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Strategies & Market Trends : Effective Collaboration - Team Research for Better Returns:
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To: The Ox who wrote (3260)4/1/2014 1:10:16 PM
From: Return to Sender1 Recommendation

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The Ox

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I thought I would take a little more time to add a little more insight into what exactly I am watching that I interpret as the most important of charts.

First of course the major market indexes themselves. Even in an uptrend that has been as long lasting as this one the market rises and then is subjected to some profit taking before rising again. You already know that RSI (14) of 70 or more is rare on a daily chart. Even more so on weekly charts and especially true of monthly charts but that kind of overbought situation can continue for months. You will note here that even though the DJIA appears to be trying to make a new high it is doing so with less relative strength.





So what I am seeing is negative divergences as the DJIA tries to set a new record high. The MACD above is looking tired. The RSI on all charts is no longer setting anything but lower highs.

In addition the number of new highs on the NYSE is also showing lower numbers of new highs at each successive new high:



But the trend changed for sure yesterday as shown by the NYSI. As long as the NYSI is moving higher then trades of stocks associated with the DJIA will pay off a lot better on the long side. I watch both the NYSI and NASI for trend changes as they seem to rise and fall in tandem with the market trend. No reason to get excited about shorting anything until it becomes obvious that the new uptrend is going to fail:



Due to the negative divergences I am still holding onto the thought that shorting later in April will pay off big time this year in May on carefully selected stocks.

RtS
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