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, 2008. 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 it 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, comprised of a series of recent lows, and also the highs from 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, 2008. 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 it 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, comprised of a series of recent lows, and also the highs from 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.
Friday, January 29, 2010
Trying too hard
Regarding that last post, you have to wonder why I'd go looking for buy signals at a time like this. Here's a repeat of our post from Monday, January 18th (the chart was current as of that date):
A number of stocks sold off on high volume Friday. A more serious correction may be in order, considering that the market has made a spectacular run since the lows last March.
This is not incompatible with a possible bounce tomorrow.
Here's a chart of the Nasdaq with the latest signals. The Climax High a few days ago lead to a quick drop, then a retest of the high, and then Friday it got hammered. Monday's data is a repeat of Friday's, since the markets were closed. Unfortunately the volume data has dropped out again for the Nasdaq. It does that from time to time. Still no good explanation from our data vendor. But trading volume was up sharply across the market.
A number of stocks sold off on high volume Friday. A more serious correction may be in order, considering that the market has made a spectacular run since the lows last March.
This is not incompatible with a possible bounce tomorrow.
Here's a chart of the Nasdaq with the latest signals. The Climax High a few days ago lead to a quick drop, then a retest of the high, and then Friday it got hammered. Monday's data is a repeat of Friday's, since the markets were closed. Unfortunately the volume data has dropped out again for the Nasdaq. It does that from time to time. Still no good explanation from our data vendor. But trading volume was up sharply across the market.
Subscribe to Posts [Atom]