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

[nine]

If you were a contrarian fundamentalist you might have been long from the bottom FW.

Given a perspective of when stock ccc is cheap you might have bought cheap with expectation of selling when it became expensive again (just been reading a book about Keynes as an investor).

 

[rajibde]

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.

hi firewalker- I am no expert (by any stretch of imagination) but imho- currently the market is resilient; as when it is a predominant downtrend in the market, one would expect a drastic fall in the prices after rallies especially with news like yesterday which caused the oil to jump by 2-3 usd-but this did not happen. To me it appears also that the market trend has now changed to an uptrend (my reasoning mentioned a few posts ago) and ofcourse Grey1's post on this subject makes it quite clear.

The 70something (cannot remember the exact figure) is the INDU Macci in the daily tf. A few days ago -i think 16th it was one of the best entries possible (at around 1930ish hrs)- the day after that also a good opportunity was there for a swing long entry; but since then I have not found an 'optimum' entry situation. I am now in a wait mode for the swing entry - to make an entry when the macci drops down considerably from its current value and starts to turn up. In the current scenario, I am much more comfortable to take a swing long position rather than a short- the intention is not to try and 'guess' that the market will crash but to see the signs of an increasing strength in the market and take a long position at the correct opportunity (I may be completely wrong in my line of thought but these are my reasons for the same )

For an intraday entry both the long and short entries are very much feasible I find.

Raj

PS- the reason for my last post was to see if anyone has a good plan for a swing long entry especially with the INDU at 70+

 

[iq200]

This is the latest commentary I got from this guy last night:

I often see the statement that "the news does not matter, it is the
reaction to the news that counts". This is true, but you also need to
take into account the market's current postion when evaluating how it is
reacting to the news. The same piece of good news might be totally
ignored in an over bought market, while it could make the market rally
like crazy from an over sold condition. During the bull market good
news would often be ignored during corrections and bad news ignored
during rally phases. I bring this up because lately I keep hearing
people saying that the market is not going down on all the bad news, so
it is going to rally like crazy at some point. This seems to be making
a lot of people bullish. Meanwhile, SPX closed today only 2 points
above where it was on 2/1. At that time the sentiment was really
bearish. We have gone no where, but the sentiment shift has been
dramatic. In my view, the market is simply in an upside correction to
the down trend, so it is currently ignoring the bad news. Any good news
causes a sizable rally. During the bull market we had several
corrections about 7% and during those moves people would get quite
bearish. We would get a good low and the market would start to rally
again. This is exactly the same situation, upside down. At some point
we will get to a fully over bought position and the sellers will
return. Trade the charts, not the bobble heads on TV.

 

[firewalker99]

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.

One more thing about 1400 though... I don't see it as a particularly important level. In fact +/- 1380 was resistance in my book.

Price could halt around 1405. So yes, I think this has some more upside to it before we turn. But I won't take the bull side camp until we break clear of 1425.

The DOW transports is particularly bullish though, and if we consider that the chart tells the news a couple of months before, that would coincide with the bad news we're having now: it's obviously been digested already.

I find this all most fascinating. I'm glad there are people on this thread willing to discuss matters without going into a fight. Good trading everybody.

 

[Tileman]

Chart from a monthly perspective resistance becomes support.A bullish scenario ?

Regards
Graham

 

[Glenn]

the reason for my last post was to see if anyone has a good plan for a swing long entry especially with the INDU at 70+

Hi Raj
A good plan ?
Well here's a plan - lol.

