQQ (all trade-able proxies for major indices.) They are 4 hour charts, with Heikin Ashi candles, RSI_EMA, Slow Stochastic, and MACD. My studies over the weekend revealed that when the candles don't have a bottom wick, the upward trend remains intact. One of the first tips that a change in trend is coming is a candle with a wick on both sides of the candle body. Then, a look at the oscillators will often show the next move. Downward sloping indicators indicate the next move is probably down. Upward sloping indicators indicate the next move is probably up. Today's DIA and SPY charts show no bottom wick and upward sloping oscillators... bullish for tomorrow. (The first 4 hours anyway.) The QQQ is wavering and slightly undecided, but the oscillators point up.
This stuff 'aint rocket surgery. I'm thinking about a bullish trend for a bit tomorrow, but I'm not inclined to buy anything to chase it. I just don't like the uber-high values of the RSI and slow stochastics. I'll look for indications that the trend is changing, then make a move.
GOOD LUCK TOMORROW!