Where is the Dow & others heading in 2005?

Racer said:
and how often is that possible?
Click to expand...
............................................................................................................................................................................
Well nobody knows that BUT you have to put the day into context to determine whether the market was already in an established trend. If that had been the Dow this week - in an established downtrend - I would have been looking for a short entry point. I would have stayed out at the begining since the market often rises after a prior down day and waited to have seen what happened. Once I took a view that it had peaked and was on the way down then I would have entered a short position. Exactly where and when is impossible to gauge when you take an individual day completely out of context.

If you take last Friday for example the market slid down on opening and then tried to break 10250 three times. When the third attempt failed I placed a stop sell short at 10200 reasoning that it would not be fulfilled if the market still kept trying to break resistance at 10250 but that it was highly likely to break down at some point therafter and if it breached 10200 it would probably head for 10100 where I next expected to see support. That's what happened except that it also breached 10100 on the way down.

On Thursday the market had drifted down on opening and so I took a short at 10340. I got stopped out at 10380 when it went up. Still looking for a short I tried again at 10300 and got stopped out again at 10340. My third attempt was at 10381 and the market subsequently fell back and I finally closed out at 10220. My first two shorts cost me 80 points by my third short made me 161 points so I made a net gain of 81 points via day trades on that day. I would agree that this is only likely when a trend is well established, as has been the case with the Dow over the past 3 weeks, but that is when supplementary tactical day trades can really work.

At the end of the day we all have to evolve our own trading strategy and use what works for us as individuals. I'm fundamentally a swing trader but tactical day trades, when a market trend has been established, can also be additional icing on the cake.
 
My third attempt was at 10381 and the market subsequently fell back and I finally closed out at 10220. My first two shorts cost me 80 points by my third short made me 161 points so I made a net gain of 81 points via day trades on that day

I'm fundamentally a swing trader but tactical day trades, when a market trend has been established


.
Click to expand...

why not just add to your short instead of trading it if a trend has become established as you say?
 
Racer said:
My chart is based on spreadbetters, if you are trading by other methods then that is different. I prefer to spreadbet indices longer term, I don't have to pay CGT that way and it suits the way I trade
Click to expand...
............................................................................................................................................................................
Well thats what we're talking about - spreadbetting.
 
Racer said:
why not just add to your short instead of trading it if a trend has become established as you say?
Click to expand...
............................................................................................................................................................................
I am adding a day trade short to my swing short. By this time my swing short is well in the money and it would take a 200 plus reversal to put it at risk wheras my day trade short - often at a higher price per point - is much more vulnerable to a market reversal. Therefore I often close it out to bank the profit but not always - my Friday day trade short from 10200 is still open - I'l decide whether to keep it open and ride it further or close it out and take the profit tomorrow.
In the meantime my swing short at 10447 is still open but I've trailed my stop down to 10320.
 
often at a higher price per point - is much more vulnerable to a market reversal
Click to expand...
so you are risking more on a shorter time scale, that makes you a daytrader not a swing trader doesn't it?
 
Racer said:
so you are risking more on a shorter time scale, that makes you a daytrader not a swing trader doesn't it?
Click to expand...
............................................................................................................................................................................
Not at all. I regularly trade the market on a swing basis. I only use day trading when I have identified a clear trend - like the dow slide over the past 3 weeks - and then I'll add some tactical day trades in an attemt to optimize my potential gain.

NB: I don't know how to use the private message facility on this site.
No I didn'y know anything about a SW meeting - can you give me the reference point ?
I doubt we know each other - I only moved back to the SW last summer.
 
An interesting point.. if all the dow components
had a p/e of 15 the value would be

8923

or if they all yielded 3% the value of the Dow would be

7945!!!
 
Based on that and if interest rates are rising rather than falling, where do you think the Dow should go?
Oil prices high, no savings, lots of debt, housing bubble, economy in, well, not the best of health etc., etc.
 
Racer said:
Based on that and if interest rates are rising rather than falling, where do you think the Dow should go?
Oil prices high, no savings, lots of debt, housing bubble, economy in, well, not the best of health etc., etc.
Click to expand...
............................................................................................................................................................................
I think that the Dow has further to fall. Through 10,000 but how far below is anyones guess. I didn't see any logic in the Dow moving up from 10400 in mid Feb to 11,000 in early March since the US economy is extemely vulnerable with the twin deficits, an asset bubble,rising oil, rising commodity prices, rising inflation, rising interest rates and the complete failure of the Bush government to address any of the real issues.

Their whole gameplan seems to be that the Asian banks will keep financing their deficit in order to support cheap exports to the US and that the Japanese will continue to buy US TB's because they get a better interest rate than they would at home. This cannot continue and is an ostrich approach. Fundamental monetary measures will have to be applied to address this situation sooner rather than later. It may take a real downswing in the markets to kick start Bush into action but as we all know markets can remain irrational for longer than people think.

So how far below 10,000. Who knows but I would not be surprised to see a short term bull back in the pen next week after a 900 pt fall over the last 4 weeks. So we could see a retracement of a couple of hundred points IF it can break back above resistance at 10,200. Even if it does I am sure it will be short lived and we will see the Dow below 10,000 by the end of the week.

