Downside Up?

//Downside Up?

Hawk’s Scan Sentry Report July 30

This week’s analysis of the S&P futures contract is nearly the opposite of last week’s.  As I see it, the path of least resistance now is to the upside. Nonetheless, I expect the American equities markets to begin the week by moving lower than they ended last week.  Here is why. The rally which began on Thursday and continued on Friday managed to confirm higher lows and higher highs… the textbook definition of an uptrend.  Yet, since our shorter term charts are showing bearish divergences and some overbought indications, this suggests that we may see some downside movement in the markets early this week. The medium term outlook at this point, however, is bullish.   The daily S&P futures chart shows bullish indications from Radars 1,2, and 3 as well as the from the Triple Trender; and to top it all off we just got a bullish Pullback 23 signal too. As mentioned last week, since Friday closed above the previous resistance level of 1375,  I am now anticipating tests of the previous highs above 1400. The key is to watch the Radar1 Fear/Greed indicator to see if it keeps making higher highs. Until it tops the previous high from July 3rd on the daily chart we are going to continue to have bearish divergences. We all know, however, that a market can rally for quite a while in spite of  these divergences.

As I have said before, when trading these markets we must be as objective as possible and allow our outlook to be as dynamic as the markets are themselves. It is important not to be blinded by past expectations or our current positions. As wiser men than me have said, “Hope is not a trading plan”.

As always, I will be prepared with opportunities both long and short. To create my weekly watchlist I use the Arps Scan Sentry Tools. I’ll share with you below some of the equities on my list this week and why they are there. If you have any questions about the indicators on these charts please follow this link to a legend describing these tools.

_____Longs_____

CVH

( A breakout of the down trendline accompanied by a bullish Pullback 23 and preceded by a nice bullish pivot divergence in the Radar2 Price Leader. This causes the Triple Trender to synchronize bullishly. Also note the strengthening Radar1 Fear/Greed indicator).

AMGN

( A breakout of a Bull Flag pattern to new highs accompanied by a bullish Pullback 23 ).

WIBC

(Another breakout to new highs. Note the recent Pullback 23 ).

_____Shorts_____

AMRN

(Denied at the $16.00 resistance level with bearish divergences in Radars 1 & 2. Also, on Friday when the rest of the market was blasting off, this dog went down… a lot ).

APKT

(We tested new lows and pulled back to the level that was previously support. We are in the midst of a Bear-Flag breakdown. Note the bearish divergences in Radar2 Price Leader. Also note that Radar 1 Fear/Greed just turned bearish again after a pullback divergence).

May the trend be with you,

Hawk

Jan Arps’ Traders’ Toolbox is not an investment advisory service nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities customers should buy or sell for themselves. Examples presented on this site are for educational purposes only.  It should not be assumed that the methods, techniques, or indicators presented in these examples will be profitable or that they will not result in losses. There is a high degree of risk in trading.  Readers using this information are solely responsible for their actions and trade at their own risk. Readers should always check with their licensed financial advisor .

2018-01-08T07:43:26+00:00 July 29th, 2012|Hawk's Picks|