Stock Incubator

[dalcindo]

Re: BEARISH MARKETS

Hello, Tony!

Short answer: Feel free to peruse, cut and paste charts in this link: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2140281

Long answer: The charts I have drawn contain channels and trends dating back to 2008. The directional trends are either indicated in COLOR over the RSI, or have a framed qualifier, such as "Weakening Rally", or "Bearish".

You will notice that on a pure objective interpretation of the RSI (Using John Hayden's method, upon which I have depended reliably for several years), broad US market indices (on pages 1, 2, 3, and 4) have printed these two qualifiers already months ago.

Whereas the markets - especially the benchmark S&P500 - have shown capable to rally several times, one should notice that the tops are lower, while the RSI is confirming a bearish reversal signal.

By BEARISH reversal signal, one has to respectfully use Hayden's definition, which is a rally of the RSI from BELOW the 33.33 RSI level, but failing to rally ABOVE the 66.67 level, followed by a continuation in the decline. The inverse is true for a BULLISH reversal signal. I have not been able to observe any stronger reversal confirmation than through this LEADING indicator.

As I mentioned in an earlier post, RSI works in lockstep with price, but in algorithmic pace. I could not fathom using any other leading indicator, although there are many out there that merit consideration and judicial use. For my use, RSI remains the best interpretation of market sentiment, direction, reversal signaling, and trend confirmation.

So, considering the charts in the link above - especially the WEEKLY and MONTHLY charts, where the mass of traders, investors, institutional monies, ... etc, have collectively move the market en mass towards a consensual direction - one could not mistake the trend heralded by the RSI and the chart's secondary indicators (here, consider A/D, OBV and ChiOsc lines as institutional buying/selling interests for visual indicators of buying trends as they compare to their respective 1-EMA lines).

Hope this answer your question.

Best,

- Dalcindo


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Message in reply to:
Hi good evening Dalcindo thank you most kindly my friend for your Technical reply most Informative.

Thank you for the RSI and the methodology.

I keep seeing articles that by October or November the recession will be pretty evident and that may be when markets fully price it in. Do you have any downside targets for S&P for that time period.

Or do I stick with the RSI methodology.

Or maybe both.

I have some concerns about the stability of the US and world markets taking a dive again or double bottom recession.

Using the RSI methodology I should see It coming.

I like your RSI methodology very much make very good sense to me, and can I use the RSI as a market Indicator.

Dalcindo what I am asking Is there signs of the market heading for a double dip recession, In the market like we had a year ago.

Thank you for helping, god bless and always the best of trading.