A simple technical analysis. Based on my analysis I find that we have not yet hit bottom. In my estimation, all of the following needs to have occurred before we have capitulated. Of course they do not all occur at the same time. A bottom is not priced based only. I expect a return to at least 1371.75. First of all this is a significant gap in my data. Secondly if you do a simple straight line Fib retracement from the low on 10/25/04 at 1186.75 (based on ES adjusted contract prices) to the high on 7/16/07 at 1566.25 you come to 1376.50 as a 50% retracement. If you base it on 8/13/04 with a low of 1159.25 a 50% retracement comes to 1362.75. Thats just the math. (By the way I am not particularly fond of straight line retracements, I think that speed resistance arcs using Fib numbers are far more accurate but far more complicated. An arc places 50% at about 1366 The trin must fill the current gap at 1.72. There are also two other gaps, one at 14.48 and 15.45. These however could be filled at a time totally unrelated to a capitulation but they will be filled. The vix must fill the highest significant gap at 36.23 and perhaps as high as 36.91 The pundits can say what they will. News can move the market greatly but sooner or later technical analysis takes over and I only listen to the news after the close.......... What else can be said!!??????? If you watched any of my previous posts, I stated a drop below 1400 back on 7/31 would take place and 5 of the 6 gaps I discussed were hit on the sell of yesterday. I think this gap thing is very very very predictive.
Quote from gqguy2003: Based on my analysis I find that we have not yet hit bottom. Agreed, but this has little value in the real world. The market will go up, down or sideways. Whoopee. but sooner or later technical analysis takes over and I only listen to the news after the close.......... No it doesn't. Tech Analysis does not "move" the market anywhere. Few studies support it. The market is moved by expectations, interest rate moves, govt announcements, sudden shifts based on world events, international links, currency fluctuations, and the fact that the indexes are made of many smaller companies with their own dynamics. This is a partial list. What else can be said!!??????? If you watched any of my previous posts, I stated a drop below 1400 back on 7/31 would take place and 5 of the 6 gaps I discussed were hit on the sell of yesterday. I think this gap thing is very very very predictive. What can be said is that 5 of 6 calls is statistically insignificant, a drop under 1400 was no clever feat as it had already dropped a lot since its high and gap filling is not particularly valuable based on smart people who have tried to quantify it. One call is as meaningful as flipping a coin and saying it influenced the market. Other than the fact that you are pretty much incorrect, you are dead on.
Mr Rcanfiel I notice in all the posts I have read from you, that you do little more in your posts than criticize. Have you ever started a new threat on something that you actually believe is productive or is it you just like to make yourself look good by tearing down every one else? If you think you have really got something worth while why don't you tell us. And if you think that the news really is the answer and that technical analysis doesn't move the market anywhere as you say, please tell us specifically what bit of news came out on 8/16 prior to 12:02 pm cst that caused the SP 500 futures to stop the sell off? Yes I would really like to know how it is that news explains all the intraday moves? And the intraday moves is all I am concerned with. I focus only on the 500 futures not on any individual stocks. Please address this question if in fact you have a clue. And if you don't then try posting something that proves you have a handle on what really works. Until then, cut the criticism and try to post something constructive. As for statistical signficance, if you pride yourself in such, your comments are equally statistically insignificant as you havent any basis what so ever to arrive at any kind of conclusion to another person's system that you have not studied. Your glaring generalities speak volumes of what you really know, which on the basis of what you state, isn't much.
Quote from gqguy2003: I notice in all the posts I have read from you, that you do little more in your posts than criticize. No, I challenge people who believe in things rather than base it on reality or evidence Have you ever started a new threat on something that you actually believe is productive or is it you just like to make yourself look good by tearing down every one else? I don't give a whoopee about "looking good." This is a forum. In the same way you posted as if to brag about your abilities. I pointed out that all you did was a big nothing. Again, you seem not to understand what I said. If you want, I can resend it to you; maybe a reread you will understand more. If you think you have really got something worth while why don't you tell us. I just did, but you obviously didn't grasp most of it... And if you think that the news really is the answer ...As for example, this is not what I said. You left out 85%. and that technical analysis doesn't move the market anywhere as you say correct please tell us specifically what bit of news came out on 8/16 prior to 12:02 pm cst that caused the SP 500 futures to stop the sell off? Not TA Yes I would really like to know how it is that news explains all the intraday moves? And the intraday moves is all I am concerned with. I focus only on the 500 futures not on any individual stocks. Repeat: ...As for example, this is not what I said. You left out 85%. Reread what I said about what move the market. Again, you did not grasp the statement(s). Please address this question if in fact you have a clue. And if you don't then try posting something that proves you have a handle on what really works. When you demonstrate basic knowledge, I will be willing to consider this. As for statistical signficance, if you pride yourself in such, your comments are equally statistically insignificant as you havent any basis what so ever to arrive at any kind of conclusion to another person's system that you have not studied. Your glaring generalities speak volumes of what you really know, which on the basis of what you state, isn't much. Your words are stout testimony to your lack of knowledge of statistics. The rest is just rather pitiful.
You have nothing worthwhile to say that could make anyone a dime. Take your lack of knowledge somewhere its appreciated.
