The following is not a recommendation to buy or sell any stock, ETF, mutual fund or other investment vehicle. You must do your own due diligence.
April 29th, 2013:
I’ve added a 60min chart of the QQQ below the $SPX chart.
Below I have marked up a 60min chart of $SPX to outline what I call the 60 minute method. I consider this method to be somewhat conservative because it’s important to wait for various confirmations, which sometimes don’t materialize.
The most important part of this strategy is the RSI. My theory is that when the RSI in the 60min time frame dips below 30 then the big computers recognize that the equity is oversold and then ‘buy’ programs kick in. At about this time, the 10,7,7 Sto should have a Bullish X. On the chart you can see that this X happened several candles later.
Once the RSI has dipped below 30 and you’ve got a Bullish X on the Sto, then you should be able to put a trend line under the equity. If the ‘buy’ signal generated by the RSI and the Sto is legitimate, then the trend line should hold until you get a Bullish 13/34 X.
This chart is from Friday, December 16th, 2011 and going into the session, the set up looked pretty good. While the less risk averse traders could have scaled in with various confirmations, the conservative trader would have waited for the trend line to hold and for the 13EMA to cross up through the 34EMA, neither of which occurred by the close of the session.
Nothing is carved in stone. Use these ideas as a jumping off point for your own research. And by all means, back test this set up before you ever employ it. There is absolutely no guarantee that past results are anything more than anomalies.
Chart courtesy of FreeStockCharts.com
This chart of the Q’s in the 60min time frame is a text book example of the 60min strategy playing out in real time. Had you entered the trade when the RSI dropped below 30 on 4/17 or 4/18, you’d be in pretty good shape.