MARKETCOLOR is a stand alone trading tool designed to provide a quick picture of a market

MARKETCOLOR is a stand alone trading tool designed to provide a quick picture of a market's technical position. The service analyzes technical indicators using classical and proprietary systems and presents the results in a color-coded table.

The indicators in the MarketColor table represent a cross section of trending, trending ability, non-trending oscillators, turning points, and extreme deviation technical studies.

MarketColor weights each indicator based on a market's trend or non-trend bias, the strength of this bias and the turning points and extreme deviations within the trend or non-trend bias.

Color-Code Table

To begin analyzing a MARKETCOLOR profile the 1st step is to determine if the market has a trend bias or not. To do this the color profile of the Trending indicators; MA and DMI should be noted.

Does the market have a trend bias?
What is the color position of the DMI and Moving Average?

A GREEN, BLUE, ORANGE or RED color signifies a trend bias. If the color of one indicator is BROWN the other indicators trend color should be discounted. If both are BROWN the market is in a NEUTRAL posture. In a NEUTRAL trend bias the analysis should focus more on the Oscillator indicators. The Moving Average indicator can be in a YELLOW or extreme position which would signal caution to any DMI signal.

If the market has a trend how strong is it?
Do both trending indicators confer?

Does the market have follow through potential?

An ADX with a BROWN color signals that the market is not showing any trending tendencies and would discount the trending indicators color bias. In this instance greater weight should be placed on the Oscillator indicators. A PURPLE color signals a trending market and will add weight to any trend signal and discount the Oscillator indicators. A trending market with trending tendencies should then view the Turning point and Dynamic Channel extremes.

Is the trend at a turning point?

The FSTOCH (Fast Stochastic) and SSTOCH (Slow Stochastic) Turning Point counter trend signals, show warning that the current trend is ready to take a pause and possibly reverse. Turning point indicators with like trend bias colors will add weight and reinforce the current trend. A YELLOW color is a signal that the market is at an extreme and the trend is exhausting with the possibility of a pause or reversal of the current trend bias. A trend reversal signal would have a counter trend action color (GREEN or ORANGE) associated with it and should always be respected.

Is the market at an extreme?

The Dynamic Channel color profile shows if a market is moving to or is at an extreme. All other colors should be noted for their support for not for the current trend.

Is the market in a Neutral posture?

If the market does not have a trend bias or does not have any trending tendencies then the Oscillator indicators (RSI, ROC and MACD) will determine the markets tone. The Oscillator indicators chosen are divided up into different time frames. The RSI (Relative Strength) being the shortest followed by the ROC (Rate of Change) and then the MACD (Moving Average Convergence Divergence) for the longer-term outlook.
Is the market overbought or oversold?

If any of the Oscillators are at an extreme they will produce a color signal. The RSI (Relative Strength) is the only Oscillator indicator that can produce a momentum signal with a GREEN (BUY) or ORANGE (SELL) signal associated with it. This signal is usually early in a market's transitional posture.

What is the general tone?

After going over the MarketColor profile a general underlying tone should be revealed. This should be used as a component when making trading decisions with or without other supporting technical or fundamental work.

Know the code.

It is essential to have a general understanding of each indicator type to get the most out of the MarketColor analysis. Any serious student of the market should take the time to garner a general understanding of the supporting indicators to best profit from subtle nuances that they will present. This can be found in the MarketColor Indicator Explained.

For sample MarketColor analysis examples, please click here MarketColor Example.