Hawk’s Scan Sentry Report May 14

Looking at the market as a whole we’ve seen quite a correction over the past several weeks. Since we’ve corrected this much, a lot of indicators are exhibiting pullback buying signals. Is this really a buying opportunity, or are we seeing the beginnings of a secular bearishness? It seems to me that there are quite a few hungry bears coming out of winter hibernation. One of the reasons for this perspective is that the rallies of 2010 and 2011 have been to a large extent fueled by bank bailouts and cheap dollars loaned into existence by the FED.  Is there any money left to continue to fuel this cyclical rally? Are the monetary manipulators running out of tricks up their deep sleeves? When you examine individual symbols you may still find opportunities to buy into. However, examine your pullbacks carefully; many of the current pullback opportunities are occurring following bearish pivot divergences at the recent highs and the pullbacks are in many cases making lower lows than the previous pullbacks. It’s true that false pivot divergences occur within strong rallies, but the last one will always be the correct one, and one of them has to be the last one! The lack of enthusiasm in the recent rally which peaked around April Fools Day leaves me (and my indicators) identifying my best trading opportunities at this time on the short side of this market. Nonetheless, I am just as prepared to buy as I am to sell.

This week I’m finding several trading opportunities using combinations of the Triple Trender and the Trend Exhaustion1 tools. Following is a smattering of what I’m looking at after I filter through all of the symbols that I examine to establish my Sunday night watchlist? The charts are accompanied by a little explanation about each of the indicators. As always, if you have any questions about any of the indicators on these charts you can find an indicator legend at this link.

_____Longs_____

CERN

(Here we see a pullback into the short-term Triple Trender (and the breakout price) after making new highs. This is accompanied by a Trend Exhaustion1 Oversold signal. We also see increasing bullishness in the Radar1 Fear/Greed indicator.)

AXP

(Another  pullback into the short-term Trender . The Radar2 Price Leader is showing the set-up signs of an oversold buy signal. This is especially appealing as the Radar3 Trend Strength indicator is showing indications of a pullback in a bullish trend. )

_____Shorts_____

ESRX

(One of my favorite set-ups! A bearish pullback into a recently synchronized Triple Trender. Our Wave Count indicator indicates that we are likely past the end of bullish Wave 5 which is corroborated by the series of bearish pivot divergences leading into the highs of early April.)

OCN

(Here we see a Trend Exhaustion1  overbought signal. Note how the Radar3 Trend Strength is showing that this is a pullback in a bearish trend while the Radar2 Price Leader is not only overbought, but preparing to give us a sell signal by crossing below the slow line.)

By the way, last weeks picks did nicely. In a bearish market even the long recommendations did well. HAIN was up over 7% on the week. We had some short positions which did well as well. I hope you did too.

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 and their tax advisor to determine the suitability of any investment.

Hawk’s Scan Sentry Report May 7

As I look at the  June S&P futures contract (eMini)  I notice that since it started trading regularly in early March, the base of  it’s early accumulation occurred at a price around 1360. Friday’s close of $1362.50 was very close to this significant support level. If it trades much lower than that level, then pretty much every long position on the March contract is losing money. That should add to the ‘fear factor’ of the current market.  The contract’s high was around 1415 several weeks ago.  “Sell in May and walk away”… that’s what they say. Well, they didn’t waste any time selling. It looks to me like the selling started promptly on May Day and didn’t stop all of last week. It took only one week to trade from near the contract high (1415) to the contract low.

So how do we make money in this type of market?  It looks to me like there is a lot of money going into Treasury bonds right now, so you could follow that crowd.  But there is not a lot of return there.  If you want to trade stocks this is what I would do. First be willing and able to sell short…. after all, the market goes in both directions and we need to be able to make money either way. Remember, the market generally goes down a lot more rapidly than it goes up, so don’t chase shorts.  If you do trade long, make some quick money and get out. It’s best to filter your long trades to stocks that are in the strongest sectors which at this time appear to be home builders, utilities, and consumer staples. Unless you are a trend trader don’t expect to hold any trades more than a few days.   It is  important to note that the amount of risk you expose yourself to in the markets can be measured by time as well as by dollars. I am going to be monitoring each day’s sentiment and day-trading in that direction for quick (and little) profits or losses.

