(Click on image above to enlarge it.)
This is a weekly chart of Wachovia, showing the NMC Zero Hits beginning as early as June 2007 (far left red arrow), and extending into September and October 2007 (with NXC agreement), the same time window pinpointed by the monthly Zero Hit shown previously.
Note that as the weekly setup was forming in conjunction with the monthly setup discussed previously, prices had traded below the Fast and Regular Ocean moving averages (green and red lines on prices), and had retraced to the resistance that they were providing as the Zero Hit occurred. Once the short trade got underway, each counter trend retracement thereafter saw prices halting their advance somewhere in the "sandwich zone" between the Fast and Regular Ocean moving averages.
Also, the BTX (3rd sub-graph) had declined from early August mid October 2007, and had retraced to its lower standard deviation line, a location where a "recycle" usually terminates. As soon as the new down thrust resumed in October, the BTX responded by crossing back above the trend threshold and continued its trend message throughout the entire collapse.
Also note that the BTX 2 Line (bottom sub-graph) had experienced a bearish exchange of dominance in early June 2007 (far left magenta arrow) as the first NMC sell setup formed. Then, as the counter trend retracement (that produced the monthly and weekly Zero Hits in September 2007) unfolded, the bearish red BTX 2-Line pulled back to its trend threshold, turning up as the Zero Hit confirmed and reestablished its widening separation from the green line (its BTX 2-Line bullish counterpart) as the trend resumed.
There were other Ocean based selling opportunities that unfolded in February, March, and May 2008 (red arrows on NMC and NXC), offering additional add on opportunities as the stock continued its historic decline.
Though even most professionals were surprised and shocked by the collapse of this bank and/or the banking sector in general, the Ocean signals were absolutely clear throughout the Wachovia and banking system debacle. Although not shown in these examples, the KBW Banking Index (symbol BKX) was showing very similar Ocean bearish formations throughout the late 2007 to 2008 banking disaster.
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