On Wednesday in the Traders room we reviewed the live ZBI indicator via the Live Charts on the members only website at http://pv.ttthedge.com. At that time the ZBI was pushing down into a new low since the firing of a ZB Thrust; a 10 day move from oversold to overbought that occurs rarely and has been a reliable indicator of the start of a bull market. Since that firing the ZBI has never returned to oversold, it has gone neutral and then powered up to take us to new highs. The last thrust up however was from a lower A/D line and clearly you can see momentum is leaving this market.
Reviewing this indicator show that it likes to make higher highs and higher lows when the market is moving up (makes sense) and the reverse for a down-trending market. We need to watch to see if the current up tick will define a new wind up to take us to a new high, or will it reverse and fail the new low, which would indicate a move down into oversold. The market is in transition territory.. so as Sergeant Phil Esterhaus from Hills Street Blues would say “Hey.. Let’s be-careful out there”..
Happy Trading
-RLT
