Thread: coolhand's Account Talk

I know I've been scarce in my account thread the past month, but I've been very busy in my full time job as well as spending a significant amount of time keeping up with my new market analysis service in the off time. Beginning in January I'll be going to a part time schedule at work, which will give me a lot more flexibility in being active on TSP Talk.

I do have two stocks that look like potential short term plays. I stress short term.

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Clorox Co. may be putting in a short term bottom. Last Thursday, the 200 day moving average acted as a support. MACD has not turned back up yet, but RSI is hinting at moving higher. I think the 50 day moving average would be a reasonable target should the technicals continue to improve. The downward trend line shows another resistance area in the $86 area.

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Entergy also looks like it may have put in a short term bottom. Price has been below the 200 day moving average for the past couple of weeks, but MACD is beginning to turn up and may have a positive signal line cross soon. This is a stock I showed you back in late April and expected it to run at that time. And it did run. But that was when liquidity levels were high. Right now they are not. While the 200 day moving average will act as resistance, if it can past that level it could tag the 50 day moving average before possibly heading back down.

Again, with liquidity levels down and seasonality weak upside opportunities are more challenging and require closer attention to market action. My confidence level under these conditions is not nearly as high as when underlying market support was strong.

I have been researching another technical analysis tool lately called Ichimoku charting, which is a popular and comprehensive Japanese trend and momentum tool. I am quickly becoming a fan of this style of technical analysis although I will also continue to use the ones I've been using all along. If you are interested in what this system is all about, you can research it here.

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I have labeled the main signal lines in this chart of the Wilshire 4500 for reference as well as a brief description of each. Looking at this chart I can see that the longer term trend remains up as price remains above the Leading Span A line. That line represents support and so far it has been holding. There is more support below along the Leading Span B line. The trend is plotted out 26 days in advance, so it provides a notional idea of where future support and resistance will be. Now, the conversion crossed the Base Line a couple of weeks ago and that's a bearish momentum cross, but as long as price remains above the Leading Span A line, the trend will remain up.

I note that MACD appears to be turning higher and RSI had a positive center line cross, so this chart looks bullish to me overall.

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The S&P 500 fell below support (Leading Span A) almost 2 weeks ago, which is bearish, but so far support is holding at the Leading Span B line. If price can get back above the Leading Span A line, that would be a bullish crossover. For now though, this chart is moderately bearish. But MACD did have a positive signal line cross last week and RSI gaining strength. We'll see how it plays out, but I am looking higher this week. That would be consistent with the projected tracking of the Leading Span A line.

You are far better at explaining the meaning of the lines than I was, back when I tried. Good job, CH.

Originally Posted by alevin

You are far better at explaining the meaning of the lines than I was, back when I tried. Good job, CH.

It's not a difficult system once you get familiar with the lay-out, but it sure looks confusing for someone looking at it the first time.

Thanks for the Ichimoku primer, CH. Looks very interesting. I'd love to do more research on this as well. Great job explaining the basics.

Originally Posted by MrJohnRoss

Thanks for the Ichimoku primer, CH. Looks very interesting. I'd love to do more research on this as well. Great job explaining the basics.

Once you know what you are looking at, it becomes a quick study to understand the trend and momentum reflected in a given chart. I didn't mention the Kumo (clouds) in my post, but they provide additional insight. For instance, the thickness of the Kumo shows the level of historical volatility, as well as the strength of support or resistance. A thicker Kumo shows a greater the level of historical volatility and support or resistance, and vice-versa. It offers a lot of information in one package.

that Ichiro Suzuki method is very intriguing...looking back in hindsight over the chart it appears obvious when to buy and sell...how can you recognize this in the moment to pinpoint an entry and exit point...i would think the time to buy equities is now and then sell when the MACD is high again...can't be that simple though

Originally Posted by rcknfrewld

that Ichiro Suzuki method is very intriguing...looking back in hindsight over the chart it appears obvious when to buy and sell...how can you recognize this in the moment to pinpoint an entry and exit point...i would think the time to buy equities is now and then sell when the MACD is high again...can't be that simple though

In "theory" that's the way it's suppose to work. And while this is an effective tool, it helps to have other indicators to give additional weight to anticipated market action. I use sentiment, auto-tracker signals, liquidity, intermediate term system, etc. to help stack the cards more in my favor.

Duplicate Post

After yesterday's big rally, here's where the charts stand now.

SPX.png

Price of SPX is sitting right at resistance (Leading Span A). MACD is positive and pointing higher as is RSI. If price can close above that resistance line, it would be bullish.

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The Wilshire 4500 by contrast is and was bullish all along. Price has remained above the Kumo (cloud), which is a bullish trend indication. MACD had a positive bullish cross yesterday is now in positive territory. RSI is getting stronger. There is a good chance we'll be hitting fresh all-time highs based on this chart. In fact, I think this is the chart to be watching more closely than the S&P 500.

AGG.png

Bonds (AGG), are a different story. Price has remained well below the cloud for weeks. That's bearish. MACD and RSI are also bearish.

Thank you for the charts and Ichimoku school, Coolhand. You do an excellent job of keeping our interests up and teaching us new things.