Again, I felt very not rushed today. During the times while I was waiting, I simply worked on finishing my How I Pick Stocks Page which really made time fly. When things would slow down, I would draw my trendlines, levels of support, etc; set my audio alerts to let me know when to start paying attention to the market again, and worked on actually enjoying the slow times during the market instead of fearing or dreading them.

Seemed to help.

One of these days, once I finish some other sections, the list of improvements to this site is to add a list of plays that I take along with examples of a good & bad setup. Price Divergences will be one of the first on that list and this may very well be one of the ‘Good’ examples.

Price Divergences occur when after a big Price & TRIX move one way, Price & TRIX start to pull back. But while the TRIX might pull back the same distance that just previously ran up, price only corrects by a fraction. Consider this a super-loud, multi-channel broadcast of the current market momentum.

It works the best when the up move is accompanied by heavy surging volume, as in a Vol+ and the accompanying pull back has contracting volume.

There are 2 ways to enter:

1.) Draw a trendline accross the top of the pull back and enter on a close above it
2.) More conservatively you can wait for the TRIX to turn higher

Depending on the market conditions and how much convergence there is in my other indicators, I use both methods quite often. Today’s setup had it all and yielded a very quick 4-tick profit. My only regret is that I closed my position so soon and left a full 2 points profit on the table :-/