roguetrader
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Spx
SPX like the other majors did well this week, In fact the SPX managed a 4 year closing high on Thursday and Friday and traded above the intraday high. SPX like the COMPQ, has shown considerable relative strength over the the INDU for the past several weeks. A couple of weeks ago in reply to a request from Lion to comment on the markets I pointed out that although the INDU was steaming south both the SPX and COMPQ were merely exhibiting a normal correction to the move up from April lows. And so here we are higher, dragging the INDU kicking and screaming as it were.
Like the INDU, SPX is also at a pivotal level. The break above the Mar highs has not been decisive as yet, so for all intents and purposes we are still at that resistance level. Thursday also formed a big shooting star on the daily chart which still remains valid.
To the upside, a decisive breakout here gives us a target of 1253 the 61.8% fib ret of the all-time highs to the '02 lows. Interestingly that's about 26 points away, if the SPX and INDU were to move in sync that target would not even require the INDU to breach the Mar highs.
To the downside I would be looking for 1216 -18 to hold, June highs, followed by 1205 consolidation, also have the 20 sma at 1208 currently. The 50 sma at 1196. April swing high and more recent consolidation bottom at 1190 - 91
SPX like the other majors did well this week, In fact the SPX managed a 4 year closing high on Thursday and Friday and traded above the intraday high. SPX like the COMPQ, has shown considerable relative strength over the the INDU for the past several weeks. A couple of weeks ago in reply to a request from Lion to comment on the markets I pointed out that although the INDU was steaming south both the SPX and COMPQ were merely exhibiting a normal correction to the move up from April lows. And so here we are higher, dragging the INDU kicking and screaming as it were.
Like the INDU, SPX is also at a pivotal level. The break above the Mar highs has not been decisive as yet, so for all intents and purposes we are still at that resistance level. Thursday also formed a big shooting star on the daily chart which still remains valid.
To the upside, a decisive breakout here gives us a target of 1253 the 61.8% fib ret of the all-time highs to the '02 lows. Interestingly that's about 26 points away, if the SPX and INDU were to move in sync that target would not even require the INDU to breach the Mar highs.
To the downside I would be looking for 1216 -18 to hold, June highs, followed by 1205 consolidation, also have the 20 sma at 1208 currently. The 50 sma at 1196. April swing high and more recent consolidation bottom at 1190 - 91
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roguetrader
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Now the question for you to consider. As an intraday player do I think like Joe Public in the longer timeframe? Or as a trader was I just wrong, some you win, some you lose.
The significance obviously is that if I was just wrong then no worries, but if I do think like Joe Public in this timeframe then what does that say about my strong preference to look for longer term shorts here?
User I'd like to run something past you at this point, I'd be interested in your thoughts. I'm predominantly an intraday trader as you probably know, so I don't bother with predictions as to market direction when I make my observations. Looking back to the June highs, I commented on the charts being bullish, which they were, and suggested caution on the short side, off the back of that we discussed what size of stops you would need to run to go short there. Now while I personally wouldn't have liked to initiate a long there either, if I was forced to take a side, in all honesty I would have favoured long. With hindsight we can see that would have been the wrong decision. Now at the current moment the charts look bullish and we are back here again. This time however I would favour the short side not even if forced to make a decision, but am actively looking for short entries on long term option contracts.
Now the question for you to consider. As an intraday player do I think like Joe Public in the longer timeframe? Or as a trader was I just wrong, some you win, some you lose.
The significance obviously is that if I was just wrong then no worries, but if I do think like Joe Public in this timeframe then what does that say about my strong preference to look for longer term shorts here?
Short the Dow, there is nothing wrong in that! But on that trade alone, what is the probability of break even? And what is the TIME to break even? There are ways around it, of course! But that requires an indepth knowledge of your account. I, personally, feel quite bearish about the bugger! But......I have no shorts in place at the moment. If i had to trade......i would go long......with respect to breakeven at some point in the future. Anticipation will kill you off in the end.......trust me.......i'm an expert in the subject! Rude.
User
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The Current trend then was up UP.....
If you were to choose a long term stance then and you decided long then that would not have worked out well. If you were just stating the trend then you were correct up until the point of reversal.....
The Current trend now is UP.....
At this moment in time if your making a decision to enter 'long' term shorts then I would ask you what your 'long term' equates to? If you were to enter long term shorts with a suitable stop-loss then I would say that in my opinion you would be 100% correct in doing so. Obviously it could be my time to get it wrong but I am confident in my work at this moment in time. Like I said I can allow the market to move higher. I can also allow the market to travel in a range to higher for the next month or so as a maximum......
I can easily see us 300points lower in the next few months it may be hard to believe but 10,000 and 1140 seem highly likely before year end.........
