Report for the Five Major Stock Indices

By: Erich Soltes | Tue, Nov 22, 2005
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Below is an explanation of the three windows of the charts and a description of each of the indicators.

In the top window is my internal strength indicator (represented by a bold blue line) this measures the strength of the security in relation to its movement between the upper and lower 3rd alpha wave bands.

The internal strength indicator is considered overbought above minus twenty (-20), and oversold below minus eighty (-80). In addition to the internal strength indicator there are two other indicators. The thin blue indicator represents the value of the last time the internal strength indicator reversed direction to the downside. The thin red line represents the value of the last time the internal strength indicator reversed direction to the upside.

In the middle widow the Long/Short position is indicated, one (1) represents a long position, minus one (-1) represents a short position. A zero (0) represents a neutral position. The Bold blue line is for long term traders and the thin red line is for short term traders.

In the bottom chart the main trend line for a security is the Alpha Trend this is represented by the bold red line. It is from this trend line that all other support/resistance lines are developed. The Alpha Trend is an adaptive moving average that uses proprietary mathematical formulas to create the base line movement of the selected security. From the Alpha Trend, I then created three separate progression/regression price areas using Fibonacci ratios, which I call the 1st Alpha waves, 2nd Alpha waves and 3rd Alpha waves. It is these three wave areas that define the vast majority of a security's price movement. Moving out from the Alpha Trend, the 1st Alpha waves are represented by the dark blue lines. This is the price range that a security will normally move to once the Alpha Trend line is crossed in either direction. Next are the 2nd Alpha waves which are represented by the light blue lines. It is this area between the 2nd Alpha waves where 79.82% of the time a security's price will remain. Last are the 3rd Alpha waves which are represented by the violet lines. Once a security's price reaches this area it is in an extreme overbought/oversold condition. A security can stay in this area for awhile, but this usually represents a poor price in which to place a trade in the prevailing trend.

The next four moving averages are the one year moving average of the Alpha Trend represented by the bold violet line. The timeframe for this moving average is the following, on the daily chart it is 240 trading days, on the weekly chart it 52 trading weeks, and on the monthly chart it is 12 trading months. The next moving average is the short term alpha trend line represented by the bold black line. The next moving average is a simple moving average of the lows when the internal strength indicator is trending up. This moving average is represented by the Bold Blue line. The last moving average is a simple moving average of the highs as the internal strength indicator is trending down. This moving average is represented by the Bold Green line.

DJ TRANSPORT

The current short term traders' position is Long.
The current long term traders' position is Long.
The current sell price for short term traders is 4,141.1064
Long term traders' stop loss price is
The Current trend is bullish.
The Alpha Trend is trending up.
Today's closing price is 7.2336 percent to the support price of Alpha Trend.
The Alpha Trend Support price is 3,861.3738.
The one year moving average of the Alpha Trend is trending up.
Today's closing price is 13.5758 percent to the support price of the one year moving average of the Alpha Trend.
The one year moving average of the Alpha Trend Support price is 3,645.7502.
The internal strength indicator is trending up.
The Transports are topping out here traders should not take a long position at this level. When the internal strength indicator turns down this will be a good time to go short.

DJ TRANSPORT

Weekly
The current short term traders' position is Long.
The current long term traders' position is Long.
The current sell price for short term traders is 4,137.8325
Long term traders' stop loss price is 3871.64
The Current trend is bullish.
The Alpha Trend is trending up.
Today's closing price is 12.3510 percent to the support price of Alpha Trend.
The Alpha Trend Support price is 3,685.4929.
The one year moving average of the Alpha Trend is trending up.
Today's closing price is 16.3408 percent to the support price of the one year moving average of the Alpha Trend.
The one year moving average of the Alpha Trend Support price is 3,559.1050.
The internal strength indicator is trending up.
The DJ Transportation is still trending up the next resistance price is 4243.44 which is the upper 3rd alpha wave band traders should take their profits at that price.

DJ UTILITY

The current short term traders' position is Long.
The current long term traders' position is Long.
The current sell price for short term traders is 400.3317
Long term traders' stop loss price is 391.55
The Current trend is bearish.
The Alpha Trend is trending up.
Today's closing price is 0.8957 percent to the support price of Alpha Trend.
The Alpha Trend Support price is 392.9405.
The one year moving average of the Alpha Trend is trending up.
Today's closing price is 6.9368 percent to the support price of the one year moving average of the Alpha Trend.
The one year moving average of the Alpha Trend Support price is 370.7423.
The internal strength indicator is trending up.
The DJU is trending up the next resistance price is 407.91.

DJ UTILITY

Weekly
The current short term traders' position is Neutral.
The current long term traders' position is Short.
The current position is neutral.
Long term traders' stop loss price is 399.55
The Current trend is bearish.
The Alpha Trend is trending up.
Today's closing price is 0.7735 percent to the resistance price of Alpha Trend.
The Alpha Trend resistance price is 399.5504.
The one year moving average of the Alpha Trend is trending up.
Today's closing price is 13.9172 percent to the support price of the one year moving average of the Alpha Trend.
The one year moving average of the Alpha Trend Support price is 348.0248.
The internal strength indicator is trending down.
The DJU appears to be bottoming here if the DJU can't close above the Alpha trend it will continue to trend down.

