Up, Down, or Nowhere

//Up, Down, or Nowhere

Hawk’s Scan Sentry Report July 23

It’s important to remember that markets can go in three distinctly different directions. It can go up, it can go down, and it can go nowhere. Truly, it is when the market is churning sideways that traders’ often experience draw-downs on their accounts. This is because it is more difficult to make money when the trend is weak as it has been for the past month. So please be careful during these dog days of summer. These days, I’m doing better with my day trading account than my swing trading account. That is because it’s easier to find and work with trends on the shorter term intraday charts in markets like our weakly trending current one. Using intraday charts  doesn’t matter to the indicators I use; the technical analysis works the same way on intra-day futures charts as it does on daily and weekly stock charts.

As predicted in last week’s blog, the S&P e-mini futures contract started the week by going down and testing 1340 where it found support. Then, on the bounce back up it found resistance around 1375 and created a double top there, which is commonly a sell signal. In the process we can now start to identify on the daily chart a bearish pivot divergence forming in our Radar1 Fear/Greed and Radar2 Price Leader oscillators.  To me this indicates that the near term path of least resistance is once again downward for this market.

If we drill down to an intraday 180 minute glimpse of the same contract we can see the same divergences, only the last two or three days have formed compounding bearish pivot divergences. This leads me to believe that we could see a downside test of 1320  this week and perhaps 1300 if 1320 doesn’t hold. However, if the bulls maintain control of this market after the current correction and close above resistance at 1375 then I would expect to see a test the of yearly highs above 1400.

As always, I am creating a watch-list created by the Arps Scan Sentry Toolkit with equities poised to move in either direction. I share some of those with you below. If you have any questions about the indicators on these charts please follow this link to a legend describing these tools.

_____Longs_____

CX

(Here we see simultaneous breakouts from a Bull Flag pattern and the down trendline after the bullish pivot divergence in May/June ).

PPG

(A breakout to new highs as the Radar1 Fear/Greed strengthens beyond previous highs).

_____Shorts_____

FHN

(A breakdown from the up-trendline following a bearish pivot divergence in Radar1 Fear/Greed and Radar2 Price Leader ).

NKE

(A bearish Pullback 23 with an overbought Trend Exhaustion 1 sell signal occurring at a gap fill resistance line ).

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 .

2018-01-08T07:44:01+00:00July 22nd, 2012|Hawk's Picks|