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| Buy Signal | Bull Trend |
Transition Bull |
Transition Bear | Bear Trend |
Sell Signal |
Neutral | Extreme | Trending |
MarketColor is a proprietary trading tool that shows a picture of a market's technical profile. The program analyzes a select group of technical indicators and applies a unique system to each study, presenting the results in a color-coded table.
The Price Map includes the MarketColor results along with the actual indicator figure. The time horizon for the MarketColor analysis is comparable to the Minor trend change (2 weeks) and should be used as a guide to underlying sentiment, supporting or not, the daily technical outlook and the R (Reversal Number) session bias.
The action colors (GREEN, ORANGE, YELLOW) have a 1 to 3 day time horizon and are pertinent to the trading session. The following are a few signals, which will provide higher probability trade opportunity.
| DC HIGH | 1125.50 |
| DC MID | 1074.80 |
| DC LOW | 1015.90 |
A price move with the trend signals a sign of exhaustion. The market is a little ahead of itself and will have difficulty sustaining price moves in the direction of the trend. Early morning follow through in the trend direction are particularly vulnerable.
For example: The market has rallied hard for the past 7 days. On the 8th day, the DC (Dynamic Channel) cells light up YELLOW, signaling that the market is at an extreme. The market opens higher. For a scalp, look for opportunities to fade this strength either at major Price Map resistance targets or on a failure back through a violated Price Map resistance level.
This type of opportunity is even greater when the extreme signal (YELLOW) is against the underlying trend. This type of signal is corrective and the market is "squeezing" the trend positions.
For example: The market has been in a 2-week Bull trend move. It then has a sharp 1-3 day corrective break, which turns the DC to YELLOW (Extreme). A lower opening, followed by fresh selling, would provide a buying opportunity off major Price Map support levels or a violation back up through a failed Price Map support level. This opportunity is farther reaching, as the signal is in the direction of the underlying trend and provides a low risk entry for the market's next advance.
| SSTOC + | 22.86 |
| SSTOC - | 18.32 |
These signals have the highest probability of success and should be expected to last for at least 1 to 3 days.
Low risk opportunity
For example: The market has been strong for the past 10 days. On the 11th day, an ORANGE sell signal is generated on the SSTOC. Traders should look for opportunities to sell the market against the opportunities to sell the market against the UP (Upside Pivot) or R (Reversal Number) or on a failure from the DP (Downside Pivot), as the probability of a corrective dip is high.
A held trade above the UP will negate this signal for the session.
or
|
SSTOC + |
82.86 |
|
SSTOC - |
78.32 |
| ADX 7D | 22 |
| RSI 5D | 56 |
| RSI 13D | 52 |
These signals are most successful on the initial session, but can influence the market for up to 3 days. The probability of success will increase when the ADX is in a BROWN (Neutral) position.
Low risk opportunity
For example: The market has been trading directionless for the past 5 days. On the 6th day, a GREEN buy signal is generated on the RSI. Traders should look for opportunities to buy the market off the DP (Downside Pivot) or R (Reversal Number) or on a breakout above the UP (Upside Pivot), as the probability of a rally is high.
A held trade below the DP will negate this signal for the session.
or
| RSI 5D | 22 |
| RSI 5D | 35 |
| RSI 5D | 45 |
| MAC 13D | 1086.10 |
| MAC 26D | 1060.30 |
| MAC 50D | 1050.20 |
| MAC 100D | 1030.20 |
| MAC 200D | 1005.60 |
| DMI + 13D | 35 |
| DMI - 13D | 26 |
| ADX 7D | 42 |
New signals in one indicator that have a like-color bias in the other indicator should be viewed as a stronger signal. In addition, a PURPLE trending ADX (Average Directional Index) will add value to any buy or sell signal.
These trend signals are the slowest of the action color signals, but the ones with the most lasting effects. Traders should use these as confirmation to the underlying market bias.
Low risk opportunity
For example: The market has been working higher for the past 5 days. On the 6th day, a GREEN buy signal is generated on the DMI. Traders should look for opportunities to buy the market off the DP (Downside Pivot) or R (Reversal Number) or on a breakout above the UP (Upside Pivot), as the probability of a rally is high.
In the above example, the MAC system is already in a Bull Trend (BLUE) and the ADX is PURPLE. This new buy signal in the DMI is both in the direction of the current trend (BLUE - MAC) and has follow through potential (PURPLE - ADX). Signals like these, if sustained, have the potential to carry the market for 2-8 weeks.
A BROWN neutral ADX or MAC would take away from the strength of this signal and any lasting effects. Buying opportunities under these circumstances should be considered short-lived, as a choppy trading environment is expected.
Strong BUY signal
Click on the links below for further MarketColor study.
Analyzing the MarketColor Profile
MarketColor Indicators Explained
Sample MarketColor Analysis
MarketColor Tutorial
The MC Value and Ranking Tables
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