Wednesday, July 15, 2009

Qs Pivot Bands Update

Here's an update of the weekly bars Qs Pivot Bands that I mentioned last week. We've been tracking this view for almost a year now and over that time time it's provided some powerful clues for impending trend reversals.
If you're interested in how the bands are tracked and analyzed, check out my series of previous posts on the bands as linked above.
The Pivot Impulse indicator (PII), which is a derivative of the bands data has also provided a solid momentum model for the Qs.
The bands have clearly been downslope since week 43 and week 42 on the PII saw it coming. That fact that the PII has dithered around the zero line, as opposed to running up to the 1.5 reversal level is reflective of the failure of he Qs to achieve an oversold condition in that time frame.
This situation, in conjunction with Monday's (technical) Outlook, continues to raise red flags in my mind regarding the Monday rally.
Keep in mind that the pivot bands and PII are based on weekly bars and as such display an inherent lag at the same time they filter out the noise of the daily bars. The bands and PII are part of my longer term trading toolbox and I use them primarily to gauge the relative safety of my various premium decay positions.
I developed a simple short side only daily bars version of the PII back in February, with respectable performance results over the 16 month test period.
As time permits I intend to revisit the SD Signal Line coding, add a long side component, and run a performance update.

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