Quote Originally Posted by mscott View Post
Because of some of the positive stock action, last week I considered taking an early entry in ISRG, a pocket pivot buy point. Then I looked at the battle line drawn at the 200-day and remembered how the current situation looks like many of the prior bear markets at the exact point the markets turned downward and decided now is not the time to take a risk like that.
ISRG will probably prove us both wrong because we're writing about it, but the EV pattern is a negative divergence which (more often than not) does not end well on the long side.

Name: 11DEC02-ISRG.jpg Views: 173 Size: 212.1 KB

Here, I have a shorter-termed TEV/LEV/SmEV plot in the middle, located above a 40d (longer-termed) TEV/LEV/SmEV plot (yellow, blue, red respectively). On the top is price with closing VWAP and intraday VWAP and the bottom is volume.

Institutional support has been waning from ISRG fairly aggressively over the past few days as price has moved upward. This negative divergence is a big warning sign. Further, the upper EV pattern is clearly evident in the lower EV pattern, indicating that there is little institutional support for ISRG at the present time, at least in terms of trading over the last 40 days. When the short term EV magnitudes are close to the longer-termed magnitudes we have the equivalent of the main sail drifting in the doldrums, and any breeze (buyer, seller) can whip us around. Not an ideal situation for making money.

Regards,

pgd