Markets in Transition

//Markets in Transition

Hawk’s Scan Sentry Report April 23

This weekend as I scanned the markets with my ‘Scan Sentry Toolkit’ I noticed an interesting phenomena. Using the Arps TTB Triple Trender spreadsheet tool to score all of the stocks in the S&P 500 index I noticed that the number of bullish stocks, the number of bearish stocks, and the number of ‘in between’ stocks was divided almost evenly into thirds (the bears had a very slight advantage). This could mean one of two things; either the market is ambivalent, or the market is in the midst of a transition. I’m seeing a lot of divergences in the recent highs as they have been rolling  over which is common as rallies approach trend exhaustion.  The relative strength of the tech sector, the financial sector, and the energy sector are all getting weaker (these being the sectors which traditionally lead  market rallies). Only the  retail sector and the very volatile healthcare sector are still showing strength.  I also notice that the relative strength of Treasuries is getting stronger. Consequently I, like many others, am losing my appetite for intermediate-term bullish risk. Don’t get me wrong, my appetite for risk has not disappeared, only my appetite for holding my positions for more than a few days. Right now I am just as happy to trade short as I am to trade long… just not for long.  I will prepare myself for either direction.

For long entries I’m watching a few consolidation breakouts and pullback set-ups for short-term opportunities.  For short entries I will be following some bearish divergence patterns . Jan Arps has just published a nice article on the “Deep Dip Divergence” pattern which can be found at this link. There is also an example of this pattern below.

Below are a couple of long and short set-ups which have my attention this week. As always, if you have any questions regarding the indicators on these charts you can find their descriptions and explanations by following  this hyperlink.

_____Longs_____

HOG

(After a pullback ‘Trend’ divergence, we see a nice breakout from congestion which synchronizes the Triple Trender. Radar1 Fear/Greed and Radar3 Trend Strength indicators have both resumed bullish indications.  )

CPN

(A breakout of the Flag pattern which synchronizes the Triple Trender. Radar1 Fear/Greed is showing increasing buying enthusiasm. )

_____Shorts_____

SIMG

(Here we see an example of a Deep Dip Triple bearish divergence pattern. Click this link for a nice article recently written by Jan Arps describing Deep Dip Divergences.)

FCS

(One big down bar just changed the Triple Trender and the Radar1 Fear/Greed to bearish orientations. The Radar2 price Leader is decelerating as the Radar3 Trend Strength becomes more bearish. I’ll try and take this down to support at $13.15 for a 5% target. )

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 .

2018-01-08T07:53:42+00:00April 22nd, 2012|Hawk's Picks|