Clarifying Thoughts on Indicators

Thought that I would clarify some thoughts on the various indicators.

1. The king of all indicators is price. Price action trumps all other indications, since all other indicators are based on price. There is no indicator that can lead price. Price can do any thing at any time, and all other indicators are simply an analysis of price.
2. I prefer to use $TICK as a confirmation of ES price. One tends to follow the other. When there is a divergence between $TICK and ES price, it usually means that the futures over reacted and will soon correct back into agreement with the indication of the $TICK. I view the $TICK as an early signal of equity price sentiment. ES futures is nothing more than a leveraged instrument of the equity, large cap market.
3. Next on my list would be the $VIX.X. On the 15 minute chart, a VIX above the 14 period EMA is typically bearish, and bullish below this EMA. Actually, I like to look at the short-term trend of the VIX on the 15 minute chart. If the VIX is below the open of the current 15 minute bar, a scalp, long trade may be possible. It depends on what I am seeing in the relationship between price and the $TICK. The opposite or scalp, short trade may be possible if the VIX is above the open of the current 15 minute bar. However, for longer term trades, if price, $TICK and VIX are all bearish, look for short trades, and long trades for the opposite scenario.
4. All other indicators that I have shown in my posts play a minor role. I look at them as an added layer of security, but do not base a trade on them. It is nice when all the indicators agree, but not necessary.

The other consideration that I pay attention to is the two-day up and down cycle. This cycle has been invalid the last two weeks, but that is because of the capitulation or panic selling situation that we were experiencing. If most of the sellers have left the market, we may return to a more normal short-term up and down cycle.

I may go back to posting my thoughts on the market as it unfolds throughout the day. I not this for a short period of time in the past, but got a little lazy. I did find that this helped me focus on the market, so I may start doing this again.

Charles