A Classic Event to keep a record of …
Let’s post a charting event that you should keep in a notebook as a reference. It is an event that happened a little less than a year ago on July 27, 2011.
It was a day where 5 out of 5 indicators on our Multi-Model went to a negative trending condition. Eight trading days later, the NYA Index had fallen -14.32% and 1,167 points from the July 27 point from where it started.
I will go through this chart briefly explaining what happened to each indicator on that day:
1. The Accelerator had a negative cross-over with the red trend line falling below the blue trend line. That meant that market Deceleration was about to happen.
2. At the same time, the Inverted data on the Institutional Selling Action had a negative, down trending cross over. This meant that Institutional Investors were starting a new short term trend of Selling.
3. Our MACD-C indicator had a tick that fell under the blue trend line.
4. The Inverted NYSE Declining Volume was negative and trending lower. That meant that the daily Declining Volume was starting a trend that was to grow larger and larger in its daily amounts.
5. Our short term C-RSI (zero based Relative Strength) went negative and below the 30 CRSI level. Both were negative and trending lower. That meant that two different strength periods had gone negative, and between the two, a negative trend was starting.
That is what happened on July 27th. of last year … all 5 indicators showed a down condition at the same time. Eight days later, the NYA Index was 14.32% lower.
Note: The red vertical line marks July 27th. where all 5 indicators had a negative condition. Do note what happened after that in August. If you look at the blue lines under each indicator, you will see that they were going up while the NYA Index was still heading lower. That represented a condition where 5 positive divergences were building at the same time. After October 4th, the positive divergences kicked in and the market started a nice upside rally. (This chart is updated daily in Section 2, Chart 4 of the Standard subscriber page.)