Comments on: Head and Shoulders and Divergences on Daily SP500 http://blog.afraidtotrade.com/head-and-shoulders-and-divergences-on-daily-sp500/ Helping traders overcome fears and emotions in trading Thu, 09 Feb 2012 14:53:15 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: buygold http://blog.afraidtotrade.com/head-and-shoulders-and-divergences-on-daily-sp500/comment-page-1/#comment-213262 buygold Mon, 13 Jul 2009 08:45:46 +0000 http://blog.afraidtotrade.com/?p=4248#comment-213262 Corey, <br><br>Great work. I have been short this market since early June. I've been seeing the volume price divergence since May. Now the question is how bad is the correction going to be. Any ideas?<br><br>Take a look at my post/chart from the early June where I prepared readers to short the dow.<br><br><a href="http://goldstocktrades.wordpress.com/2009/06/08/buyers-beware-major-resistance-be-prepared-to-short/" rel="nofollow">Be Prepared to Short Dow</a> Corey,

Great work. I have been short this market since early June. I've been seeing the volume price divergence since May. Now the question is how bad is the correction going to be. Any ideas?

Take a look at my post/chart from the early June where I prepared readers to short the dow.

Be Prepared to Short Dow

]]> By: buygold http://blog.afraidtotrade.com/head-and-shoulders-and-divergences-on-daily-sp500/comment-page-1/#comment-209860 buygold Mon, 13 Jul 2009 03:45:46 +0000 http://blog.afraidtotrade.com/?p=4248#comment-209860 Corey, <br><br>Great work. I have been short this market since early June. I've been seeing the volume price divergence since May. Now the question is how bad is the correction going to be. Any ideas?<br><br>Take a look at my post/chart from the early June where I prepared readers to short the dow.<br><br><a href="http://goldstocktrades.wordpress.com/2009/06/08/buyers-beware-major-resistance-be-prepared-to-short/" rel="nofollow">Be Prepared to Short Dow</a> Corey,

Great work. I have been short this market since early June. I've been seeing the volume price divergence since May. Now the question is how bad is the correction going to be. Any ideas?

Take a look at my post/chart from the early June where I prepared readers to short the dow.

Be Prepared to Short Dow

]]> By: Why 880 in SPX is SO important http://blog.afraidtotrade.com/head-and-shoulders-and-divergences-on-daily-sp500/comment-page-1/#comment-209834 Why 880 in SPX is SO important Wed, 08 Jul 2009 17:40:09 +0000 http://blog.afraidtotrade.com/?p=4248#comment-209834 [...] have now officially broken this confluence level, as well as the Neckline on the Head and Shoulders formation - that’s clearly a bearish [...] [...] have now officially broken this confluence level, as well as the Neckline on the Head and Shoulders formation – that’s clearly a bearish [...]

]]> By: Why 880 in SPX is So Important | Afraid to Trade.com Blog http://blog.afraidtotrade.com/head-and-shoulders-and-divergences-on-daily-sp500/comment-page-1/#comment-209833 Why 880 in SPX is So Important | Afraid to Trade.com Blog Wed, 08 Jul 2009 16:19:19 +0000 http://blog.afraidtotrade.com/?p=4248#comment-209833 [...] have now officially broken this confluence level, as well as the Neckline on the Head and Shoulders formation - that’s clearly a bearish [...] [...] have now officially broken this confluence level, as well as the Neckline on the Head and Shoulders formation – that’s clearly a bearish [...]

]]> By: Corey Rosenbloom, CMT http://blog.afraidtotrade.com/head-and-shoulders-and-divergences-on-daily-sp500/comment-page-1/#comment-209801 Corey Rosenbloom, CMT Mon, 06 Jul 2009 19:08:57 +0000 http://blog.afraidtotrade.com/?p=4248#comment-209801 True - excellent point. We can look to other related leader/laggard markets as confirmation/non-confirmation and clues. For example, it looks like Crude Oil may be hitting (and coming down from) confluence resistance which hints that the S&P may be doing the same. <br><br>There's so many things to use for conf/non-conf. True – excellent point. We can look to other related leader/laggard markets as confirmation/non-confirmation and clues. For example, it looks like Crude Oil may be hitting (and coming down from) confluence resistance which hints that the S&P may be doing the same.

There's so many things to use for conf/non-conf.

]]> By: Corey Rosenbloom, CMT http://blog.afraidtotrade.com/head-and-shoulders-and-divergences-on-daily-sp500/comment-page-1/#comment-209799 Corey Rosenbloom, CMT Mon, 06 Jul 2009 19:07:38 +0000 http://blog.afraidtotrade.com/?p=4248#comment-209799 Please refer to my many blog posts that reference the principle "Momentum Precedes Price."<br><br>A momentum divergence often precedes reversals because of a decline in buying 'momentum' or pressure as swings contract or narrow. Please refer to my many blog posts that reference the principle “Momentum Precedes Price.”