1. Is the market technical or not at the moment ?
Daily says not i.e. not cyclic - do you agree ?
Weekly will be OB soon, but look at the second half of 2007. Hmm.
Monthly turned up but never got OS.
Mkt has been battling around 12800 in a consolidation at the highs.
To me this says there won't be a reversal in the Daily, there will be an inverse (i.e. continuation of previous uptrend), which seems to suggest that overall the mkt is not technical.
2. If not technical then how to enter ?
Remember those (intra)days when the market just keeps going up and up or down and down.
How do you enter on days like that ?
To my mind you have to step down the timeframes and look for cycles there i.e. 60 and 30 minutes supported if possible by the 10. But even then you may not get OS happening, so watch for upturns in the Macci.
3. News and data - crucial to pay attention here. If 'the other shoe' drops then time to cut and run and wait.
4. So where are we now ? On the above basis a 60 minute cycle has just been missed (turned up around 7:30 pm Friday) and the 30 minute is now OB and mkt looks strong in 10 minute. Hmm, tricky.
Mkt closed near HOD and may gap up Monday (watch the pre-open Futs) and not look back for some time. Or it may be kinder and let you in earlier. Just have to wait and see and pick the right intraday timeframe cycle for entry.

5. If you think it's technical, then Weekly and Daily and 30-min suggest stay out and wait for OS or upturn to go Long, or get your shorts on asap.

I think this is an interesting point in time for others to put their ideas forward, if only to see how much or little variety there is in peoples thinking.

Glenn

 

[rajibde]

Hi Raj
A good plan ?
Well here's a plan - lol.

1. Is the market technical or not at the moment ?
Daily says not i.e. not cyclic - do you agree ?
Weekly will be OB soon, but look at the second half of 2007. Hmm.
Monthly turned up but never got OS.
Mkt has been battling around 12800 in a consolidation at the highs.
To me this says there won't be a reversal in the Daily, there will be an inverse (i.e. continuation of previous uptrend), which seems to suggest that overall the mkt is not technical.
2. If not technical then how to enter ?
Remember those (intra)days when the market just keeps going up and up or down and down.
How do you enter on days like that ?
To my mind you have to step down the timeframes and look for cycles there i.e. 60 and 30 minutes supported if possible by the 10. But even then you may not get OS happening, so watch for upturns in the Macci.
3. News and data - crucial to pay attention here. If 'the other shoe' drops then time to cut and run and wait.
4. So where are we now ? On the above basis a 60 minute cycle has just been missed (turned up around 7:30 pm Friday) and the 30 minute is now OB and mkt looks strong in 10 minute. Hmm, tricky.
Mkt closed near HOD and may gap up Monday (watch the pre-open Futs) and not look back for some time. Or it may be kinder and let you in earlier. Just have to wait and see and pick the right intraday timeframe cycle for entry.

5. If you think it's technical, then Weekly and Daily and 30-min suggest stay out and wait for OS or upturn to go Long, or get your shorts on asap.

I think this is an interesting point in time for others to put their ideas forward, if only to see how much or little variety there is in peoples thinking.

Glenn

Hi Glenn,

Thanks a lot for your reply- I was actually thinking of a 10min indi entry during the second half of the day with a hawkish stop but 60 min I think is a much better approach with a stop.

Cheers

Raj

 

[firewalker99]

...
Price could halt around 1405...

The pre-market high was 1404.75...

 

[firewalker99]

The pre-market high was 1404.75...

And the high during market open hours with 30 minutes to go is 1404.
Remember: my 1405 number was based solely on pure TA. Nothing more, nothing less.

Traders might still overcome this resistance, and that's where real time observation comes into play. By studying the chart beforehand, you'll know where to look and what to do. Technicals only

Grey1, question if you don't mind, if the Fed doesn't cut on Wednesday, does that affect your view on the fundamentals of these markets?

 

[Grey1]

And the high during market open hours with 30 minutes to go is 1404.
Remember: my 1405 number was based solely on pure TA. Nothing more, nothing less.

Traders might still overcome this resistance, and that's where real time observation comes into play. By studying the chart beforehand, you'll know where to look and what to do. Technicals only

Grey1, question if you don't mind, if the Fed doesn't cut on Wednesday, does that affect your view on the fundamentals of these markets?

It is not the FED cut which might affect my decision ,, It be reaction of the market players to the fed cut which is important to me, If the market sold off after the FED CUT or FED keeping it the same then I might consider to reduce some of my positions with the stop at my entry for the rest of the position ,,

All said , in Fundamental analysis we don't look at one factor.

