DecisionPoint

Climactic Activity On Volatile Short-Term Indicators

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Yes! It's Carl. I thought it was about time that I contribute to the new DecisionPoint blog on StockCharts.com. I plan to periodically blog here when I find something of particular interest that I'd like to share, similar to the Chart Spotlight on DecisionPoint.com.

If you look at the volatile or ultra-short-term indicator chart and the Advance-Decline breadth and volume chart in the DP Chart Gallery on StockCharts.com, you will spot recent climactic activity.

First look at the Participation Index - UP. I've annotated climactic readings and the corresponding price action. 

Screen Shot 2014-03-07 at 4.48.19 PM

I've done the same to the Net Breadth and Volume. (Note: for clarity, I have adapted the Advance-Decline Breadth and Volume chart from the DP Chart Gallery to exclude the A-D lines)

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In September the climax marked a price top. In October and February the climax came out of a price bottom and signalled the beginning of a substantial rally. The most recent climax looks more like the ones in November and December, where there were price advances but they were smaller and rolled over into consolidating moves.

Climactic moves can indicate an initiation to higher prices or an exhaustion leading to lower prices. Using past moves for comparison and evaluating the indicators in the DP Chart Gallery can help us determine whether the climax is an intiation or exhaustion.

Watching the windsock,
Carl

Carl Swenlin
About the author: is a veteran technical analyst who has been actively engaged in market analysis since 1981. He was the founder of DecisionPoint, one of the web's premier market timing and technical signal services, which was acquired by StockCharts.com in 2013. Carl has contributed his market commentary and expert analysis to StockCharts since then. He is a Member of the CMT Association. Learn More
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Hi Carl: I found your charts very interesting. Have you compared to what happened in 2008 as guidance for a similar correction indicator? I would like to see your comparison. Best wishes. Fred Fred, Just click on the chart and it will open in the Charting Workbench. From there just pick the time frame you would like to view. -Carl
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