After The Bell-Using Andrews PitchFork to Find SPY Dominate Trend

Definition of 'Andrew's Pitchfork'

A technical indicator that uses three parallel trend lines to identify possible levels of support and resistance. The trend lines are created by placing three points at the end of identified trends. This is usually achieved by placing the points in three consecutive peaks or troughs. Once the points have been placed, a straight line is drawn from the first point that intersects the midpoint of the other two

Read more: http://www.investopedia.com/terms/a/andrewspitchfork.asp#ixzz1gvsRXO8U

Identifying and anticipating trends is how one makes money in the stock market.  Using Andrews PitchFork is a good place to start when you set out to identify and project trends. Simply work left to right plotting highs and lows until something fits.

Chart 1 from left to right shows that the August fast down move was not able to be sustained by the bears. Once the C-line of the fork was broken to the upside and retested, no matter the justifiable reasons for the sell off, a money runner must go back and reconsider what is the current DOMINATE TREND.

Again, if you run money for a living, its about getting POINTS, nothing else matters.

Chart 2 correctly identifies the current DOMINATE trend. S&P has been moving in this angle of trend for a few months. Its confirmed by the pull back angles from top of fork to bottom; consistent with the initial set up B-C angle.

Chart 3 I believe indicates a new faster trend; changing pull back angle.  Notice A did not pull all the way back to the bottom of the DOMINATE fork C angle, thus changing the slope. I have drawn new angle C down to the Dominate angle C, BUT we don't know yet what tomorrow brings. Should the SPY bottom at its current price, this would make our new fork angle even a faster trend. From FAST trends and FAST angles, we get direction changes; which is what we are looking for.

Chart 4- I project a NEW DOMINATE FORK cycle based on my previous post about squaring of price and time projection, sometime in the beginning or end of January.

Lets have a look at the NASDAQ 100. You might be shocked. We can't just eyeball these charts and think we can pick out the story. Even though SPY and NASDAQ charts look same, they tell a different story.

Chart 1-Same as S&P, initial bear crunch could not be sustained.

Chart 2-Fast Bull trend could also not be sustained. The punch, counter punch between Bull and Bear is now a draw.

Chart 3-Is what I believe to be the current DOMINATE trend, which shows that even though the Bears have conceded a few rounds; this is a twelve round heavy weight fight and the Bulls have not taken the upper hand. OBV also backs this trend up as it continues to move lower and away from the 20 moving average.

Conclusion-Look for DOMINATE trends to buy and sell within; then keep eye out for a SUB-DOMINATE trend that foreshadows a potential change of trend. Getting the BIG picture right, helps eliminate all the noise in your trades and the volatility that eats up profits.

Tim Kathlina