I was fortunate enough to stick to my plan yesterday. I felt after the very weak open on Monday morning that something was amiss. Additionatlly, when I took my long positions in QQQ and DVY on Jan 21st and Jan 20th respectively, I planned to sell those positions once short term overbought conditions were reached. “Yeah, yeah – I know – of course you did.” But really here are the trades from my broker.
Those that have been following my trading ideaology for awhile know that I like to see divergences in my indicators. A higher low in the medium term indicator especially. Right now we have a sizeable bounce in the medium term indicator. What happens when it heads back to its lows is anyone’s guess.
As you can see below, the short term indicator seemingly failed to reach recent highs which is a bearish sign. It is currently neutral.
The medium term indicator has rallied back into slightly oversold territory. If it falls from here and finds a higher low, we’ll be able to more confidently take some positions to the long side.
The long term indicator remains slightly oversold. It remains above the low reached in August 2015 which is a slightly positive sign. As pointed out in my last post, the long term indicator can remain oversold for a long period of time.