Is the market about to take another HIT?

[happytrader]

Re: Is the market about to take another HIT??

I notice the slow stochastics on the XAO are at the bottom of the oversold zone. Of course this is a secondary indicator only. However, its significance is that it indicates their is a lessening of downside at this point and to watch for consolidation leading into consensus. BTW my views are very short term observations only.

Cheers
Happytrader

The views expressed are merely personal opinions only.

 

[NettAssets]

Re: Is the market about to take another HIT??

John.............A simple system that can achieve this is always preferable to a more complex system that can (maybe) achieve the same thing.

Bunyip

Thanks
lots to look at
John

 

[bunyip]

Re: Is the market about to take another HIT??

I notice the slow stochastics on the XAO are at the bottom of the oversold zone. Of course this is a secondary indicator only. However, its significance is that it indicates their is a lessening of downside at this point and to watch for consolidation leading into consensus. BTW my views are very short term observations only.

Cheers
Happytrader

The views expressed are merely personal opinions only.

Beware of reading too much into Stochastic or any other momentum based indicators. In a strong downtrend the Stocahstic will fall into the oversold zone and stay there as long as the downtrend continues. Even if Stochastic was to climb out of that zone because prices rallied, that in itself is no indication that the downtrend is over. Any rally during a downtrend is likely to be short lived, followed by the resumption of the downtrend.

Conversely, look at Stochastic on any strongly uptrending stock or market. Chances are that Stochastic went into the overbought zone and stayed there while prices continued to climb.

The way to use momentum based indicators like Stochastic, RSI, ROC, W%R etc is to ignore any signals they give contrary to the direction of the trend, and to only take the signals they give in the direction of the trend.

For example, if the stock or market is downtrending, only act on sell signals from Stochastic, while ignoring its buy signals. To give a sell signal, Stochastic must climb into the overbought zone. This can alert you to a shorting setup, but is not in itself a signal to go short. The actual signal to go short is when the rally ends and the downtrend resumes.

If the trend is bullish, Stocastic sell signals should be ignored and only its buy signals should be acted upon.

Bunyip

 

[bunyip]

Re: Is the market about to take another HIT??

Bunyip,

Totally disagree.When the market shoots down 2.3% as it did on Friday, I for one don't want to be in a position where I lose more than my initial stop loss due to stocks gapping down, especially when using leverage.

2.3% Friday, but what about when that becomes 5%, or worse.You will wipe out a large percentage of your trading capital.

Yes, we can all short the market, but at the moment it is just as likely to shoot up as down.

I will stick to my trading plan and have most of my funds in cash until we see a trend develop, or at least the markets stabilise.

Markets spend approximately one third of their time trending well. Sideways markets can last for a considerable period of time. You could be sitting on the sidelines for ages if we go into a prolonged sideways market.
In the meantime, there will be numerous stocks that defy the overall market by trending strongly either up or down. No, these stocks are not just as likely to shoot up as down, what they're likely to do is continue trending decisively in the same direction long enough to give you a profitable trading opportunity. Momentum breeds momentum as increasing numbers of traders and investors quit falling stocks, pushing them lower. Or buy rising stocks, pushing them higher.
The important thing is the strength of their trends, and the amount of volume pushing them along. Trend strength and volume are a big influence on a stocks likely future direction.
Some of these strong trenders exist right now during these volatile times. If you have the right tools and the ability to identify strong trends, you can find them and trade them profitably. It's not as impossible as you think.

Bunyip

 

[happytrader]

Re: Is the market about to take another HIT??

Hi Bunyip

I agree with most of your observations. As I have stated stochastics are a secondary indicator and their significance is to watch (be on the alert). I also stated that my observations are short term only.

Primary indicators such as trend, pricebars and volume are my call to action.

Cheers
Happytrader

 

[wayneL]

Re: Is the market about to take another HIT??

4:30 AM in Chicago:

The bears are up early.....

ES = SP500
NQ = Nasdaq
YM = Dow
ER2 = Russel 2000

 

[mit]

Re: Is the market about to take another HIT??

Wayne,

I was surprised that the ASX had that late rally. If anything the middle east is in a worse state with Israel getting hit back. I assumed we would have gone the other way unless the markets are passe about this as well.

Golds down as well I have 663 against around a 675 high today (According to CMC so it is more ballpark)

MIT

 

[wayneL]

Re: Is the market about to take another HIT??

Wayne,

I was surprised that the ASX had that late rally. If anything the middle east is in a worse state with Israel getting hit back. I assumed we would have gone the other way unless the markets are passe about this as well.

