SharePlanner Reversal Indicator

How much more can we expect from news in Greece to continue juicing this market? Some will say that it’s not all about Greece – it’s about earnings too. Wrong! Take out Apple (AAPL) and earnings season was quite dismal to say the least. I will say though that AAPL has helped the markets aside from Greece, particularly the NASDAQ and the NASDAQ 100. In all honestly, I’m just trying to get through this post without using the words P*r*b*l*c and T*P since it seems like you can find a million other posts on the web stating the same thing. Be cautious though because the markets are closed tomorrow, and there is another “important” Greece meeting among the European countries which requires another agreement, that technically has yet to be agreed upon (I can’t keep up with all the agreements that has to be made). But there is a chance that this agreement doesn’t go through, and as a result Greece would start down the path of default. With the market closed tomorrow it could create quite the quagmire for equity longs if this were to happen, because we’d likely see a nasty market sell-off (assuming rational market behavior of some sort). 

For those of you who are not familiar with the SharePlanner Reversal Indicator, here’s a quick tutorial…

The Indicator uses the advance/decline ratio with a stochastics overlay. The bottom half of the chart is the weekly candles of the S&P. The chart itself goes back two years. Some folks have criticized me for posting this chart in the past saying that it isn’t 100% accurate – but if it was, as some think it must be, then I wouldn’t be posting it – I’d save it all for myself and make an ungodly sum of money off of it. But it isn’t perfect and there is always a level of error that you can expect from it. But overall, it is fairly accurate, and when the indicator hits certain extremes on the stochastics, it is often a good time to start hedging positions that are going against the direction of the indicators, or start loading up on short or long positions in-line with the direction that the indicator itself is pointing to.

Remember to pay the closest attention to where the %K & %D lines cross (i.e the red and green lines). This is typically where we begin to see changes in the behavior of the market – not always but quite often enough, to warrant our attention. What this tool is best for, in terms of what I use it for, is market timing and position building. When there is a crossover that goes against the positions in my portfolio, I, often times, look to take profits in those positions or at least hedge against them

Here is the SharePlanner Reversal Indicator.