Where is the Dow & others heading in 2005?

[roguetrader]

Well looks all set for a bullish open to get us off, as I write this DIA is pricing in a 46 point opening gap thet wil take us almost all of yestrdays loss, that should fill the open gap from yesterday, next target will be top of the NR7 at 10522 followed by recent highs 10560. Downside risk remains as stated in pst #4455

 

[roguetrader]

Slow and steady

A slow steady move up here, but a distinct lack of va va voom. Internals very strong and holding the highs on both markets. Volume is unremarkable, NYSE more or less even with yesterday, Nasdaq slightly ahead. Hard to get excited about any direction here.
SOX strong, through the 200 week sma now needs to clear 434 78>6 fib retrace

11am vol comparison shows Nasdaq approx 10% ahead of yesterday while NYSE more or less even

 

[User]

Brief update....VIX is reaching dangerously low levels suggesting a SELL.

Take this as a good opportunity to short the last time the VIX was at these levels the Dow was at over 10500 and then went to 10,000 now we have a similar set-up....

I think Mondays high should we see it again will be very difficult!

Great great chance to get shorts in. Upside limited....

 

[orky]

User

Where can I see the VIX.

Regards

Orky

 

[User]

Orky try this link:

http://stockcharts.com/def/servlet/SC.web?c=$VIX,uu[m,a]daclyymy[pb50!b200!f][vc60][iut]

Copy it into your web browser window.

Kind Regards
User

 

[roguetrader]

Never much followed the VIX user, not much use intraday, but since your mentioning it I have started to watch it. I see exactly what you are referring to in this post, however what would concern me is that on 24th of Feb it was at this level and we now know we were about to take a 200 point run at the top..
So while I agree it's a goood indicator to combine with other things, I wouldn't bet the farm on it.

 

[User]

however what would concern me is that on 24th of Feb it was at this level and we now know we were about to take a 200 point run at the top..

I agree with your point.....

But I think you'll agree with my point:

The VIX went to the lowest ever value on those occasions. The Dow was acting extremely weird. People lost faith in the VIX and couldn't understand why it was giving these warnings. 12,000 was being discussed.....

The VIX does give warning in this manner and yes we moved higher to a limited extent but then at the same time we basically got the Shi***T breakout at around 10860......

Like you said its a good indicator that definitely is worth noting and yes nothing is 100% but mostly the VIX works as a good warning indicator when at lows levels....

So far this week we have basically seen sideways actions. Obviously we got Friday's session left but so far this is exactly how I wanted it......

I'm getting my longer term shorts in with 200 point stop losses seeming more then sufficient at this moment in time.....

 

[roguetrader]

I'm getting my longer term shorts in with 200 point stop losses seeming more then sufficient at this moment in time.....

Now that post really justifies your point. I agree pretty much with everything you say, my only concern is that you are a fairly experienced trader and there will almost certainly be newbies reading this who are not. That post defines for a newbie what his or her risk might be, and allows them to realise they might have a position 100 plus points against them before it comes good. You would be surprised how many people would be prepared to follow the trade advice of someone they have seen make good calls with no idea befor grtting into it what is involved in managing the position, and thereby having an appropriate position size.

 

[Racer]

You have all been busy while I was getting my phone fixed...yet again!

Did you see in the details of the GDP figures today that corporate profit growth slowed sharply in the first 3 months and the GDP revision upwards was due to a smaller surge in imports?

 

[kriesau]

Now that post really justifies your point. I agree pretty much with everything you say, my only concern is that you are a fairly experienced trader and there will almost certainly be newbies reading this who are not. That post defines for a newbie what his or her risk might be, and allows them to realise they might have a position 100 plus points against them before it comes good. You would be surprised how many people would be prepared to follow the trade advice of someone they have seen make good calls with no idea befor grtting into it what is involved in managing the position, and thereby having an appropriate position size.

Hi RT - What you say is possibly true but neither User or anyone else on this board is selling financial advice, neither are they encouraging newbies or others to replicate their trades. Everyone has to take responsibility for their own trades and if they follow someone else, and they get it wrong, it becomes part of their learning curve in evolving their own trading styles.

Personally I find it interesting when experienced and respected traders like User discuss the trades they they have made (or plan to make) on the board as it usually contains their rationalization also. All of us sometimes get it right and wrong !

In addition to the VIX we have now made lower highs and lower lows for 3 consecutive days on much lower than average volume. Apart from Mondays very brief breach of 10560 this resistance level has now held for 5 consecutive sessions. Average volume over this period has been almost the lowest since the sessions that followed the high on March 7th. This also suggests that Mondays high could be the top of this rally. We really need to see a convincing and sustained break over 10580 for another upward leg to be instigated. Still could happen of course but the balance of current indicators suggests down as the next direction although consolidation in the 10450 - 10540 range could persist to the weekend.

 

[Racer]

Oil still going up

 

[roguetrader]

Agree totally Kriesau, and maybe I am over-reacting. Touched a chord perhaps that in the beginning when I started out I was caught following the advice of people who could trade. Their trades were sound, but because I had no idea what their management was, they weren't so fine to me. Limited upside means different things to different people.

I happen to agree pretty much with everything User is saying about the current market I think his posts and observations are great as are many of the folks who post here and would not seek to discourage him from making them. I can honestly say I derive benefit from many people posting here. I guess I just wanted to point out for the less experienced that things like the VIX should be used in conjuction with other things

 

[kriesau]

Agree totally Kriesau, and maybe I am over-reacting. Touched a chord perhaps that in the beginning when I started out I was caught following the advice of people who could trade. Their trades were sound, but because I had no idea what their management was, they weren't so fine to me. Limited upside means different things to different people.