Just my take - everyone should follow their own view and gameplan.
 
Kriesau,

I think that the Dow has further to fall. Through 10,000 but how far below is anyones guess. I didn't see any logic in the Dow moving up from 10400 in mid Feb to 11,000 in early March since the US economy is extemely vulnerable with the twin deficits, an asset bubble,rising oil, rising commodity prices, rising inflation, rising interest rates and the complete failure of the Bush government to address any of the real issues.
Click to expand...

Part of the logic is thus.
The DJI is a list of 30 companies.
These 30 companies, have quite diversified businesses, that are in many cases global.
These 30 companies while exposed to the policies of the US Government, are not in point of fact the US Government, and can thus thrive or fail independantly of US economic policy.

In rising inflation, tangible assets are preferrable to cash.
Buying stock in a business, is buying tangible assets.

Rising interest rates will eventually mandate a switch into Bonds.
That time I do not believe is yet, as Dividend yields, and Earning power still exceeds Bond yields of US Treasuries (Risk Free Rate)

Asset bubble?
Housing, or Financial?

Deficits, and Bush administration, and devaluing dollar are issues that cannot really be addressed in a short post.

cheers d998
 
ducati998 said:
Kriesau,



Part of the logic is thus.
The DJI is a list of 30 companies.
These 30 companies, have quite diversified businesses, that are in many cases global.
These 30 companies while exposed to the policies of the US Government, are not in point of fact the US Government, and can thus thrive or fail independantly of US economic policy.

In rising inflation, tangible assets are preferrable to cash.
Buying stock in a business, is buying tangible assets.

Rising interest rates will eventually mandate a switch into Bonds.
That time I do not believe is yet, as Dividend yields, and Earning power still exceeds Bond yields of US Treasuries (Risk Free Rate)

Asset bubble?
Housing, or Financial?

Deficits, and Bush administration, and devaluing dollar are issues that cannot really be addressed in a short post.

cheers d998
Click to expand...
............................................................................................................................................................................
I agree that this is too big a subject to address on a BB.
However I would comment on your Dow composition oint as follows.

All of these 30 companies have to translate their global earnings back into $US. The $ has fallen 30% against the £/Euro over the past 2 years. The decline was significant enough for many Dow companies to keep overseas earnings abroad in other currencies. Not repatriating these revenues back to the US in $ also contributed to the dollars weakness. Bush cynically addressed this by giving these corporations a 12 month moritorium to repatriate these funds at a concessionary tax rate of 5.25%. This will probably result in a $100 billion being repatriated which will underpin the dollar maybe until the end of this year - then what !
This is the last shot in their locker unless they can get the Asians to disengage their currencies from the dollar peg and let them rise. This is unlikely to happen since they will then take an even bigger hit on their $ reserves. So what happens then - the dollar will fall further - maybe another 20% and that will really fuel inflation, interest rates etc, recession follows and the stock market falls. Of course this fall will probably precede rather than follow events.
Bush has screwed up big time with his excessive tax cuts, disincentives to save, Iraq war and other military expenditure and the chickens will eventually come home to roost.

Thats my view anyway.
 
f you look at IBM a lot of the increase in revenue growth(in previous quarters) was in fact currency adjustment, it they are having a bad time now with the weak dollar then hmm!!



IBM shares closed down $6.94, or 8.3 percent, to $76.70 Friday on the New York Stock Exchange, below the previous 52-week low of $81.90, and at it's lowest point since March 12, 2003, when it closed at $75.18.

IBM posted earnings per shares of 85 cents, versus the S&P Equity Research's estimate for 92 cents. Revenue was $22.9 billion, about 4% short of the firm's estimate due to weaker hardware and software sales. Services revenue rose 6.1%, but short-term signings slipped late in March and hurt profitability. S&P Equity Research said it views positively IBM's expensing of stock options. The new $87 target price is based on a blend of revised discounted cash-flow and price-to-sales analyses.
 
Don't think so somehow!
Look at that NIK and HSI! Even the very bullish ASX has gone down a lot recently

and DAX has finally given up as well :)
 
Maybe we’ll see some sort of token ‘bounce’/ minor consolidation form around the 10000 level, but I suspect that the ultimate destination is a return to test ‘support’ at 9700 – the launchpad for the October rally….

Also the c.650 height of the upper consolidation above 10360 confirms the target…..

Who was it who said “the force of correction is equal to the deception that preceded it”…?…(or words to that effect… ;) )
 

Attachments

  • 18-04-05.gif
    18-04-05.gif
    33 KB · Views: 177
Last edited:
You must log in or register to reply here.

Similar threads

B
Where is the VIX headed?
Replies
4
Views
1K
arabianights
arabianights
Dr John Summa
  • Article
Technical Analysis Determining Market Direction With VIX
Replies
1
Views
4K
trendie
trendie
Mike McMahon (guest author)
  • Article
Technical Analysis The Vix is Nothing New
Replies
1
Views
3K
charliechan
C
M
Is it Historic-Time to Take Profit and Hedge OR jusPrepare to Trade on the Bear Side?
Replies
1
Views
3K
mminoo
M
I
$VIX - Volatility Index
Replies
0
Views
2K
InvestedCentral
I
Top