20DMF in "Shorted protected 30"

[Pascal]

As you might have noted, the 20DMF went from a "shorted" status to a "Shorted protected 30."
As you know, a usual Buy Oversold signal is produced when the OBOS signal turns around to the upside after having closed below the -70 level. It however happens that a pull-back does not push the OBOS signal below the -70 level.

The "Shorted protected 30" status is entered as soon as the OBOS closes below the -30 level.
This is to say that if the OBOS at some point bounces and if that bounce is so strong that the OBOS +30 level is taken, then at that point, the system will revert to a standard buy signal.



Pascal

[Pascal]

Today's bounce looks like a very standard bounce after three days of a strong move.
We can see that there is neither any positive nor negative divergence being formed between the 20DMF and the S&P500: the lines connecting different highs show the same direction on both panels.
Nothing really to do for now, except watching the stops and not letting a winning position turn into a losing one.



We could notice today that the commodities sectors rejected the shorts-covering bounce of yesterday. This includes the PM sector. The US$ and the Euro both confirm their change of trend: a stronger US$ and a weaker Euro.




Pascal



Pascal