Wednesday, February 10, 2010
Amazingly similar charts
Here are a couple more charts to ponder. The resemblance is amazing. But will history repeat itself?
The first chart shows the setup 3 days after a Climax Low signal in the Nasdaq back a few years ago, as it was well on it's way down. The signal is shown in blue. It's supposed to mark a low, and it usually works, but not this time. The market plunged the next day, and the day after that the Nasdaq took out the low of the signal, officially rendering it a Failed Signal.
The second chart shows the setup right now, 3 days after a similar Climax Low signal. This time it's in the Dow Jones Industrials. The similarity between the two charts is surprising, especially over the past several days, although there are some subtle differences. For example, this time around the price is above the 200-day Exponential Moving Average (shown in red), and the average is pointing up, not down. Also, the short-term pattern appears to be more of an ascending triangle, rather than a sideways one. One more thing, the index has closed the past two consecutive days above the high of the signal, which it couldn't manage to do in the other chart.
Irrespective (or notwithstanding) all this, my gut is telling me that the signal has marked a the low for the intermediate term, as it's designed to do. But that's why we developed the signals! Going on your gut usually is a bad policy in the stock market, unless your gut tells you not to trade from the gut.
The first chart shows the setup 3 days after a Climax Low signal in the Nasdaq back a few years ago, as it was well on it's way down. The signal is shown in blue. It's supposed to mark a low, and it usually works, but not this time. The market plunged the next day, and the day after that the Nasdaq took out the low of the signal, officially rendering it a Failed Signal.
The second chart shows the setup right now, 3 days after a similar Climax Low signal. This time it's in the Dow Jones Industrials. The similarity between the two charts is surprising, especially over the past several days, although there are some subtle differences. For example, this time around the price is above the 200-day Exponential Moving Average (shown in red), and the average is pointing up, not down. Also, the short-term pattern appears to be more of an ascending triangle, rather than a sideways one. One more thing, the index has closed the past two consecutive days above the high of the signal, which it couldn't manage to do in the other chart.
Irrespective (or notwithstanding) all this, my gut is telling me that the signal has marked a the low for the intermediate term, as it's designed to do. But that's why we developed the signals! Going on your gut usually is a bad policy in the stock market, unless your gut tells you not to trade from the gut.
// posted by gigascanner @ 7:49 PM 
Subscribe to Posts [Atom]
