Where is market heading ? Short , Medium Term Grey's analysis

[firewalker99]

OK You are not using VIX correctly,, If you use VIX when it is at it is highest you are bottom fishing , You are guessing the bottom. People who say buy VIX when it is at its highest are taking immense risk ,, You need to let VIX to settle down ( IN TA is called BASING ),, you need to see a BASE or in my case a REGRESSION CHANNEL .

so to use the VIX correctly you need VIX to break down and on the down trend before you go LONG .

This is wednesday's VIX interpretation
http://www.trade2win.com/boards/pod...stock-option-prices-retreats-2-9-20-26-a.html

Just thought to explain this ,,

grey1

Thanks, but I should've said the VIX alone is nothing more than an indicator. Going long or short based on VIX extremes is obviously - as you say - bottom picking and top fishing. I was merely pointing out that at the time of the January low other indicators were pointing towards a capitulation low (selling climax).

Basing and accumulation is obviously needed to start a new trend. Which I why I don't believe we have had that. There's been some consolidation at the lows and we've moved higher of the March re-test yes... still nothing conclusive imo. Anyway, I think we'll soon see, the time window is running out and either we break higher (which would signal a long entry for me IF I were trading off daily charts). Until then I see no reason to assume the bear is over. Just my 2c

I'm interested to hear what would invalidate your long though.

 

[Grey1]

Don't mean to go on about this Grey1, my post is nothing more than an intermezzo

Anyway, to finish this short arc, I'm curious as to which signals would invalidate your long? You said you went long for 3 months, but I take it you have some elements in your mind that would make you close your position. Or will you just let the trade hit your stop in case it shouldn't turn higher?

My LONG signal will be invalid based on market fundamentals and not TA. I am worried in case the credit crunch leaks into retail business and hence the extension of pain for the next couple of month but bernake knows this and I am sure he will take care of the issue.

From what I have seen the hedge fund managers are buying heavily into this market and ( I have consulted this @ my previous work place ) and things should not go south but you never know .
To make things short NO STOPLOSS Based on TA but I am watching market fundamentals like a HAWK and will close and update the Board of my views when I get to that point.

I am a black and white kinda guy as you have noticed . I am not a political Technician which most TA people are. I just hope i am not bloody wrong as I made loads of $$$ last year and would kill me to give it back ,,

Grey 1 is and always has been a Fundamentalist first, and a technician second,, Nothing is more important to me than the fundamental of the instrument i am trading .

Grey1

 

[firewalker99]

My LONG signal will be invalid based on market fundamentals and not TA. I am worried in case the credit crunch leaks into retail business and hence the extension of pain for the next couple of month but bernake knows this and I am sure he will take care of the issue.

Grey 1 is and always has been a Fundamentalist first, and a technician second,, Nothing is more important to me than the fundamental of the instrument i am trading .

Grey1

Thanks for clarifying that. I didn't realize there were so much fundamentals in play in a forum called "technical trader" :-0 No offense though, this is not about being right or wrong. In the end, only the market is right. Good trading Grey1. But I wouldn't put my hopes on Bernanke too much. How much more money can he spread and how much lower can the interest rates go?

Potential for a 1000 points move up if 12800 kneckline broken.
No doubt many are watching this level to go long.... as are others preparing to go short again.
Glenn

As a final note, I just wanted to say that the volume doesn't look right for a correct inverted head and shoulders formation.

 

[Grey1]

Thanks for clarifying that. I didn't realize there were so much fundamentals in play in a forum called "technical trader"

I have given 2 seminars this year and I have asked and explained to people how important it is to become a fundamentalist. I USED TA on its own in advanced format for years, In fact since 1987 where I was involved in modelling time series but the final conclusion was TA on its own is not GOOD enough to make wealth and one either has to use fundamentals on its own or both TA and Fundamentals to beat the market . You see for every BUY ARGUMENT there is a SELL ARGUMENT in technical analysis and depending on what mood you are in you could choose one and sound correct. This is no joke and a good technician is the one who is first a politician and then a technician ,, A politician in the sense that he must not COMMITTE HIMSELF in terms of forecasting the future projection but remain and sound technical .

