I would study the 2000 drop, daily charts and ranges, where the market opened at and where it closed at and the weeks progression, the psychological progression. The market puts up a stand at the 200-250 day MA's, once it looses the battle there, technicians and chartists wont hesitate, to print lower lows. The forces impinging on the market have severe macro economic implications. The credit bubble is similar to the tech bubble, even though its not evident blatantly in equity prices over the past few years. Usually the psychological underpinnings of the market can be rescued by the FED, on FED day this is a supposition on my part, to preserve the impression in the confidence in the FED, vested interests should funnel money in a supportive manner, if the marekt doesn't rally on FED day, it has drastic implications for the future of equities. Similar to a 1965 bear trading range could ensue. Again the market can't brush aside macro economic implications of the credit bubble popping. And this is what portfolio managers have to deal with. With the implications of a recession, there is no incentive to buy equities at this juncture. Only when the FED starts easing after a initial few will confidence be restored. I hope the FED understands what they are dealing with here. They are managing psychology more so then the actual liquidity at this point. You can only project out present conditions onto the future. Those implications waver similar to a laser pointer drawing onto the ceiling. I posted awhile back I was sensing the 'superoil tanker' turn in the global economic cycle. And that turn seems to be taking a sharper angle as this situation snowballs. Low PE ratios are characteristic of a bear market. So don't let the talking heads point to them as a incentive to buy equities. Let others be heroes and do the heavy lifting in the markets. Only once psychology has become stable can one venture and take calculated risks. Study the 2000 daily bars on the decline, and you can sense how the market lost its battle to maintain its upward trend. The probability of a similar situation is higher then the other intermediate term declines. A break of 1360 has serious implications about the future of the long term trend. At this point the FED has to be extremely aggressive to keep the ponzi scheme going. With a aggressive FED it means GOLD should do well in the coming years, not immediately, since its price will decline with other assets. Other macro markets like the currencies, the carry trade will get unwound further, as capital seeks to become less speculative. With the implications of a future recession, 1360 should fail also. Chris
the fed has a chance to save this market. Heres a pic of the weekly chart, and similar pattern, in the late 90's. With aggressive action by the FED, the market could do quite well. But the implications are a long term bear market in the bonds.
Spectre, Since your doing ad-hoc correlations, here's a link you may find useful... http://www.mrci.com/special/ You'll find Yearly Correlations, both daily and weekly for DJI and SPX. Good trading Osorico NOTE: mrci is a for-profit subscription service. The above link contains free mrci research. Osorico is not affiliated with mrci.
I agree there **can be** correlation between trade style and leverage. But not TF and leverage. If a trader does not use charts, is leverage considered high or low? Osorico
At 11:10 pm ET, ES is trading right at the top of the short-term price channel on the 240-tick chart at 1442+-. If the upper trendline holds and we get a downward confirmation bar, it should fade at least 9 points to 1433, and possibly go much lower. On the other hand, if the upper trendline is violated and especially if 1445 paints, it should rally 20 points to at least 1465. Place your bets, gentlemen. EDIT at 11:40 pm ET: I'm inclined to think we're going down from here, more likely than not, but I'm not quite ready to go short until I see a couple of down bars with some volume behind them. There's still a chance some party pooper could place a big buy order and trigger a run of buy stops from 1443 up.