Hawk’s Scan Sentry Report August 6
The markets are thin and nervous… (but at least they are reacting pretty much as my last several blog posts have predicted). As a mini-swing trader I don’t generally trade off of the news, I figure that the news is usually already factored into the price by the time it gets broadcast to me. But in a jittery market like this one it seems that a few carefully chosen words can have as much or more effect on the markets than just about anything. This makes our jobs as technical analysts even more challenging.
Speaking of well picked (and over-used) words, consider this idea… everyone seems to be using the phrase “Fiscal Cliff” these days. What is the effect of this? Well, obviously it is meant to instill fear in the hearts and wallets of investors, consumers, and probably voters. When one phrase gets over-used by so many pundits it takes on the propaganda-like nature of a ‘talking point’ or ‘sound byte’. We all know that talking points are promulgated with an agenda behind them. So what advantage is there to pumping fear into the markets? Well, for one thing it puts the ‘trading masses’ on the wrong side of an up move. At the same time it makes it possible for the bulls to buy at a low price. Ironically, the whole time that we have been inundated with this phrase ‘Fiscal Cliff’ the markets have been making higher lows and higher highs. That seems like the opposite result of what one would expect given the economic doomsday that this phrase portends. I mention this simply as an observation, a theory, and NOT as analysis of the the markets. However, it does supply one non-technical reason to support a bullish outlook during these ‘Dog Days of Summer’ … as we march intrepidly toward the precipice of this fiscal cliff.
In addition to the higher lows and higher highs, the thin volume we typically see this time of year is the norm in a bullish trend, whereas bearish markets generally trade at higher than average volume.
Now for some technical analysis. Below are some charts of some symbols that the Arps Scan Sentry Toolkit has helped me identify for my weekly trading watchlist. Each contains a little explanation of the analysis visible on the chart. If you have any questions about the indicators on these charts please follow this link to a legend describing these tools.
(This is bottom fishing. Note the bullish pivot divergence in the Radar1 Fear/Greed indicator and the breakout of the down trendline. Also note that all three Radar tools are now giving bullish indications).
May the trend be with you,
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 .