Dow Jones Industrials 1900-99
The current short term traders' position is Long.
The current long term traders' position is Long.
The current sell price for short term traders is 10,795.5303
Long term traders' stop loss price is 10701.36
The Current trend is bullish.
The Alpha Trend is trending up.
Today's closing price is 2.7540 percent to the support price of Alpha Trend.
The Alpha Trend Support price is 10,477.7422.
The one year moving average of the Alpha Trend is trending down.
Today's closing price is 2.3302 percent to the support price of the one year moving average of the Alpha Trend.
The one year moving average of the Alpha Trend Support price is 10,521.1387.
The internal strength indicator is trending up.
-23.51
The Dow's internal strength indicator is in overbought area, the next resistance price is 10779.31 traders should take their profits at that price.

Dow Jones Industrials 1900-99
Weekly
The current short term traders' position is Long.
The current long term traders' position is Long.
The current sell price for short term traders is 10,790.8145
Long term traders' stop loss price is 10509.92
The Current trend is bullish.
The Alpha Trend is trending up.
Today's closing price is 2.4394 percent to the support price of Alpha Trend.
The Alpha Trend Support price is 10,509.9209.
The one year moving average of the Alpha Trend is trending up.
Today's closing price is 3.0703 percent to the support price of the one year moving average of the Alpha Trend.
The one year moving average of the Alpha Trend Support price is 10,445.5850.
The internal strength indicator is trending up.
The Dow is still moving up the next resistance price is 10941.55.

NAS/NMS COMPOSITE
The current short term traders' position is Long.
The current long term traders' position is Long.
The current sell price for short term traders is 2,234.2808
Long term traders' stop loss price is 2206.80
The Current trend is bullish.
The Alpha Trend is trending up.
Today's closing price is 4.1616 percent to the support price of Alpha Trend.
The Alpha Trend Support price is 2,138.0918.
The one year moving average of the Alpha Trend is trending up.
Today's closing price is 6.9237 percent to the support price of the one year moving average of the Alpha Trend.
The one year moving average of the Alpha Trend Support price is 2,082.8591.
The internal strength indicator is trending up.
The Comp's internal strength indicator is in overbought area the next resistance price is 2243.05 traders should take their profits at this price.

NAS/NMS COMPSITE

Weekly
The current short term traders' position is Long.
The current long term traders' position is Long.
The current sell price for short term traders is 2,232.7747
Long term traders' stop loss price is 2142.73
The Current trend is bullish.
The Alpha Trend is trending up.
Today's closing price is 4.4262 percent to the support price of Alpha Trend.
The Alpha Trend Support price is 2,132.6743.
The one year moving average of the Alpha Trend is trending up.
Today's closing price is 9.1533 percent to the support price of the one year moving average of the Alpha Trend.
The one year moving average of the Alpha Trend Support price is 2,040.3143.
The internal strength indicator is trending up.
The Comp is still trending up the next resistance price is 2238.29.

S&P 500 NDX Continuous
The current short term traders' position is Long.
The current long term traders' position is Long.
The current sell price for short term traders is 1,252.1279
Long term traders' stop loss price is 1237.86
The Current trend is bullish.
The Alpha Trend is trending up.
Today's closing price is 3.1171 percent to the support price of Alpha Trend.
The Alpha Trend Support price is 1,212.4076.
The one year moving average of the Alpha Trend is trending up.
Today's closing price is 4.1369 percent to the support price of the one year moving average of the Alpha Trend.
The one year moving average of the Alpha Trend Support price is 1,200.5348.
The internal strength indicator is trending up.
The S&P 500 is still moving up but is near the overbought level. The next resistance price is 1251.94.

S&P 500 NDX Continuous
Weekly
The current short term traders' position is Long.
The current long term traders' position is Long.
The current sell price for short term traders is 1,251.4950
Long term traders' stop loss price is 1214.62
The Current trend is bullish.
The Alpha Trend is trending up.
Today's closing price is 2.5174 percent to the support price of Alpha Trend.
The Alpha Trend Support price is 1,219.5002.
The one year moving average of the Alpha Trend is trending up.
Today's closing price is 5.9519 percent to the support price of the one year moving average of the Alpha Trend.
The one year moving average of the Alpha Trend Support price is 1,179.9689.
The internal strength indicator is trending up.
The S&P 500 is still trending up the next resistance price is 1275.33.


 

Erich Soltes

Author: Erich Soltes

Erich K. Soltes
AlphaTrendAnalysis.com

A graduate of Brookfield High School in Brookfield CT and an Eagle Scout, Erich went on to graduate from SUNY Maritime College in New York City in 1988, with a BS in Marine Transportation and a minor in Economics. For the next ten years he was a Navel Reserve officer and a Merchant Marine officer. In 1998 he went to work on Wall Street obtaining his series 7, 63 and 65 licenses. He worked both as a stockbroker and a financial planner helping clients obtain their financial goals. In 2004 he was able to finally reach his goal of developing a mathematical trading model that could beat the "buy and hold" method of investing. In mid 2005 the Alpha Trend Analysis website that you see before was created.

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