The Quick Takes Pro blog by Michael Kahn, CMT about anything that might affect your portfolio.
Friday, November 6, 2009
Classic pattern?
This is a chart we've been watching in Quick Takes Pro. If you have any faith left in technical analysis than a channel breakdown with falling-volume retracement should mean something.
I'd say we've lost the upside (optimistic) momentum, but there's no fear yet, so we can't actually change course ... (and that's based on TA as well as BF) ...
Thanks, Michael. This post could very well save some people a lot money. I haven't bailed but I put in fairly tight stops today. I don't want to around when price drops through that last low.
Can you comment on how High Frequency Trading might be affecting charting?
My limited understanding of it is that HFT is basically agnostic on sentiment, so since HFT trading volume represents neither a bullish or bearish treade wouldn't it "break" traditional charting indicators?
That being said, there was a similar rally on declining volume back in early October. But it does seem that were looking kinda right shoulderish here if 107 holds. . .
I am not really up on HFT but you are right - so many of the changes the market has undergone have made many technical indicators less reliable to worthless.
Just this simple move to pennies from 1/8s killed half of the trade based indicators such as Worden's and Birinyi's money flows. And TICK and TRIN seem different.
Forget judging who is trading what when so much of it happens in ETFs, options, off exchange, hedging and whatever.
I am not giving up on TA but we are going to have to figure out how to deal better.
I'm a little late to post a comment here, but sometimes it's nice to revist things a few days later. See the spread of VIX/SPX. There's a pretty nice warning sign building. 2 week ago the market was relatively less fearful. It appears that we may be creating a H&S top here (as opposed to one in the SPX alone). Today speaks volumes with the SPX jumping to a new 52wk high, while the VIX is jumping.
chart printed at 1pm NYT Friday.
8 comments:
I'd say we've lost the upside (optimistic) momentum, but there's no fear yet, so we can't actually change course ... (and that's based on TA as well as BF) ...
Thanks, Michael. This post could very well save some people a lot money. I haven't bailed but I put in fairly tight stops today.
I don't want to around when price drops through that last low.
Perhaps a head/shoulders forming too?
You read my mind (and newsletter?)
Yes, I see a much better head-and-shoulders pattern with confirming indicators that the one from July (which I got flak for debunking as valid).
If you have not bailed then how about some cheap put options - just in case? VIX is still mighty low (relative basis).
Can you comment on how High Frequency Trading might be affecting charting?
My limited understanding of it is that HFT is basically agnostic on sentiment, so since HFT trading volume represents neither a bullish or bearish treade wouldn't it "break" traditional charting indicators?
That being said, there was a similar rally on declining volume back in early October. But it does seem that were looking kinda right shoulderish here if 107 holds. . .
I am not really up on HFT but you are right - so many of the changes the market has undergone have made many technical indicators less reliable to worthless.
Just this simple move to pennies from 1/8s killed half of the trade based indicators such as Worden's and Birinyi's money flows. And TICK and TRIN seem different.
Forget judging who is trading what when so much of it happens in ETFs, options, off exchange, hedging and whatever.
I am not giving up on TA but we are going to have to figure out how to deal better.
I'm a little late to post a comment here, but sometimes it's nice to revist things a few days later. See the spread of VIX/SPX. There's a pretty nice warning sign building. 2 week ago the market was relatively less fearful. It appears that we may be creating a H&S top here (as opposed to one in the SPX alone). Today speaks volumes with the SPX jumping to a new 52wk high, while the VIX is jumping.
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