FINDING BOTTOMS PART 1: The $NYHL is good for identifying both long term bottoms and short term

bottoms which give option traders a chance to act on higher immediate prices. The setup occurs when the price goes below the lower Bollinger Band with the general setting of 20,2.

$NYHLR is used in conjunction with the above chart to find longer term bottoms. I use this chart to buy outdated, out-of-the-money calls on the indices and to swing position myself long. This particular chart gives a buy signal when the price drops to, or below, 0.25. When it starts giving multiple lines in succession you know a major bottom is forming. You can see now that it is producing negative divergence to the recent highs, which is why I'm currently out of and not entertaining long positions.

$SPX:TLT again uses a Bollinger Band setup, however we change to 30,2 instead of the standard 20,2. This chart is recommended for more longer term bottoms, but does give intra-trend bottoms occassionally. The buy setup occurs once prices drop below the lower BB. In a trending market, the mid BB can be used as a buy or sell point.

$SPX:$VIX uses a simple RSI measurement to find longer term bottoms. The signal, RSI below 30 is the signal, usually does not produce a low. The signal tells me that caution is warranted and generally the next low in the indices is the buy point. This new low in the indices often occurs with a positive divergence in the RSI as you can see from the chart below. That's when I buy.

These charts are great for finding both mid and long term bottoms. I hope you benefit from following them. When these events occur in conjunction with my Elliott Wave counts they are highly profitable transactions. Some of these indicators are also useful in finding tops, but I will cover that in an upcoming file. All the best to you and your trading. Any questions can be sent to PEACE

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