As I scan my universe of nearly 7000 stock symbols with my Scan Sentry Toolkit I notice that there are exponentially more short set-ups this week than long. Below you will find a few of the stocks that are on my watch-list for the early part of this week, and some of the reasons I am monitoring them.  For an explanation of the indicators on the charts below please follow this link.

_____Longs_____

HAIN

( One of the few stocks left with a bullish Triple Trender. This one broke to new highs with a Pullback 23 signal while the rest of the market was tanking.)

LF

(Another bullish breakout with a Pullback 23 signal and a bullish Triple Trender. )

_____Shorts_____

LAMR

(Here is a bearish Pullback 23 coinciding with a Trend Exhaustion Overbought signal and a Trendline Breakdown signal. Also Radar1 Fear/Greed indicates very few buyers at this time. )

LINTA

(After the first pullback into a bearish Triple Trender we get a Pullback 23 signal. Also note the very weak buying enthusiasm indicated by Radar1 Fear/Greed.)

VLO

( A very nice Bear Flag breakout signal coinciding with a Trendline Breakdown signal.)

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 and their tax advisor to determine the suitability of any investment.

This weekend as I scanned the markets with my ‘Scan Sentry Toolkit’ I noticed an interesting phenomena. Using the Arps TTB Triple Trender spreadsheet tool to score all of the stocks in the S&P 500 index I noticed that the number of bullish stocks, the number of bearish stocks, and the number of ‘in between’ stocks was divided almost evenly into thirds (the bears had a very slight advantage). This could mean one of two things; either the market is ambivalent, or the market is in the midst of a transition. I’m seeing a lot of divergences in the recent highs as they have been rolling  over which is common as rallies approach trend exhaustion.  The relative strength of the tech sector, the financial sector, and the energy sector are all getting weaker (these being the sectors which traditionally lead  market rallies). Only the  retail sector and the very volatile healthcare sector are still showing strength.  I also notice that the relative strength of Treasuries is getting stronger. Consequently I, like many others, am losing my appetite for intermediate-term bullish risk. Don’t get me wrong, my appetite for risk has not disappeared, only my appetite for holding my positions for more than a few days. Right now I am just as happy to trade short as I am to trade long… just not for long.  I will prepare myself for either direction.

For long entries I’m watching a few consolidation breakouts and pullback set-ups for short-term opportunities.  For short entries I will be following some bearish divergence patterns . Jan Arps has just published a nice article on the “Deep Dip Divergence” pattern which can be found at this link. There is also an example of this pattern below.

Below are a couple of long and short set-ups which have my attention this week. As always, if you have any questions regarding the indicators on these charts you can find their descriptions and explanations by following  this hyperlink.

_____Longs_____

HOG

(After a pullback ‘Trend’ divergence, we see a nice breakout from congestion which synchronizes the Triple Trender. Radar1 Fear/Greed and Radar3 Trend Strength indicators have both resumed bullish indications.  )

CPN

(A breakout of the Flag pattern which synchronizes the Triple Trender. Radar1 Fear/Greed is showing increasing buying enthusiasm. )

_____Shorts_____

SIMG

(Here we see an example of a Deep Dip Triple bearish divergence pattern. Click this link for a nice article recently written by Jan Arps describing Deep Dip Divergences.)

FCS

(One big down bar just changed the Triple Trender and the Radar1 Fear/Greed to bearish orientations. The Radar2 price Leader is decelerating as the Radar3 Trend Strength becomes more bearish. I’ll try and take this down to support at $13.15 for a 5% target. )

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 and their tax advisor to determine the suitability of any investment.

Welcome back to Hawk’s Scan Sentry Report. As some of you may have noticed, this report took a week off over Easter weekend. This is what I learned over that absence… If the Easter holiday is supposed to be about new life, regeneration, or resurrection the equities market didn’t seem to get the memo. I’m sure that you noticed that the only market participants that found new life over the last several weeks were ‘da bears’. Our current market environment demonstrates a ‘risk-off’ mentality identified by a lot of money shifting from equities into the supposedly safer bond markets. We have seen quite a bit of profit taking of late which may indicate the beginning of a distribution  phase for many of the high-flying stocks which have led this year’s rally.

