Tuesday, March 25, 2014

ImageCorrection in time or correction in price? The S&P 500 strong openings followed by weakness can render TD Sequential into a vacuum. Alternating price flips every other day is indicative of a trading range, which subsequently sets up a volatility squeeze demonstrated by the Keltner/Bollinger band (K/B) relationship. When the Bollinger band contracts fast enough where it enters into the Keltner band, the market goes into a “quiet period” and sets up a volatility squeeze. This is the case now for the daily where the SPX range is contained between 1840 – 1880. Once the Bollinger band exits back out the Keltner band, a momentum trend becomes probable. 

The TTM_Squeeze indicator from thinkorswim is a great visual indicator for the K/B relationship. The red horizontal dots are indicating a volatility squeeze on the daily and if they alternate between red and green, the squeeze gets larger if the weekly Bollinger band enters in the Keltner band space – indicating a wider potential volatility squeeze. Also, the longer the “red”, the more potential energy the market will possess. This indicator will play a bigger part if the S&P continues to trade sideways. (Another example of the TTM_Squeeze is shown below with Google)



Back to neutral with a SPX close above 1865.89.

ImageThe TDST Support and Resistance is defining the levels of interest but the bears have the ball. 



Staying bearish if the SPX closes below 1865.89, the same as Short Term Outlook.

ImageImageImageImageAll major daily indices are operating on the TD Buy Setups. The Nasdaq has one count in the lead. One noticeable difference is the Dow is no longer leading the downside. If the Dow closes above 16,276.69, it may foreshadow the continuing trend of no trend. 



Flip to bearish if SPX weekly closes below 1841.13 OR if all of the following occurs: SPX closes below 1859.45, Nasdaq 4245.40, and RUT below 1183.03 (updated March 24th).



Flip to neutral if SPX closes below 1805.81 on the last day of March (updated March 3rd). 



Google finally shows a confirmed sell.

ImageImageWhen Google broke 1000 back in October, it had all the ingredients for a upward trend and it did not disappoint. On the weekly chart, the Keltner/Bollinger volatility squeeze (TTM_Squeeze) took off, leading to a non-stop TD Sell Setup and never let off the gas pedal up until now. Speaking more to longer term holders, when a trend is confirmed with daily/weekly/monthly TD Sell Setups, you can filter the noise in accordance to timeframes. For example, there was a selloff back in late January on the daily chart that was never confirmed by the weekly chart. The TD Sell Setup continued unabated on the weekly. But recently there is some confluence between the TD Sell Setup @9 on the daily and TD Combo Sell @13 on the weekly. This becomes a red flag for a potential selloff. Currently this has been confirmed with both the daily and weekly charts on TD Buy Setups.  Looking forward, things can get serious if the 1160.56 TDST Support solidly breaks, but if it can hold around this area, followed by an eventual bullish price flip on the weekly, this will relay the message GOOG is ready to establish another uptrend.





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