A momentum divergence often precedes reversals because of a decline in buying 'momentum' or pressure as swings contract or narrow.

]]> By: Corey Rosenbloom, CMT http://blog.afraidtotrade.com/head-and-shoulders-and-divergences-on-daily-sp500/comment-page-1/#comment-209798 Corey Rosenbloom, CMT Mon, 06 Jul 2009 19:01:43 +0000 http://blog.afraidtotrade.com/?p=4248#comment-209798 Bob and James - a "war" and "battle" are excellent terms to use to describe this - no one *knows* which side will prevail - they're both entrenched and will be using all they can to support (or break) the market.<br><br>It's better to go with a Mark Douglas style philosophy - identify key inflection/turning points in the market, watch as price comes into this level, then join (long or short) once price begins to break through or bounce off these levels - with a stop just beyond the line (a comfortable distance). This is trading neutral and not allowing emotions or biases to overtake you.<br><br>For example, the worst thing to do is convince yourself that we're going to break down hard from these levels, put on a massive position now, and then if price bounces up from here, add to your position as price kept going up because you think "there's no way the market can keep going up." Bob and James – a “war” and “battle” are excellent terms to use to describe this – no one *knows* which side will prevail – they're both entrenched and will be using all they can to support (or break) the market.

It's better to go with a Mark Douglas style philosophy – identify key inflection/turning points in the market, watch as price comes into this level, then join (long or short) once price begins to break through or bounce off these levels – with a stop just beyond the line (a comfortable distance). This is trading neutral and not allowing emotions or biases to overtake you.

For example, the worst thing to do is convince yourself that we're going to break down hard from these levels, put on a massive position now, and then if price bounces up from here, add to your position as price kept going up because you think “there's no way the market can keep going up.”

]]> By: Corey Rosenbloom, CMT http://blog.afraidtotrade.com/head-and-shoulders-and-divergences-on-daily-sp500/comment-page-1/#comment-209797 Corey Rosenbloom, CMT Mon, 06 Jul 2009 18:59:09 +0000 http://blog.afraidtotrade.com/?p=4248#comment-209797 The psychology of the pattern is that on the left shoulder, people are still bullish and there's little reason to be bearish. The head makes a new high, but on weaker volume. Still the public is bullish - pros start to notice the non-confirmations. As the right shoulder forms, the public is still optimistic but they can't push price to a new high, and when price breaks the support line, many stops are triggered and many pros get short - that's the psychology as I interpret it. The psychology of the pattern is that on the left shoulder, people are still bullish and there's little reason to be bearish. The head makes a new high, but on weaker volume. Still the public is bullish – pros start to notice the non-confirmations. As the right shoulder forms, the public is still optimistic but they can't push price to a new high, and when price breaks the support line, many stops are triggered and many pros get short – that's the psychology as I interpret it.

]]> By: Corey Rosenbloom, CMT http://blog.afraidtotrade.com/head-and-shoulders-and-divergences-on-daily-sp500/comment-page-1/#comment-209796 Corey Rosenbloom, CMT Mon, 06 Jul 2009 18:57:49 +0000 http://blog.afraidtotrade.com/?p=4248#comment-209796 Mike, that's a lot to cover! Thank you for sharing. I mentioned your comment in a recent post.<br><br>I'm waiting for the neckline break and confirmation - would love to see a powerful candle form beneath it as well as a surge in volume - would be irresistible to resist an aggressive trade (close stop in case the break winds up to be false - which would be frustrating).<br><br>You hit on something I'm campaigning against - long-term position or even month-long swing trades in 3x funds. Those are best only for experienced, aggressive, risk-seeking day-traders (and they can do some amazing things with them) but better for the general public to tread lightly in these funds - for the reason you mentioned. Mike, that's a lot to cover! Thank you for sharing. I mentioned your comment in a recent post.

I'm waiting for the neckline break and confirmation – would love to see a powerful candle form beneath it as well as a surge in volume – would be irresistible to resist an aggressive trade (close stop in case the break winds up to be false – which would be frustrating).

You hit on something I'm campaigning against – long-term position or even month-long swing trades in 3x funds. Those are best only for experienced, aggressive, risk-seeking day-traders (and they can do some amazing things with them) but better for the general public to tread lightly in these funds – for the reason you mentioned.

]]> By: Corey Rosenbloom, CMT http://blog.afraidtotrade.com/head-and-shoulders-and-divergences-on-daily-sp500/comment-page-1/#comment-209795 Corey Rosenbloom, CMT Mon, 06 Jul 2009 18:54:59 +0000 http://blog.afraidtotrade.com/?p=4248#comment-209795 Thanks Damien!<br><br>You as well. Thanks Damien!

You as well.

]]>