📈Weekly Charts📉
This week’s video looks at the recent selloff, the behavior of some key leadership groups, and several signals that were developing beneath the surface before Friday’s decline.
$SPY $QQQ $IWM $SOXX
Link below 👇
New Market Wizard is out!
Audio version is available NOW!
Book comes out June 9th
I’d suggest listening over the weekend…that’s what I’ll be doing😉
@jackschwager@gfc4
Novice and aspiring market speculators think the magic is found in trade identification.
The "what" and "when" components of trading -- while necessary -- represent only about 5% of a trader's "edge."
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📈Weekly Charts📉
This week’s video looks at the recent selloff, the behavior of some key leadership groups, and several signals that were developing beneath the surface before Friday’s decline.
$SPY $QQQ $IWM $SOXX
Link below 👇
📈Weekly Charts📉
This week’s video looks at the recent selloff, the behavior of some key leadership groups, and several signals that were developing beneath the surface before Friday’s decline.
$SPY $QQQ $IWM $SOXX
Link below 👇
📈When Momentum Stops Confirming📉
If you're familiar with RSI divergence, the recent action in $QQQ provided a textbook example of how the concept develops.
On May 7, in the @CMTAssociation's Market Mosaic Daily, I discussed a condition that technicians often monitor during strong advances:
"When price recovers from a pullback and moves to a marginal new high, but momentum fails to confirm the move with a corresponding new high in RSI, that type of negative, or bearish, divergence can suggest that upside momentum is beginning to weaken beneath the surface."
♦️That wasn't a prediction.
♦️It wasn't a market call.
♦️And it certainly wasn't a signal to short the market.
It was simply an observation about a condition that often becomes important when evaluating risk.
At the time, $QQQ's daily RSI reached 83.21. Subsequent rallies pushed price to new highs, but momentum never produced a corresponding higher RSI reading. The divergence I described on May 7 eventually developed.
The important lesson isn't that RSI predicted a decline.
It didn't.
♦️It didn’t tell us the magnitude of any future decline.
♦️It didn't identify the exact timing of a pullback.
♦️It didn't tell traders to abandon a bullish trend.
📰What it did do was provide information.
As technicians, our job isn't to predict the future.
Our job is to evaluate evidence and adjust our level of aggressiveness based on the message of the market.
When momentum stops confirming price, it tells us that conditions may be changing beneath the surface. That doesn't mean the trend is over. It means risk deserves closer attention.
In my own process, this wasn't an isolated observation. 🧩It was one piece of a larger puzzle.
At the same time the divergence was developing, the number of open positions was beginning to decline. Fewer stocks were presenting attractive low-risk swing trade entries.
New opportunities were becoming harder to find without chasing extended moves.
Individually, none of those factors were decisive.
Together, they painted a picture of a market that warranted a little more caution.
That's the value of technical analysis.
♦️Not prediction.
♦️Not certainty.
♦️Not calling tops.
It's the ability to observe changes in behavior, recognize when conditions are shifting, and adapt accordingly.
The market is always sending messages.
Our job is to listen.
ICYMI: this week’s market commentary has been published through the @CMTAssociation Market Mosaic Daily.
The articles are completely free to read. No membership or subscription required.
Today’s piece looks at one potential warning sign beneath the surface of this rally: elevated RSI readings in QQQ and what similar conditions have looked like historically.
Not a prediction of an imminent top — just an important piece of context as markets remain extended.
https://t.co/VT0L3y3N3U
@DickDragonPriv1@CMTAssociation Nice. Probably a good move. This doesn’t seem like kind of action that gets erased quickly. Although that absolutely would not surprise me.