Sunday, August 9, 2015

Aug 9 - Buy signal in equities

Equities sold off again but came with unthreatening volume and a declining VIX.  On the 1 hr frames, we are seeing some pretty interesting long set ups, especially in the indexes that have been battered the most.  Not only are we seeing localized buy signals on the hourly but they are also aligned with clear positive divergence which could give more strength to a bounce.  My favorite signals are ones that line up across other indicators and timelines.  This is one of them.

DIA tapping its declining trendline with positive divergence.

 IWM also showing a strong positive divergence which might give the shorts a surprise Monday morning.

 SPY not showing divergence but is resting on a level that has provided bounces 3 times in the past except for the area where it was broken during the Greek debt crisis.

 SOXX, the semiconductor index making a very interesting bullish wedge set up with decreasing volume and increasing RSI/ CCI.  If this one breaks up and out, techs might bounce strongly.
 QQQ also showing positive divergence with a strong close on Friday.
 The CPC indicator while sometimes imprecise often marks short term turning points
 $VXO hit its upper BB and turned down which often portends to rises in equities.

 Another look at SOXX and the daily also shows a very promising picture.
 Lastly, still watching a long play on gold miners or DUST short but thinking this is still not the time.  The consolidation is starting to look like a previous consolidation (in orange) that led to a flush out.  I am not placing bets until I see a flush out or evidence that the current consolidation zone will hold.  Right now, it is looking less doubtful that it will.

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