The State of the Trend

By: George Krum | Sun, Jul 28, 2013
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Last week we focused on the tug of war between daily and weekly market breadth readings, and between seasonal and fractal patterns. Therefore, it should come as no surprise that the major indices finished the week practically unchanged.

This week we'll follow up with a chart showing the net difference (delta) between the daily and weekly market breadth indicators:

SPX Chart
Larger Image

The message should be pretty clear: instances when the two indicators trade at opposite extremes of the spectrum, as is currently happening, are often followed by corrections.

This is further confirmed by a look at the seasonal chart. Despite all the talk about QE, the economy, China, and what not, all the SPX has done so far this year is closely follow the seasonal pattern. And while there's no guarantee that this will be the case for the remainder of the year, we continue keeping a close eye on this particular indicator and will use it as a roadmap for the future:

SPX Seasonal Chart
Chart courtesy of OT Seasonal

From a more traditional TA point of view, the SPX finished the week with a textbook hanging man candle, and is testing the top of the channel, factors which suggest that a trend reversal may be in store:

SPX Chart 3
Larger Image

In summary, several indicators and patterns signal that a countertrend move may follow. We'll adjust our get bullish daily level to above 1700 and our neutral level to 1671 - 1700, while our short-term bearish level remains below 1671.

 


 

George Krum

Author: George Krum

George Krum
www.citdates.blogspot.com

George Krum is the author of the "CIT Dates" blog, and the following apps:

OddsTrader - combines the power of Hurst Channels with proper risk and position size management. For a web version see OT Signals below.

Gann 9 - the only financial app that allows users to effortlessly apply the legendary W.D. Gann's tools and methods for trading (including the Square of 9).

OT Trend - helps you quantify and forecast the seemingly random ebb and flow of stock, index or mutual fund movement.

OT Fibonacci - automates the process of applying Fibonacci numbers, ratios and time series to any security.

OT Seasonal - allows you to perform seasonal analysis on practically any security from around the world, and to build long-term forecasts and models.

OT Pairs - pairs trading, one of the most successful hedge fund trading strategies, is now available on your smart phone.

OT Pivots - combines the power of pivot lines with cycles to provide you with concise technical analysis and powerful trading signals.

OT Signals - a web app accessible from any browser, tablet or pc. It gives buy/sell/hold ratings for any instrument from around the world, and defines the trend and support/resistance levels.

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