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SharePlanner Reversal Indicator: Some Room to Climb

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May 16, 2014 – Comments (0) | RELATED TICKERS: DIA , QQQ , SPY

The SharePlanner Reversal Indicator (SPRI) is comprised of two separate view points: a daily and a weekly.

Typically the Weekly is a much stronger measurement of market direction going forward. The daily can be a bit more fickly as it reacts more to the day-to-day machinations of the stock market. As a result, when there is conflict between the two indicators, I will automatically default to the weekly SPRI unless I have overwhelming reasons otherwise. 

Ideally it is best when both time frames are in agreement with each other. But that can't always be the case - as is the situation this week. 

Here's the Daily SPRI:  

On the weekly, you can see where the conflict exists with the daily SPRI. The tendency in the past has been for the weekly to top out at extremes before providing us with a bearish reversal signal - which in this case is at least 1-2 weeks away. 

Here's the Weekly SPRI:

Going for the bulls here as well is a significant price breakout that was achieved on Monday and looks to continue in that direction in the short-term. Both of which I think outweighs the bearishness being seen on the Daily SPRI. 

I mentioned this in today's Trading Plan, that the one concern I have is whether we could be setting up for another repeat of  what started on 4/4/14 after the S&P 500 broke out to new all time highs only to give it all back in very quick fashion. 

That's why you have to always be cognizant of the risk that faces you in the market and trade accordingly

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