I also need to see where $ heading after the FED during the next few days ,, If $ falls then the value of foreign investments in US equities shrinks even if the stocks prices rise which basically means Overseas fund managers might not be reluctant to invest more in US stock market which as a result the market weakens .

I am still a very strong BULL and I feel the market will break out with in next few weeks.

SO no decision either way till next 2- 3 weeks .

Grey1

 

[firewalker99]

It is not the FED cut which might affect my decision ,, It be reaction of the market players to the fed cut which is important to me, If the market sold off after the FED CUT or FED keeping it the same then I might consider to reduce some of my positions with the stop at my entry for the rest of the position ,,

That's already a more technical than fundamental position. But I'm glad you point it out, perhaps we think more alike It's always the reaction to the news, not the news itself that's important.

I am still a very strong BULL and I feel the market will break out with in next few weeks.
SO no decision either way till next 2- 3 weeks .
Grey1

I'm positive that in 2 weeks time the market should show more direction than the last two weeks that were mostly sideways. But my bearish stand still stands. Although the DOW peaked up to 13010 my stop on the hypothetical swing trade was at 13050.

Note also how nice the market reacts to resistance at 1405, the important number I talked about for last couple of days.

Good trading Grey1, you've been in this game longer than I and I respect your opinion although I might (and probably will) disagree on several elements.

 

[iq200]

Latest market analysis to 30 April 2008 (from a private forum I am in)

A bit of a quandary here for me. First of all, the reaction to a FED
meeting is often reversed the next day. We will have to see if that
happens tomorrow or not. If not, this rally could be over. The VIX
briefly broke below the 20 level which has acted as support for a long
time now. It is now back above it. Today was the heaviest volume down
day since the area of the March lows. SPX came within a couple of
points of tagging its 200 day EMA. That could be a place sellers come
back to the market. Long term breadth readings are in neutral
territory. I was expecting them to get mildly over bought before the
next leg down, but the VIX was not all that high at the lows. This may
be enough, but it is hard to say. The number of NYSE stocks above their
40 day MA is in the area that can make bear market tops. This is not
a clear cut case of a bear market top, but it could turn into one.
Caution on the long side would seem to be in order until we know more.

This rally is now suspect until we get a solid break of today's high.
Two key lows on the way up for SPX were 1312 and 1326. We could be in
for a pull back, that finds support somewhere between here and there and
the rally continues. The crystal ball is pretty cloudy here, but that
could change with new information over the next few days.

 

[firewalker99]

Latest market analysis to 30 April 2008 (from a private forum I am in)

A bit of a quandary here for me. First of all, the reaction to a FED
meeting is often reversed the next day. We will have to see if that
happens tomorrow or not. If not, this rally could be over. The VIX
briefly broke below the 20 level which has acted as support for a long
time now. It is now back above it. Today was the heaviest volume down
day since the area of the March lows. SPX came within a couple of
points of tagging its 200 day EMA. That could be a place sellers come
back to the market. Long term breadth readings are in neutral
territory. I was expecting them to get mildly over bought before the
next leg down, but the VIX was not all that high at the lows. This may
be enough, but it is hard to say. The number of NYSE stocks above their
40 day MA is in the area that can make bear market tops. This is not
a clear cut case of a bear market top, but it could turn into one.
Caution on the long side would seem to be in order until we know more.

That sounds a lot like what I said two weeks ago Regardless of what the Fed did or didn't do, no one - even the Fed - can influence the primary direction of the market. It has all long been priced into the market. Remember, if the VIX drops very low, caution is always necessary and it's very likely the current move will be reversed.

