Dow 2007

[Atilla]

Hi LL,

Thank you kindly for your kind words of support, encouragement and guidance. I have been there and do agree with your excellent points. I only risk money I can afford to lose and as the saying goes easy come easy go. Lose some win some.

I will be maintaining my short position over the weekend and feeling 50/50 regarding the direction.

The reasons for the short entry I feel were sound. On the Daily and hourly charts DOW30 looked as if it had well extended it self with a nice pull back. Diverging MACD and Stochastics pointed to a fall.

I normally wait for MAs to crossover and my BBs to narrow but felt the highs were too good to miss. As I say I'll be holding my position and the hourly charts at least look like they may only be making a lower high so pullback may be expected.

I felt I got the moves right on the FX cable today in fact best part of the week but for some reason being over cautious didn't take the trades that might have been profitable.

Always next week. Did have a good week outside of trading and mustn't grumble.

Life is a beach and if you feet don't touch the ground then you simply got to go with the waves and bop up and down...

Enjoy all that you do and once again many thanks for your kind words and guidance.

 

[frugi]

Breadth still deteriorating by the looks of it ...

 

[lurkerlurker]

Breadth still deteriorating by the looks of it ...

Cheers frugi. I am considering a sell limit above the market at around 13300. If you're interested, I was able to "scalp" about £50 profit in a few quick trades- this has offset Tuesday's losses so I end the week -£120. I can live with that more than a £200-odd loss...so I am a little more confident about trading the Dow.

 

[ammo]

frugi thanks for the post, could you exlain what the indexes are comparing themselves to in each graph?

 

[frugi]

No worries.

Charts show 3 breadth measures of various indices:

number of advancing stocks minus number of declining stocks (labelled ADVANCES)
volume of advancing stocks minus volume of declining stocks (labelled VOLUME UP)
new 52 week highs minus new 52 week lows

Also there is a 26 period ema of Nasdaq and NYSE TICK HLC average. On a 15 min chart this equals one day.

Just a crude way of drilling a bit more deeply into the market, another set of clues, not something I would trade off directly. Basic idea being if fewer stocks are participating in the general move then its health may be suspect. Especially in the Dow where a few heavily weighted stocks can have a large impact.

After a couple of days of negative divergence such as this (roughly 3 peaks on the breadth line) I would be more inclined to avoid or downsize intraday longs and press shorts harder, especially if the Utilities and Transports are misbehaving as well. Or look for reversals more than trend trades. (Tran continued to diverge today, Util matched yesterday's high). I think of it as the scales falling heavier on one side than usual.

Vice versa for positive divergence. e.g have a look at the 1st May when the Dow made a new low but the vol and A-D didn't ... a clue to cover shorts and put trust in the bottoming action on a short term chart. The more indices showing a similar pattern the better. Note the S&P Naz and NYSE didn't make a new low on that day, so positive divergence of a sort between other indices & Dow as well as breadth.

Whereas if breadth confirms i.e follows price it's safer to buy or sell pullbacks against the trend. But remember these indicators are very well known and the idea of divergence is somewhat flawed. Still I find them useful as pieces of puzzle.

If you're interested, daily figs are available on stockcharts. Can get an idea of longer term divergences / confirmation from them.

e.g

http://stockcharts.com/charts/candleglance.php?$COMPQ,$NAAD,$NAUD,$NAHL,$CPC,$VIX,$NAHGH,$NALOW,$NAA200R
http://stockcharts.com/charts/candleglance.php?$NYA,$NYAD,$NYUD,$NYHL,$CPC,$VIX,$NYHGH,$NYLOW,$NYA200R

LL well done scalping with an SB, that takes some skill. I have enough trouble overcoming costs despite the 1 pip futs spread. Anyway I'd better shut up I'm no guru, just a barely adequate 'position scalper'.

 

[Pat494]

Give Dostoiyevski a big miss Attila until you got your good spirits back mate. His miserable drivel is enough to tip anyone over the edge ! Especially if you are having a bad week !!
Good advice by LL

 

[ammo]

attilla ...knock off the dow and spx and get rich quickly....that thinking will break you in a hurry... its a marathon not a sprint ,take what the market gives you,trade the signals in front of you ,not the ones in your head

 

[Atilla]

attilla ...knock off the dow and spx and get rich quickly....that thinking will break you in a hurry... its a marathon not a sprint ,take what the market gives you,trade the signals in front of you ,not the ones in your head

Great advice from you all and do appreciate it. I'm much obliged. The loss is not as great as some I have had and in fact it's pretty small at the moment - not counting the gains I have given up - even then it's still not much.

I think my struggle is still between TA and FA - head case that I am. Jekkle & Hyde type thing. :cheesy:

I don't know where the horse whipping beating came from just sort of conjured up in the head. I haven't read the book again either - it's been ages. Just remembered the horse whipping as a prelude to the murders. I don't know but it suddenly made sense as I visuallised the SPX and the DOW as these money cows and I was going to get a hiding.

