Oscillator #1 – Trading Index (TRIN)
The Emini got thumped today, closing down 22.50 points at 1,520.00. The 3 non-correlated oscillators featured had all peaked in the last couple of days.
The chart above shows the Trading Index Oscillator. It is based on TRIN data from the NYSE and NASDAQ and uses volume and the number of advancing/declining issues, not price. The Oscillator peaked on Friday and turned down on Monday, giving an early signal. This is one of my most reliable and useful oscillators. You can read more about the TRIN indicator here.
Oscillator #2 – Hilbert Sine Wave
The chart above shows John Ehlers’ Hilbert Sine Wave. This oscillator is based on price and extracts trend and cycle information from any data stream. The fast line crossed below the slow line on Friday. This oscillator can signal too early and so I use a break below the previous bar’s high or low for an entry signal. You can read more about the Hilbert Sine Wave here.
Oscillator #3 – Smart Money
The chart above shows my “improved” version of the Smart Money Oscillator. This oscillator analyzes market activity in the last hour of trade. It is the slowest of the 3 oscillators, however, it doesn’t suffer from whipsaw signals. It peaked on Monday and then turned down today – a good confirmation signal. If you read some of my previous articles about the Smart Money Index, bear in mind that I recently improved the code to give sharper peaks and clearer signals.
So 3 oscillators, all based on different data (non-correlated), all turning within a day or two and we get a 22.50 point move. Where to from now? My best guess is that this correction will not be very severe. The latest Commitment of Traders Report was very bullish and professionals will take advantage of any panic selling.
Good luck with your Emini trading.