Mikula Forecasting Company

MarketWarrior: Swing Projector Type #1 Sell Signal

Below is a 1 minute bar chart for Apple Inc., stock symbol AAPL. The Swing Projector has been applied to this chart. The symbol the Swing Projector uses to identify large "Warning Pivots" is the red triangle that points down and has a "T" for Top inside the triangle. On the chart below I have drawn an arrow to the warning triangle. The warning triangle identifies where you should watch for a top Change-In-Trend (CIT). As a note, we use the words "pivot" and "change-in-trend" to refer to the same thing, a point where the market changes direction. The Swing Projector Type #1 Sell Signal starts with the appearance of the large "Warning Pivots" symbols, which is the red triangle. Once the warning that a top may be occurring is given by the Swing Projector, momentum indicators are used to watch for Bearish Divergence. I have added two momentum indicators to the chart for this purpose. First is the "Stochastic of RSI" and second is the "Detrend Momentum". These two indicators show a Bearish Divergence with the price. The momentum indicators formed a lower top at "B" in relation to "A" while the price formed a higher top. This is Bearish Divergence which indicates the market is losing upward strength. When both Bearish Divergence and a Swing Projector top warning symbol occur at the same time it represents the Type #1 Sell Signal. On the next chart you can see what happened after this signal was given.



The next unique application for the MACD that I will discuss occurs when the MACD histogram moves into a tight sideways band. The chart below is a 1 minute chart for Apple, symbol AAPL from July 16, 2008. On this chart I have used the letter "A" to mark where the MACD started moving in a very tight band close to zero. I have used the letter "B" to make where this tight band ended. When the MACD moves in a tight band very close to zero it is an indication that a market breakoutt is coming.