The setups I include on this blog are used in conjunction with the 3/10macd and the criteria I ascribe to it as a way to alert me to an existing condition of price. The key concept to take away from this blog is that I try to anticipate what will happen on the higher time frame by using a faster time frame to trigger the trade setup. I do not trade a "system" I use two indicators to clue me in to price conditions. Please read the Disclaimer located in the sidebar of this site. I can be contacted via email at
I am always open to questions, comments, or suggestions on how to improve this blog.

Friday, August 27, 2010

Momentum Buy Divergence

Signaled across the board today, was a momentum buy divergence on the 3/10 oscillator (daily chart). A handy dandy indicator to use when price is cycling, as it is now (as opposed to trending, and has been ever since the flash-crash).
DIA (green vertical lines indicate the divergence buy signal. Red vertical line represents a divergence sell signal),
QQQQIWM - Actually triggered yesterday and again on Tuesday.SMHIYT
The biggest problem at this point is the overhead resistance (a.k.a. SUPPLY). One can't expect a "Death Cross" to mean an immediate rejection of price. There are bound to be some short-covering, dip-buying rallies.Essentially, what it all boils down to is that the coming bounce should determine whether we probe lower (for a lot of, so far, untested price levels below), or higher (within the range we currently find ourselves in, up to around $113). It is critical, because "pace" (the bounces off of support we have experienced) is quickly fading.
Just as an aside, here's a good example of why the 3/10 oscillator isn't ideal in a trending market. Unless of course you use the signals as a contrary indicator.

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