This chart shows SPY, the major ETF proxy for the S&P500 index, on a Daily timeframe.
Plotted on the chart are our SCMR Trends™, which sequences price to find the correct behavior, and SCMR Dynamic Levels™, which dynamically plot support / resistance zones. Both are available in the TradingView App store.
Following a confirmed reversal on Oct 20th (see "O" under price there), the market has continued the trend of the past 15 months by rallying in a straight line to new highs. Although the reversal was easy to spot, the relentless run now creates a (familiar) problem: Do you chase up here?
My take is that the market is more likely to go rangebound after such a strong advice but I do not yet see evidence of a new material decline on the horizon. How to plan for the next steps?
For short term traders, 2 days - 1 week horizon:
1.) Two former Dynamic Supply™ areas and one recent demand area are plotting under price in a range of $196 - 199, so I strongly expect some demand there on a dip. This is a good entry because of what I consider the adverse scenario. Choppy market. This should be near a range low, at least on the first try of the level.
2.) According to SCMR Trends™, price is currently painted green, so if it wasn't obvious already, the price is in a strong uptrend. Strong uptrends rarely roll over and die, usually you get at least one chance to buy a dip.
RISKS:
1.) A new material bad news event can change risk appetite, so the dip or range may be smaller than expected. 4.) Not a recommendation to buy or sell, just an example of how to use the indicators to tackle a common problem in today's market where everything is a V-shaped rally to new highs.
Other Notes:
1.) Both Sector (Industrials) and Sub-sector have been very bullish, so the market of stocks as they say is generally healthy up here 2.) Large Caps as an asset style and Nasdaq have been outperforming. 3.) The most bearish scenario I can think of is this new high is a trap, then we reverse into a range. Given that Nasdaq is way above the highs, it lends to support to a dip buy rather than a breakdown (as in, SPY in the range will coincide with QQQ ranging above old highs which is still bullish)
when I try to import the indicators with "make it mine" why does it say: error msg study not authorized!
Do these indicators require a subscription?
SPYderCrusher
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yes, they are a subscription product. I am happy to help answer any questions you have just PM me or email me. Thank you for the interest.
GERVASEJOE0709
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great
laurelweiner
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nice
SPYderCrusher
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thanks!
SPYderCrusher
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UPDATE 2/3/15: Hit range support cited above and bounced perfectly. Currently in an *UN*confirmed reversal, but still subordinate to downtrend. On one hand bullish that this wick undercut the prior range low and reversed. On the other, trend is still down and having to test the 198 area so many times is not great. Lets see if the reversal confirms.
Alphaoptions
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How would you describe the limitations of your system: 1. Does it work on all stocks besides SPY? 2. Will it work for commodities or just stocks and FX? 3. Do you find it effective on any intraday aggregation period and how low of a time-based bar?
SPYderCrusher
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Hello Alpha:
Thank you for the interest and the question. First, I want to make clear this is not a standalone system -- you are the system. This is a powerful tool to improve your insight, trade selection, and execution.
The reason I say it's not a system is because while you absolutely you can design several different profitable systems around this product, it does not explicitly say risk this much, use this portfolio management, select these trading vehicles etc. Those are critical parts of a system, not just entry and exit. For example you could design a system around trading only the confirmed reversal bars. Or a system that trades the first pullback in any green or red trend (we have tools to do this in the suite).
My value proposition to the client, aside from the benefits of unique software that doesn't smooth data and properly contextualizes the action unlike the others, is that it can be one size fits all -- so it can find reversals, just like it can find trends, just like it can find support, just like it can find pivot zones.
To answer your other questions, yes it will work on any instrument b/c prices are fractal across timeframes. Some stocks may have different results - the more erratic the trading the harder it will be to find good trends, but the pivots and reversals will still be effective.
The only real limitation software wise is that it will not work on highly illiquid instruments. A thin penny stock on a 2min timeframe will show bad data only because of "garbage in, garbage out". This is due to the fact that the highs and lows of the sequencing algorithm are counting potential bars with no trading. See example below.
---- TNA, a liquid stock on the 1min timeframe is ok.
----BTCUSD, an illiquid currency, is not usable on a 1min timeframe.
TNA 1 minute
BTCUSD 1 minute
1 - 3 minutes is as low as I would go for SPY / IWM / QQQ etc, and for highly liquid stocks like AAPL. In practice, 5 min and up is good. For illiquid items best on a 15min and up.
SPYderCrusher
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Also @Alphaoptions , if you have any other questions, please feel free to PM me or email me.
404notfound
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I have a question on the support level indicator. Do the lines start appearing on the first green dot? I have market the bars iam talking about with oranges lines in this picture: i.imgur.com/6ESUmR7.png. Hope to hear from you soon.
Do these indicators require a subscription?