Most experts are politicians. They can never be wrong , because they have learnt the TALK not to give away much but ANALYSE the market for hours. I used to have this guy assisting me who was a Technician but I asked him to be removed from my team as i got fed up of his NONE COMMITTAL ARGUMENTS.

OK lets make this short. TA should only be used for small time frames such as 1 day ( intra day ) and don't expect to become wealthy because you wont,, ODDS are against you ,, TA cannot do it for you .When i say TA i mean conventional TA .. I'e chart pattern , S&R and all that stuff and I don't mean time series modelling ..

Use fundamentals as much as you can .. you need to become an INDEPENDENT ANALYST with a sufficient knowledge of fundamental and use you TA know ledge to help you for entry .. YOu don't need TA please understand it .. but you need fundamentals. so if you used your TA knowledge and your entry was poor you still have fundamentals to back you up. WINNING TRADERS are long term 3 month - 5 years investors, They catch the BIG RUNS,, This is where Money is and not scalping 30C off AAPLE.

If i ever refered to a conventional TA as basis of my argument it is soley to speak the language that the other party understand,,

grey1

 

[Grey1]

I am amazed with the strength of the market. A very bad day in terms of OLD NEWS hitting the market and market trading up 100 points,,,

The fundamentals of the market is sound as ever and I think Mr BERNAKE should increase the rate by 0.25 ( and not cut I know it sounds silly ) to confirm the sound foundation of this market. I am sure market will get excited and see it as a positive move by the Fed,, ( very unlikey if he does that but my view is that he should to tame inflation ) .

Market trading @ 12865 . DO we get to DOW 14000 by the end of 2008 ?

I leave that to technicians to use their FIB levels to find the answer to this question ..

grey1

 

[firewalker99]

I have given 2 seminars this year and I have asked and explained to people how important it is to become a fundamentalist. I USED TA on its own in advanced format for years, In fact since 1987 where I was involved in modelling time series but the final conclusion was TA on its own is not GOOD enough to make wealth and one either has to use fundamentals on its own or both TA and Fundamentals to beat the market . You see for every BUY ARGUMENT there is a SELL ARGUMENT in technical analysis and depending on what mood you are in you could choose one and sound correct. This is no joke and a good technician is the one who is first a politician and then a technician ,, A politician in the sense that he must not COMMITTE HIMSELF in terms of forecasting the future projection but remain and sound technical .

If you have a set of rules and you know what to look for, than there won't be a buy argument for every sell argument and vice versa. Of course it's important to remain bias-free which is why I don't try to predict markets, I act on what I see.

OK lets make this short. TA should only be used for small time frames such as 1 day ( intra day ) and don't expect to become wealthy because you wont,, ODDS are against you ,, TA cannot do it for you .When i say TA i mean conventional TA .. I'e chart pattern , S&R and all that stuff and I don't mean time series modelling ..

We'll have to disagree on this one. Your opinion is obviously on the other end of the spectrum than mine, so I won't try to convince you otherwise. I respect your opinion, but I have seen enough to know TA "works" on any time frame. It depends on what you expect from TA and how you define TA. For me: it's price, volume, S/R, and some patterns. No indicators. Anyone interested in seeing how it's done just needs to study the chart. I'd even go as far to say that you should rule out anything other than price. No news, no fundamentals, just plain ol' chart.

 

[firewalker99]

I leave that to technicians to use their FIB levels to find the answer to this question ..
grey1

I don't use Fibs and as for being a 'technician'... too many people give some magical meaning to TA as if it were some kind of crystal ball that predicts the market. It doesn't. but if you use it the way it's meant to be used, you can make money of it.

On a sidenote, If I were you, I'd take those +400 points on your long. Late entry, but still a good trade there

 

[firewalker99]

Closure

Last note on this topic. Let the record note that - as per pure TA - I'm calling the highs of today the tops for this intermediate term counter trend trade move that began mid-January. TA indicates that we will be moving towards the lows in the near future.

