The Dow - May 23-27 2005

TheBramble last night at 18: 58 said:

If it goes above 550 on big volume and re-tests 550 successfully - I'll be Long.

If it goes below 400 on any volume, I'll wont be waiting for a re-test of 425 - I'll simply be Short.

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2nd day running where I needn't have bothered rushing back to catch 'the action'

It is drifting lower and even the slight increase in interest to bring it back up off the 425 level doesn't convince.

I'll stick to my guns. Below 400 on Volume of 3+M and I'm in for a Short ride

Although I wouldn't have traded any of the action today had I been around, has anyone else had any setups triggered (not punts or gambles - but real setups)?

Bramble,
Not sure how to read your last post? What is a real set up?
In my view volume is of interest, but it is price that alters my profit and loss bottom line. The downtrend today was flagged up before the open. VIX low and had triggered a sell signal. My favourite 60 min candle chart with my empiracally tested moving averages signalled a short from the open. So I went for it.
Is my profit not valid because it might not measure up to a "real setup" ??
regards, G McA

TheBramble said:

Although I wouldn't have traded any of the action today had I been around, has anyone else had any setups triggered (not punts or gambles - but real setups)?

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With apologies for the puce colours, the attached chart shows the one set up I traded today for just 20 points.

The spike down to 10429 (the three day swing low + support from Friday) was an obvious reversal candidate to at least the s1/s2 mid point at 10455 so I did just that. As I write it looks like I should have helfd onto it too, but a setup is a setup.

Will be looking to short with a fairly loose upside stop anytime over the next couple of sessions

daily pivot up at 500..has it got the legs?...dunno, but im already in the black (edit.lol) with a stop at even...

as the weekly pivot is way down below at 369....hoping that one is not hit first!!

closed at pivot .. lovely...pity no legs in open hours....

I would be looking for a dip to around 10455 today. It may open slightly higher than yesterdays HOD before that. I have a range of 10455-10379 for the next few days but on previous setups the top of the range should be in play for today.

Although I wouldn't have traded any of the action today had I been around, has anyone else had any setups triggered (not punts or gambles - but real setups)?

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I traded the breakout of the range as I said I would - short at 477 (YM futs). Sorry no charts last night, didn't have time.

I was really expecting a trending day, after the NR7 day and with oil futs rising to around $51.5 I really thought we were in for a nice drop. I failed to exit on the volume climax at around 430'ish but decided to wait and see if the pullback to 450 held. Eventually stopped out at 462 for +15 so made a small gain for the day.

Strong resistance back at the 480 level, if it holds then I still think we're headed down, but no trading for me today (in the morning session at least) due to work commitments.

Justyn.

I was really expecting a trending day, after the NR7 day and with oil futs rising to around $51.5 I really thought we were in for a nice drop.

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Yes Justyn, the nr7 proved to be a bit of a damp squib, started out well enough but just ran into that old apathy that is plaguing the market at the moment, sellers are no more interested in committing that buyers.

kevin your 379 aint far from weekly pivot....but unlikely to get there today surely?....maybe were in for a cliffhanger

gmca686 said:

Bramble,
Not sure how to read your last post? What is a real set up?
In my view volume is of interest, but it is price that alters my profit and loss bottom line. The downtrend today was flagged up before the open. VIX low and had triggered a sell signal. My favourite 60 min candle chart with my empiracally tested moving averages signalled a short from the open. So I went for it.
Is my profit not valid because it might not measure up to a "real setup" ??
regards, G McA

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A real setup is one which has fully pre-defined entry criteria (and preferably exit criteria as well!) which form part of one's overall trading system. Such as that which you describe from your own 'trading toolbox' above.

As opposed to a "I'm feeling bored and it's probably going to go up soon..." approach or a "I'll just stick in a Long and a Short and cancel the 'wrong' one when it starts to move...' approach. I.E. Gambles & Punts...

I don't think there are too many on these boards interested in the latter. That's all I meant.

HTH

Heading into Thursday, May 26th...

Look at the Volume in the last half-hour of yesterday's trading - and then - look at the Price action. Particularly the diminishing High/Low range and the movement of Open & Close 'toward' each other.

