“Make hay while the sun still shines” or so the saying goes. It’s not often we see such strength in the market, especially with dark clouds on the economic front upon us. Maybe that’s exactly why we see market strength, from a contrarian perspective. The Dow Jones Industrial Average has risen 24 out of the…
Readers, I know I discuss momentum divergences very frequently but they work (are effective) on so many levels. Primarily, they set up trade ideas, and I take many of my swing trades based on momentum divergences. They work better than average for day-trading but not as well as swing trades off daily charts (in my…
Many articles have been posted regarding the axiom: “Sell in May and go away,” which is in reference to studies that show that the market’s worst performance begins in May and ends in November. While performance is mixed on various years, it is helpful to study the last 5 years of market action (as evidenced…
Is it possible the recent year’s rally in the US Stock Market is in part due to a falling dollar and rising inflation, rather than economic conditions? Consider the following. Many people are ‘bearish’ the US stock market and cannot believe the strength of the creeping uptrend in the US Indexes because they believe a…
Here is the most updated weekly swing chart of the US Dollar Index, which is on par to do one of two things: Make new lows or find support & reverse (temporarily). Notice the two momentum divergences. We are currently experiencing a ‘buy’ divergence at a place where the market reversed in the past (2005)…
I’ve posted a chart of the 15 minute action of the DIA (Dow Jones ETF) for a study on momentum divergences. This illustrates the buy divergence occurring around noon on May 1st which led to the “Impulse Buy” trade concurrent with the breakout and new momentum high. The market has ended a buy swing and…
The market notched another record closing high for the Dow today. Such headlines inspire more yawns than cheers now. Are investors becoming complacent? Here is a look at the swing chart of the major indexes: Dow Jones New Price Highs confirmed by New Momentum Highs. This suggests higher prices are yet to come. Uptrend is…
Dr. Steenbarger recently posted a comment from Dr. Bruce Hong regarding the “Fight or Flight” adrenaline response that we all feel at some point during trading. I have experienced this many times and likely will do so in the future, and so will almost all traders, especially when situations do not go as expected. Here…
The Dow Jones made yet another all-time closing high today, while the Nasdaq failed to confirm. Although both indexes ended higher, the day’s action was choppy at best. Notice the creeping and solid uptrend Notice New Momentum Highs confirming New Price Highs, heralding higher prices are likely to come Notice the solid uptrend on the…
Cotton futures recently declined more than 50% from their 2004 swing high at $110, and have declined 67% from their 1998 price swing high of $150. If you study and analyze this chart, you can experience the anatomy of a downtrend with clean price swings and consolidation patterns (I have indicated a triangle pattern in…