I happen to agree pretty much with everything User is saying about the current market I think his posts and observations are great as are many of the folks who post here and would not seek to discourage him from making them. I can honestly say I derive benefit from many people posting here. I guess I just wanted to point out for the less experienced that things like the VIX should be used in conjuction with other things

Excellent point - the VIX is nearly always a very good indicator but it needs to be viewed in combination with some other indicators to enhance its potential validity.

I've never used a 200 pt stop on a Dow trade - be interested to see how effective this 'volatility buster' is on Users short which I assume to be in the region of 10525.

 

[User]

The trades that I have mentioned in relation to shorting at these levels with around a 200point stop loss are being placed on the basis of the market heading 'possibly' lower over the next few weeks or so. I have taken the comments of RT on board and T2W members may choose to act on this information this is entirely up to them.

I just hope I've made my trades a little clearer.......I have justified my thinking by analysing why I think the market is in the process of topping out and we could have the potential of heading towards 10,000. Obviously 10400 is the initial target.....

I would obviously not want the trades to reach the stop losses but you can't rule the possibility out. I would try to remain contained if that was to occur as I have placed these trades on analysing the market to the best of my ability. If it simply did not go my way then I would re-evaluate the situation accordingly.

I have looked at Weekly charts, daily charts, 15min charts. Volume has also been looked at. The VIX has also been looked at. I have looked at other indicators as well. CTI indicators, smart money flow index etc etc etc. I have posted some charts where I have drawn appropriate trend line lines, support lines, resistance lines etc even the fundamentals are bad....

I hope this justifies my reasons for placing the trades that I have. You can follow or ignore. Posting on this board helps me justify my own actions......

Good luck.

 

[User]

kriesau and RT thanks for the support. The threads been operating smoothly this week I just hope the ratings of the thread improve.....

I think most members were not impressed with the antics of last week and the ratings went lower as a result of that. I just hope members re-evaluate the given ratings as the thread has hopefully ended the drivel of last week and now we can hopefully continue with the task at hand: Where is the Dow and others heading?

 

[kriesau]

The trades that I have mentioned in relation to shorting at these levels with around a 200point stop loss are being placed on the basis of the market heading 'possibly' lower over the next few weeks or so. I have taken the comments of RT on board and T2W members may choose to act on this information this is entirely up to them.

I just hope I've made my trades a little clearer.......I have justified my thinking by analysing why I think the market is in the process of topping out and we could have the potential of heading towards 10,000. Obviously 10400 is the initial target.....

I would obviously not want the trades to reach the stop losses but you can't rule the possibility out. I would try to remain contained if that was to occur as I have placed these trades on analysing the market to the best of my ability. If it simply did not go my way then I would re-evaluate the situation accordingly.

I have looked at Weekly charts, daily charts, 15min charts. Volume has also been looked at. The VIX has also been looked at. I have looked at other indicators as well. CTI indicators, smart money flow index etc etc etc. I have posted some charts where I have drawn appropriate trend line lines, support lines, resistance lines etc even the fundamentals are bad....

I hope this justifies my reasons for placing the trades that I have. You can follow or ignore. Posting on this board helps me justify my own actions......

Good luck.

Keep it coming User - your input is greatly valued.

I'm still looking for short entry points. My analysis concurs with yours and I think that 10400 will be tested soon. Not quite convinced that another test of 10560 won't happen again first though. Still some support at 10500 though I don't think that this is particularly robust. Post 2.00pm price action may be more revealing - market may get a little downbeat ahead of the holiday weekend.

Would feel a bit more comfortable seeing the SPX fall back to 1190.

 

[roguetrader]

Volume comparison coming out of lunch shows the Nasdaq still around 10 - 15% higher than yesterday with the NYSE coming in more or less even

 

[roguetrader]

As an observation the indices, SPX, INDU, and COMPQ all converging on the 61.8% fib retrace from year high to year low. SPX already just above that level by 4 points, COMPQ within 8 points and INDU about 88 points off

 

[User]

Joules,

I think you would agree with me when I say the stops tend to be tighter on smaller timeframes and wider on larger timeframes.

On 1min, 10 or 15min charts your stop could be....? Well it depends on individual choice really and in relation to risk and money management but lets just say 20-50 points.

Then on a daily chart you could have a stop at 100-200 points away?

That obviously does depends on your entry and trade rationalising......
For e.g. If you are placing a counter trend short.....trend is up and lets say for e.g. on the daily chart the Dow has heavy resistance at 10400 then you could enter at 10390 short and well if you think the resistance is so bad that the market may not even touch 10400 then in terms of daily charts you could put the stop loss around 30-50 points away.

However if you think the market can travel above 10400 but can't close above it then you will allow more room for your trade giving your trade a possible 50-100 point stop loss.

So much depends on the style of trading in relation to account size.

On a daily chart the ATR - average true range is around 120 points

So if traders are placing a trade in relation to the daily chart then the ATR needs to be considered

Similarly looking at the weekly chart the ATR is around 240 points so when placing a trade in relation to the weekly chart then you really need to provide adequate breathing space.

Another reason is if you look at the 24/01/05 then the Dow was at roughly 10400 and then we moved higher towards around 10840 and kicked back a little and moved higher towards 10940.

Similar pattern now.......Before January low to March high......500-600points was the move and the time it took was around 1 and half months......

Now April low to possible May/June high.......500 to maybe 600points move and the time it may take could also be around 1 and half months. Could be a similar situation......

Also the Vix is moving lower but not exactly at its lows therefore we could have some little upside left hence 200 point stop loss.

Also I have used 15min charts but my main analysis has been done in accordance with daily and weekly charts hence 200point stop loss.

Hope that helps....

Regards
User

 

[Racer]

Didn't they do well.. AIG goes to new session high on confirmation of Spitzer suing over improper
accounting