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When Daily, Weekly, and Monthly Sell Signals Align


But don't interpret these indicators in a systemic black box approach.

Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial).

Minyan Kirk writes:

Professor Depew,

The monthly sell setup is in, the weekly is in (assuming a correct close tomorrow), the daily is in assuming a close above 1138 today.

My question is when was the last time this setup occurred where all three have aligned?

And if you have the time maybe the last three to five times they have aligned? Just the dates. That way we can draw our own conclusion on the viability/reliability of the signal.

This is a good question. I went back to look at monthly sell setups in the S&P 500.

Including the monthly sell setup that recorded in January, there have been 14 perfected monthly TD Sell Setups since 1963.

  • May 2007
  • March 2006
  • December 2003
  • July 1999
  • May 1997
  • September 1995
  • August 1991
  • October 1988
  • September 1987
  • April 1983
  • August 1972
  • May 1971
  • December 1968
  • July 1964

Minyan Kirk asked which of those also had concurrent TD Sequential signals on the weekly charts. This was a bit trickier because sell setups are active for 1-4 bars (months in this case) so I had to go back to compare weekly signals, both setups and sell signals over a wider time span.

The following weeks also recorded sell setups and/or sequential signals during those weekly periods. Remember, too, that a setup is a prerequisite for a sell signal.

  • May 25, 2007; TD Sequential 9-13-9 Sell signal.

  • July 9, 1999; TD Sequential Sell Signal

  • May 9, 1997; TD Sequential Sell Signal and August 8, 1997, TD Sequential Sell Signal

  • September 6, 1991; TD Sequential Sell Signal

  • August 14, 1987; TD Sequential Sell Signal

  • August 4, 1972; TD Sequential Sell Signal

  • June 11, 1971; TD Sequential Sell Signal

  • January 12, 1968; TD Sequential Sell Signal

  • June 24, 1983; TD Sequential Sell Signal

Note how important context is: Although the monthly chart recorded a TD Sell Setup in October 1988, the weekly actually recorded a TD Sequential Buy Signal the week of November 25, 1988.

I didn't bother to look at daily charts due to the time involved and labor intensiveness, but obviously as time scales become smaller signals increase and so it stands to reason that at some point over the spans there were concurrent signals. Also, daily is for fine-tuning. I use quarterly, monthly, and weekly for portfolio management.

Lastly, I would caution, as does Tom DeMark, against interpreting these indicators in a systematic black box approach. There are important contextual elements that are missing from these studies; TDST Levels for example, that provide broader trend context, TD Propulsion, TD Lines, etc.

-- Kevin Depew

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