So how do I trade this type of market?

In a market like this, the types of trading set-ups I’m looking for are very specific. My time frame for being in a trade is much shorter than while the market was strongly rallying.  I don’t expect to hold anything for more than a couple of days at the most until the market shows its hand. The stocks I will be trading are generally filtered by industry to select only from those sectors which are showing stronger relative strength than the S&P index.  I am primarily interested in momentum trades that are likely to attract the attention of industrial strength players. For long entries I’m scanning for strongly trending stocks; those that are breaking out of congestion may still be good for a 5% gain in a couple of days.

For short trades I want to catch sell stops being run or topping divergences which may indicate trend exhaustion.  The shorts on my watchlist are mostly chosen from industry groups that have recently been weaker than the S&P index.

Let’s take a look at  a few stocks from this week’s  list and I’ll provide a  little explanation of the technical analysis indicated on the charts. If you want further explanation of any of the indicators on the charts below you can find a ‘legend’ at this link.

_____Longs_____

PM

(Note the Oversold Trend Exhaustion1 signal occurring within a nice pullback into the Triple Trender. Also note that Radar 2 Price Leader and Radar3 Trend Strength are setting up for a potential Pullback 23 signal. )

MKC

(Here we see another pullback into the Triple Trender accompanied an oversold Trend Exhaustion 1 signal. The Arps Auto-divergence finder has simultaneously identified a “Trend” divergence signal. Also note the continued accumulation indicated by the Radar1 Fear/Greed indicator. )

ARB

(Here we see a nice Bull Flag pattern preparing to break out. Note the accelerating Radar2 Price Leader. )

_____Shorts_____

PIN

(Here a Bear Flag has just broken down accompanied by a recent shift to bearishness identified by the Radar3 Trend Strength Indicator. This signal is accompanied by a bearish  breakdown of the up-trendline.)

ACHN

(The Triple Trender has just aligned into bearishness as a bearish trendline breakdown occurs. Note how strongly Radar2 Price Leader and Radar3 Trend Strength are bearish.)

ATLS

( THIS SET-UP IS MORE RISKY! Note the Trend Exhaustion3 signal along with the bearish Pivot divergence. The divergence is easy to see in the Radar2 oscillator below.)

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 and their tax advisor to determine the suitability of any investment

Hawk’s Scan Sentry Report April 2

When I want to look at the American equities markets in general, I look at the E-Mini futures contract as a reference (I also like to day trade it on occasion). This week I noticed a few interesting things from my technical analysis indicators. First, note the consistently decreasing buying pressure over the last few months (indicated by the Radar1 Fear/Greed indicator) as the price has been rising. This is a strong signal that the rally is losing stem. We even saw it dip into the bearish side of the zero line this week for the first time since last November. Could this be a prelude to the old axiom “Sell in May and Walk Away”? Well, it’s not May yet! Note the bullish Pullback 23  signal indicating a likely continuation to the upside, and all three Trenders of the Triple Trender are still bullish.  As noted last week, it is time to be very careful with our swing trades, but I don’t think it’s time to abandon ship yet.  As this rally continues to play itself out I will look for opportunities to sell out of my bullish swing positions (I have not been bearish since late last year). I have already been stopped out of a couple of positions, but I believe that there is still a bit more upside to this rally for short term trades. I am still bullish on my longer term (years) investments as well.

Below are a few individual stocks from this week’s watch list and a little explanation of the technical analysis indicated on the charts. If you want further explanation of any of the indicators on the charts below you can find a ‘legend’ at this link.

_____Longs_____

FDO

(This is a basic breakout of congestion on increasing buying pressure after a nice pullback into the Triple Trender. Radars 1,2 and 3 are all getting stronger .)

FRBK

(Another breakout from congestion, this one accompanied by a TE1 signal and a Pullback 23. Radar1 Fear/Greed shows quite a bit of accumulation in the consolidation period preceding the breakout. )

CYH

(This one just filled a gap which was a key support level and in the process created a bullish pullback divergence in Radar1 Fear/Greed and a bullish Pivot Divergence in Radar2 Price Leader. These are accompanied by a Pullback 23 signal. )

_____Shorts_____

HMSY

(I like the pullback into the Triple Trender and the subsequent Pullback 23 signal. Also note the diminished buying enthusiasm indicated by Radar1 Fear/Greed at the recent highs. )

LNCR

(Radars 1,2 and 3 all just turned bearish as did the Triple Trender. There hasn’t been much buying in the last stages of this rally!)

