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SharePlanner (< 20)

SharePlanner Reversal Indicator



August 19, 2012 – Comments (0) | RELATED TICKERS: SPY , QQQ , IWM

Total change up in the SharePlanner Reversal Indicator, and last week I mentioned the possibility of this happening if we continued to push higher... and we did. While we have not confirmed the signal, all we have to do is maintain the status quote and not have a total market meltdown this week, and we should get that confirmation. Remember the market is not so much about predicting future movement but about be responsive to what it is trying to tell you. So when you get the signal, try to do less thinking about how the market must be wrong, and more of trying to align yourself with the right side of the market. 

Also, that bearish wedge that was forming for week's on end now, is just about nullified as you'll see noted on the chart below. 

Here's the SPRI Indicator

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.

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