What's the probability of the ASX mimicking the Dow?

[eric341]

Hi guys, I have a quick question for you tonight.

Do you believe that if the dow falls tonight (at least 1%) then the asx will certainly fall tomorrow? If so, what do evidence do you base your prediction on? Historical data?
Also, what IS the probability based on historical data that the ASX will follow moderate to substantial changes in the Dow, especially in a bear market like this current one?

I'm actually thinking about shorting the asx200 tomorrow, depending on how wall st acts overnight....

 

[Trembling Hand]

Re: What's the probability of the ASX mimicking the Dow

Blindly following what the US has done the previous night will get you in a world of trouble. Its not that easy.

Why would you be asking these questions and thinking of trading them tomorrow? That is hardly the right application of a proven edge!!

 

[rocket67]

Re: What's the probability of the ASX mimicking the Dow

G`day Eric, looks like a pretty safe bet!
Have just checked on CNNMoney.com - Europe is a sea of red
UK down 1.73%
Germany down2.73%
Pre market djia down 156 points to 11,973, so it is down over 1% before it even opens for the day.

I am no expert but it seems that we follow on from the USA most of the time.
Coud be "Black Friday" for us tomorrow.

Rocket.

 

[kloid]

Re: What's the probability of the ASX mimicking the Dow

Hi guys, I have a quick question for you tonight.

Do you believe that if the dow falls tonight (at least 1%) then the asx will certainly fall tomorrow? If so, what do evidence do you base your prediction on? Historical data?
Also, what IS the probability based on historical data that the ASX will follow moderate to substantial changes in the Dow, especially in a bear market like this current one?

I'm actually thinking about shorting the asx200 tomorrow, depending on how wall st acts overnight....

I've been following the markets for a while now. To me it seems that if the US markets are lower then Aus will have a good chance of being lower. Actually, I have noticed a much stronger relationship between FTSE and DOW. But if those two are up (like yesterday for example) then it doesn't mean that the All Ords will follow.

It is my strong belief that it is very difficult to make money by trying to "outwit" the market. Those who do are either very talented or very experienced or both. If you have to ask this question then I don't place you in either of these categories so keep your cash, or buy a bargain or two for the long term.

 

[Surly]

While it is great to see what the DOW does overnight to set a tone for our market it does not indicate whether our index will close up or down from its open.

cheers
Surly

 

[rub92me]

Even if say there was a 75% chance of the ASX going down if the DOW went down the previous night, how are you going to benefit from it? Imo you could be looking for: what's the chance of the ASX closing higher/lower than its open (and by how much) if the DOW went up/down the previous day. That way you could actually trade it if there proved to be a meaningful edge.

 

[mfp]

Hi guys, I have a quick question for you tonight.

Do you believe that if the dow falls tonight (at least 1%) then the asx will certainly fall tomorrow? If so, what do evidence do you base your prediction on? Historical data?
Also, what IS the probability based on historical data that the ASX will follow moderate to substantial changes in the Dow, especially in a bear market like this current one?

I'm actually thinking about shorting the asx200 tomorrow, depending on how wall st acts overnight....

It is pretty obvious that our market is highly correlated to the DOW, but how will you benefit from that? Stocks can have huge gaps up or down on open, they do not simply open where they left off so that you can decide whether to go long or short based on how the DOW went overnight. If it were that simple we'd all be perfect traders. As the previous post suggests, you need to get a feel for where the market will close in relation to where it opens, so that you can trade the move...and that ain't easy either.

 

[eric341]

You can trade CFD indexes before the market opens to profit from any gaps (provided that you've predicted them in the right direction).
But I agree that it is a very difficult strategy as you are exposing your capital to a lot of risk by trading gaps.