Mikula Forecasting Company

MarketWarrior: Swing Projector Type #1 Buy Signal

Here is another example of the Swing Projector's Type #1 Buy Signal. In this example we will use the 5 minute chart for the Dow index symbol $INDU. The Type #1 Buy Signal uses momentum divergence and the MarketWarrior Swing Projector. In this example I am using the indicators, Detrend Momentum and the Smoothed Stochastic which are seen on the chart below. I will describe the Type #1 buy signal in the steps shown below.

1) On the first chart below the bottoms B1 and B2 identify two bottoms in the price and two related bottoms in the momentum indicators. You can see that B2 is a higher bottom in the price but B2 is a lower bottom in the momentum indicators. This is a momentum divergence that indicates the market is holding strong while the momentum falls. This indicates the market should move up and make a new higher swing top.

2) Second, while the momentum divergence in step 1 is occurring, the Swing Projector must be showing the Warning Pivot Symbol. The Warning Pivot Symbol for a bottom is the red upward triangle with a "B" inside. On the chart below, you can see this setup at bottom B2.

3) The final step is to see the price start to move upward away from the Warning Pivot Symbol. When the price starts to turn up, the buy signal is given and you would look for an opportunity to buy long.



The chart below shows what happened after the Type #1 Buy Signal was given. You can see the 5 minute chart for $INDU formed an upward swing.