I had to see it through even if it killed - cost me money. I do feel much better now thank you all. In fact I felt fine on Friday doing the garden. Took most of the day out watching and listening.

Thinking of doing a little more analysis tomorrow evening and hopefuly I'll put up a few more charts...

On another side note went out today with the family to do a little shopping at Ilford. There is a new cafe called the Titanic. My boy he is somewhat obsessed with the Titanic so we had to go in there. There wasn't much of a Titanic feel to it except for the name and two or three pieces of posters and videos. More of a builders cafe kind of place really. However, I felt strange in there wondering if the markets were perhaps were now ready to sink from their new found fame and glory highs? Probably not just Mr Hyde playing tricks with Dr Jekkle.

Losing fact and fiction I am. Please pay no heed. Everyone have a nice weekend.

 

[stevechelt]

However, I felt strange in there wondering if the markets were perhaps were now ready to sink from their new found fame and glory highs? Probably not just Mr Hyde playing tricks with Dr Jekkle.

Well, I reckon they will try to bump it up a little more on Monday to try to equal the longest bull run, and maybe Tuesday to make a new record, then (maybe) it will be allowed to retrace as a breather, but not below 13000.

Have a good weekend everyone, I'm off to the pub now

 

[Kinger]

I think it'll drop down almost from Monday ... I closed my long pos yesterday from mid April. Just looking at the charts and other sources tells me its getting weak, lots of short positions planned for next week anyway, I think the crowd followers will be right behind them ... have to wait and see... its only money anyway

 

[hobby]

I havent a clue about stochastics, but Oscar touches upon them here half way through his weekly round up.....

http://www.youtube.com/watch?v=KtaLhgVNg34&mode=user&search=

to my untrained eye, it looks like a given that the mrkets will reverse based on what they're showing.

one other (leftfield) indicator....Bradley Siderograph has Monday earmarked for a 'big mover' day (doesn't predict direction just that it'll be a biggie). Have a look here (disregard the actual peaks & troughs...they're not correlated with market price)...

http://www.amanita.at/e/faq/e-bradley.htm

to be truthful this latter one scares the living daylights out of me, because...

1. A bull run sometimes has a one day blow off where it goes friggin supernova, before yielding a little!

2. M&A activity is at fever pitch & Mondays arethe days that is typically driven by associated weekend M&A announcements.

3. The way the market trended into close (& after close) was very skittish but ended rather strong (ie IG's prices pumped on up past the previous highs of the day after 9.00pm)

Gulp! (cos I'm presently shorter than Ronnie Corbett)

 

[daytradingUK]

I think (opinion once again) this is only still going as people see a load of M&A and it overshadows all the bad news. There's a bit of trader psychology going on here that's making people hard nosed to bad news and embrace any good as being reason to push for new records.

 

[lurkerlurker]

LL well done scalping with an SB, that takes some skill. I have enough trouble overcoming costs despite the 1 pip futs spread. Anyway I'd better shut up I'm no guru, just a barely adequate 'position scalper'.

Thanks for the compliments, although I'm not sure I agree. I was taking 5 pips and then closing a trade. That means the spread of 5 ate half my profits. Now consider I was taking 10 points out of a 25-40 point move because of a desire to reduce my risk, and all of a sudden it doesn't sound so skilful. I had big losses earlier in the week due to a bad platform and worse discipline - I was wanting to take a bite out of my losses without allowing them to worsen. Getting in and out that frequently on a SB account isn't something I'd ever recommend - if you are skilled enough to profit from that you would get more pips trading once every 90 minutes, and going for pieces of the big swings.

Cheers
LL

 

[lurkerlurker]

Where to short?

I would think that a sizeable proportion of smart longs have covered before the weekend. Plenty of profit on the table, and these longs will have been generously rewarded for their bullish insight. As other posters have commented, Monday is great for stuff like "$FOO up on M&A" - so perhaps it is not likely that there will be any significant correction.

I think most people here agree that the support at 13000 isn't going to be broken any time soon. If this is the case, the best bears can hope for is a 2/3 hundred tic decline. Hopefully that can be squeezed out of the market in a week.

Next time I take a short on the Dow, it will be a weekly future contract through an SB. Spread of 7, stoploss of 30 (fairly tight). This doesn't give me much margin for error, and I would have some reservations about going back in if my stop gets hit.

I am looking for an explosive rally, touching all time intraday highs, perhaps an exhaustion gap, and a lower high before I will consider shorting.

What news could move the market? Aside from M&A activity over the weekend, we have an FOMC meeting on Wednesday, Consumer Credit report on Monday evening, etc. I can't see news moving the market substantially this week. Anyone disagree?