 

[Grey1]

Last note on this topic. Let the record note that - as per pure TA - I'm calling the highs of today the tops for this intermediate term counter trend trade move that began mid-January. TA indicates that we will be moving towards the lows in the near future.

Will you be shorting the market NOW ? if yes please give us your entry for the short position

thanks

 

[firewalker99]

Will you be shorting the market NOW ? if yes please give us your entry for the short position

thanks

I only daytrade and don't hold overnight positions. But if I did, I'd be in a short from the ES at 1395, the NQ at 1942 or the DOW from 12905. All prices are from the June futures contract, not cash.

If I'm wrong about this move lower, I'll stop posting in this thread
I suspect we'll soon find out.

 

[belflan]

great to see people posting around here

 

[Glenn]

I only daytrade and don't hold overnight positions. But if I did, I'd be in a short from the ES at 1395, the NQ at 1942 or the DOW from 12905. All prices are from the June futures contract, not cash.

If I'm wrong about this move lower, I'll stop posting in this thread
I suspect we'll soon find out.

On the same instrument person A can be short and person B long and they can both be right, provided they qualify the timeframe they are working to.
Glenn

 

[firewalker99]

On the same instrument person A can be short and person B long and they can both be right, provided they qualify the timeframe they are working to.
Glenn

Correct, that's why I asked Grey1 to clarify what his objective reasons will be to invalidate his setup and close his trade. He answered that he would close the trade based on fundamental reasons instead of technical. I could not derive from that answer how much points he would let the trade go against him.

In my previous I replied that if I were a swing trader I would take short positions yesterday at the indicated levels. I don't have time horizon for this, but the first target is the March lows. If price moves above 1425 on the ES or above 13020 on the DOW I will be stopped out. Remember, I am not a position trader, I only make intraday trades.

 

[Glenn]

Correct, that's why I asked Grey1 to clarify what his objective reasons will be to invalidate his setup and close his trade. He answered that he would close the trade based on fundamental reasons instead of technical. I could not derive from that answer how much points he would let the trade go against him.

In my previous I replied that if I were a swing trader I would take short positions yesterday at the indicated levels. I don't have time horizon for this, but the first target is the March lows. If price moves above 1425 on the ES or above 13020 on the DOW I will be stopped out. Remember, I am not a position trader, I only make intraday trades.

Well without puttings words into Grey1's mouth, I think that he will close the trades if he decides that his analysis is wrong. Simple as that. This would not be represented by a number of stop points in advance of, or indeed during the trade.

On that basis your way of thinking cannot be compared to Grey1's directly because you say that you are not accounting for market fundamentals.
Asking him what his stoploss is is like asking you what market fundamentals would override your technical view.

Perhaps what separates Grey1's thinking from yours is that he believes (as I) that markets are not technical all the time - a fact which recently caused the hedge-fund quants to mess up big-time.

Anyway FW, good to have you visiting TT imo, and hope you will linger longer
Glenn

 

[firewalker99]

On that basis your way of thinking cannot be compared to Grey1's directly because you say that you are not accounting for market fundamentals.
Asking him what his stoploss is is like asking you what market fundamentals would override your technical view.

I understand, point taken!

Perhaps what separates Grey1's thinking from yours is that he believes (as I) that markets are not technical all the time - a fact which recently caused the hedge-fund quants to mess up big-time.

Depends on how you define "technical". I'm still actively studying the market while I improve my trading. I must say, some days I am truly amazed at the "order" in the markets. As for hedge funds messing up, no one is above the market and because some big players mess up doesn't mean the market is less technical. The market is always right...

 

[keano]

looking good grey!

The lesson is, dont trade against this guy, lol.

 

[Grey1]

Well without puttings words into Grey1's mouth, I think that he will close the trades if he decides that his analysis is wrong. Simple as that. This would not be represented by a number of stop points in advance of, or indeed during the trade.

On that basis your way of thinking cannot be compared to Grey1's directly because you say that you are not accounting for market fundamentals.
Asking him what his stoploss is is like asking you what market fundamentals would override your technical view.