 

[Grey1]

Latest market analysis to 30 April 2008 (from a private forum I am in)

A bit of a quandary here for me. First of all, the reaction to a FED
meeting is often reversed the next day. We will have to see if that
happens tomorrow or not. If not, this rally could be over. The VIX
briefly broke below the 20 level which has acted as support for a long
time now. It is now back above it. Today was the heaviest volume down
day since the area of the March lows. SPX came within a couple of
points of tagging its 200 day EMA. That could be a place sellers come
back to the market. Long term breadth readings are in neutral
territory. I was expecting them to get mildly over bought before the
next leg down, but the VIX was not all that high at the lows. This may
be enough, but it is hard to say. The number of NYSE stocks above their
40 day MA is in the area that can make bear market tops. This is not
a clear cut case of a bear market top, but it could turn into one.
Caution on the long side would seem to be in order until we know more.

This rally is now suspect until we get a solid break of today's high.
Two key lows on the way up for SPX were 1312 and 1326. We could be in
for a pull back, that finds support somewhere between here and there and
the rally continues. The crystal ball is pretty cloudy here, but that
could change with new information over the next few days.

hi

if i was you i would disregard this kind of analysis,, In a technician's crystal ball there is always plenty and plenty of cloud even when things are clear to a fundamentalist.
The above post by this guy is nothing but putting a doubtful view into TECHNCIAL FORMAT to sound as technical as possible.

A technician in wall street relies on his salary where as a fundamentalist relies on bonus which could be 500 Million ( not bad hey ) ..

The problem with TA in wealth creation is that it cannot explain the underlying reason for a MOVE .In continuation theory all moves after a third wave of a pull back must be shorted in the direction of the previous trend and the NEXT move is expected to last twice as much as of the previous trend. ( In another word look at the previous trend and short a rally ) ,,This only and only works if the underlying reason for the pull back is known,,

Conventional TA has not made many people wealthy ( I am not talking about time series modelling ). Fundamentalist analysis has . As simple as that .

I leave you guys to sit back and think again ,,, ur money ur future ur neck

PS:-- you don't have to buy and hold for years ,, Trade the strong stocks in the direction of the market for 30% gain or 3 month which ever comes first,, compound that and you be making $$$$$ year after year


Grey1

 

[Grey1]

I'm positive that in 2 weeks time the market should show more direction than the last two weeks that were mostly sideways. But my bearish stand still stands. Although the DOW peaked up to 13010 my stop on the hypothetical swing trade was at 13050.

I think your stop was 13020 and not 13050 ,,but if you wish to raise stop I have no problems with that ..

What matters is not if your stop is 20 points more or less as the stop itself is not of any value to market players and to be quite honest i donot really know what is the significance of a certain level of Stop .. But i leave that for die hard followers of TA to come into terms with .

I think within next 2 weeks we be having a MAJOR break out and i said that in a seminar i gave 3 weeks ago to a few traders in the bank and I feel before then we should be consolidating with in + , - 100 points.

My portfolio is doing really well and I hope those who follwed me on 17th have already made enough with nearly 500 point up ..

$ is going mad.. low interest rate ,,, financial rallying ,, Oil , Gold falling . would you short this market ? These are the underlying reasons for STRENGTH ,, remember what i said in my previous post,,, $ trending up means if you bought 1000 share of AAPL and stock went down at least your account is hedged with $ rising and this is very attractive to smart money from overseas,,

I JUST noticed that DOW is trading @ 13025 which means has hit the stop given by my man FW.


I think a lot of credit should be given to my mate Firewalker by NOT being a TECHNICIAN POLITICIAN and committing himself to SHORTING the market with a entry and exit.

I also think one bad trade does not make a trader a fake. Fw could be wrong 10 times but 990 times right ,, so one can not judge performance based on 1 call ,, it simply is not correct,

I invite people to wake up and only day trade with a small portion of their money and do the right thing for urself and ur family by swing trading of fundamentally strong stocks,

Grey1

 

[iq200]

Iraj, I am learning so I hope you dont mind me putting up those market analyses on your forum. One of the reasons for doing so was that I was interested in hearing what other people and in particular, you, thought about them. Thanks for the feedback. It was useful.

With regards to fundamental analysis, CANSLIM is a methodology made popular by the TURTLES. Can I ask what your opinion is of CANSLIM?

