I kept shorts loaded at 2454 (when it broke out to the upside for ATH), but of course decided to close them at BE when I saw the fight and bounce from 50 area during that sell off on Thursday. The problem with that sell off is that even though it is long overdue, it is based on geopolitical news and not regular auction process. Until we see a retest around the highs (return to the crime scene) it's hard to say whether it is a top for now. Although the situation is serious enough to make some people finally decide to take the chips of the table...
Then how come some of us were able to foretell it? I sure didn't see the SK dictator doing shit but I can read a chart... Here was a giant hint: While the irrelevant Dow was still edging up, both NDX and SPX went sideways, and after one quick upkick they predictably melted down...
I haven't studied Dow in any depth, but I do see that it is incredibly difficult to figure out who is leading who. Between ES and NQ, they trade places, and often times, when one is rolling over and you think the other has to soon as well, what actually happens is the one that was rolling over gives up and joins the rally. Perhaps there is a better edge/correlation with the Dow, but I doubt its obviously or statistically significant. Have you tested this?
I think you're confusing "foretelling" with hindsight chart analysis. And since you were "able to foretell it" where have you loaded up your shorts then? Anyway, I don't know what charts are you watching and what crystal ball you have there but if my memory serves me right I remember ES broke out from a nice congestion to the upside and was trending up strongly from the open until Trump's comments on North Korea hit when it reversed. To me it was not a "test up and fail", it was a trend up until the news hit causing it to reverse. Maybe it is a thin line between the two, but still... Everyone knows a correction is long overdue but everyone (rightly so) keeps saying one must be crazy to call the tops (like Volante). Now we are about 2% from the top and we have geniuses all calling the top. I had the balls (or stupidity) to put my shorts on much earlier (loaded on the way up through 54 handle so I took s a lot of heat already) and planned to hold until we finally get a good correction (even ready to hold until 2750 and add more there), but seeing that the market was making another strong break to the upside towards 2500 and only reversing on some piece of news (instead of auction failure to attract new buyers), however serious that news is, I decided to take the opportunity to flatten the position at BE and regroup instead. Damn it if the market decides to drop down a lot from here! But since I exited my shorts, of course it is going to drop!
I sold SPY vertical calls, that way I don't have to be exactly right by calling the top and time works for me. And once ES went up to 2488 it dropped down but overnight later on still came back to I think 2476 and that was after we called the top, plenty of time to get short and this was also after the initial SK scare... Then the bottom fell out...
The Dow is a historical leftover, that is its only value. I almost never use it when looking at the charts. People do know or at least heard about the Dow, thus the news agencies keep referring to it, but its relevancy is in the past. Also since we like bigger numbers, the Dow rallied 500 points sounds better than the S&P is up 40 points. That doesn't mean anything for the average people...