MTL

(Radar 3 Trend Strength just turned bearish to synchronize with the Triple Trender. Radar1 Fear/Greed is indicating increasing selling pressure on this stock.)

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 and their tax advisor to determine the suitability of any investment.

Hawk’s Scan Sentry Report March 26

Well, clearly the American stock indexes are drawing back and everyone wants to know if this is the end of the rally, or is this a buying opportunity? I look at hundreds of charts every weekend and I must say that I am seeing a lot of bearish pivot divergences in the recent highs. Of course, we all know that strongly trending markets are known for giving several false divergence signals before they finally run out of steam. That is what I think we are witnessing here. In the long run (6 months – 1 yr) I am still bullish; I believe that this rally still has more fuel in the form of sidelined money that will eventually push some stocks higher. For the short term, however, I’m tightening my stops and I am being a bit more cautious about the set-ups I’m willing to trade. I am,nonetheless, still looking for good pullback opportunities as well as valid breakouts from congestion.

Here are a few items from this week’s watch list and a little explanation of the technical analysis indicated on the charts. If you want further explanation of any of the indicators on the charts below you can find a ‘legend’ at this link.

_____Longs_____

ESL

(Here we see a breakout of the down trendline and a continuation of the Bull Flag progression after a nice pullback into the Triple Trender.)

UTIW

(A breakout from the down trendline after a pullback into the Triple Trender. Also note the strengthening Radar1 Fear/Greed indicator. )

_____Shorts_____

TOL

(Note the diminishing bullishness in the Radar1 Fear/Greed indicator creating a bearish pivot divergence. I would not short this stock, however, until all three Trenders are bearish and Radar3 Trend Strength crosses below zero. )

AEC

(I like the recent Overbought TE-1 signal and the selling pressure indicated by the Radar1 Fear/Greed indicator.)

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 and their tax advisor to determine the suitability of any investment.

Hawk’s Scan Sentry Report March 26

Ok…I admit that I am a college hoops fan and have been enjoying following some of the games of the NCAA Men’s Basketball Tournament (‘March Madness’) this week. The obvious metaphor here is that the bracket picks that look the strongest according to the analysts’ rankings will not always be the best or correct choices. It’s the same with choosing stocks regardless of whether you are using technical analysis or fundamental analysis for your choices. The rankings are often irrelevant to the performance. When we trade the markets, the rise or fall in price is beyond our control… only our response to what happens is within our power.  As I watch some of the basketball games, it is interesting to observe the mental and emotional fortitude of the individual players and teams. Sometimes it is easy to see who will succeed and who will not in that high pressure environment by observing their emotional response to success or adversity. Here we have another analogy with trading… we must develop mental and emotional discipline as well as our intellectual and financial fortitude in order to succeed. Having a good coach makes a big difference.

As a part of our 20th Anniversary celebration, Jan Arps’ Traders’ Toolbox is offering a free webinar with esteemed trading coach Adrienne Tograhie on Tuesday March 20^th at 4:30 PM (EDT). She will discuss some of the psychological challenges of trading and how to successfully address them.   Pre-registration is mandatory for this event, so please take advantage of this free opportunity and use the following URL link to register for her webinar:
http://tradingontarget.omnovia.com/registration/pid=75881331324225

What have you got to lose?

And now for this weeks charts… In the selections below you will find a few examples from my watch-list for this week. These include some early trend identification trades, pullbacks, and trend exhaustion trades. If you want further explanation of any of the indicators on the charts below you can find a ‘legend’ at this link.

_____Longs_____

CBSH

(I like the bullish accumulation in Radar1 Fear/Greed, the recent bullish signals in the Triple Trender and Radar3 Trend Strength as we approach the beginning of a Wave-5 identified by the wave pattern indicator. I will wait to see a breakout of resistance on heavy volume to confirm entry).

