20
richard
Hello Hedgers! I’ve noticed a few things in the markets this past week so I thought I’d share them with you before heading off to Vegas for the week. Take a look at the S&P 500 WEEKLY chart:
The first thing you’d probably notice is the hammer candle. The white hammer indicates that the prior downtrend is about to end and may reverse to an uptrend. This is a great short-term instrument, in fact the white hammer is rather bullish because it shows that the market sold off sharply during the session and then rebounded to close slightly above the opening price level. We’ve seen 9 consecutive red candles, so we are overly extended on the weekly time frame. We are due for a bounce. If we close above 1270 we should go bullish for at least a few weeks.
Now the chart you see above has an added Slow Stochastics indicator (top). The slow stochastic oscillator compares two lines called the %K (solid line) and %D (dotted line) to predict the possibility of an uptrend or a downtrend. Unlike the previous chart, I’ve decided to use the slow stochastic oscillator to monitor a daily chart. When the %K and %D lines fall below and then rise above the 20 threshold this indicates bullish potential. Not only did we pass 20 but the %K line has crossed above the %D line within a 5-day period…the bullish signal has officially triggered!
Richard
richard[at]hedgeagainstspeculation.com
July 22nd, 2008 at 6:27 am
Nice post, you got some good points there - thank you.
July 25th, 2008 at 8:47 am
great
July 25th, 2008 at 10:16 am
I really WISH I had a clue what any of this meant.
July 27th, 2008 at 9:56 pm
Hey thanks for the comments
Tony, start getting your feet wet in the stock markets, once you know the basics you’ll catch on to what my blogs are all about. Just knowing the basic terms will get you a long way cause I try to make everything as clear and simple as possible.
I just got back from Vegas, so once I study the market a bit I’ll put another post up!
July 30th, 2008 at 10:43 am
excellent post… thanks for posting it up.. graphs too
August 1st, 2008 at 6:46 am
Thanks kg lew! I’ll be on a golf trip this weekend, so as soon as I come back from Kananaskis I will make a new post. Happy trading!!
August 1st, 2008 at 12:29 pm
SPX fell -53.85% since 10/31/07 and I haven’t seen an up side like this. I would consider this a buy and hold for now, wouldn’t you? With that hammer candle showing up like that, lets hope it creates a right side up smile!
August 18th, 2008 at 12:27 pm
Looking back at it, this was definitely a buy and hold situation…glad you guys agreed and picked up on this
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