Obviously I'm a big fan of pivots. What other technical tool gives you trend status, entry, management and targets all in one package? But sure, I look at moving averages and their slope too. Often pivots give the signal first, but when there is combination then it is an even better setup. So, what else to use with pivots for more effective returns?
1. Volume. While not always a lock, a higher volume move off a big tends to work.
2. RSI. It takes some art to use this but i had one momentum indicator this would be it.
3. Sentiment. I prefer a combination approach of standard put-call, ISE and both the AAII Investor and Manager readings. So here's the point:
The ISEE index was 146 at the close on 1/26. That is far too high considering when everyone was looking for Santa on 12/24 it was 144, and the spike high for the last six months was 187 on 12/15. Anything near 150 is toppy and has been near several key trading highs the last two years. ISE readings pointed to people being overly bullish and complacent and the result was a very ugly January. Yesterday everyone thought the market would rally on the FOMC, and today the market looks like it may threaten the 1/20 lows.