Iraj, on another note, you mentioned a while ago that you were going to do another day of training at some point. Do you still have that in mind? Obviously I am sure I speak generally for everyone in saying that we would all be very grateful if you did decide to do so!

Regards,
Imran

 

[Grey1]

Iraj, I am learning so I hope you dont mind me putting up those market analyses on your forum. One of the reasons for doing so was that I was interested in hearing what other people and in particular, you, thought about them. Thanks for the feedback. It was useful.

With regards to fundamental analysis, CANSLIM is a methodology made popular by the TURTLES. Can I ask what your opinion is of CANSLIM?

Iraj, on another note, you mentioned a while ago that you were going to do another day of training at some point. Do you still have that in mind? Obviously I am sure I speak generally for everyone in saying that we would all be very grateful if you did decide to do so!

Regards,
Imran

of course i don't mind you posting comments ,, why on earth should I > in fact i think it opens people's eyes.
Regarding fundamental analysis it needs a full day as my approach to ANALYSIS is a combination of TA and FA. I arrange a seminar a soon as i can .
I will also arrange another day trading session LIVE like before for those of you who like to intra day trade as soon as I can sort out few health issue as it needs 8 hours of sitting and that is not how i trade now a days ,,,

Grey1

 

[dcraig1]

With regards to fundamental analysis, CANSLIM is a methodology made popular by the TURTLES. Can I ask what your opinion is of CANSLIM?

Not the TURTLES. It was William O'Neil

Stock-Picking Strategies: CANSLIM

 

[firewalker99]

I think your stop was 13020 and not 13050 ,,but if you wish to raise stop I have no problems with that ..

Sorry about that, it was 13020, typing error there. I'm not going to move my stop or trying to get out of my trade by any means. If it's a loss, I'll take it humbly but for those who are following I'd like to re-iterate that I'm not a position trader, I'm a daytrader and all my positions are closed by the end of the day.

My portfolio is doing really well and I hope those who follwed me on 17th have already made enough with nearly 500 point up ..

Remember that I said taking a long from the re-test in March was the technical thing to do. You entered late, but still plenty early to make a decent profit. I'm still not quite sure on which elements you are referring to when you talk about being "a fundamentalist". At that time all the news was bad (and it still is) so from a fundamental point of view you should not be long. This is what the majority considers to be "fundamentals". Perhaps your fundamentals are more technical than I realize and we think more alike than we might believe at first!

I JUST noticed that DOW is trading @ 13025 which means has hit the stop given by my man FW.

Just a second now, let's not be too eager shall we I said I traded from the June futures contract, not cash. The intraday high was 13017 so my stop is not triggered yet. I am a realist here, and I do know that chances are very high that it will be taken out tomorrow. However, I should point out that 13020 proves to be a barrier, as did 1405 like I predicted Sunday. Both those levels are derived from TA alone. What one does with it is another matter...

I think a lot of credit should be given to my mate Firewalker by NOT being a TECHNICIAN POLITICIAN and committing himself to SHORTING the market with a entry and exit.

I also think one bad trade does not make a trader a fake. Fw could be wrong 10 times but 990 times right ,, so one can not judge performance based on 1 call ,, it simply is not correct,

Thank you Grey1. It serves no one by giving analysis which supports both views of the markets. If I'm doing an analysis I'm not going to fuss around, and if I'm wrong than so be it. Besides, no one gets its right all of the time. Here's an example of a trade analysis of a long position I took yesterday.

I invite people to wake up and only day trade with a small portion of their money and do the right thing for urself and ur family by swing trading of fundamentally strong stocks,
Grey1

I realize you are somehow convinced that swing trading is more profitable then daytrading, but - and this might be surprising to some - I have been on the long side trading intraday more than anything for the last couple of days; and yes I made a profit. Somehow, if I do get stopped out on this trade (ES needs to go above 1425 for that and DOW above 13020) than I will have lost on a trade that I kept open for at least a week, despite the fact that I made money on 4 out of 5 days by intraday trading...