What I can say is that we can still see some problematic upside in the sense that we could start to see intra-day reversals at strong resistance points......
When you do take intra-day positions you use a set stop loss......20/30 points?
When you take longer term positions you have to consider the risk/reward.......
I can't see much more upside, I can see more downside, in that respect alone I would not see myself incorrect in taking shorts........However this scenario is not as simple as that......I am taking shorts for many reasons and I am not just basing my decision on risk/reward - No WAY!........My research supports my stance on shorts and I am extremely content in making that decision to go short.....
I cannot see my trade going wrong. If however it does disappoint I will simply evaluate the situation at the time. For the moment, shorts is my play and I'm comfortable with that.......
If you were to choose a long term stance then and you decided long then that would not have worked out well. If you were just stating the trend then you were correct up until the point of reversal.....
The Current trend now is UP.....
At this moment in time if your making a decision to enter 'long' term shorts then I would ask you what your 'long term' equates to? If you were to enter long term shorts with a suitable stop-loss then I would say that in my opinion you would be 100% correct in doing so. Obviously it could be my time to get it wrong but I am confident in my work at this moment in time. Like I said I can allow the market to move higher. I can also allow the market to travel in a range to higher for the next month or so as a maximum......
I can easily see us 300points lower in the next few months it may be hard to believe but 10,000 and 1140 seem highly likely before year end.........
What I can say is that we can still see some problematic upside in the sense that we could start to see intra-day reversals at strong resistance points......
When you do take intra-day positions you use a set stop loss......20/30 points?
When you take longer term positions you have to consider the risk/reward.......
I can't see much more upside, I can see more downside, in that respect alone I would not see myself incorrect in taking shorts........However this scenario is not as simple as that......I am taking shorts for many reasons and I am not just basing my decision on risk/reward - No WAY!........My research supports my stance on shorts and I am extremely content in making that decision to go short.....
I cannot see my trade going wrong. If however it does disappoint I will simply evaluate the situation at the time. For the moment, shorts is my play and I'm comfortable with that.......
User
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I 100% can't agree with that.
I could breakeven on my shorts in the future 100%. Not a problem......
I'm happy at reading stances opposite of mine.......these quotes give me the represenatation of a market.........
The markets need a balance from time to time......and where you have me wanting to short like mad I'm sure you have somebody in the markets who is willing to buy......
Should be an interesting week ahead.......
But if you don't anticipate that would also kill you of in the end........
roguetrader
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If you took a long trade here, that would indeed be anticipation, the trend is up but we are at significant resistance all over the shop and until there is a decisive break above that resistance supported by institutional volume I would not go long. If however you are already long and have profit cushion as I believe Kris said he was then you can if you choose afford to sit tight. I would probably run a fairly tight stop at this level, but no way would I initiate a long at this point.
I agree RT. I am currently long with my trailing stop some 70pts ahead of my entry point. So I will hold to see if there is further mileage left if the resistance at 10650 can be broken. If I was not already in this trade I would not go long at this point unless 10650 was convincingly breached and even then I would employ short stops since I believe that there is a strong chance of a downswing before the end of the month. The VIX is flashing red !!roguetrader said:
Hello RT! At this point what would anybody do? O.K. What would the account allow us? If the account is a reasonable account? Is the market reasonable at the moment? Short........? Go for it! Let's face it, my guess is consolidation, short termers, pick your support/resistance? Channel this one? You can't escape the short term trend? Rude.
roguetrader
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Ok essentially I am looking for entries in two sets of trades, and will be watching the market very closely this week. Ideally I would have liked earnings season past first, but I will likely be packing up shop for the month of August and am not sure I can be bothered to monitor the market closely enough to place the trades then. The first trade targets December by which time I believe we will have at least tested the range bottom at 10,000 and possibly a shot at the October '04 lows.user said:
The second set of trades targets circa 2007 targeting an approximate 20-30% move lower in the markets. Obviously these are speculative trades and fall under the description of top picking All will be options trades, no stops.
Not hard to believe at all matey especially when you consider for all intents and purposes those levels simply correspond to the trading range we have been in for the last 18 months or so.
RogueTrader,
I know I am bearish and have often taken flack for uttering what some call the unthinkable, but do you not think that 7450 is a bit extreme? For the record, I stated at the turn of the year that the DOW will hit 7450 or less and I still stand by that view.
I will also be using options to back the view as the potential losses are known an quantifiable at the outset. I cannot stand sleepless nights.
I know I am bearish and have often taken flack for uttering what some call the unthinkable, but do you not think that 7450 is a bit extreme? For the record, I stated at the turn of the year that the DOW will hit 7450 or less and I still stand by that view.
I will also be using options to back the view as the potential losses are known an quantifiable at the outset. I cannot stand sleepless nights.
