trying to see the divergence between the oex and dji and can't find it. (I am using icq 5 min charts).
Hi Nevada.
I use a different chart service for intraday, but usually it coincides nicely with iqc. This time, however, it is a little harder to see on iqc.
First, I am assuming that you are looking for the macd divergence within each of the oex and the dji, and not between. If this assumption is correct, then the following should explain. If you really mean between the oex and the dji, then I can't help you because I don't see it either.
Anyway, the macd divergence that I am seeing in the dji is the divergence that started very early Friday, when the dow hit ~8768. It rallied from there to ~8845, and then went down from there. During that downward movement, there were 3 macd ripples, and this is where it gets tricky. (I believe that these are the 3 where you didn't see divergence?) On my intraday chart, there was no movement of the macd above the zero line, on the iqc chart there was. A few bars above zero doesn't bother me, but iqc's chart negates the divergence for me (others might still go with it.) I don't know why it differs between the services, the averages used are the same, sometimes it happens.
Anyway, for explanation sake, and to let you know how I saw it on my service, let's say that it didn't go above zero. We will compare the 3 ripples to the macd low set in the morning. The first ripple is not divergence, the price had not gone below that morning low. The second ripple was divergence, but was not confirmed with any of my stochastics (different than the default stoch on iqc). The third ripple was also divergence, and was confirmed with my stoch. Sometimes you can act before the stoch confirms, but it is always best to wait.
The same kind of setup occurred on Thursday, and again, my chart differs from iqc, but I will use the iqc one for my point. The second low on the dow ~11am showed a higher low on the macd, and when confirmed by the stoch, could have been played for a very short term move. (In reality, my chart doesn't show the second macd as a higher low.) Then, when the dow made a lower low Thurs afternoon, the setup was there (I posted this point.) I took a small long position at the close of Thursday, without stoch confirmation. (Small because of the non-confirm.) I was lucky in that the issue that I went long on didn't gap down like others did, got out even. Lucky, that is all.
The same holds for the oex with respect to the action on Friday. Look at the 3 ripples as one wave, and compare it to the wave in the am. Again, my chart is different, and on mine, the macd crosses above the zero line, but just barely, and not enough to negate the divergence. On the iqc cart, it is negated in my book.
These intraday divergences are for very short term moves, and that is all that you should expect from them. Sometimes they go further, and it is best to watch short term support and resistance points for your stops. Extend the gains if you can. Cut your losses quick.
Nevada, I am glad that I can be of some help to you in understanding how this works. But it doesn't work out every time, and each person's objectives are different in each trade. I am glad that you were pleased with your result by exiting your put position. But how will you feel if we gap down strongly Monday am? (I'm not saying that this will happen.) I would hope that my posts are not for advice or for recommendations, only for trying to help you figure it own on your own, in your own way.
Debra
PS. Sorry it took till today to answer your question...am trying to spend at least one day non-obsessed with this game. <g> |
