SDS Trade Update

Click on Chart to Enlarge

The chart above is a screenshot of the short-term models I use from Sentimentrader.com for blog trades. The left side is the S&P model with the heading STEM.MR MODEL. The right side is the Nasdaq model. Also underneath the models are the cumulative intraday TICK for the NYSE and Nasdaq respectively. The cumulative TICK is the sum of the closing TICK values of the last thirteen 30-min periods.

Notice that as price has pushed into modest new highs on those indices since our entry on Thursday, both the short-term models and the TICK data are not reaching new highs. This is setting up a bearish divergence. Divergences work in this model in a similar way to traditional technical analysis.

With the long-weekend coming up, I would guess that tomorrow will be a lackluster mover, so there will probably be no potential exit until next week. There were a few subtle but notable happenenings from a charting perspective the last couple days in regards to recent down gaps being filled, and the high of the possible left shoulder being exceeded intraday on the S&P. This was followed with selling to bring prices back down a bit from those levels.

To sum up, I don't see much underlying strength in this move at these levels, and I doubt there is much upside left in it before a significant pullback occurs.


Pete