Looking Back Helps to Move Forward

Here's a few posts from the recent past that shed some light on 3c divergences among other things.

November 5, 2009 UNG A Reversal?
UNG was around $10 and showing positive divergences

UNG made a new low in at the start of December and lost 15%, but showed an even stronger signal of accumulation. Think about it-you are accumulating, the stock drops-don't you buy more? That's what seems to have happened. UNG ran up close to $11.00, but the point here is that there is an accumulated position and still a strong 3C positive divergence. I think UNG sees more upside.


November 2, 2009
Overall Market Looks Ready for a Downside Move, but Not Before a Bounce 


 I said, "The intraday 3C charts show a clear positive divergence suggesting a short term bounce attempt, while the more influential daily charts show a very negative divergence."

Short term turned out to be a bit longer than thought, again, it's difficult to call a reversal even when you know there is distribution. You don't know how much inventory needs to be liquidated and how long they may accumulate short positions.

And, "also included a chart of the $USD index which is showing a bullish falling wedge that looks to have broken out or be close to it, which is surprising to me. I'm neutral on gold and oil and other related commodities until I see how this will play out."

The Falling Wedge in the $USD also started a positive divergence and the pattern worked out, so if we go with measuring implictions, this could run all the way up to $88.00

Oct 11, 2009 "Is the Dollar About to Bounce?" Video.

Sept 12 "PLA Making Money" Video

In the short term, we saw a 25% gain. PLA pulled back to breakout Support and then ran 70+% in a few days. The negative divergence at the highs were a signal to take the money and run. Here's the chart.

I guess the point is, sometimes accumulation takes time like the 3 months on this charts first positive divergence, sometimes a negative divergence can be in a day, like the run of 70+% and sometimes it takes months. The best way to get a more accurate read is to use 3C in multiple time periods including intraday. For the most part though, these divergences eventually bear fruit so they are not to be taken lightly. I'll keep working to improve the accuracy of the indicator, but sometimes even smart money can change their minds an blow a divergence.