This is what I look at on a daily basis. I post this so that other traders can get an idea of what it means to have "Transparency" in the market. SE I have to attach 5 different posts, cause I have no clue as to how you can post multiple attachments. 1 http://www.elitetrader.com/vb/attachment.php?s=&postid=87284 2 http://www.elitetrader.com/vb/attachment.php?s=&postid=87285 3 http://www.elitetrader.com/vb/attachment.php?s=&postid=87286 4 http://www.elitetrader.com/vb/attachment.php?s=&postid=87287 5 http://www.elitetrader.com/vb/attachment.php?s=&postid=87288
07-08-02 06:17 PM Todays selloff bounced off of the Daily 20MA and retraced back to the Daily 5MA, EXACTLY. This won't happen exactly all the time, but you can see how it will build your confidence up. Averages work, and I am attempting to show you this in real-time. Elliot Wave, if you can ever understand it, is, well,..........Elliot- Wave. SE http://www.elitetrader.com/vb/attachment.php?s=&postid=87295 Here is the daily chart that shows today's low (intraday) and its relation to the daily 5MA. SE http://www.elitetrader.com/vb/attachment.php?s=&postid=87298
By Transparency I am refering to the ability to see all markets and market components and how they behave. You watch: The Bond Market The USdollar/Yen relationship (optional) Both Futures Markets (sp/nd) Oil Index Biotechs Semi's Dow ....to see if everything is normal. For example, a major news event hits the markets and the bond market starts selling off. You have to be able to spot that and see how that is going to affect trading in other markets. SE
5min Chart of The Nas Comp (or ND100) By now you should be familiar with the 5min chart of the comp and how the moving averages relate to trading. We will continue with the daily analysis of the comp in the following days. BREAKS: Breaks relate to when the comp breaks the moving averages INTRADAY to the upside or downside. How do you know which break is going to be the real deal? So lets study the anatomy of a break. See the chart attached for an explanation. http://www.elitetrader.com/vb/attachment.php?s=&postid=87364
Intraday Trends Breaks: A break is a dynamic event. It varies on a day to day basis. But the more breaks you see the better you get at identifying them early on. They occur very frequently and the best ones come on days where the market sells off all day. So the anatomy of a break is as follows: 1. A test of the 20MA 2. A push up in the comp/nd100 (either one) to actually break through the 20MA. Sort of the comp's way of saying, "I'mma Commin' ". 3. Break confirmation comes when a pullback occurs after step 2, but 5MA does not violate previous lows of the rally that gave rise to the break. This is your entry. 4. Finally, you observe as the comp gets back on its 5MA and rides it up. Exit Strategy: Sell in incremental lots above a previous high. This way if there is only one previous high that you can identify you sell all your shares. If there is two previous highs you get rid of one half of your position and sell the other half at the next high. If you miss the next high or are not given an opportunity to sell at that high you can still sell and earn a good profit and watch the market for a potential reversal. See attached chart displaying exit strategy. http://www.elitetrader.com/vb/attachment.php?s=&postid=87374 quote: -------------------------------------------------------------------------------- Originally posted by ANCHOR super_ego, What is the significance of the bottom listed as number 3 on your chart? Is it just that fact that it held at the low before the actual break of the 20sma? If so are you then looking for it to hold the low right before the actual break of the 20sma? -------------------------------------------------------------------------------- Bottom 3 is last bottom before the break (the bottom that gave rise to the break). That bottom should not be violated and it rarely is (a violation would be the 5MA crossing below bottom 3) You are going to notice the break (of the 20MA) after it happens. Then you are going to look back and see that there was a test of the 20MA in the previous rally. Then you are going to buy the next pullback, randomly, and watch the comp move up above the 5MA. High probability stuff.
-------------------------------------------------------------------------------- Originally posted by Lavish Ego, You stated: "QQQ trade well ahead of the market." Will you please tell us your definition of "well ahead"? (minutes, hours, days, weeks, months, years? How many of which?) In order to follow your system of: "In uptrends, buy all pullbacks into (and below) the moving averages...In downtrends, short all rallies into (and above) these moving averages." Will you clarify a couple of issues regarding trends? Under your heading: "To set up and identify a trend" You stated that QQQ "are the immediate trend," (although ahead of the market?) You also stated that the daily chart of whatever investment is traded..."is the immediate trend." So, when they are opposite each other, which one do you suggest we use to determine the trend? Or, because we are using these and many other (indices) charts, do we take the consensus? ie: 4 up, 3 down, we're in an uptrend and vice versa? By the way, I set up my charts today just the way you specified and was able to identify the opportunities to get in but didn't always find a profitable way out. Of course, I didn't trade "for real"....learning curve ya know. -------------------------------------------------------------------------------- I should have been more clear on the subject of "trading well ahead of the market" that gets everyone's panties in a bunch. I am talking about seconds, obviously. Since markets are controlled by program trading (computers) discrepancies in the market exists for only seconds (2-10 at best). However, with a trained eye and a feel for program trading levels a good trader can capitalize on this discrepancy. I look for divergences in the market, also. I watch the QQQ's I observe daily trends in the QQQ's and watch to see when market participants start selling the qqq's before selling the ump'teen thousand stocks in the nazzie composite. The Immediate trend. The Q'z move first (immediate...), then the market moves second (not immediate). God I love this. Daily chart/investment traded/immediate mumbo jumbo: OK. Lets say you are watching MSFT and you observe that MSFT is not obeying the movements in the Nas or INDU's (or vice versa). Msft will have its own immediate trend. That will be evident by observing the 5MA on its 15min chart, regardless of what the Nas Comp is doing or INDU's are doing. You can see the trend of MSFT on its 15min chart, its really not that hard. Take a look-see yourself if you don't believe me. Oh! Also, if one is moving up and the other is moving down, well then, short the one going down and buy the one going up. C'mon, Don....you know all this stuff already. As far as intraday exit strategies are concerned, we are going over that as I type.
The 15min Chart Use daily charts to see the overall trend exhibited by the 5MA, its angle of decline, and its relationship to the 20MA/40MA. Once you have determined the trend look at a 15min chart to determine your intra-day trend. The intra-day trend will obey the 15min, 5MA and test its 20MA very frequently, sometimes several times per day, sometimes once per day, and sometimes the 5MA will guide a stock higher/lower all day without a test of the 20/40MA. I will show you examples of these occasions. See attached chart. SE http://www.elitetrader.com/vb/attachment.php?s=&postid=87941
I have received a bunch of emails from people asking if these averages work on charts of the bond market. yes, they work for trading in all markets. See attachement. http://www.elitetrader.com/vb/attachment.php?s=&postid=87955 here is a pic of the bonds trading well ahead of the 5MA. http://www.elitetrader.com/vb/attachment.php?s=&postid=87959
So a 15 min chart is used for a broader intra-day trend. If you look at your chart and the 5ma is below the 20ma and they are both declining, then you are in an intraday downtrend. If you spot a rally into the 20ma then you can short it. But, use a point of reference, don't just short because the candles are headed into the 20ma. ....and I will show you what I mean by "a point of reference".
07-09-02 05:53 PM Watching the bond market will help you in figuring out where the money is going. If you noticed today's selloff stalled a bit while the bond market broke out causing money to move out of the comp and into the bonds. I know most of you know this already, but for those of you who don't, read 'em up. see chart http://www.elitetrader.com/vb/attachment.php?s=&postid=87971