Squeeze Momentum Indicator implies that the upwards retracement after the bottoms has come to an end. However, it has not given a clear signal of the direction of the next momentum in the market. By combining this information with the Volume Flow Indicator (VFI) we can see that the upwards trend is really losing its vitality. Besides this the occurring negative divergence with the price gives a bearish signal that may signal a major negative price move.
However, you should notice:
Divergence isn't to be relied on exclusively, as it doesn't provide timely trade signals. Divergence can last a long time without a price reversal occurring.
About the Squeeze Momentum Indicator [by LazyBear]
This is a derivative of John Carter's "TTM Squeeze" volatility indicator, as discussed in his book "Mastering the Trade" (chapter 11).
Black crosses on the midline show that the market just entered a squeeze ( Bollinger Bands are with in Keltner Channel). This signifies low volatility, market preparing itself for an explosive move (up or down). Gray crosses signify "Squeeze release".
About the Volume Flow Indicator (VFI) [by LazyBear] VFI, introduced by Markos Katsanos, is based on the popular On Balance Volume (OBV) but with three very important modifications:
Unlike the OBV, indicator values are no longer meaningless. Positive readings are bullish and negative bearish.
The calculation is based on the day's median (typical price) instead of the closing price.
A volatility threshold takes into account minimal price changes and another threshold eliminates excessive volume.
Can this indicator be used on other time frames beside the daily?
dscrockett
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Agree with your thesis. My guess is Mr. Market awaits some grim news to begin its markdown? I believe we're witnessing a bull trap?
Dr_Roboto
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I appreciate the explanation of your analysis and the indicators. Thanks.
The noticeable reduction in volume in the last week while making new highs is typically a warning sign that something is about to happen. It also lines up very well with the Wyckoff phase C and UTAD event, though we are making news highs and not testing the highs. In a normal market I would lean towards a reversal, but with some much liquidity being pumped in this market it seems hard to believe we are going to turn down. It could just as likely be a pause before the next big leg up. If you noticed, it is not tech stock pumping up the market now (many are actual noticeably off their highs and are probably at their oversold status). It is airlines and cruiselines that have pushed the market to new highs.