Which Way Are We Going?

//Which Way Are We Going?

Hawk’s Scan Sentry Report July 16

Looking back at the analysis from last week one would have to say that the Scan Sentry Report did pretty well. Last Sunday I wrote that I thought the US equities would go down for a few days and then bounce back up…. this is exactly what they did.  I also wrote that one must continuously re-evaluate one’s analysis; you must not become too attached to a potentially outdated perspective. The markets are a dynamic stream of ever-changing data; and as such our analysis must also be equally dynamic. So what do we see for the coming week? Let’s take a look.

There are a lot of different ways that people like to look at the price movement of financial markets. Specifically, there are a lot of different ways to draw a chart. There are line charts, market profiles, candlestick charts , Renko charts , range charts, tick charts, daily charts , weekly charts , minute charts, and many others . One of my favorites for futures contracts is the volume chart. Rather than using time to delineate the beginning and end of each bar on the chart, a volume chart uses the number of contracts traded to determine the beginning and end of each new bar. This is especially useful when looking at equities index futures products that may not change very much during the hours when the underlying markets are closed and trading volume is slim. In this way the indicators are always calculating equally relevant bars; and you do not need to add a volume histogram to your charts either. Let’s do some analysis of the S&P futures contract using both daily and volume charts.

On the S&P futures contract our daily chart shows that we have pulled back into a relatively bullish Triple Trender; and the Radar3 Trend Strength Indicator is identifying a moderate bullish trend. However, our Radar1 Fear/Greed indicator shows that the bears have a slight advantage over the bulls right now, and the June  price highs created a bearish pivot divergence… which from a longer term perspective created a bearish pullback divergence.  Conclusion: we are bouncing up within a bullish pullback within a longer-term bearish market.

We see a similar pattern on the shorter term 100,000 share volume chart.  We have a bearish pivot divergence in the Radar2 Price Leader which created a longer term bearish pullback divergence easily seen in the Radar1 Fear/Greed indicator. However, our Triple Trender is currently quite bullish as is our Radar3 Trend Strength index.

So what do we conclude from this data? Using the information provided by these indicators I would expect to see the S&P once again go down early in the week (Radar2 bearish divergence), at least to the 1340 area and maybe as far as 1320. If 1340 holds, then look for upside tests of 1370.

As always I am creating a watchlist 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_____

CBSH

(An early trend opportunity with Triple Trender synchronicity, bullish Radar3 Trend Strength, and strengthening Radar1 Fear/Greed.  Beware, we are likely to get a TE1 overbought signal soon which may provide a slight pullback opportunity ).

NNN

(A breakout of the horizontal resistance trendline. All other indicators are quite bullish ).

DO

(Another early entry opportunity following a bullish pivot divergence in Radar1 Fear/Greed. Note that  Radar1 is making new highs while we get a nice breakout of the down-trendline and the Triple Trender synchronizes bullishly ).

_____Shorts_____

XRX

(Recent bearish Triple Trender after a bearish pullback divergence. Watch for support at $6.80 ).

CY

(A breakdown from the up-trendline and increasing bearshness in Radar1 Fear/Greed and Radar3 Trend Strength ).

TGI

(A pullback 23 combined with a TrendExhaustion 1 overbought sell signal, one of my favorites ).

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 .

2018-01-08T07:44:33+00:00July 16th, 2012|Hawk's Picks|