OK - there's normally the final 30min 'flurry' but that one was significant.

Now, yesterdays closing action isn't necessarily going to carry on into today's session but if it had/did - what would we expect?

When a stock acts like this it could be Accumulation or it could be Support. Massive Support.

Whichever way it goes today, if that Support breaks - it could break big time. If it doesn't do so on (or before) the open - it will provide some reasonable Shorting opportunities I suspect. In anything from one to three legs down today.

If the Support is again 'attacked' and barely holds - it will be another rangey day (we're used to them... ).

And of course, if the Price/Volume action was/is indicative of a little bit of accumulation, that could well continue in passive mode again today. Although it's possible it might go for broke on the 500 today I still feel that's a lower probability than the other scenarios I've outlined.

So, staying with a slightly more Bearish than Bullish view (although I will be guided by the market ) I'll go short on big volume down through 400 (but only if after the open).

If it powers up through 500 on Volume - I'll wait for the re-test (with appropriate volume profile) to go Long.

gmca686 said:

Is my profit not valid because it might not measure up to a "real setup" ??

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Mr. McA - just realised you were feeling a little 'iffy' about whatever you thought I meant rather than what I actually meant. I hope I cleared that up a couple of posts back.

However, one other thing I guess I should have said is that as a very infrequent Index trader (and then only the futures), I wonder if you regular Dow gurus get used to this comparatively narrow range trading - and can trade it profitably - consistently.

I normally trade stocks, but I'm looking for real 'commitment' from them to my trade direction. The Dow seems a little narrow and I just wondered if it's a psychological perspective in relation to this instrument as opposed to others (such as stocks).

I'm happier (?) trading a $1 move on a $40 stock than I am a 40pt move on a 10,000pt index. There's money to be made in both, of course,

It's just that I'm wondering if any traders trade both stocks AND indexes using the same criteria and if so, what the comparative W:L and Aw:Al is?

This post probably shouldn't be in the weekly Dow thread, but I'm kippered if I'm going to cut&paste it somewhere else now. Sue me...

My one week view of the DOW from here (for what it's worth) is that we are approaching a significant turn into either a correction to the 570 point (to date) run up from 20th April or, more likely the continuation (EW wave 3) from the years high at 10983. Either way several hundred points of downside are looming. The question as always is timing it - notoriously difficult for a big turn down.

I still have that bull flag pointed out by Justyn in play and would not be at all surprised to see more upside into the US Memorial Day holiday to take the wave 2 retrace to 62% at about 10606 or even higher. Having said that I've just shorted the opening gap again at 10511 but won't be slow to exit if the news prompted action dictates.

For swing traders prepared to take a 2-3 week view and run loose stops I reckon it's a short from anytime about now since we'll almost certainly see levels down in the 10200-10300 during that time frame even if the bull continues through the summer (a 32% retrace from 10,600 would take us down to about 10360 for example)

Me - I'll just stick with my intra-day stuff. Its far less stressful.

(All number relate to the YM-M5 contract btw)

Hi Bramble, You explained yourself quite satisfactorily.
My definition of a real set up would be a bit "iffy" for you. It's horses for courses.
I don't trade stocks alongside indices as I found the amount of homework and monitoring too much. With the exception of UK shares in my SIPP.
However, I trade Forex in parallel with indices and, horrow of horrows, am usually short and long similar instruments. My TA is the same as is the enrty/exit criteria.
regards, G McA

leeshindig said:

kevin your 379 aint far from weekly pivot....but unlikely to get there today surely?....maybe were in for a cliffhanger

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379 is something I have noted for the next few days. The 475 area was a recent support level, so not too surprised to see it go back up there last night for a retest. The sensible play today would be to watch that level again for a break and run down to around 450. It might even keep going and break 400

Hi All

Update on Dow

S

short dow 534 stop at 70

leeshindig said:

short dow 534 stop at 70

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Why?

And do you mean stop at 470 or 70pts!!!?????

I mean stop at 570 and why?...because I have seen the count of this being a b of a small abc at the top of 5 legs up....


and other signals from other standard chart patterns

I can also be wrong and often am, but thats what the stops for init