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.

Thursday, August 18, 2011

This has all happened before, it will all happen again.
There will be a time to position for long entries, but it will take some time (aside from intraday short covering rallies).
I use the 3/10macd indicator because it is closely derived from price and reacts quickly to price; all it does for me is help to take out some of the noise and subjectivity in viewing price.  The criteria I ascribe to the indicator's relationship of Fast Line to Slow Line is simply my way to quickly identify, and alert me to, higher lows or higher highs, trend continuation likelihood, range-bound markets, etc.
With that said, the 2b, 4c, or 4b criteria simply alerts me to a lower high or waning momentum.  In the chart below there's a 4c and 4b short setup highlighted:

or even this 4c criteria on the monthly S&P500 chart:

And more recently, this:

as an added bonus, the 2b criteria on the 3/10 macd isn't necessarily a lower high.  In the chart above the absolute high (prior to the shaded region) occurred while signaling a 2b setup (exhaustion of price/waning momentum).

Anyway, as we can see from the above chart, price confirmed a lower high and sold off.  At this point, the rallies will get sold and we will likely spend a number of weeks digesting the recent volatility to a point where a firm higher low can develop and begin a new intermediate trend up.  The question always remains; How low will we go?

To start with, take a look at this morning's opening gap down.  Price reached the 100% projection intra-day, while the 200% coincides with the August 9 lows.  Not to say price always achieves a 200% momentum projection, but the fact that it coincides with the lows is curious

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