The market continues to make lower lows.
My indicator is indicating a divergence with price. It has a volume component, however, so I wonder if it's just a virtue of the light holiday trading.
In any case, I've decided to play safe and go flat as of yesterday, in case we get a bounce next week.
I've discovered another indicator that I like which moves very similar to mine, which is the RMI or relative momentum index. It is based on Wilder's RSI, but adds a momentum component. I believe momentum is key. The indicator by default oscillates between 30 and 70 for overbought and oversold. I've always thought such thresholds were arbitrary and seldom reliable. I do like looking for divergences with price, however, and whether it is holding above or below 50, which is the midpoint. I've modified RMI on my platform to show only the 50 line, and use 12 periods for momentum and 26 for look-back. The defaults on my platform are 5 and 20. You can see how similarly it moves to my wave momentum indicator, despite differences in how they are calculated.
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