"Can You Tell Where the Markets Are Going Next?"

The OVI Can Give You a Valuable Insight!

The truth is, no one can tell for sure where the markets are going, but Guy Cohen has been developing something that can give us a better clue. 

"I've been developing a new market indicator called ... The OVI Index" 

Here's why the OVI is so unique.  The OVI measures the flow of Big, Smart Money, not price.  It does this by creating an oscillator derived from option volatility, volume and open interest.  Other indicators such as moving averages, MACD, RSI, Stochastics, Gann, Elliott, Fibonacci etc, are all derived from price.  In my book, price and price pattern are the best indicator of price, so these other indicators must be inferior. 

The OVI is special because it does not lag the market.  This gives you a huge advantage!  Other oscillators like MACD, Stochastics, moving averages and RSI are smoothed by way of averaging several days of data.  This creates a lagging effect, which means often the indicators will signify something only after the market has made its move. This is all very well in theory but not so good in practice where we need something more immediate. 

Here's an example where the market was making a major turn in March 2009, yet the OVI was already forecasting this possibility.  If you'd have the OVI, you'd have been prepared for this spectacular turnaround. 

The OVI helps us with two main areas of trading

• First, it helps us with trading flag patterns and having a sense of whether flags are going to follow through or turn the other way.
• Second, the OVI is going to help us devise a safe reversal strategy.

Here's another example.  In this chart the market made a false breakout on 11 June 2009.  The OVI was already showing a significant divergence that showed the distinct possibility that the markets were headed down.  

Here's another example where the market was poised to move down into the July earnings season.  However, the OVI was pointing upwards and continued rapidly into positive territory.  This gave the clear signal that the mareket would recover. 

Now for Goldman Sachs – see how easy it can be to trade this stock.  In mid November the stock is forming the second shoulder of a Head & Shoulders pattern.  Compared with the rest of the market GS looked weak, in terms of the chart pattern and its OVI. 

If the bull flag of the second shoulder failed, it could result in the stock rolling over ... which is exactly what happened:

And just a few days later we now have a bear flag, which is perfect for another short because the OVI is now firmly back in negative territory. 

If we’re not already short, we simply do so on the breakdown below support and exit with a great profit as soon as possible on the Doji bar a couple of days later. 

As you can see by now, the OVI is one of the most powerful indicators to help supercharge your trading profits.  It works best with liquid stocks where there’s plenty of activity and will give you the edge you need.

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