Though the Pink oscillator continued its upward movement at open today and the Black oscillator swiftly turn around, today belonged almost entirely to the Slow Blue oscillator. It shot up and remains up at close. A very strong downward crossing point [2] between the Pink and the Black could only lead to weaker retreat we saw towards close. 

In the intraday chart for NASDAQ composite at close of today shown below, we can see that

• The Pink oscillator is still going down. Its crossing point impact has caused the Black oscillator to lose considerable momentum.
• The intraday residue in the top right chart is way out of lower bounds. It can have a bounce back early tomorrow.
• The Blue oscillator and Daily Residue at the bottom right who dominated today are now way out of bounds. The Blue still is not showing any signs of reversal.

It was a great Tuesday for Intraday trading with the NASDAQ composite first going down almost 1% and then climbing up almost 1% into the positive territory. Both positive and negative alerts [1] in the ticker table benefited from the big move. 

In yesterday's blog, I had anticipated an up open from the fast oscillators which would then have sustained momentum as the Pink oscillator had its upward move expected for most of the day. But NASDAQ opened lower. The fast oscillators and the downward moving Pink from yesterday pushed the levels lower before doing a bounce back quite like the slingshot move we have seen earlier.

Instead of presenting a single screenshot, today I am posting first the enlarged and zoomed in view of the top right panel of the Intraday graph of NASDAQ that shows the fast oscillators and the intraday residue (in gray). We can see below how they evolved during the day doing full cycles. 

Those interested in day trading definitely benefit from using these oscillators for timing. 

However the safety of the moves of these fast oscillators depend on the relatively slower ones which we call the Mid oscillators. In the enlarged view of the top left panel of the Intraday chart shown below, we can see these. 

The Pink oscillator is the sum of the Green and the Violet. We can see 

• how the Green component led the surge initially and 
• by the time it turned around the upward momentum was sustained by the Violet component. It is the conflicting move of these components that caused the mid way turn around that the Pink oscillator did during the day today. 
• Also notice that when the Pink oscillator was moving with good momentum, the fast oscillators fizzled out in their opposing move. This is the essence of what we call "safety" based on slower oscillators.

The black oscillator can be seen steadily finishing its downward move today. Towards the end of the day, it appears to have begun a turn.

From the positioning of the Pink oscillator today, its primary move will be downwards tomorrow. If this move begins early in the day, it can delay the turning around of the Black. We have more negative alerts than positive alerts at the end of the day today in our ticker table across the individual stocks. This preponderance of negative alerts also adds to the chance of a downward move tomorrow. 

I expect the Green which is currently pausing at the zero line to continue its downward move in this scenario. The significant crossing point[2] if it happens tomorrow will be the downward one of Pink and the Black when the Black moves up.

I'll refrain from speculating about how the open would be because it is earnings season and it gets tricky when biggies like JPM report.

Now we can take a look at the longer term scenario from the End-of-Day charts shown below. Once again only the enlarged view of the top left panel is shown. We use the same color coding for oscillators of various speeds in both the Intraday and E-o-D charts but while a Mid Pink oscillator in the Intraday has a time period roughly one trading day, as you can see below, in the case of the Pink in E-o-D the time period is several weeks. Today's move hasn't made any significant changes in the way oscillators are poised in this chart. The wait for the elusive Red October continues here!

Have a great evening!

[1] Learn more about alerts in this manual chapter.

[2] This blog talks about the significance of crossing points.
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Today saw some distinct moves for the whole market which provided plenty of intraday trading opportunities. As we had expected from the closing charts of yesterday, the downward momentum of the Pink (top left panel) and the subsequent crossing point of Black with Blue (bottom right) helped us time the slides in the market. Towards close we had an upward crossing point of the Pink with the Black led to some recovery benefiting the positive alerts. 

In yesterday's blog, I mentioned that the fast oscillators for NASDAQ Comp were out of bounds and could bounce back. But from their magnitude at close of yesterday, it didn't look like such a bounce would be able to induce a turn around in the Black or Pink oscillators. 

Those traders were clearly not interested in buying back in at that time.

But come this morning, the fast group did a magnificent quick plunge taking the market down 1%. 

From that level, their bounce back was sufficient to make the slower groups sit up, take notice and follow suit. 

The move was similar to the gravity assist or slingshot maneuver in orbital mechanics. The fast oscillators rapidly moved down at the start and then bounced off armed with greater momentum in the upward move. 

I had tweeted the screenshot of the charts illustrating this move earlier today:

http://twitpic.com/2stsww/full

Now let's look at the Intraday chart at close of today. 

The Fast oscillators are within bounds and poised down in the right panel. In the left top panel we see that the Pink and the Black groups have some more upside. In the bottom right panel, Blue is steadily heading down. 

So it is a battle between the groups in the top left panel and the Blue. 

We have roughly the same number of positive and negative automated alerts in the ticker table today which would signal tomorrow to be another day of good intra day movement. Also keep in mind that the oscillators in the top left panel move much more swiftly compared to the Blue.

In the E-o-D charts we see that the Black oscillator still is optimistic. Today's move has done precious little to the other groups. The downward crossing point of Pink with the Black here will definitely be interesting.

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Granted we were expecting an upward open from the way fast oscillators and the Green component of the Pink oscillator was poised at close of yesterday. We had twice as many positive alerts as negative alerts, so today was very profitable in terms of individual trades. But obviously the brilliant 50 points move of NASDAQ definitely demands careful study.

The intraday chart for NASDAQ COMP from 15:00 today shown is shown below. The impact of today's move as captured and distributed over the different oscillators and the daily residue is clear.

With our system of oscillators, we are not caught up with numbers like ceilings and floors which get broken through or pierced. Our philosophy is to profit from the market when it moves. Prices don't form our triggers, the turning of oscillators do. And these oscillators capture the sentiments of different groups of traders.

In the intraday charts:
The fast oscillators represent the higher frequency traders who trade a couple of cycles in the market within a day. The Mid oscillator (Pink) with its main components (Green & Violet) capture the group that trades in a cycle that lasts close to one trading day. The group whose trading cycle lasts a couple of days or so form the Black oscillator. The much slower moving Blue oscillator has a half period close to a week. It makes sense to have standard deviation based symbolic upper and lower bounds for the faster oscillators and the slower oscillators. It is the ones in the middle (Mid) are the ones who get swayed the most psychologically!

The oscillators in the end-of-day charts also capture such distinct group of traders and investors but they trade in cycles that last weeks and months. We can see the upper and lower bounds in these charts.

What the charts offer us is a snapshot of how the different groups are poised so that we can time our moves. It is also important to realize that all these groups are active participants who are watching each other as represented by the market. Thus the influence and transfer of momentum across oscillators of different scale. When new traders/investors enter the market (more money coming in), they are distributed among the oscillators or get accounted in the daily residue (gray).

It'd be most interesting to see how today's move is reflected in the End-of-Day oscillators. I'd expect much of the momentum to be captured by the fast oscillators there with the Violet component of Pink delaying its turning down. Even if slowing down and small upward kinks appear in the downward moving oscillators in that chart, it will take more than just one day's move to change the mind of those longer term traders. It took the whole first week of September surge from the Pink group before the Black group decided to do a rethinking there.

Will post the End-of-Day charts later.

Have a great weekend.

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We have discussed how the various oscillators can be viewed as representing the sentiments (bullish, bearish or neutral) of different groups of traders active in the stock or market. 

For different stocks and the index, from time to time, different groups gain and lose dominance (amplitude).

With this in mind, think about the crossing points between adjacent oscillators. 

By adjacent, I mean, ones with time-periods that are comparable. 

So the fast oscillator is considered adjacent to the Mid oscillator(Pink) and its main components (Violet and Green); the Mid oscillators and its components are adjacent to the Black oscillator and the Black oscillator is adjacent to the Blue oscillator. 

The crossing point of adjacent oscillators can be looked at as a point in time/price when these different groups of traders become aware of each other's position. It is at the crossing point that oscillators influence each other's momentum. Therefore the crossing points herald major change in the price in the direction of the faster of the two colliding oscillators.. 

For a great example of this crossing point theory in action, look at the zoomed in view of the top left panel of NASDAQ COMP end-of-day chart at today's close below. 

We can see a clear crossing point that heralded the September surge. In fact it was a double hit. The traders who had been bearish since August, captured by the Black oscillator, collided with the upward moving groups of both the Violet and the Green. We can see that subsequently not only did the Black group lose their downward momentum, but they even did a shallow turn around.

The choppier light blue line seen here is the End-of-Day fast oscillator not to be confused with the smooth deep Blue oscillator in the intraday charts.

Yesterday we had a nice crossing point of the faster Green with its adjacent Violet. Today we can see that the Violet has begun to flatten out though it is not quite turning yet. 

Unlike the double hit that lead to September surge, now we are heading to three separate crossing points. First we will have the Green with the Black possibly as early as tomorrow. Pretty soon we should see a change of heart of the men and women in Black again as they decide to stick to their original plan from the beginning of August!

In the Intraday chart posted earlier today, we can see that there is some upward movement coming from Intraday Pink and Intraday Black but the dominant Blue oscillator is steadily down. So in the absence of some major uplifting fundamental news, we could have a flat or slightly up move which doesn't look like carrying much steam. Remember, the price/index is always the sum of the oscillators and indicators.

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In our user manual, we have discussed that it is very beneficial to align the trades with the general direction of NASDAQ.
Yesterday's NASDAQ Comp charts showed that there was still upside left for the market.
So when the ALTR buy alert shown below came along, it had added incentive for taking it.
Notice that at the time of the alert both the components of the Pink oscillator (top right panel) i.e. the Green and the Violet have turned upwards. The entry price was $26.63. The fast oscillators in this chart don't have much influence on the price (Reminder: price is the sum of all the oscillators and indicators).
The Black oscillator hasn't yet turned and the Blue oscillator is still up. So the only concern for safety comes from the Daily Model (bottom left) that has turned down.
But it is a short term type 6 alert with 0.9 trading days duration. Learn more about alerts here or in the manual.

As expected, after the dip in the open the market turned around (we'll get to the COMP chart shortly). By 11:15am today, as seen from the charts today, we can see that the fast oscillators that have gained magnitude are turning down. At this point with the price at $27.57, we can exit with a very neat 3.5% profit without waiting for the automated exit alert.

In fact the automated exit alert was issued for the trade 12:30 at a price of $27.50 as the Pink oscillator had turned down.

Picking trades that are aligned with NASDAQ would have also led to trades on RFMD and DD yesterday as can been seen in the charts at our site.

Now let us look at the zoomed in top panels of the NASDAQ COMP Intraday chart from 12:45 today. We can see how as expected from yesterday's charts, the fast oscillators moved down first before turning around and making the markets positive.

The market movement today, as can be seen above, was well correlated with the oscillators. The media had to first find a causation in European worries for the down open and then reassign the cause to report on retail sales once the market turn around :-)

Here's the Intraday chart (using 15 minute data) at the close of today (9/13) for the NASDAQ Composite Index. As we had expected from the earlier charts of the day, the Pink did turn around and we got a nice upward move as Pink and Black moved in tandem. 

Since the oscillators move consistently, it is possible that the Pink turns this afternoon and provides upward momentum along with Black.
The blog will be update with the End-of-Chart and Intraday chart after close this evening.

As anticipated on Friday, we opened with a nice little pop with the turning around of the Black and Pink in the intraday charts.
As shown in the chart from 10am this morning (9/13), we can see that the fast oscillators have now turned down.
We'll see how that influences the Pink.
As mentioned earlier, the effect of the Blue has been neutralized by the strong upward momentum from the End-of-Day Pink oscillator.

Will post another COMP chart towards Mid-day.