OSG

(I like the Pivot-Buy signal followed by the bullish trendline breakout, Triple Trender synchronization and now Radar3 is starting indicate bullish trend strength).

BXS

(This one may pull back to $12.50 support. I like the bullish breakout after a nice consolidation marked by a lot of buying pressure indicated by Radar1 Fear/Greed).

_____Shorts_____

OKE

(Here we see a Pivot-Sell Divergence signal coinciding with a couple of Trender Pullback signals after the Triple Trender turned bearish. Radar 1 Fear/Greed indicates a lack of buyers at the top of the rally in late January and a recent consolidation marked by sell strength. )

ARCC

(Note the Pivot-Sell divergence signal 11 bars ago. Radar3 and the Triple Trender are both bearish now).

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 and their tax advisor to determine the suitability of any investment.

Hawk’s Scan Sentry Report March 12

In last week’s blog I discussed looking for pullback opportunities while the market is trending. And this past week was a good week for picking up a few more shares on the retracement… and for holding on to the shares I’ve already got.  As always, my stock scans are oriented toward early trend identification (which is hard to find these days), and pullbacks within the trend. This week I am turning to one of our new tools, our market Wave Analysis indicator to help identify some of my trading opportunities. I am also looking for signs of trend exhaustion, distribution, and decline for my potential short-term short positions. The Arps Scan Sentry tools which accompany most of my indicators make it easy to scan a universe of symbols for the trading set-ups which these indicators identify.

Below you will find a few examples from my watchlist for this week. If you want an explanation of any of the indicators on these charts you can find a ‘legend’ at this link (I know that the link did not work last week, and I apologize… but I think that we fixed it).

_____Longs_____

LPS

(Here is a nice breakout of the downtrend line and of the Flag pattern. The W3 and W4 signals indicate which wave patterns have been completed. This looks like the beginning of Wave-5).

IRDM

(Here’s another trendline breakout preceded by an oversold pullback which was  identified by Trend Exhaustion 1. The Triple Trender has just synchronized bullish and all three Radar tools are now bullish. Note the beginning of the Wave-5 in the Wave pattern analysis).

QEP

(A Pullback 23 signal after the first pullback into the bullish Triple Trender. I like to find Triple Trender synchronicity during the Wave 2 phase of the Wave analysis for early trend identification ).

_____Shorts_____

CHT

(A pullback into the Triple Trender accompanied by an overbought Trend Exhaustion1 signal as well as a Pullback 23 signal. Note the gradually increasing bearishness of the Radar1 Fear/Greed indicator).

CAVM

(Here’s an example of the Triple Trender turning bearish about the same time that the Radar3 Trend Strength does. This follows a retracement to the pullback signal on the downtrend line. Notice the recent weakness of the buyers and the increasing selling pressure identified by the Radar1 Fear/Greed indicator).

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 and their tax advisor to determine the suitability of any investment.

A lot of market bystanders these days want to know “How do you jump onto a raging bull?”. Many watched the January/February rally from the sidelines, some doubting it, and others waiting for a pullback to jump into.  Some news junkies may have even tried to short the early 2012 rally.  Well, if you ask a rodeo cowboy how to get on a raging bull he’ll tell you to get on it before it starts raging… and then hang on like hell! In one way the rodeo bull is a really good analogy… that “ lil’ doggie” is going to buck and bounce and do everything he can to throw you off the ride…Just like the markets we trade. Those rodeo pros have a visceral understanding of volatility!

A month or so ago I expressed my bullish sentiment, and started accumulating positions to hold onto for swing trades…. Even so, I was further behind the trend than I like to be.  I am still bullish for the long run, but given that the market has been trending for several months now, I’m now scanning for pullbacks in the trend for my trading opportunities. I have several types of pullbacks I look for which will be demonstrated in the charts below. One of my favorites is the combination of an oversold signal in Trend Exhaustion1 (R2) with a Pullback 23 signal. Another good low risk set up is to look for a Trender Pullback after the Triple Trender has synchronized; or, if you want confirmation, wait for the short-term Trender of the Triple Trender to reconcile the Triple Trender synchronicity. A Flag pattern is another good pullback in the trend pattern. I also like to scan for pullbacks to a trendline with my Trendline Signals indicator. Fortunately I have scanning tools which match the charting tools to help me find some of these set-ups.