Golds down as well I have 663 against around a 675 high today (According to CMC so it is more ballpark)

MIT

Yes, gold & oil futures are selling off before the open.

Index futures not so negative at the moment.

U.S. stock futures get a lift, then come off, after a report that Israel could end its military operation in Lebanon within "days." Crude turns lower on the news.

I suspect that sans any really crappy news from the Mideast or elsewhere, that the market has run out of sellers for the moment.

Just a suspicion mind you!!

I think a brief rally from here, then more blood. FWIW.

 

[mit]

Re: Is the market about to take another HIT??

I'm short S&P at the moment. My stop is at 1250. If it doesn't get hit tonight I might build up the stake a little.

(Also short Euros and look at that sucker dive)

MIT

 

[YOUNG_TRADER]

Re: Is the market about to take another HIT??

Wayne do you have links to this article or source that cites possible cease fire in Mid East?


U.S. stock futures get a lift, then come off, after a report that Israel could end its military operation in Lebanon within "days." Crude turns lower on the news.

Thanks

 

[wayneL]

Re: Is the market about to take another HIT??

http://www.marketwatch.com/News/Story/Story.aspx?column=Indications&siteid=

 

[wayneL]

Re: Is the market about to take another HIT??

CNNNNN not reporting it though

http://www.cnn.com/2006/WORLD/meast/07/17/mideast/index.html

 

[wayneL]

Re: Is the market about to take another HIT??

I'm short S&P at the moment. My stop is at 1250. If it doesn't get hit tonight I might build up the stake a little.

(Also short Euros and look at that sucker dive)

MIT

Mit,

You trading CFD's/forex or futures?

 

[dutchie]

Re: Is the market about to take another HIT??

Could be a short bounce starting today going on XJO rally yesterday and US markets overnight. Bounce could be for a week or so and then futher weakness.

Cheers

Dutchie

 

[mit]

Re: Is the market about to take another HIT??

Mit,

You trading CFD's/forex or futures?

CMC CFDs/forex. Only small positions. With all the volatility this small account has doubled in a month (never more than 2% risk) while my normal long only portfolio has taken a hit. If it was the other way around I would have made a years salary. Makes me wonder whether to increase the capital in the account. I certainly like this kind of trading. My mechanical portfolio trading is good but like all portfolios you have 2% risk on each position which can add up over 10-12 positions if the market takes a hit.
While keeping a max of 3 positions for my discretionary, if you are on the wrong side of the market it's a smaller hit and doesn't seem to limit the upside as I am more selective of my positions. Also the correlation between the markets still exists but is weaker than within a market.

Long term mechanical trading is good because it only takes very little time to maintain but currently I do enjoy trading

MIT

 

[mit]

Re: Is the market about to take another HIT??

Could be a short bounce starting today going on XJO rally yesterday and US markets overnight. Bounce could be for a week or so and then futher weakness.

Cheers

Dutchie

Yesterday's rally really surprised me. Though oil and gold are down so this may have a negative impact. I reckon it will open positively and flat to slightly positive at the close.

MIT

 

[TheAnalyst]

Re: Is the market about to take another HIT??

Hamas, Hezzabollah and the Syrian and Iranian traders have taken short positions on the sp500 and they are long oil and gold, so what does that tell you?

 

[mit]

Re: Is the market about to take another HIT??

Hamas, Hezzabollah and the Syrian and Iranian traders have taken short positions on the sp500 and they are long oil and gold, so what does that tell you?

And gold dropped and the S&P went up because the CIA has entered the markets and are trying to drive them broke.

MIT

 

[noirua]

Re: Is the market about to take another HIT??

From the comment made by President Bush to Prime Minister Tony Blair yesterday, picked up by a microphone accidentally, - or was it?
The US seems to be taking some pleasure in Israel's soldiers not being released and the hell being beaten out of the Lebanon. He probably, President Bush, would like to knock out the key nuclear facilities in Iran and chase some of the Taliban taking refuge in Syria and indeed all those Iranian missiles being brought into the Lebanon and bomb making materials into Iraq, from there.

This does look like being a long-term situation which will zigzag its way through 2006. If you'r a bit of a speculator these markets should be enjoyable, but keep lots of your money in cash in case the pack of cards come tumbling down.

 

[TheAnalyst]

Re: Is the market about to take another HIT??

And gold dropped and the S&P went up because the CIA has entered the markets and are trying to drive them broke.

MIT

This is reality