Short-Term Trading (days)
Short-Term Trading for hours
Here is a simple system to count waves using the sometimes leading or lagging Tick line to expose the waves of buying that may not be that evident in small price movements. It can be used to detect low risk entry points for trading intraday reversals in price and sentiment when both get too stretched in one direction and other indicators support a reversal. Real-time versions of these charts can be viewed during the day at My Charts at StockCharts.com
Charts courtesy of StockCharts.com
Charts courtesy of StockCharts.com
Short-term trading for days
The 15 minute Nasdaq 100 chart is used to trade the QQQQ, QLD/QID and/or QQQQ options for a few days. The ideal trade has both
StochRSI and PPO crossing the mid line after a cycle or two in oversold or overbought, and the move is confirmed by the blue
Put/Call, red QQV and white Tick lines also turning together from high or low levels. A proper entry and exit can then be chosen
from the geometric support and resistance lines and cycles. Real-time versions of these charts can be viewed during the day at
My Charts at StockCharts.com
Sentiment
The Blue line is the 5 hour MA of the Put/Call ratio. The Red line is the 5 hour MA of the Volatility and shows how expensive Options
are due to fear of sharp moves. It is best to buy out of the money options after it has dropped sharply and sell out of the money
options when it has risen sharply. The White line is the 12 hour moving average of the Tick and shows the eagerness to follow the trend.
All three signal caution when they turn from very low or high levels of sentiment. When all three are trending together it usually means
the market will trend too, but when they diverge be cautious of sudden reversals.
Moon Cycles
The white circles are the Moons, and we should always be aware of these since sharp moves often occur a few days before a Moon like
the mini panic of January 22, 08.
Cycles, Geometry and S/R
The markets are oscillating up and down and the slope of the highs and lows extended in time gives us clues to possible future support
and resistance points in time. Higher priority is given to parallel lines since they confirm each other, but a newly sloped line with
many points may indicate a change of trend. The intersection of lines from different sources on a single point usually further confirms
their significance.
Charts courtesy of StockCharts.com
Charts courtesy of StockCharts.com
Other Indices and Indicators
The SPX chart has the blue line substituted for the Nasdaq Highs since the Put/Call is already in the NDX chart above. The red line
is the Volatility for the OEX and the white line is the NYSE Tick line. The Dow chart has the NYSE Highs as the blue line, the Lows
as the red line and the Trin as the white line, giving us a different look at market strength.
Charts courtesy of StockCharts.com
Charts courtesy of StockCharts.com
Trading with the Moon
Trading the Moons, which can be done with amazing success at times, is not about statistics which don't tell the whole picture because of inversions which actually make the stattistics weaker and less significant than they really are. You can buy Full Moons and sell New Moons, just like you can buy in November and sell in May using the seasonal statistics, and greatly increase your buy and hold profits in both cases as seen in this study. More information can be found in an interesting study of the effects of the Moon on Markets of the G7 group. However looking at the Moons closer using a line chart to accentuate the turning points, we see that they are quite accurate and profitable especially in an emotional market. Over the last 9 months they inverted 7/9 times or about 44% of the time, but such inversions can be detected as they occur with regular techinical analysis tools to determine chnages in direction and momentum.
Charts courtesy of StockCharts.com
Charts courtesy of StockCharts.com
Short-Term Cycles
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Charts courtesy of StockCharts.com
Possible Fractals and Analogs
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Charts courtesy of StockCharts.com
Short-Term Breadth Summation index (BSI)
The short term Breadth Summation index is made up of the following Breadth indicators and is a good indication of oversold and overbought conditions. It includes the Tick to measure interest, the Trin to size up volume, the Highs/Lows ratios and STocks above 50 day MA to see if the market is actually gaining ground, the Put/Call ratio and VIX to see where the majority of short term traders are positioned.
Tick ratios of trades at Ask
The Tick ratios are very volatile, but their moving averages do indicate whether a trend is bought into (at Ask) or sold into (at Bid). Periods of high Tick are followed by periods of low Tick, and this over many time periods, from hours to days. When the Tick gets too high or low, the market is often near a short term turning point.
Charts courtesy of StockCharts.com
Charts courtesy of StockCharts.com
Trin/Arms index
The Trin/Arms indices are the ratio of Advancing/Declining issues vs Up/Down Volume and are very volatile, but their moving averages do indicate when most of the volume is with the current trend and a sign of a capitulation. Periods of high Trin are followed by periods of low Trin, and this over many time periods, from hours to days. When the Trin gets too high or low, the market is often near a short term turning point.
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Charts courtesy of StockCharts.com
Put/Call ratios
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Charts courtesy of StockCharts.com
Advance/Decline Ratio
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Charts courtesy of StockCharts.com
Up/Down Volume Ratio
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Charts courtesy of StockCharts.com
New Highs/Lows ratio
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Charts courtesy of StockCharts.com
McCLellan indicator
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Charts courtesy of StockCharts.com
McCLellan indicator
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Charts courtesy of StockCharts.com
Volatility Indices
The Volatility indices (VIX and QQV), are the insurance premiums paid by buyers of Calls and Puts to protect or profit from large price swings. The higher this premium, the higher the fear and expectations of large price moves. The Volatility premiums on options are some of the most watched sentiment indicator in the markets. Periods of high volatility are almost always followed by periods of declining volatility, and this over many time periods, from days to decades. The markets can actually rise or fall with a rising VIX and vice versa like we saw in the late 1990's and early 2000's.
Charts courtesy of StockCharts.com
Charts courtesy of StockCharts.com