Thursday, May 21, 2015

A Schwab White Paper as we wait for the Break...05.21.15

Here's today's Ergodics/ADX chart of the SPY and for those that haven't been following along the thesis is that divergence in these indicators reflects HFT activity versus the trend while indicator convergence reflects true accumulation or distribution.  It's been noted that in divergent situations the ADX tends to lead the Ergodics, which is really a proxy for price.
Those using the VIXEN approach will appreciate that this little nugget of info can be very useful as a confirmation signal for both entries and exits.
I regularly listen to the one hour bi-weekly charting presentations offered to Schwab clients (I"m not trying to push Schwab).  Today they talked about an interesting series of white papers available to the public,  This current one offers some original thinking on what performance metrics may or may not be telling you.