Comments on: Intraday TICK Divergences and Structure May 13

By: Flea Meds

Flea Meds — Sat, 30 May 2009 15:44:56 +0000

Your picture explanation is really good…….. It helps easily understand TICK divergences…..

By: Flea Meds

Flea Meds — Sat, 30 May 2009 10:44:56 +0000

Your picture explanation is really good…….. It helps easily understand TICK divergences…..

By: Corey Rosenbloom, CMT

Corey Rosenbloom, CMT — Sun, 17 May 2009 05:28:07 +0000

Yep – divergences aren't 100% – not even TICK divergences which you think would be. It'd be too easy if that were the case!

I love seeing your charts – thanks for sharing.

By: u2com

u2com — Fri, 15 May 2009 09:11:32 +0000

My EW interpretation can be found at:
http://scoutfinance.blogspot.com/2009/05/you-mu...

By: Corey Rosenbloom, CMT

Corey Rosenbloom, CMT — Fri, 15 May 2009 02:11:01 +0000

Haha - I've had some conversations with traders the last few weeks that would make your head spin. Along the lines of:

"The market SHOULD go down or else" to
"Hmm. It's too obvious the market should go down, thus it will keep going up." to
"Wait - no, it's so obvious that the market should go down, but it's also so obvious that people are expecting the market to keep going up because it should go down because everyone uses contra-opinion now, so really the market will actually go down"
and worse!

You actually bring up a good point that I hadn't thought of - that of the retail shorter. I sometimes still have trouble with clients and traders I talk with, getting them to be 'ok' with shorting. They're far more receptive now thanks to the market decline, but it's hard to shift the paradigm.

But with more people jumping short - or getting into these 3x inverse funds - you bet it's going to lead to larger than normal short squeezes.

Dark poetic justice if part of the viciousness and relentlessness of this wave up was due to that - I'll have to look into it more.

By: Corey Rosenbloom, CMT

Corey Rosenbloom, CMT — Fri, 15 May 2009 01:54:27 +0000

Ron,

Good question - you really didn't know in advance. The only thing that could have kept you short was watching the 20 EMA and the 50 EMA. Price nipped above the 20 gently before falling (meaning don't place stops right at the 20) but also in Elliott terms, price made an "ABC" 3-wave corrective push (clear on the 1min charts). The line in the sand was a significant and powerful close above the prior high at $89.50, particularly on the 5-min chart. We didn't get that but we came oh so close. Remember they'll try to take out stops so it's best to ignore minor ticks/spikes when classifying structure.

Iron stomach and conviction that the day would most likely resolve as a Trend Day. The TICK also failed to make a new high at that level, which would be expected if we were to get a reversal.

My advice there would have been to take a stop-loss there if you felt uncomfortable and play to re-enter when price fell back below your stop-out, or have a steel stomach and hang in. There was no magic way to know price would reverse there as it did.

By: meques

meques — Thu, 14 May 2009 21:07:16 +0000

yep, yesterday i had almost the same chart.
In reply to Ron Brown should tell that that divergences at 12:15 indeed realized but then it was one more push down. Saying more, with a tandem of divergences with 3/10 oscillator, stoch lines, rsi14 and etc i entered there and soon met stop loss. but i again entered after 1pm in more slear and strong divergence, so for the day i was in plus.

wow, today was hard day for me with lots false signals and ugly incorrect divergences.

By: Ron Brown

Ron Brown — Thu, 14 May 2009 18:34:47 +0000

My question refers to the higher high made at around 12:15. How did you know that this high would fail? I don't see a divergence in the TICK at this point? If you were short at that point, what signaled you to stay short? Thanks.
(this replaces my earlier question which didn't indicate the time of day I was referring to.)

By: Ron

Ron — Thu, 14 May 2009 18:28:03 +0000

How did your charts tell you that the bounce to a higher high at would fail? It seems that the TICK did not show a divergence. Thanks.

By: tgarfield

tgarfield — Thu, 14 May 2009 16:38:59 +0000

Do you think – what ever major wave we are in that we are completing a 3-4 on the indexes before a wave 5 up?
I figure that wave will be ever last bear giving in and covering. Some say it is the retail buying wave. I think it will be the retail covering wave. People have seen the money in shorting and they have attempted to be all over it. Just a thought.