Perhaps what separates Grey1's thinking from yours is that he believes (as I) that markets are not technical all the time - a fact which recently caused the hedge-fund quants to mess up big-time.

Anyway FW, good to have you visiting TT imo, and hope you will linger longer
Glenn

Agree Glen, We have spoken long enough about the role of TA and FA and more than any thing else the performance of fundamentalists against Technicians . Qualified Technicians and not self given Title are hardly in charge of any funds in WALL STREET because they simply after 500 years have proved not to have the effective tool for the JOB. And the JOB is to make MONEY .
This of course has nothing to do with firewalker's knowledge or skill in market analysis as I am sure he is Good at what he knows but I am 100% sure along his learning path he will notice that he can be 10 times more effective if he watched and studied the market behavior based on FA .

OK let me give an analysis of the today's market.

Yesterday S&P was trading at around 1400 ish and as you all know there has been an every day talk on CNBC about this level . Now , this is how business is conducted in the market ,,
Individual traders want to short the market based on hitting the resistance where as institutional investors WATCH approaching to this level as a sign of further STRENGTH in the market and go LONG the market. The problem is none of the smart money can or wish to BUY @ market so they execute their trade @ VWAP through 3rd party algorithms which means stamping the market down/ fragmenting the large order and buying it back in portions . As a result one SHOULD expect an original sell off with much buying activity underneath. This is how we used to execute our large Order in the BANK ..

Now the problem is every one wants to be a part of the buying process and the vwap engines have to push the market down until they are all filled and then BINGO market will break out to above. A technician see this as a sign of weakness and shorts the market which basically is shorting a STRONG MARKET.. so he can scalp and win but if he stays long he be a toast because he has gone against the market direction .

Today we had Terrible consumer index in fact the worse in 26 years.. US attacked an Iranian boat which pushed the price of the OIL by 3$ pushing the market down but still market ignored all the bad news and rallied to close in positive. THIS IS NOT THE SIGN OF A WEAK MARKET and this market MUST NOT BE SHORTED for LONG PERIOD,..
I aint a dummy when it comes to TA or chart analysis ( in fact I was the first 1 in the UK who OWENED a TA site called CITYINFORMER.COM which I had to close and sharky was one of my traders at the time he immediately opened T2W when i closed cityinformer) but the fact remains that analysis of financial market need more than couple of TREND LINES or S&R.

Where we going from here? My view is we will be hovering around this level for few days depending on the number of hedge fund managers before the break out and then we will gap up to above with heavy volume . The more we spend time around 1400 level the more short covering and the result should fuel the market even harder.

I mean no DUAL or challenge to Firewalker's authority but Am hoping to make a contribution to his skill by passing knowledge which he cannot find else where on this BB.

If I am wrong My kids suffer so i cannot afford to be wrong ... Trading is my life line and i better be ahead of average trader or I am toast.

Market up 51 points. INDU @ 12900 S&P 1398..

I hope firewalker continues posting even after the break out .. We will get there sooner or later.

grey1

 

[firewalker99]

Agree Glen, We have spoken long enough about the role of TA and FA and more than any thing else the performance of fundamentalists against Technicians . Qualified Technicians and not self given Title are hardly in charge of any funds in WALL STREET because they simply after 500 years have proved not to have the effective tool for the JOB. And the JOB is to make MONEY .

To put things in perspective, we obviously have to realize that small traders like myself don't have the power to move the market by putting on a trade. When you need to unload or buy yourself thousands of contracts, it's a different game. However, I'd hardly see those in charge of big funds as the best people for the job, given how much money they lose from time to time...

This of course has nothing to do with firewalker's knowledge or skill in market analysis as I am sure he is Good at what he knows but I am 100% sure along his learning path he will notice that he can be 10 times more effective if he watched and studied the market behavior based on FA .

Depends on what you mean by effective on what it is you understand by 'FA'. However, one of the biggest steps forward in my trading came when I closed out all news sites, stopped reading the papers and stopped listening to what other analysts on Bloomberg, CNBC or whatever had to say.

OK let me give an analysis of the today's market.

