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Category Archives: Technical Analysis
The 50/200 golden cross in S&P 500 yesterday marked the end of a short squeeze in the stock market that started with the low of February 11. The losses of shorts in S&P 500 from the 50/200 death cross on … Continue reading
The 50/200 golden cross on Monday is inevitable unless the index loses 204.11 points to close below 1887.47, something that is highly unlikely. This is an example of a technical signal that is known in advance but that offers very … Continue reading
Last Wednesday a 50/200 golden cross occurred in the adjusted DIA chart and a new all-time high close occurred on the following day. However, the unadjusted chart paints a different picture: No golden cross and no all-time high close.
Technical analysis gave the false perception to a very large number of traders that there was an easy method of dealing with uncertainty one could use to profit. Speculators, instead of going to casinos, traded the markets with known results.
The S&P 500 chart with the Profit Factor indicator for a period of 250 days shows the persistent decline in market strength since the beginning of 2014 and how crucial it is for the index to stay above current levels.
Stocks are at a crucial juncture and some may think this is a good time to sell and wait for the next correction to end. The profit factor indicator shows this well.
This is descriptive technical analysis of course and far from predictive. Going from descriptive to predictive is a complex task. Experience plays a key role and technical analysis is just the excuse for any confirmation bias. What is the next … Continue reading