Geofract
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That setup is working quite nicely atm. Not sure it has legs yet though.
Wallstreet1928 Analysis & live calls on FTSE,DAX,S&P...aimed to help New traders
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That setup is working quite nicely atm. Not sure it has legs yet though.
london_lad
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long at 4662. Got back late from meeting.
london_lad
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What's happening guys, why are we so slow today? Btw, next buy target is 4550. I am now going to go long at every 100 points or so retracement and build a portfolio.
Chelski
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Wallstreet,
What basis are your horizontal lines taken from? High /Low Open / Close or a clustering of support.
kaisen
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Hi Mr G, this is my second attempt at conveying my thoughts on this matter! The first I decided was a bit convoluted.
So here goes...
The price action on a TA chart tells us about behaviour at different price levels and gives us clues as to future behaviour.
Many TA experts will argue they do not need to know about the stock or financial instrument and that the charts, showing past S/R levels, are all they need to know.
Everything to do with the stock is reflected in the price at any given time, and we need to learn the messages being imprinted before our eyes and past behaviour at different price levels (along with psychology) to know what is "likely" or most probable to happen next in a certain time frame. (The use of likely and most probable are important to note as this re-confirms the importance of account management. You can have a 90% success rate but if you trade your full account every trade that 1 time you are wrong will wipe out your whole account.)
While all the stocks have different prices, human behaviour to price action is likley to be very similar if not the same.
Therefore whether it is a peanut or a Ferrari, each will have its own market with its own price action, but the human reaction to fluctuating prices will be the same. Some prices too high and the price falls some too low and people buy pushing the price back up.
Each will have good/bad economic environments and factors affecting their own value but this will be refelcted in the price! Etc Etc.
So really the game is to:
Read the likely reaction at certain prices based on past performance given to us by hsitoric price action.
Use indicators to confirm the environment or changes in the environment and the likely impact this will have on price, and ,in what time frame
And learn and understand psychology of the markets/crowd
As they say at Inthemoneystocks - Price, Pattern and Time. (and psychology!)
I hope that makes sense!?!
🙂
Mr. G
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kaissen - I makes total sense. What isn't so clear to me is how all of the things you mention can happen the same way repeatedly across all of the stocks that make up an index. On individual stocks I buy it, but on an index....surely there are too many variables.
kaisen
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I think price action is one thing and reactions will be the same based on the same emotions and factors that govern all prices. Something will either be too expensive or too cheap and price action will tell you what has been decided both now (as it rolls out live) and in the past.
On another matter, IMO, everything is inter related. If the dollar falls, gold and oil tend to rise along with usually the stockmarket as commodity stocks will start doing well. If people are concerned with risk then defensive stocks may get a rise or gold or the dollar as people look for something safer. There are many factors which affect why prices move and the trick is to know what the determining factor is, what affect it has (so you can trade accodingly) and know when the factor changes and what affect that will have.
As ws says, trading the market is like reading music, and we need to learn how to read the "music" so we can play each note.
One thing is related to another and each affect needs to be accounted for in analysing what is most likely to happen next and when.
Of course the markets are not perfect and, to quote ws again, we need to determine through analysing all the inter connecting factors and variables, what is justified price movement and what is unjustified. Thats where the psychology comes in! Knowing whether the crowd has over sold, over bought or yet to realise an opportunity!
If we get things wrong we have usually missed a variable (ws again).
I hope that answers your question?
🙂
wallstreet1928
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well said Kaisen..........
trading the markets is like playing the piano............every note has to be learned and mastered before you can play the song and get paid for your performance.
YouTube - Market Technical Analysis - Markets Float Into Major Levels On Light Volume...Weak Dollar
watch Nasdaq .............
1630
> 1630 ..............market rallys
< 1630 .............we rollover hard as failed double top
as soon as oil falls below $71 and euro 1.44 .............i will start to look for shorts chaps
FTSE is the weakest out of all the indices as acceptance above 4700 is found lacking ............therefore that is the indices I will short
trading the markets is like playing the piano............every note has to be learned and mastered before you can play the song and get paid for your performance.
YouTube - Market Technical Analysis - Markets Float Into Major Levels On Light Volume...Weak Dollar
watch Nasdaq .............
1630
> 1630 ..............market rallys
< 1630 .............we rollover hard as failed double top
as soon as oil falls below $71 and euro 1.44 .............i will start to look for shorts chaps
FTSE is the weakest out of all the indices as acceptance above 4700 is found lacking ............therefore that is the indices I will short
wallstreet1928
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I am also watching the VIX for early signs of a reversal
potential double bottom support brewing @ 26.3 level
potential double bottom support brewing @ 26.3 level
Bare in mind when reading it's the end of the trading day, I'm usually a tad phased and random at this point 😉😕
The influence is going to come from things like weightings and sector/industry groups (obviously index constituents aren't all moving around randomly) and current perceptions towards those sectors etc. Predictability is from human behavior as you said.
