The ER2 Trading Journal

ER2 chart:

 

CCI and Zero Line Rejection.

 

long-term MACD liine again wraps the short-term MACDs.

 

Looking this YM's one year chart, it made a similar move last year like last week, however, it started to move up on Dec 6th when it touched the 34 EMA. I see the 34 EMA for DOW is around 10720 and 20 EMA is at 10790, DOW is becoming bearish.

The short-term MACDs are crossing through the long-term MACD like last year:

 

Last year around this time, YM went down 200 points (from around 10650 to 10450) before making an upside move.

 

YM's CCI14 is about to reach the zero line rejection, 100 points drop from this level will do it.

 

Trend indicator (ADX) shows YM is at extremely overbought condition, it is just the opposite of April 2005, where YM was oversold:

 

YM - 10760 to 10740 appears good entry area, 38.5% retracement is at 10700.

 

ER2 has no sign of overbought, though it is trending up, but ADX line is not at the very top like YM. Right now it is at 1.27% fib extension from the last bottom. If it goes up, next stop appears at 697.6 (1.618% fib extension).

 

ADX line - compares to the same time last year:

Looks to me, to maximize the profit, the strategy is - if the market goes down, short YM, if the market goes up, buy ER2.