DOW 31 May - 3 June 2005

[peterpr]

Bramble's away. I've been asked to start the weekly thread.

Preamble - my focus is intra-day. Chart and all comment refer to YM futures contract.

Daily chart attached. Majority of bears see us approaching the end of a EW2 of 5 down, which requires W3 to be not the shortest and usually severe. Bulls see YTD as a correction from the upturn at March 2000. Whoever is right we are clearly approaching a 'correction' if the short-term top is not already in. However, short-term trend (3 days-week) is still up although on clearly declining volume. Most indicators say there's room for more upside yet and if the DAX is anything to go by the French referendum result is seen as a positive - for European equities anyway - strange! News accumulation + seasonal factors argue for limited further upside through the summer at least

 

[TheBramble]

Good work Peter.

My expectations at the start of last week's thread weren't exactly on the nail...

The Dow is finding Resistance at 10500 (although has been having a go at it) and will find strong Support at 10000 and weaker support at the century levels (and the 64s of course! ).

It doesn't seem to have the 'strength' to push through and is likely to meander between 10400 and 10500 for the early part of the week, but with an overall tendency to drop toward 10300 by end of the week.

Well, it did find a little bit of oompah to push through and make 550 once and almost twice.

It did meander, but between 450 and 550.

And it didn't drop to 10300 by week-end. In fact, although is was a less than inspired performance for the week ( I could only fund one additional Maserati from this weeks 40+ pt moves per day) it didn't display the 'weakness' that had been a clear possibility.

Who knows.

My general outlook has turned from somewhat Bearish to Neutral. Which is pro-speak for "I haven't got a clue - it could go either way".

10550 is still Pivotal (no pun) and a Daily close above 10550 with supporting buying on the following day would see a real possibility of a shot at 11000 again this week.

 

[frugi]

A good PeterPreamble-Bramble kind sirs. Please forgive my sullying your thread with shallow predictions.

Window dressing will spike us up to 623-32 to mark the top of the week, around 6.00 BST today, with the unexpectedly low close resulting in sweaty new longs and deposed, rueful shorts.
Four chances to be wrong there, but I can never resist an accumulator (especially the aggressive type)

NR7; volume has dwindled to the pitiful; an eerie calm has descended - so the action may be fast and nasty, at any rate. I'll be ineffectually brandishing my pattern cutter at the late evening session, once some direction and relative calm has been established. Gotta watch for a marabozu that gains momentum after 8.00 BST though, as they can really slice a woolly pelt if left unchecked.

 

[TheBramble]

Window dressing will spike us up to 623-32 to mark the top of the week, around 6.00 BST today, with the unexpectedly low close resulting in sweaty new longs and deposed, rueful shorts.

'Deposed, rueful shorts' you had a good weekend then by the sound of things FrugHindle...Stick 'em in the wash with a bit of fabric conditioner, they'll be OK.

That's a balls-on prediction - off with you sirrah....no prognosticators here, damn your eyes....

I'm only quoting your post in case you decide to delete it. (But as a mod, you can edit mine as well...damn!)

So, a high of 623/32 today (which will also be the high of the week) AND at precisely 18:00BST.

But where is the low close. Come on man - out with it - we are all banking on you (hopefully in more ways than one). I've got my entire trading pot lined up on this...

There'll be no sweaty longs or deposed rueful shorts on these boards today. See you all down the bar later....

 

[TheBramble]

Well, I'll be surprised if it breaks up thru 600 today Frugeshunderbild...

I'll also be surprised if it breaks down thru 450.

Pretty average volume based on recent history.

If it goes above 550 on supporting Volume and a re-test with reduced Volume on the reaction - I'd say a Long would be in order (esp. if Frugesh is right!).

If it goes below 420 on supporting Volume and a re-test with reduced Volume on the reaction, a Short would be worth considering.

Note my re-test requirement on the Short this week whereas last week I wasn't going to wait for that.

An indication of my Neutral stance as opposed to slightly Bearish last week.

Let's see. Personally I suspect it's more likely to be rangebound today (although a 60 pt move, if you caught the early move, is hardly rangey...)

 

[TheBramble]

Frugi...

Frugi......

Frugi.........

I bet the ranch on it hitting 623 at 18:00 BST - and it didn't.

Can I have my trading pot back please?
===========================================

 

[TheBramble]

There's something strange going on here that even an amateur Dowie like me can't fail to notice.

I don't understand it - but I can see it.

Diminishing volume, but the price being 'held' in an unnatural (don't know how else to describe it) range.

I'll adjust my previous Short criteria and go into 'Tank Mode' :- if it plummets through 450 I wont wait for a re-test - the Volume will tell me all I need to know.

 

[Piperlad]

Like you Bramble we've just lost the farm!!! And still no word from Frugi???? See what you mean about the volume but not sure we understand what you mean re the "unnatural" range?? Agree about going short at 450. If it breaks our guess would be down to 250.

 

[rrtech]

Where did you place your bet that it would hit 623?

 

[Piperlad]

Frugi......................
Frugi............................
Talk to us.........................

 

[frugi]

Well at least I provided a good reason to trade patterns not predictions.

FWIW ... (nowt obviously): Top of the week, possibly; trend change at 6.00 BST, sort of; unexpectedly low close, yes, to me at least; 623, not at all; deposed shorts, no; sweaty longs, quite possibly. Hey we might even get that marabozu, gathering momentum after 20:00. What more do you want, 75% accuracy? (Nah just an excuse to use semicolons, a woefully ignored mark of punctuation if I may say so.)

