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Dissecting The Markets with the Triple Play

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At the end of May my post Pick Your Poison was about looking at different timeframes and realizing choosing a time frame to focus on can dictate how you view the markets. I also discussed it was an exercise I like to each month.  I find it especially helpful after months like July that shake things up a bit and give us some extra volatility.  It can help ground my views by stepping back and moving from the longer time frame step by step down to the short-term.  So, let’s take a look.  If you are not familiar with my RSI charts you might take a quick peak at this RSI chart explanation video

Monthly8-1-2015 7-01-37 AM TP Monthly

On the monthly chart we have a steep trend in all 3 major ETFs we follow as they are well above the riding MA bands.  $IWM is least extended coming off the breakout from the flag that was 2014.  the July $IWM candle is a bearish engulfing pattern to watch in August, but using the blended candle approach with the last two months would give you a doji which goes well with the indecision we have seen so far this summer.  $SPY $QQQ had both been moving consistently higher until the last couple of months where they began to see more volatility creep in.  All three are still in strong RSI bull ranges.  $IWM is the laggard, but $SPY & $QQQ both are sporting new RSI Positive Reversals after closing higher this month.  All have relatively neutral CFG readings.  The trends are still up and don’t look to be in much danger at the moment.

Weekly8-1-2015 6-59-36 AM TP Weekly

The weekly level shows a little more of the volatity we have witnessed.  $IWM showing the most, $SPY looks more like a flag or box consolidation and the $QQQ aren’t showing any quit.  All three are coming off their MA Bands and in RSI bull ranges with none of the RSI or CFG overbought. Note how steady the trend in $QQQ has been while it has worked off the overbought readings of late 2013.  RSI works better as a trend indicator than moment if you learn to use it as such.  Weekly charts are consolidating but are still configured to favor higher prices.  no major damage to these charts yet.

Daily7-31-2015 9-31-26 PM TP Daily

It is in the Daily charts where we start to see the differentiation more. $IWM is currently the laggard and in a RSI bear range.  However, the $SPY and $QQQ both remain in bull ranges for now and the $SPY successfully held at the recent lows.  The volatility really starts to show up on this level showing the daily battle that was July.

65 minute7-31-2015 9-36-53 PM TP 65min

Drilling down to the 65min level we can actually see all of July’s trading activity 65 minutes at a time.  It was a bit of a roller coaster with the $IWM trajectory down while the $SPY $QQQ were more constructive.  $SPY was iffy for a while, but pulled it out in this last week. All three ended the month with RSI bull range shifts and trying to find support on now rising MA bands.  This is not a strong thrust so far so we need to keep an eye and see if RSIs can move above this week’s peaks for a more convincing range shift or will it fail and show we need more time to regroup before moving to and through the highs?  One good note here is CFGs are falling faster than RSI was on Friday which can be a positive.  More tentative shift back higher on this level;  Okay for now, but needs to build on it early next week to survive.

30minute8-1-2015 7-04-15 AM TP 30min

The 30 minute view shows all three are in RSI bull ranges, moving well off the lows. Friday ushered in a small pullback within the bull ranges.  The week closed with RSI pulling back within a bull range while CFG are getting oversold at or below zero and price is finding some support at the MA bands.  Until we lose the bull range the 30min level looks constructive and could be ready for another move out of the gate on Monday.

5 minute8-1-2015 7-05-22 AM TP 5min

As we get down to the very short-term, the 5 minute charts shows the Friday afternoon dropped blew through the bull ranges and are all now recovering back near the 50 level on RSI.  The trajectory is higher, but being in the bear range and below the MA bands we know a failure is very possible which could leave us with RSI Negative Reversals here showing this timeframe does need more time before it can shift back.  If a failure does happen and the RSI bear range holds it is certainly not the end of the world as this is a 5 minute view after all.  It could delay that move we talked about on the 30 minute for a while or outright negate it, but let’s get there first. The lower the time frame the more shifts we have and the less important they are unless that is the time frame you trade on.

As I said above after a month that can pull you in different directions and leave you a little uncertain, it can help to take a step back and drill down your time frames one by one and see what you can see which should allow us to better plan for the upcoming month.

Good Luck and I hope this helps!

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(All market data above are derived from Stockcharts.com, Esignal, and Reutersdatalink)
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