Early Trend Identification

//Early Trend Identification

Hawk’s Scan Sentry Report February 6

Today I want to show you another set-up I like to look for, and offer a few examples of it from current charts.  To find the early identification of a bullish trend I look for the Arps Triple Trender to turn bullish (below the price) on all three Trenders and combine that signal with a cross above the zero center-line of the Radar3 Trend Strength Index. It’s pretty simple really. The Triple Trender identifies the orientation of the trend across three different abstract time-frames; while the Radar 3 Trend Strength Index confirms the direction of the trend and identifies the strength of it. This works even better when supported by a divergence in the Radar1 Fear Greed Indicator or the Radar2 Price Leader. You should put your stop on the outside of the long-term Trender because the price will often pull back into the short-term or medium-term Trender before really moving in your direction with conviction .  This is a good set-up in both bullish and bearish directions…. But the markets are so bullish right now that it is currently a bit difficult to find this set-up as a short-selling signal.

I am currently bullish on the medium and long-term orientation of the American markets these days for reasons political and historical as well as technical.  But, as always, I am preparing myself with trading options in both directions. Here is a sampling of a few that are on my watchlist this week with examples from the set-up described above.

_____Longs_____

MA

(A good example of the set-up described above. Note the divergence in the Radar1 Fear/Greed Index before the breakout).

CDNS

(Here’s one that shows the Triple Trender and Radar 3 signal nicely. I expect it to pullback to resistance around $10.80 and fill the gap  ).

KSS

(This one is NOT confirmed by the Radar 3 Trend Strength Index as described above, but is a bullish Triple Trender preceded by a very nice divergence ).

_____Shorts_____

KMX

(Here’s a bearish example of the set-up described above. As it is already close to resistance at $29.50, I would still look for a pullback into the Triple Trender for a good entry price).

LINE

(Here’s a pullback into the short Trenders with a newly bearish Radar3 Trend Strength signal. Note the Radar2 Price Leader crossing under its center-line while the downward pointing blue bars of the Radar3 Trend Strength tool show a pullback indication).

NEM

(I like the Pullback 23 signal in the downtrend here ).

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 .

2018-01-08T08:01:35+00:00February 6th, 2012|Hawk's Picks|