*grasps embarrassingly at non-existent straws*

I really hope nobody took me seriously, anyway. (as if)
After nearly 3 weeks of not trading (watching, watching) I bet against myself as a matter of principle and took one fewer than fiddy mainly thanks to a lucky 123 TTE / 4 min at 20:22, closed on the 20:42 climax. Anyway nuff pointless self-congratulation. I hope Brambler's deceptively spacious cottage "The Ranch" is in fact safe after all. Good call on Tank Mode btw.

 

[CZON]

Well everybody, see what I mean about fundamentals. Less than 10 mins before close today, some wierd news, probably due to Sky rocketing Oil futures has caused our beloved DOW to plummet 50 points!
Bramble, it almost broke your 10450. And who could have predicted that?! I'll am prepared to buy him or her a bottle of champagne if he or she tells me when the next great break like that will occur.

BTW has anybody heard of a software called Vantage Point which uses Neutral networks to do market forecasts? It claims 80% accuracy.

 

[neil]

Mug punters only

Well everybody, see what I mean about fundamentals. Less than 10 mins before close today, some wierd news, probably due to Sky rocketing Oil futures has caused our beloved DOW to plummet 50 points!
Bramble, it almost broke your 10450. And who could have predicted that?! I'll am prepared to buy him or her a bottle of champagne if he or she tells me when the next great break like that will occur.

BTW has anybody heard of a software called Vantage Point which uses Neutral networks to do market forecasts? It claims 80% accuracy.

And they are gonna sell this 80% profitable sysytem to the public - ROFLMAO

Anyway - some views on VP for you to ponder:


http://www.elitetrader.com/vb/searc...d=793561&sortby=lastpost&sortorder=descending

 

[peterpr]

Well I had a bit of luck yesterday - and that's what I recognise it as - luck pure and simple. I had left 2 contracts open from Friday at 10536 on the basis that the long weekend was more likely to produce market-moving bad news than good + a load of other rule-breaking rationalisations. In the event we got neither really but because of the rise into Friday's close which missed my stop by a whisker I closed too early Tuesday, but for 28 points nonetheless. Had to go out pm and left a sell order at 10506 which was filled with no more than two points to spare and which I closed - again too early - but for another 18 points. So that's over half my weekly target in the bag

Today? - I'm still wary of a burst up to the 10,600 mark before the expected correction proper takes hold - mainly on tha basis that the market is just so good at wrong-footing bears in the run-up to any worthwhile down move and the swing high to date is in a fib no-man's-land - Also, potential market-moving news at 3:00 + auto-sales towards the close - also footsie + futures have an upward bias just now - we'll see.

 

[peterpr]

Got the run up but...

News superficially good - ie construction. but, does the US really need more shopping malls and new housing at these prices? Odd that a 100 point rally follows news that the manufacturing sector has cooled further and oil is creeping up again together with the Dollar making US exports even less competitive.

Today is the fifth attempt to breach 10600 on the YM, a quintuple top on the daily chart no less - so far just short. Allowing 0.1% of the 14 day ATR as leeway, my auto pivots thingie tells me they were April 3, 7, May 23, 31, and now today - and that after quite a spurt on very mixed news too.

Need to hit 10610 or thereabouts to make a complete .618 retrace of the March high - but I'll hazard a guess that we're not going to make it yet a while.

Net conclusion - it's getting out of puff and the long awaited 'correction'??? is about to begin. I'll believe it when I see it though

 

[kevinmcm]

News superficially good - ie construction. but, does the US really need more shopping malls and new housing at these prices? Odd that a 100 point rally follows news that the manufacturing sector has cooled further and oil is creeping up again together with the Dollar making US exports even less competitive.

Fed talking head on CNBC saying rate hikes are in the 8 innings (a la baseball) so he is saying one more hike of 0.25%, so DOW rally is on rate hikes ending news, it initially spiked down a little on ISM, then Fed comments hit the wires.

Doesnt add up to me either :?:

 

[kevinmcm]

oil up, $ up, stocks up, bonds up - something doesnt add up.

I dont think I would jump on longs for a ride to 11K if 10600 is breached. Markets are clear as mud to me at the moment. I can think of many more reasons why the market would drift down but cant think of one good reason to make me go with the long view. Thats a short term view I should add. In weeks or months to come the situation may be clearer (to me) but for its not how I view the way ahead.

Couple of interesting articles if you haven't seen them.

http://www.gold-eagle.com/editorials_05/wallenwein053005.html

and

http://www.gold-eagle.com/editorials_05/mchugh052405.html which is a week old but sets the tone for me as to why the DOW wont go too far. 608 was his traget when this came out last week and his topping date has been missed.

 

[kevinmcm]

If the top of this move up is in place a break of 10565 could see it move to approx 10540. 38.2% fib for the move up and where a gap happens to be on the 5 min chart. Dont think I will be touching this tonight. Dont like trying to apply logic to the illogical, never works.

 

[peterpr]

Couple of interesting articles if you haven't seen them.

I'm a bit of a gold bug myself so I do monitor Gold-Eagle. There's some good stuff on the site.

Having another good look at the daily chart and discounting what the background/news/overbought etc situations indicate, fact is that a close above about 10590 leaves all that congestion from March/April and the past week or two behind and clears the way for even more upside. Maybe we'll see a higher order fib retrace to 10770 ish ? There's a hell of a lot of volume invested in the present 10500-10600 levels though, so a convincing close outside should produce a big move. Logic says it ought to be down but, as the saying goes 'market logic is an oxymoron'

 

[peterpr]

Dont like trying to apply logic to the illogical, never works.

My last post crossed with this. Similar thoughts on 'market logic' then?