Tuesday 24 July 2007

TRIN Indicators - Emini Divergence

TRIN Indicators Emini Divergence Image

TRIN indicator signaling divergence on the Emini today. A gap down open followed by an afternoon sell-off ended up in a 26.25 point decline on the Emini. The Emini eventually closed at 1,523.00 with very high volume of 2.1 million contracts traded.

Last Wednesday the TRIN Oscillator showed divergence and signaled short at the close. That trade felt uncomfortable at the time but has worked out well. Funny how the best trades often don't feel right - but great back-testing results help to pull the trigger.

Friday's sell-off resulted in an adjusted TRIN indicator reading of -97; today's adjusted TRIN reading was -73. With today's lower low than Friday, this sets up a TRIN indicator divergence pattern and a potential long entry on the Emini. The signal might be early - my cyclical indicators have yet to turn - but this may be an early warning sign.

The Emini chart above shows TRIN indicator divergence with red (bullish) and white (bearish) dots superimposed on the Adjusted TRIN indicator. The signals aren't foolproof (nothing is) but even the poorer signals are early warning signs of market turning points. You can read more about the TRIN indicators and Emini divergence patterns here.



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