Tuesday, June 18th. - Stock Trends, Charts, and Commentary (*** If you see last week's Tuesday Update: Click Here)
One of the "favorite" charts used by Money Manager ...
Its called our Multi-Model chart because it uses 5 indicators simultaneously as you will see below.
Let's take a moment and look at the five elements on this chart. They are the following in order from the top to the bottom:
a. The Accelerator: There are really two elements to the Accelerator. Think of a car for a moment. Given that you have a fully operational car with gas, let's focus on what makes it go fast and up hills when necessary. Two of the key elements are the rate of acceleration and the horse power of the motor. You can push the peddle to the floor, and unless the motor has enough horse power strength, you won't get much movement. The equivalents here are the Accelerator Indicator and the "Strength" as indicated in item e.) below (Strength being equivalent to the horse power of the motor.)
With that in mind, let's look at the Accelerator ... Note that its green daily bars are in negative territory. Its trend lines moved sideways and merged yesterday, so the rate of "deceleration" went flat. Now, move your eyes down to item e.) which show's the 9 and 30 C-RSI indicators. (The 9 and 30 depict the number days that the indicators are set at, and the C in the RSI stands for Chenard because we are the only analyst that we know "zero base" the Relative Strength Indicator. Zero basing just means that we subtract a value of 50 from the old indicator that went from 0 to 100. SInce 50 was neutral, zero now becomes the neutral line. In this way, you can tell when the RSI is positive or negative.)
Back to the 9 and 30 C-RSI readings ... Just when the Accelerator was flat and negative, note that the faster 9 C-RSI has been trending higher and it reached a very low positive value of +0.71 yesterday. At the same time, the 30 C-RSI was a low positive of +2.38. If the 9 C-RSI moves ABOVE the 30 C-RSI line today, then the power behind the any Acceleration will have increased ... and that would translate to up movement in the market.
b.) The Inverted Institutional Selling Action: Now, let's focus on indicator b. which measures the trending and direction of the Institutional Investor Selling activity. Not that it had already stopped its down trending and was starting to trend up. That means that the downside selling pressure that was coming from large Institutional Investors was subsiding. That is a plus if the Accelerator starts showing an up trend on its red/blue trend lines.
c.) The MACD Indicator: The third item on this chart is our MACD indicator. Note that it wasn't very negative, but it was still negative and had not gone positive yet at the close on Monday. Until it turns positive, it says that there is still more work to be done in the market.
d.) The inverted NYSE Down Volume: With the above in mind, we now look at the NYSE Down Volume and trending. The NYSE Down Volume is a brush with a broader stroke than the Institutional investors and it was showing upward trending that actually moved to a low positive level.
e.) The 9 versus 30 C-RSI Indicator: We discussed the 9 and 30 C-RSI in item a. above so we will ask you to refer to section a. while we avoid the redundancy of re-posting it here.
f.) The NYA Index: Now, if all of this makes sense to you, look at the last item on this graph which is the actual NYA (NYSE) Index. Hopefully, you will find it easy to see the correlation between the indicator movements and the movements on the NYA Index.
And don't forget to observe times like the last half of March when the (horse power) C-RSI was low with the 9 C-RSI being lower than the 30 C-RSI. In spite of the Acceleration level, the horse power was not enough to drive the market up.
FYI ... I hope that this update and explanation was helpful to you today. Thanks for taking the time to join us on this update.
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