Yesterday S&P was trading at around 1400 ish and as you all know there has been an every day talk on CNBC about this level . Now , this is how business is conducted in the market ,,
Individual traders want to short the market based on hitting the resistance where as institutional investors WATCH approaching to this level as a sign of further STRENGTH in the market and go LONG the market. The problem is none of the smart money can or wish to BUY @ market so they execute their trade @ VWAP through 3rd party algorithms which means stamping the market down/ fragmenting the large order and buying it back in portions . As a result one SHOULD expect an original sell off with much buying activity underneath. This is how we used to execute our large Order in the BANK ..

I completely agree. This is why on the way down today, as the day before, the volume was still high enough to indicate the upside isn't totally over. I shorted the market at the open today and closed it on the way down. I didn't put a trade on later, but when I came back home later I noticed it had gone up again quite a bit. Given that it's Friday I didn't really expect that, but the high volume on the way down meant there were still enough people supporting this market.

Today we had Terrible consumer index in fact the worse in 26 years.. US attacked an Iranian boat which pushed the price of the OIL by 3$ pushing the market down but still market ignored all the bad news and rallied to close in positive. THIS IS NOT THE SIGN OF A WEAK MARKET and this market MUST NOT BE SHORTED for LONG PERIOD,..

Not sure what you're trying to say. Markets can rally on bad news, they can drop on good news and vice versa. Besides, most of the time the news is already calculated in the price. Which is why you'll often notice price reversing some time later after the news.

I aint a dummy when it comes to TA or chart analysis ( in fact I was the first 1 in the UK who OWENED a TA site called CITYINFORMER.COM which I had to close and sharky was one of my traders at the time he immediately opened T2W when i closed cityinformer) but the fact remains that analysis of financial market need more than couple of TREND LINES or S&R.

I'm sure you know what you're talking about, but I use more than just S/R and trend lines. No indicators though.

Where we going from here? My view is we will be hovering around this level for few days depending on the number of hedge fund managers before the break out and then we will gap up to above with heavy volume . The more we spend time around 1400 level the more short covering and the result should fuel the market even harder.

I agree with that too. The more time we stay here, the more potential any directional move will have.

I mean no DUAL or challenge to Firewalker's authority but Am hoping to make a contribution to his skill by passing knowledge which he cannot find else where on this BB.

If I am wrong My kids suffer so i cannot afford to be wrong ... Trading is my life line and i better be ahead of average trader or I am toast.

Market up 51 points. INDU @ 12900 S&P 1398..

I hope firewalker continues posting even after the break out .. We will get there sooner or later.

grey1

Don't worry, I don't have any "authority" Also I won't mind being wrong, because I only place intraday trades, so I don't have anything at stake (except for perhaps my honor). I must admit it would surprise me if we break higher though. So far everything's still in check. For those who are following intraday, they'll notice we had a lot of big swings in both direction. There are two possibilities obviously: the smart money needs time and price to unload, or they are buying again in anticipation for a break-out. I favour the first scenario.

 

[rajibde]

bad news does not create the panic now-a-days; the indu is close to being OB (70 something)- been waiting for a few days for a good long entry but am a bit scared to enter at this level....what could be the best long entry strategy at this point......I wonder...

 

[firewalker99]

bad news does not create the panic now-a-days; the indu is close to being OB (70 something)- been waiting for a few days for a good long entry but am a bit scared to enter at this level....what could be the best long entry strategy at this point......I wonder...

You see? The news is all bad, but the market rallies... If I were to follow fundamentals, wouldn't all this negativity advocate taking a short position?

Btw, what's that '70 something' ratio, how do you acquire that, is it some sort of indicator?

Imo if you were looking for a 'late' long entry you should've done so couple of days ago, when we dipped back below 12700.

I'm just weary of false breaks here. With every man and his dog watching that 1400 level on the ES, it's not unlikely we break higher first, but reverse sharply. That would hurt the most number of people: those who were short first (stopped out) and then those who went long on the breakout (stopped out when price reverses). Next week will be crucial imo.

PS: remember that the biggest rallies happen not in bull, but in bear markets...