Posts Tagged ‘momentum indicators’
America’s Retail Markets: Part V
I have decided to add another installment in this series before the final overview chapter is written. And indeed, it can not be written until we examine the United States’ leading retail foods giant, Wal-Mart.
Wal-Mart is now in the midst of a daily downwards fan pattern as shown on the Daily Chart below. This pattern can be somewhat unstable at the end, and it indeed seems to be nearing its’ end. It can break upwards and is likely to given the fresh upwards trends taken by the retail companies mentioned in my 2 previous articles. These are fresh trends and recently the 1st two articles’ stocks has started an upwards trend as well. Wal-Mart’s price level has been at or below the lower bounds of the Bollinger Bands, showing a tendency of over-selling, since the fan has started. The RSI is also right by the 30 level which is, basically, sold-out. The buyers may come, and probably soon, technically speaking. But economically this will rely on the major companies’ sales, revenue and profit margins as quoted in their next fiscal reports.
There seems to be good times ahead for the Retail Markets, as shown by the Bollinger Bands showing their crossing of the price levels, and the indicators that show oversold prices on the way in the Weekly Chart below. As I said, the RSI is sold-out and ready to accept buyers, or rather “bargain hunters”. And the Average True Range, or ATR is low indicating little intra-day changes in prices and signaling a breakout soon. Do not act in any way on this “tip” because there is no breakout yet. Watch your charts daily and, when you see a true pattern break, then it is more wise to act on.
This is the way the Weekly Chart looks:
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The Dow SPDR Trust Series
It seems the Dow Jones Industrial Average will not leave the headlines alone. It stands as I say and no one can dare prove me wrong, because they can’t. It is exactly as I mentioned it in my previous article on the Dow and that same thing exactly is what brought about about 50% of the September 2008-February 2009 avalanche, NOT any maneuver of putting massive stop-losses by Market Technicians or any other single investor or even the effect of the herd.
Granted that caused half of our woes, but their greed caused the start of the stocks falling down. But they hide, and the Congress and the Administrations, previous and present–continue to hide the incredible gnawing greed that caused the suffering of billions of people around the world. By selling-short, or selling what they have, in millions of share equity, they caused the panic–staying out of the bitter ending–and then, when they decided, they bought back slowly what they sold, quietly so no one will hear of it.
At any rate, third is the Exchange Traded Fund of the Stock Index called D.J.I, or the Dow Jones Industrial Average Index. This E.T.F tracks the DOW 30 and gives traders an opportunity to buy a priced version on this index that is otherwise not trade-able. The Monthly Chart shows how my OBV–EMA,3,-1 trading method shows a clear long-term buy signal, plus the RSI is in a good buying position, and the Daily Chart with the same method used has, at the lowest point technically correct come to a buying position.
This is the way the Monthly Chart looks:
This is the way the Daily Chart looks:
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EUR/GBP-EuroDollar vs British Pound
It is just not going well for the Euro lately. It is a period that does not bode well for it. It has lost ground to the Japanese Yen, the Australian Dollar, and as a matter of fact this past two months the leader in the climb on the back of the Eurodollar march is the Royal Great British Pound Sterling, the ighest valued currency in FOREX. That is not to take away credit from the Eurodollar, as it is the second in value after the Great Pound.
The Chart shows the downtrend I speak of. It has now come to a support line that may be strong enough to support further deterioration of the Euro’s value. This, as you may see from my previous article in this category, is true of the Euro/Yen pair as well. This, and the fact that there are other Euro pairs that are in a similar position, makes me wonder if the Euro might end the worldwide downswing it was in and change direction. This seems to be the case, at least, concerning the Euro/Yen and Euro/Pound pairs.
In the Euro vs. British Pound pair there exists another interesting phenomenon. The RSI shows a recent uptrend while at the same time prices went down. This is called a negative divergence and it is a good sign that forewarns a turnaround. This may yet be, and it may be sound financial advice to put a little money on the Eurodollar, at least against the Pound Sterling, or maybe even against the Japanese Yen.
This is the way the Chart looks:
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Do you Know a Sure Thing When You See One?
This advanced lesson will teach you the Know Sure Thing. This happens to be an indicator that is a complex, smoothed price velocity momentum indicator. This is a price velocity indicator that shows the rate of change in the prices over a moving average and weighted to give more recent data precedence. If it is used wisely, makes investing choices easier for even the most experienced. It was developed by Martin J. Pring and described in his book Martin Pring on Market Momentum, McGraw Hill 1993. Before you go jumping to conclusions, there IS no sure thing, as Pring points out, “it’s also important to know that this approach is not a sure thing.” But since there are better indicators available to us, we continue to search for the best method.
