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SharePlanner (< 20)

SharePlanner Reversal Indicator



August 13, 2011 – Comments (1) | RELATED TICKERS: SPY

This market has been, by far, one of the biggest tests of patience as well as of mind and will. I would basically categorize the market under one of two options: 1) Either the global economy is as bad and unfixable as they say it is, that the central banks have run out of 'silver bullets' to fix the matter, and thus the world's economy is going to hell in a hand-basket....


2) This is the greatest buying opportunity that we've seen in quite some time, and the place where small (or in some cases big) fortunes can be made. 

That is essentially what I have had to ask myself all week long. 

If the market continues to move lower, it'll be because Europe can't get their act together, and for it to get worst then what is already priced into the market, means that we'll see Financial Armageddon unfold. But if not, then this could be one heckuva buying opportunity. I  am leaning towards the latter of the two options, believing that this is nothing like 2008, and that the nations will work to find, at the very least, a short-term solution to their problems, that should help to stabilize the global markets.  

For those of you who are not familiar with the SharePlanner Reversal Indicator, here's quick tutorial...

The Indicator uses the advance/decline ratio with a stochastics overlay. The bottom half of the chart is the weekly candles of the S&P. The chart itself goes back two years. Some folks have criticized me for posting this chart in the past saying that it isn't 100% accurate - but if it was, as some think it must be, then I wouldn't be posting it - I'd save it all for myself and make an ungodly sum of money off of it. But it isn't perfect and there is always a level of error that you can expect from it. But overall, it is fairly accurate, and when the indicator hits certain extremes on the stochastics, it is often a good time to start hedging positions that are going against the direction of the indicators, or start loading up on short or long positions in-line with the direction that the indicator itself is pointing to.

Remember, the extremes are where you are wanting to pay the closest attention to, particularly where the %K & %D lines cross (i.e the red and green lines). This is typically where we begin to see changes in the behavior of the market - not always but quite often enough, to warrant our attention. What this tool is best for, in terms of what I use it for, is market timing and position building. When there is a crossover at one of the extremes that goes against the positions in my portfolio, I, often times, look to take profits in those positions or at least hedge against them

Here is the SharePlanner Reversal Indicator.

1 Comments – Post Your Own

#1) On August 13, 2011 at 10:00 PM, davejh23 (< 20) wrote:

Looking back to last Summer's decline, the reversal indicator looked like it does now about a month from the actual bottom.  We do look oversold on the daily chart, and we may get a bounce this week, but I think there's more downside ahead before the weekly chart start signaling a more significant reversal.

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