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SharePlanner (< 20)

SharePlanner Reversal Indicator

Recs

1

January 10, 2012 – Comments (0) | RELATED TICKERS: SPY

It's been a couple of weeks since I last posted the SPRI, and instead of waiting until the weekend, which is when I usually post it, I figured I'd do it mid-week here. While things are looking awfully bullish to start the year out,  we are nonetheless, starting to show signs of being overheated. Combined with the pathetic volume showing so far this year, I'd say this market is starting to distribute, and may see some down side before it's all over. Earning season is just getting started, and if we see disappointment there, then it could lead the bearish cross over in the near-term. . 

For those of you who are not familiar with the SharePlanner Reversal Indicator, here's a 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 to pay the closest attention to 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 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.

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