The KST can be used as a buy signal when the oscillating lines shown below cross each other going upwards. The sell signal is indicated when the lines seem to peak and come into a horizontal position, more or less. This is my approach, it is rather simple but it can give you more than 65% chance of having a profitable investment, more so when used for long term investment.
The KST seems to work, on the Charts I’ve tried it on, and may be useful to those who can get the formula and build the indicator in MetaStock version 11.0.
If you’re interested, this is MetaStock’s code for the KST indicator:
Periods:= Input(“Enter the number of periods”, 1,9999,1);
((1*Mov(((C/Ref(C,-(9*periods)))*100),(6*periods),E)
+2*(Mov(((C/Ref(C,-(12*periods)))*100),(12*periods),E))
+3*(Mov(((C/Ref(C,-(18*periods)))*100),(6*periods),E))
+4*(Mov(((C/Ref(C,-(24*periods)))*100),(6*periods),E)))
/10)-100;Mov(
((1**(Mov(((C/Ref(C,-(9*periods)))*100),(6*periods),E)
+2*(Mov(((C/RefC,-(12*+periods)))*100),(6*periods),E))
+3*(Mov(((C/RefC,-(18*periods)))*100),(6*periods),E))
+4*(Mov(((C/RefC,-(24*periods)))*100),(9*periods),E))
)/10-100,(9*periods),E);Input(“Plot a horizontal line at “,-100,100,0);
To get this indicator working, you must type the above code in the Equis Metastock 11.0 Charting Software at the Indicator Builder Option. Below is an example of It being used on Fannie Mae. Note that both red lines below the Chart have bowed into a horizontal position. This seems a time to sell, but never short-sell on this indicator, as that is not one of its defined uses.
produced by MetaStock (www.equis.com)
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The ProShares Ultra Oil and Gas Fund
This is a doubled up Fund, which means that if oil and gas prices go up 1 dollar, you gain 2 dollars and, understandably the converse is also true. This Commodity ETF is on a good upwards trend. The blue lines that demarcates the price line are Donchian Channels. When a security on its particular chart shows prices close to the upper bound of these channels for some time, as is the case here, this means that they will go down and do indeed at some point tend to go down past the Donchian Channel midpoint, that is the red line between the 2 blue channel lines. That was done in the last few days, and now the equity has broken its’ trend line, looking as if it is about to break into downwards pattern.
The ROC indicator has gone down to show a new downwards trend in the making, and so has the STOCH indicator, showing a clear sell after Wednesday trading. But the Weekly Charts show positive momentum on the ROC indicator and a buy signal has appeared on the STOCH, or Stochastics Indicator. Which is why I think that this is a good ETF to invest in only for a long period of time, taking into account that above the high s/r line in the daily chart, there is a whole lot of blank space with no horizontal lines in the horizon.
This is a long-term investment only. To profit from such investments, one must invest in the chosen equity for at least a year or more. I do beleive that Petrol Fuel prices are going to go up, but not soon. They have been down for the whole period of this last recession and, with the recovery in progress, and I still believe we are in a recovery with NO double-dip in sight and this is by all means an economically secure and fundamentally sound investment. It may stand still for a period, of even go down somewhat on the Daily Level, but on the Weekly and Monthly Charts, I see a lot of room for the thesis of a decent upwards trend developing.
For acting on this and positioning in this ETF, using the Monthly Chart is recommended in addition to the Weekly Chart. Though actions should be performed on a weekly basis with the Weekly Chart in mind.
This is the way the Daily Chart looks:
This is the way the Weekly Chart looks:
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The US Natural Gas Fund
The United States Natural Gas Fund (symbol UNG) is now in the process of testing the $7.7 price line that is acting as a resistance. The momentum indicator (MOM) is giving a positive value and that is a good sign; and the RSI is going into buying territory as well. There is a rectangular pattern, as seen in the Closing Line Chart below, that is emerging and is smaller at the right end of the scale and may break upwards, which is the likely way as market indicators show a chance for it to break upwards. The fact that the pattern is diminishing and is not on an upwards ascent and, in contrast the RSI and MOM indicators are showing an upwards trend starting means that there is here what we call a divergence between the indicators and the price line. This shows decision in favor of the upwards trend. This may come soon or later on, but this equity most probably will continue in this pattern for a while.
The indicators show us the way to a good opportunity, though not for certain. There is a high demand for Natural Gas in the US and prices are, fundamentally speaking, supposed to be going up. They may be, if this analysis proves correct and the pattern breaks in the right direction.
Below you see the Japanese Candlestick Chart showing the support/resistance line and the divergence in blue, the indicators going up and the prices down., and the Closing Line Chart showing the rectangular pattern. I picked the Line Chart because is many times makes clear ambiguous signals from the Candlestick Charts as to the placement of Line Studies.
This is the way the divergence looks on the Candle Chart:
This is the way the pattern looks on the Line Charts:
