Using Daily moving-averages on $SPX (and children)Hello all,
Not a financial advisor, i just trade full-time. I can share some stuff that I look at.
TL;DR
Look at crosses, touches and space
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Please also pull up my other idea on $SPX timeframe'd weekly, linked (scroll down to bottom for links | also, to open the link in a NEW TAB, hold the control ( CTRL ) key down and then click the link).
- The traffic light time-axis markers are borrowed from the weekly time-frame.
If you need to manage your position with $SPX or your children, then this is for you.
References:
MA = moving average.
DMA = daily moving average
The calculations in this study are from TradingView, I am unsure how they are calculated. Who cares! We just like to draw on charts, right?
Orientation:
We are on a $SPX weekly BASELINE chart (values are from the week of 03/16/2020 for baseline)
We have the S&P 500 (or 505, if you know) drawn up 4 times
----Each one of these lines represent the percent of stocks ABOVE their relative moving average
-----There are 4 daily moving averages: 20, 50, 100, 200.
-------For example, the BLUE line represents the percentage of stocks inside of the $SPX that are trading above their 20 DMA (daily moving average).
snowy, elkenpolar-branded traffic light time-axis markers from $SPX weekly
Two highlighted boxes mapping the $SPX weekly corrections to 25 EMA.
EDIT: I didn't use it, but the RSI is based on the 20 DMA. I just noticed a couple neat things there, look for yourself.
Our baseline is the bottom of the market in March, 2020. This is a great time to start looking because this was a huge shift in...well, just about everything.
The boxes highlight some periods of volatility in the $SPX. The first box (yellow) is the first (double) correction to the $SPX 25 weekly MA. The red box highlights a very volatile correction to the 25 weekly MA.
Yellow Box
This is EXCITING! We can see some indecision and faltering to the 25 weekly here. Notice how the 20/50 percent line form a cross in the first red rectangle. They also bounce off the 100 DMA line. The second box is a SNAPPY correction and notice how this one falls off a cliff to the 200 DMA line.
Red Box
Here we highlight the correction in purple. You can see a cross in the couple of week before hand. A leading indicator to what was possible in the next couple of week. We then got a RSI divergence on the weekly $SPX price chart and a correction. Notice the difference between the two 'major' highlighted boxes though - i.e. we did NOT touch the 100 or 200 DMA percentage lines. What could this mean?
To Note
Notice when our 'short' or 'small' moving average (% of above 20 DMA) crosses over our 'long' or 'tall' MA (50 DMA) it may lead one to turn off the playstation and open up a chart, with crayons.
Also note other convergences, divergences and, you know, funny shapes.
Observations
Later on we can see some similar stuff lining up this month.
We had a bearish cross (blue crossing below red), a bullish cross (blue crossing ABOVE red) and now we are kinda in this place of "Ruh Roh". Do I have a crystal ball? No, but my system tells me to sell/heavy hedge right now, so that is what I am doing. This doesn't just apply to my positions in this asset class either.
Look at crosses, touches and space
What does it mean, Mason?
Well, that is going to have to be decided for you. I can tell you what I did, I bought naked long puts. For Monday. What will I do this week? Probably more crayons. We are in turbulence and the best way to ride a turbulent airplane is with nothing in your tray and it *securely* stowed into the seat in front of you. Unless you got one of those fancy flying-beds.
If you make this chart and use it, be sure to correlate this chart with a price action chart from $SPX.
Please leave me any questions or if you would like something explained further below.
And what do you think? Link me your charts.
Thanks
Black Elk Speaks, Crazy Horse:
"imagine using smoke signals in 1998" *chuckles*
