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How I use Yellowband up and down trends; $FIZZ, $SHOP, $IGT, $JCP, $QQQ

@ 8:09 am

I wrote a few posts ago about a key chart pattern that I noticed in the 1990s, called yellowband. It is a way of staying focused on the longer term trend of a stock. A yellowband up-trend is a stock on a weekly chart that closes repeatedly above its rising 10 week average that in turn is consistently above its rising 30 week average. A yellowband down-trend is simply the reverse. The following charts illustrate yellowband patterns. Some charts show the transition from up to down trends. I discovered the value of the yellowband pattern in the 90s. I primarily buy stocks that are above or near their last green line break-out (GLB) that have a yellowband up-trend. I try not to sell as long as the yellowband is intact unless I see unusually high volume selling or a climax top. A close below the 10 week average is a significant technical signal for me to exit or reduce my position. If I had diligently checked a stock’s yellowband pattern I would not have been shaken out and exited many great stocks too early during the past few years. A picture is still worth 1,000 words….

The QQQ remains in a yellowband up-trend and recently found support at the 10 week average, a good place for me to enter or add to a position..

And the GMI remains Green.

Will post again on Wednesday evening.

 

 

 

$QQQ on precipice, $AAPL violates Yellow Band pattern

@ 9:28 pm
GMI4/6
GMI-24/9
T210857%

The weekly chart below shows the QQQ has, with one small exception in April, not closed a week below its 10 week average (blue dotted line). The 10 week average has in turn been rising well above the 30 week average (red line). This is a strong pattern I have been monitoring since the 90’s when I discovered it and named it the “Yellow Band” pattern. In those days I would draw a band with a yellow highlighter in the empty white space between the 10 and 30 week averages. Hence the name. As long as the QQQ closes this week above the 10 week average (currently 137.57), the bullish pattern will be maintained. This week is a critical week because of the 3 weeks of very heavy down volume, shown by the red volume spikes. Recently, the heavy volume down weeks have overshadowed the volume on up weeks, a possible sign of distribution by the institutions. A bounce up off of the 10 week average would be a very bullish sign to me.

One reason why I think the QQQ may fail is this weekly chart of AAPL, which has already violated its 10 week average on above average volume. Apple’s Yellow Band pattern is over, for now.

The SPY is holding up much better.

The GMI remains at 4 (of 6) and still on a Green signal.

 

 

 

 

21st day of $QQQ short term up-trend; Market had a “dead cat bounce?”

@ 9:30 pm
GMI5/6
GMI-25/9
T210843%

While the QQQ remains in  short and longer term up-trends, I am dubious very short term because the actions of the daily technical indicators I follow are not consistent with the market’s bounce at the end of last week. During the beginning of the rise in the QQQ that began around April 19 (A) the daily 12.26.9 MACD was rising above its signal line as shown by the histogram’s rising and turning black (B). Similarly, the 10.4 stochastic was rising above its 10.4.4 signal line (C). These 2 short term indicators were strengthening along with the QQQ’s rise. Compare that pattern to  last week’s action. While the QQQ started back up (D) the MACD histogram declined and turned red (E) and the stochastic declined (F). This bearish divergence between the action of the QQQ and these 2 indicators suggests to me that Thursday’s and Friday’s rises in the QQQ may have been the proverbial dead cat bounce and should not yet be trusted. (The DIA and SPY exhibit the same divergence.)  Of course if these indicators reverse up this week, I might jump back on the train.

Meanwhile the GMI is at 5 (of 6) and still on a Green signal.