Let’s take a look at a few of the stocks from my watch list this week and I’ll show you what I’m talking about. If you have any questions about any of the indicators on the charts below, you can find an indicator legend at  http://www.janarps.com/main/images/upload/BlogLegend.pdf

_____Longs_____

MR

(Here we see a breakout above resistance represented by the downtrend line following  the second pullback after the Triple Trender synchronized bullish… and a breakout of a Flag pattern! ).

EQY

(Here we see a confluence of a Trender Pullback into the long-term Trender, a Pullback 23, and an Oversold Trend Exhaustion1 (R2). The oversold Radar2 valley creates a “Pullback Divergence” also known as a “ Trend Divergence”).

_____Shorts_____

QCOR

(Note the Pullback 23 and the simultaenous overbought Trend Exhaustion1 signals after a pullback into a recently short Triple Trender. Also notice the ‘Trend’ divergence in Radar 2 Price Leader. I also call this type of divergence a ‘Pullback Divergence’).

OSK

(Here we have a breakdown from the uptrend line, all three Radar tools have just gone bearish, and the Triple Trender just turned bearish).

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 and their tax advisor to determine the suitability of any investment.

In this post I want to share with you how I read between the lines when I look at a price chart. There are many ways people have found to draw trendlines.  I will show you what I have found to be the most effective method. In order to draw an up-trendline, first identify the most recent valley on the price chart and then identify the next most recent valley of the same magnitude whose nadir is lower than the most recent nadir. If there is no lower valley over the lookback period, then the up-trendline is a horizontal line at the lowest low. The opposite is true for down-trendlines.

Trendlines represent significant points of support and resistance, not just for aesthetic reasons on a chart but because they truly show us the price points where significant buy/sell decisions are made. Often you will notice that price will oscillate back and forth across a trendline for several bars. That’s because this is often the “line in the sand” where the traders find their trading opportunities. You see, the slope of the trendline represents the ‘average speed’ at which a stock is moving, the higher the slope the higher the speed. When the price crosses the trendline it means that the price may no longer move at the same speed or even in the same direction. This offers opportunities for entering or exiting a trade and is often the battlefield where the tug-of-war between the bulls and the bears takes place.

There are several distinctly different types of trend-line signals. A cross above a down-trendline is a bullish breakout which signifies ‘hope’ for the future of the stock.            A subsequent cross back below that line is a failed test of  the breakout and represents insufficient energy from the bulls. This could be a bearish pullback opportunity. A cross below an up-trendline is considered a bearish breakout and represents pessimism toward the future price; however a cross back above that up-trendline is seen as a bullish pullback opportunity… These signals are very useful and become even more effective when divergence analysis is included to qualify the signals.

Here are a few stocks that I’m looking at this week which  show trendline signals. I’ll demonstrate one of each type. If you have any questions about any of the other tools shown on the charts below please follow this link .

_____Longs_____

Bullish Breakout – FTE

(Note the cross of the value of the previous peak in the Radar1 Fear/Greed Indicator preceded by a  Bullish pivot divergence . Also, note the recent bullish indications of The Triple Trender and Radar 3 Trend Strength Index).

Bullish Pullback -LHO

(In addition to the trendline pullback, we have a Trend Exhaustion1 signal and a Pullback 23 signal. Nice pullback into the long-term Trender as well ).

_____Shorts_____

Bearish Breakout – SWY

(This breakout signal was preceded by a nice bearish divergence in the Radar 1 Fear/Greed indicator and the Radar2 Price Leader. We also now have all three Trenders bearish and the first bar of a bearish Radar 3 Trend Strength indication).

Bearish Pullback – GPC

(This shows a failed test of the horizontal downtrend line at the same value as the uptrend line. All three Triple Trenders just went short, the Radar3 Trend Strength indicator just went short, and we have a bearish divergence in the Radar1 Fear/Greed indicator).

Here is an example of the scanner I use to find the trendline signals.

May the trend be with you,

Hawk

Jan Arps’ Traders’ Toolbox is not an investment advisory service nor a registered investment adviser 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 adviser and their tax adviser to determine the suitability of any investment.