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Message: Tsi trader update
Thursday, January 13, 2011
Sold PAL $7.20
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In this morning's pre-market I sold my position in North American Palladium (PAL) at $7.20. I had a very nice gain that I chose to put in my pocket. The negative divergence of the price action vs. True Strength Index (TSI) indicator gave me pause for concern.
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However, this is a trade and I will be back, as I have every confidence that PAL is going to go much much higher in the next couple of months.
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My TSI Trading record has been updated.
Wednesday, January 12, 2011
SP-500: Doesn't Look Good -- Gold: Trend Line Breaks
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I have been waiting quite some time to write this particular post. And well, I think the time has come.
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I have been amazed by how long the stock market has been able to hold up with sentiment at an extreme. Investor's Intelligence today reported the highest bullish sentiment of the entire rally - 57.3%. That is about as nose bleed as this reading ever gets. Bearish sentiment, by the way, was a scant 19.1%.
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But it is not the sentiment figures that I have been waiting on. They have been calling for a correction for 8 or more weeks. I've been waiting for the True Strength Index (TSI) indicator to show me something truly concerning. And today I think the TSI is speaking loud and clear that the end of this stock market rally is very near.
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You may have read my post of this past weekend about the series of three consecutive TSI negative divergences that built up in the gold market before price took a precipitous spill. The bearish situation for gold that I wrote about showed up on its 4 hour chart.
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The same situation is finally set up on the SP-500. Of greater concern, however, is that this situation is now apparent on the SP-500's daily chart, not the 4 hour chart. It is impossible for me to know how much longer the index is going to hold up, but my guess is not long. Certainly, when the TSI first breaks the red trend line, then the ZERO line, it could be a very nasty correction.
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Some readers have asked to see me demonstrate in greater detail the trend line break technique of generating BUY and SELL signals using the TSI indicator. What follows are a couple of 4 hour charts of GOLD's continuous contract.
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First the trend line breaks generating BUY signals. Rather accurate, yes?
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And now, the SELL signal trend line breaks.
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Also incredibly accurate.
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Isn't the True Strength Index (TSI) indicator awesome?
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