The HLC TREND indicator is a moving pivot line signal that I’ve been fiddling with. Basically, we examine the lead or lag of a moving pivot line (H+L+C/3) against a 7 period moving average. This differential of these 2 values provides an indication of whether the focus stock or ETF has reached (or is about to reach) overbought or oversold levels. We could also apply standard deviations bands to the indicator relative to the zero line to help gauge likely reversal thresholds but a quick eyeball of SPY’s performance with the HLC TREND shows that once the signals reverse they don’t turn back. The low risk tactic to using this signal is to monitor zero line crosses and play momentum very short term (1-2 days).