Generally:
Which stocks are, or which stocks will be, having an effect on an index, depends on
which sectors are in, or are coming into 'fashion' (due to macro trends) at the time, in other words, what's the overall prevailing thinking of the market, i.e. are we going into/out of a recession ? or is the current economic trend continuing ? which part of the cycle are we in i.e. which stage are we in - early, middle or late ? (The old business cycle/sector rotation theory stuff). Get this right and longer term assumptions on the direction of the indices (markets in general) should prove profitable.
While the above is more longer term investment orientated (what will be, rather than what is) it's all still applicable to shorter term trading, but with current and recent news flow and their short term effects on sectors replacing the longer term macro economic trends above.
Obviously it's the underlying stocks that drive an index, (but what the index is doing also plays a part in decision making process with regards buying and selling in the constituent stocks, hmmm Reflexivity anybody ? 😉 )
So does analysing stocks/sector indices help give clues to the direction of the overall index ? Yes and , for me personally , no :whistling
With regards to the short term movements, people do look at the underlying stocks/sectors of an index in order to help them determine the possible direction of the index (even do it myself. but very rarely, an example would be when the financial crises started kicking off , watching the BKX US banking sector index)
The main reason I don't do it myself (for the sort term at least), is that it was adding another layer of complexity to the decision making process without a corresponding increase in the percentage of profitable trades. Sometimes it helped, but most of the time it was getting in the way.
As we know with trading (TA etc), no one knows what the outcome will be before hand. It's normally a case of , Is it what I think I'm seeing or isn't it? will it do what I think it's gong to do or won't it ? You never know , you just have to go with it, see how it pans out,
When I looked at the underlying stocks/sectors, instead of getting answers/hints with regards to the future direction of the index, I was just ending up with more of the same, is it/isn't it , will it/won't it as I did with the index, In other words just more confusion. So now I just trade the index itself.
Longer term with regards to trying to get a picture of the larger macro trends and any possible signs of change, I do take a look at constituent stocks , looking for any info like, leaders loosing influence , topping/bottoming formations (depending on bull/bear market etc) in the heaviest weightings , rotation out of and into various sectors etc, trying to look for clues (same thing though, usually end up confusing myself 😱)
kaisen
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Hey ws, thanks for the analysis.
wallstreet1928
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failed double top on Nasdaq and what happens ...........
oil falls below $71 and S&p rolls over from the days high
Nasdaq is the King and S&p is the Queen ..........
happy trading chaps
I'm off to Manchester Airport
kaisen
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Thanks again for sharing your thoughts and interesting you are looking at the VIX - good to know.
On another point, IG spread betting are 9pnts lower on the FTSE than the CGD´s on CMC.
Is that an indication of the spread betters expecting a fall?
🙂
wallstreet1928
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oil falls below $71 and euro falls below 1.44 .........and what happens?
I will leave it to you to work out the rest ..............
need to drop the family off at the airport , i must dash or they will miss there flight for the sake of a few more points profit
Gooood evening everyone...after my losses of last week (first string of losses this year!) I thought I'd rethink my existance...should I bank all my profits thus far and quit the game for good? YEAH RIGHT! All traders suffer losses, I've take mine on the chin...I've dusted myself off and ready to go again...I've been thinking that this market will plummet, but after yesterdays rise i'm reconsidering this and redeveloping my model. More later....
kaisen
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kaisen
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Anyone know why?
IG spread bet quoting FTSE at 4670/4676
CMC CFD quoting 4688/4694.
Does this mean CFD will eventually come back down to the SB level?
I have gone short at 4695 on with CMC´s CFD and the price has gone down to 4688/4694 so currently in the money but trying to figure out why such a big difference between companies?
Dont know what the correct price is!?!
Any thoughts?
Also barring a mega run in Asia, surely the CMC price has to come down towards the close price of today? Surely it cant gap up 20pnts?
IG spread bet quoting FTSE at 4670/4676
CMC CFD quoting 4688/4694.
Does this mean CFD will eventually come back down to the SB level?
I have gone short at 4695 on with CMC´s CFD and the price has gone down to 4688/4694 so currently in the money but trying to figure out why such a big difference between companies?
Dont know what the correct price is!?!
Any thoughts?
Also barring a mega run in Asia, surely the CMC price has to come down towards the close price of today? Surely it cant gap up 20pnts?
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