Sunday, February 7, 2010
Buy signals
But do we trust them?
Here are some pictures of Climax High and Climax Low signals, in red and blue. The daily numbers of the two signals are plotted in the top two indicator windows, again in red and blue.
In each picture you can see a wave of Climax Highs for a few weeks, then a wave of Climax Lows, leading to a signal in one or more of the indexes.
This picture shows the market top in October, 2007. The signal at the left edge failed outright, and the market went down hundreds of points. It's noteworthy however that it was undercutting a previous low at this point (can't see it on the chart, that would take a zoomed-out view).
The next chart shows the bottom in March, 2009. The wave of climax lows lead to a signal in the Nasdaq, but the real bottom occurred a few weeks later. There was a signal the the Dow, but just a minor wave of signals across the overall market. The third picture shows the current situation.
The third chart shows the current situation. I think in this case the climax low signal will mark the lows. Leading stocks like AAPL (which had a climax low signal) are apparently basing around after a big run-up, but without breaking down. AAPL right now is sitting on a long-term support line, comprising a series of recent lows, and also the highs from back in May and June of 2008. Basically it gave us a climax low signal bouncing off a long-term support line.
I think it's an inflection point, and Friday's trading will mark the low. But I could be wrong! If it fails, it fails. Watch carefully for a breach of the lows. If so, all bets are off.
Here are some pictures of Climax High and Climax Low signals, in red and blue. The daily numbers of the two signals are plotted in the top two indicator windows, again in red and blue.
In each picture you can see a wave of Climax Highs for a few weeks, then a wave of Climax Lows, leading to a signal in one or more of the indexes.
This picture shows the market top in October, 2007. The signal at the left edge failed outright, and the market went down hundreds of points. It's noteworthy however that it was undercutting a previous low at this point (can't see it on the chart, that would take a zoomed-out view).
The next chart shows the bottom in March, 2009. The wave of climax lows lead to a signal in the Nasdaq, but the real bottom occurred a few weeks later. There was a signal the the Dow, but just a minor wave of signals across the overall market. The third picture shows the current situation.
The third chart shows the current situation. I think in this case the climax low signal will mark the lows. Leading stocks like AAPL (which had a climax low signal) are apparently basing around after a big run-up, but without breaking down. AAPL right now is sitting on a long-term support line, comprising a series of recent lows, and also the highs from back in May and June of 2008. Basically it gave us a climax low signal bouncing off a long-term support line.
I think it's an inflection point, and Friday's trading will mark the low. But I could be wrong! If it fails, it fails. Watch carefully for a breach of the lows. If so, all bets are off.
// posted by gigascanner @ 5:20 PM 
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