Trading the Bounce

[ducati916]

So the VIX

Now we simply watch for the completion of this up-move and then re-enter the market. Difficult to know how long it might take, possibly days, possibly a week or two.

All that you need do is plan what you want to buy and keep a close eye on it, ready to grab some once the market bottoms out.

jog on
duc

 

[ducati916]

The oil imbroglio:

Word is that the losses accrued were between US $6B and US$10B. They were incurred by (a) professional arbitrageurs and (b) a handful of SWF (Saudi's).

It remains to be seen if there is any fallout.

jog on
duc

 

[ducati916]

Always a bit of a tricky one.

The next couple of days will either validate or invalidate the signal. If it does (validate) fall, I'd be looking (along with everyone else) at first the 260+/- level, then the 240+/- level and if that failed, the 220 +/- level.

Of course it could simply take off higher from here, never looking back.

jog on
duc

 

[ducati916]

So just checked the signal from the up day today: no change. Signal still indicates that there is a (potential) correction of the bounce in the wind.

We'll see how it plays out over the next couple of days.

jog on
duc

 

[ducati916]

Sentiment surveys:

In this week's AAII survey, only 24.86% of investors responded as bullish. That is the lowest level of bullish sentiment since the COVID-19 outbreak began! The last time the bullish reading was this low or lower was on October 10th when it was 20.31%. The 10 percentage point decline from last week's reading of 34.86% was also the largest weekly decline since February 27th.

Whereas bullish sentiment fell, bearish sentiment rose to 50%. This is the first time since the final week of March that at least half of respondents reported as bearish, and it was the biggest jump in bullish sentiment since March 12th. The inverse moves of bullish and bearish sentiment this week has also sent the bull-bear spread to its widest level in favor of bears since last August. Today, the bull-bear spread is at -25.14. At its widest level back in early August is was slightly wider at -26.54. This week also marked the first time since April of 2013 that bearish sentiment doubled bullish sentiment.

Recently, neutral sentiment has been extremely muted. At its low in mid-March, neutral sentiment was only at 14.5%. Every week since then, neutral sentiment has ground higher reaching over 25% this week for the first time since late February.

So the market has had a couple of up days, but still below the bounce high, a little doubt starts to creep in. The oil issue is also creating uncertainty (as evidenced on this forum) in the market. The tone of the market has changed this week. These surveys just confirm (for me) that lean towards risk off.

jog on
duc

 

[ducati916]

News? Rumour? Noise? Signal?

Responsible for market dropping?

Who knows. Thing is, in a bounce that has a slight decline in prices, no-one waits to find out...they are out. Sell. Had the news (rumour) come out at a different point in time, the market may have just ignored it and carried on carrying on.

Additionally, with the w/e fast approaching, where news can be released, with no ability to react immediately, bulls get very nervous (or bears when the situation is reversed).

jog on
duc

 

[rnr]

Always a bit of a tricky one.

View attachment 102542

The next couple of days will either validate or invalidate the signal. If it does (validate) fall, I'd be looking (along with everyone else) at first the 260+/- level, then the 240+/- level and if that failed, the 220 +/- level.

Of course it could simply take off higher from here, never looking back.

jog on
duc

Hi ducati,

Just wondering what generates the "signal" that you refer to in your post and also what is the event that will either validate or invalidate this signal?

Cheers,
Rob

 

[qldfrog]

what the hell was that??

 

[Smurf1976]

what the hell was that??

I don't know but I do see it as "interesting" that the fall stopped at the opening price then abruptly reversed from there.

It's as though whoever started buying / stopped selling at that point really wanted today to be an up day.

 

[Dona Ferentes]

I would like the markets to resume the trend in a perfect 'V' shape.

today's intraday.... got any idea what happened around 3pm ??

 

[Dona Ferentes]

the frog beat me! ooops

 

[frugal.rock]

what the hell was that??
View attachment 102600

It's the shortened version of a test run, for next week...
What's more interesting is, what were the stocks that were the players in the shenanigans...?

F.Rock

 

[Smurf1976]

What's more interesting is, what were the stocks that were the players in the shenanigans...?

Looking at charts of the 20 largest cap stocks, they all participated in the dip at least to some extent. Some followed it more closely than others but did to some extent.

I haven't looked at smaller cap stocks to see what they did.

 

[ducati916]

Hi ducati,

Just wondering what generates the "signal" that you refer to in your post and also what is the event that will either validate or invalidate this signal?

Cheers,
Rob

I discussed all of my signals in the 'Dump It' thread. I have about 6 in total that I watch. Some are fast, some are slow. It is really just my 'subjective' assessment of them at any given time. Mr Skate has quantified (some of) them into an objective signal.

The 'event' is that either (a) the signal does not actually create a signal or (b) reverses.

jog on
duc

 

[ducati916]

what the hell was that??
View attachment 102600

What chart is that?

jog on
duc

 

[qldfrog]

What chart is that?

jog on
duc

Asx200 yesterday,(friday 24/04) with intraday crash-fall to open level around 3pm.

 

[ducati916]

today's intraday.... got any idea what happened around 3pm ??

View attachment 102615

Without knowing which chart it actually is...

However, speaking generally now (if it was US traded): it was likely to be a trading program entering the market. I used to keep an eye on them when I day traded because you could either (a) try and piggyback or (b) trade the pullback once the program ended.

They would work something like this: (a) there would be an event, news, etc and the program would trade in very fast behind that news or (b) it would occur in a low volume part of the day (traditionally the lunch period) but anywhere where volume dropped off.

You could 'see' the program in this way;
(i) have $TICK and $TRIN running on Dow (30 stocks made it easier to see);
(ii) When Dow 30 were either +20 or -20 on $TICK a program was running;
(iii) Wait for $TICK/TRIN to drop back to +/-12 and then either buy or sell as program ended in ES/SPY
(iv) The reason is that the program was self-limiting if it was selling short, it would buy to close (sell to close) so the volume generated worked both ways and you were already watching and ready. When a program starts, it comes out of nowhere and you (I) was usually to slow to follow at the start. But once awake, could follow the counter trade.

I no longer daytrade so I could not tell you whether that was a program. It does however look like a program behind news.

jog on
duc

 

[ducati916]

Asx200 yesterday,(friday 24/04) with intraday crash-fall to open level around 3pm.

Ok that explains it. I don't follow the ASX at all and I would have been at work yesterday in any case. So you chaps don't really have buy/sell programs, as you cannot sell short, unless that is your futures market?

jog on
duc

 

[qldfrog]

Ok that explains it. I don't follow the ASX at all and I would have been at work yesterday in any case. So you chaps don't really have buy/sell programs, as you cannot sell short, unless that is your futures market?

jog on
duc

Can not comment Duc :
I do not do any intraday trading and very rarely anything other than weekly. Was just puzzled to see this intra day action.maybe timed with the news in the US of that promising medicine not being that good at all?

 

[ducati916]

That seems to be that. Pullback over. The indicators that I follow have 'normalised' invalidating the original signal.

Come Monday I will reallocate that 25% that I took off.

jog on
duc