 

[Grey1]

Sorry about that, it was 13020, typing error there. I'm not going to move my stop or trying to get out of my trade by any means. If it's a loss, I'll take it humbly but for those who are following I'd like to re-iterate that I'm not a position trader, I'm a daytrader and all my positions are closed by the end of the day.


Remember that I said taking a long from there was a very technical position (re-test of a selling climax). I'm still not quite sure on which elements you are referring to when you talk about being "a fundamentalist". At that time all the news was bad (and it still is) so from a fundamental point of view you should not be long. This is what the majority considers to be "fundamentals". Perhaps your fundamentals are more technical than I realize and we think more alike than we might believe at first!



Just a second now, let's not be too eager shall we I said I traded from the June futures contract, not cash. The intraday high was 13017 so my stop is not triggered yet. I am a realist here, and I do know that chances are very high that it will be taken out tomorrow. However, I should point out that 13020 proves to be a barrier, as did 1405 like I predicted Sunday. Both those levels are derived from TA alone. What one does with it is another matter...



Thank you Grey1. It serves no one by giving analysis which supports both views of the markets. If I'm doing an analysis I'm not going to fuss around, and if I'm wrong than so be it. Besides, no one gets its right all of the time. Here's an example of a trade analysis of a long position I took yesterday.



I realize you are somehow convinced that swing trading is more profitable then daytrading, but - and this might be surprising to some - I have been on the long side trading intraday more than anything for the last couple of days; and yes I made a profit. Somehow, if I do get stopped out on this trade (ES needs to go above 1425 for that and DOW above 13020) than I will have lost on a trade that I kept open for at least a week, despite the fact that I made money on 4 out of 5 days by intraday trading...

a) High of the day for INDU was 13029 @ 1452 which would have hit your stop but lets forget about this trade and look at your view from here on ward// Would you go long if yes when and what would be your entry ? what technical justification would you be having to convince yourself we are not going to HIT the March LOW?


b) I never said swing trading is better ,,,, you still can swing trade and lose if you don't trade correctly . what i said was TA was not the answer and you would need to understand the underlying reason for MOVES. If you don't look at the reason for the move then you are guessing the turning points and you never be any wiser to know if the rally is a fake or a true one,,,,
c) I also think you made another error to call the market change of trend technically,, You should have let the market to fall lets say 300 to establish the change of trend before calling the MARCH LOW .In my humble opinion you must stop GUESSING TOP or BOTTOMS ,, This is a bad habit which must be stopped ,, When I scalp a Euphoria / capitulation I do it with tiny pos size and very tight stop and I don't really class it as trading ,, only guessing and perhaps even gambling ,,,

Now, I think you have made a good contribution to Technical Trader and hopefully this thread will carry on but I really want to see your analysis from here on ward,,

The current situation is

1) Smart money is positioning itself with the $ rise,,, WOuld we bet against smart money ?
2) 65% of S&P500 are beating their estimates,, would we short the market ?
3) 3 of the top fund managers responsible for 1.1 trillion Dollar profit in 15 month have gone long and all positions filed with SEC.. do we really want go against them ?

4) Market is a forward looking mechanism which as a result ignores the current bad news( all discounted in the current price ) ,, With Interest rate @ 2% do we really think things are getting worse ?

5) Monthly , weekly and to day daily indicators based on market cycle have turned up ... would we really want to go against the cycle ? I use a fisher transform to measure the cycle ,,,others might use other indicators ,,, ( cycle analysis is the foundation of TA)

6) technology stocks lead the market ,,, Today the leading components of NASDAQ 100 blew away other sectors ,, do we really want to ignore this ?


I invite other members of Technical Trader contribute to this thread as NO ONE including myself has all the answers and we are here to help each other

PS:_- I just realised i have not addressed one of your comments regarding day trading ,,, Yes I think day trading is a MUGS game for an average trader specially those with only basic knowledge of TA ,, There is too much evidence to support this claim and apprently the success rate is around 3% but donot quote me of this .
I class myself as one of those 3% .



Grey1