There appear to be divergences all over the place, and I am sure this bull run will not last. Anyone here care to state their short indicators for this market?

 

[firewalker99]

I think it'll drop down almost from Monday ... I closed my long pos yesterday from mid April. Just looking at the charts and other sources tells me its getting weak, lots of short positions planned for next week anyway, I think the crowd followers will be right behind them ... have to wait and see... its only money anyway

This will probably sound arrogant, but I'll give my comment anyway.
Why do you think it'll drop down on Monday? I'm under the impression a lot of people "feel" that it "should" do this or that. And let's not forget 75% of the posters in this thread have all been shorting (and losing money) along the way? Sure, they'll be right eventually... and when they do it'll probably make up for a nice short... recovering the losses from the previous 10 trades

Looking at the charts I can't find a single technical reason to short this, apart from a gamble that in time it will head lower (which it obviously will do). Also... care to let me in on those "sources" that tell you it's getting weak?

Where to short?
What news could move the market? Aside from M&A activity over the weekend, we have an FOMC meeting on Wednesday, Consumer Credit report on Monday evening, etc. I can't see news moving the market substantially this week. Anyone disagree?

There appear to be divergences all over the place, and I am sure this bull run will not last. Anyone here care to state their short indicators for this market?

I would have thought that over the last couple of weeks it became very clear that the market discounts the news...

Anyway I don't agree nor disagree about the coming week... "I don't know" is the only answer I can give, but from experience I've learnt one big thing: thinking you are "sure" or "certain" the market cannot do this or that will cost you a lot of financial and emotional pain.

Best of luck nevertheless.
I hope it can be a profitable time for everybody

 

[lurkerlurker]

I'm a big grizzly bear today. I hope I don't get impaled on a bull horn. Looking for entry opportunities on failures to make higher highs.

firewalker - yes I think it is clear that the market discounts the news. That is what I was suggesting in my post. I agree that it is bad to be "sure" of something in the markets. Suffice to say I think today I can either be short, or on the sidelines, and if I see an opportunity to sell at a price I believe to have a favourable risk/reward I will do so. Isn't that what every trader ultimately does - calls a direction and then enters at a favourable price? Right or wrong, longs need someone to buy from.

 

[lurkerlurker]

Short from 13309 on the June Future. Stoploss 13339. May bail before the cash market opens. This contract has a spread of 7 and expires at the end of the week (TradIndex) - however it is priced off the June Future.

Anyone else with an undeclared position?

 

[brutusdog]

opinions....

Firewalker,

I couldn't have put it better myself. thank you for the reminder, its all to easy to convince ones self of a direction and be bias to that and then miss profitable moves in the opposite direction. this is something i was guilty of last week. all the charts i had for dow were bullish and my intraday trades are only supposed to be in the direction of the overall trend, taken off daily and weekly charts. my intraday trades are based on 5 and 30 min charts.

There are so many instances of things happening in contiuation that there is no reason for that to stop. Apparently it is a common thing in casino's to see up to 30 or 40 red/black in a row and after around 15 times of the same colour people start betting against the colour that is consistent. obviosly this is a random senario but it points out human nature.

The key is trade what you see let the market show you its direction not what you belive / think / feel.

Also i'm guilty of forgetting that markets are not random, that they are controlled by market makers. These people are there to make money. They control the news and how the market reacts to it. They are able to take positions and offload them to make money. This is the cycle that moves markets.

From now on i will try to post all my trades live as a learning exercise and all the best for the week ahead.

cheers. bd

 

[lurkerlurker]

For us spreadbetters here: Live Book for DD and YM

 

[Paul71]

This will probably sound arrogant, but I'll give my comment anyway.
Why do you think it'll drop down on Monday? I'm under the impression a lot of people "feel" that it "should" do this or that. And let's not forget 75% of the posters in this thread have all been shorting (and losing money) along the way? Sure, they'll be right eventually... and when they do it'll probably make up for a nice short... recovering the losses from the previous 10 trades

Looking at the charts I can't find a single technical reason to short this, apart from a gamble that in time it will head lower (which it obviously will do). Also... care to let me in on those "sources" that tell you it's getting weak?





I would have thought that over the last couple of weeks it became very clear that the market discounts the news...

Anyway I don't agree nor disagree about the coming week... "I don't know" is the only answer I can give, but from experience I've learnt one big thing: thinking you are "sure" or "certain" the market cannot do this or that will cost you a lot of financial and emotional pain.

Best of luck nevertheless.
I hope it can be a profitable time for everybody

Totally agree with your sentiment, FW.

Trade the market short-term, take into consideration its daily parameters, but always keep an eye on the bigger picture.

Most make the mistake of applying longer term fundamentals to their short-term trades.

Keep the two separate.