a lesson in the importance of watching for death blows...
here is the nasdaq chart around the 1946 top..
stockcharts.com[h,a]daclyiay[d20011219,20020319][pb9!b13!b20!h.02,.20!b200!b150!b50!f][vc60][iUb14!La8,17,9!Lh5,5!Le5,10,1!Li10,10!Lp14,3,3!Ll14]&pref=G
key points....just broke above 200 da ma....looked like just a selloff before a move to a higher high...reversal candle...but next day was plus 3.81....looked like it was ready to breakout...
RSI riding above 50....
MACD got above 0 and looked like it was turning up again....very bullish...
slow stoch a bullish cross and heading up...
PPO above 0
fast stoch turning...
full stoch looking very bullish turning up above 50....
ADX just had a bullish cross...
folks were calling for a "spring rally" 2300 area possible.....
the headfake was set-up.....
here is the chart following that march 19 headfake....
stockcharts.com[h,a]daclyiay[d20020215,20020519][pb9!b13!b20!h.02,.20!b200!b150!b50!f][vc60][iUb14!La8,17,9!Lh5,5!Le5,10,1!Li10,10!Lp14,3,3!Ll14]&pref=G
what happened to that bullish chart....
the best clue at the time was the slow stoch which just did a bullish cross and was heading up....stopped at the 50 line and went into a death blow"...
nothing mattered after that....that was a major warning....and those who never saw it were still looking for that "spring rally"
the best clue was on the weekly chart though....
stockcharts.com[h,a]waclyiay[dd][pb9!b13!b20!h.02,.20!b200!b150!b50!f][vc60][iUb14!La8,17,9!Lh5,5!Le5,10,1!Li10,10!Lp14,3,3!Ll14]&pref=G
look at the full stoch in march... major death blow on the full stoch weekly......thats the second worst kind of death blow.....the worst is a full stoch monthly....
anyway...after knowing this was under a major death blow...i went on ZEEV's thread and warned of the upcoming doom while others were thinking spring rally....
nasdaq started its dump from 1832 to 1560 a week after i showed up....
the point is....folks look at charts with no stochastics on them....or just maybe 1 stochastics indicator....and they never check the weekly or monthly charts....only looking at the present on short term daily....
they are missing so many clues its unreal...
death blows come on all stoch's....if you only use one...just because that one looks bullish...the ones you don't see may be under death blows already and you get toasted and wonder why...
thats why i use 3 stoch's to cover a bigger picture...and just because a daily chart looks good...i make sure theres no death blows on weekly and monthly charts.....
same on a day chart....if everything looks fine...but i see a death blow on a 30 min or hour chart....i know things are going to turn ugly real fast and could turn into 2 days or more of down coming....
folks not looking for these are missing an important signal...
same as the stoch's turning up at 50...thats a highly bullish indicator most don't even know exist..or don't see it because the one stoch they use doesn't have it...but maybe the other stoch's are under a bullish 50 and if they saw it..they wouldn't be short...or they wouldn't dump a long too early and maybe let it ride some....
anyway....this is one of the best signals i ever found and just wanted to share it with those who might be interested in watching for this....they come in all different degree's of effectiveness depending on which stoch and which timeframe....and on how close they are to that 50 line when the move occurs...its a high probability indicator...and when seen...should be respected....<gg> |
