Click on the chart to enlarge it.
(A 203-minute chart was chosen since it is one half of the full 405 minutes of the S&P day session.)
Turning to this half-day chart, we can see that prices have remained below the Ocean NMA for the past 2 weeks, and the NMC (first sub-graph) has remained below zero over the same two-week duration.
Notice the Ocean Natural Market Slope (NMS) oscillator shown in the bottom sub-graph. The mathematics behind this Ocean tool is radically different from most of the other Ocean tools, and yet the message being generated from it substantiates the bearish case very clearly.
NMS (shown as a dark cyan line) is solidly below zero as well as being below an Ocean Natural Moving Average (shown as a dark magenta smoother line) based on the NMS itself, which is also below zero and clearly sloping downward.
Once you have learned the Ocean techniques it's glaringly obvious that these are the fingerprints of a very weak market. The only remaining piece of information that we need for an ideal trade setup is another NMC Zero Hit on this time frame to pinpoint an entry location.
As luck would have it, the zero hit occurs at the completion of the last bar of the day on Wednesday, July 20th. This means that all we need is an entry signal (fully explained at the Ocean Workshop) the following day to finesse the entry and minimize the risk (the real key to successfully trading the markets!).
In fact, the entry signal that we employ with Ocean setups almost always limits the required risk to assume a trade to the range of a single bar. I know of no other methodology or technique that can consistently make that claim. It's one of the primary reasons that Ocean is so highly regarded by those who are currently using it.
In the first half of the following day, the 21st, the market continues its counter trend upward drift and ultimately finds terminal resistance at the precise level of the Ocean NMA, marked with the down arrow. It's quite common for prices to hit a brick wall at the NMA in a counter trend drift and this helps add confidence to the anticipated success of our potential sell signal.
Note too that the NMS oscillator is also finding resistance at its own Ocean moving average (shown by the circled arrow in the bottom sub-graph), another valuable clue as to the expected bearish outcome.
At the moment when prices are repelled from the NMA and NMS also finds resistance at its own NMA, our strategy is to then dial down to an even lower time frame to finesse an entry and further minimize the risk required to assume the trade.
(This is the end of Part 2. Go to Part 3.)
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