Hi gqguy2003, I too monitor the Emini ES futures since its birth, traded it exclusively for many years before traversing to Emini ER2... Yet, I will always continue to monitor the SPX.X, SPY and ES as if I can drop ER2 in a heart beat to put on a trade in ES. Further, the S&P 500 is a key component of my intermarket analysis. What moves the markets??? News, geopolitical events, FED events, economic events and other key markets (ex. oil, gold et cetera) are the main reasons why the markets does what it does because they heavily influence trade decisions among the big boys and retail traders that trade the S&P 500. This is a fact and every trading day may have a different reason or several of the above reasons for any particular swing point. I mainly approach my own trading via the above because of my background associated with the above and it has been consistently profitable. So where does Technical Analysis comes into play in my own trading??? TA is very useful for entry/exit signals in the above picture of what really moves the markets. Thus, we should already know what's going on in the market prior to the use of TA especially since they are strongly connected. The moment big boy movers or retail traders looks at their chart to say this is a good place to make a trade decision... They are using technical analysis and such does not need to involve any indicators. Further, every losing trader that I've met that uses TA do not have a strong understanding of what really moves the market or they think its unimportant. However, this can be an issue of semantics and that in itself can create debates about this... TA all by itself does not move the markets!!! Why??? TA is the tool used by many like you and I. It can help to explain to others why the market did what it did especially if other traders have a strong interest in Technical Analysis. Yet, to properly keep it all in context...the explanation should involve TA with the real reason the markets did what it did. For example, one of my favorite TA tool is Japanese Candlestick Analysis to help with my primary trading tool involving intermarket analysis. When I see a Bullish White Hammer pattern... I don't see it as a prediction tool to tell me that the market will go up. For me, I should already know what the market is going to do after interpreting (news, geopolitical events, FED events et cetera) for the day or at that moment. If I think the market is bullish but don't know exactly when to open a Long position... That's where the help of TA comes into play. More importantly, when that Bullish White Hammer pattern appears or the appearance of any other type of bullish price action... It confirms my already existing bullish perception (not prediction) of the market. Simply, understanding the markets should always precede Technical Analysis and not the other way around. That reason alone is why many can't understand why some traders using TA are consistently profitable because profitable traders (those that have endure for many years and longer) have a strong understanding of what really moves the markets. The debates occur because backtesters or doubters of TA approach their testing of TA from the view point of TA all by itself instead of from the perspective of consistent profitable traders... Understanding the market prior to using TA as a trading tool for entry/exit signals. With all that said, let me try to answer your question although it was directed at someone else. I got wind of rumors on August 16th Thursday that the FED will take it one step further (beyond injecting money into the markets)... To help bring some confidence in the financial sector after all the disturbing credit issues et cetera that started coming to surface around mid July. Since mid July (if you've being paying attention to what moves the markets)... It's been very bearish and disturbing of what has been occurring in the financial sector. Heaven for many traders that use trading methods that do well in high volatility market conditions. Yet, scary for many investors or those working in the credit industry and industries related to it. Next, as mentioned, I started hearing about a rumor involving the FED getting a little more involved to stabilize things early morning August 16th Thursday. That doesn't make me bullish but it does tell me I need to be alert and careful in my Short positions. On August 16th Thurs around 12noon est, market still looking bearish especially in its reaction to the 12noon est Philly FED survey (FED event). Market pushes down hard then volatility suddenly contracts (TA analysis) and the market reacts by attempting a counter-thrust upwards just prior to 1230pm est. Volatility expands again but the market doesn't follow upwards. Instead it drops again until it gets slowed by contracting volatility around 1245pm est. Guess what, there's that rumor again about the FED getting involved. I'm starting to think the following: * Price decline in reaction to the Philly FED survey has problems with the contracting volatility. * Other key markets reacting the same (intermarket analysis) * Rumors of FED pending involvement I"m now changing my perception of the market along with reducing my position size on Short positions to better manage the risk exposure. Then around 1245pm est I start seeing a few White Hammer Lines in key markets besides the S&P 500 (intermarket analysis). I talk to a fellow trader that trades big in Gold and Oil...he too hears the rumor about FED and begins reducing his position size on Short positions. Next, I see a few news alerts that a few major financial lenders have borrowed billions from bank to fund loans to prevent a collapse I'm now convinced the FED will get involved especially with the rumors of such an involvment circulating in the markets down to us retail traders. Markets then contracts again along with some Hammer Lines showing up in the s/r zone of the prior Hammer Lines. I'm now looking for any bullish price action because my perception (understanding of the market) has changed from bearish to bullish. That's when I saw a few bullish white hammer patterns in key markets and did my first Long positions (back to back) with the first Long position around 1:03pm est and the second Long position around 1:11pm est in ER2 to correlate with my new perception of the markets. Nice price movement upwards and there's a retracement back to the s/r zone of that bullish 1:00pm - 1:15pm est price action. What happens next??? There's one heck of a rally upwards that becomes the talk of the town among traders and the financial TV networks. We all know what the FED did the next trading day around 0815am est after that scary feeling slowly returned in the overnight price action. Was it all Technical Analysis or was it an understanding of the markets prior to TA along with managing the risk exposure of that understanding. I say the latter (to answer your question aimed at someone else) and it didn't need to occur exactly at 1202pm cst (1:02pm est)... It was an accumulation of events and its OK to use TA to help explain those events but its flawed to say its the reason why the swing point occured. An analogy, the market is like a book and TA is discussed in the last few chapters. To ignore everything else and only read the chapters about Technical Analysis may be ok for awhile but eventually it will catch up to you along with not allowing you to fully understand the book. Mark (a.k.a. NihabaAshi) Japanese Candlestick term
^^^ Excellent post with a well written thought process of events leading to the Fed's action on Friday. Sorry if this has been asked before, but what specific markets do you look at besides gold and oil for your intermarket analysis?
They has hit a bottom on Thursday and they has hit a top on Friday. One of them will break in the not too distant future.
Well I know on the YM chart the 12600 level looks like a pretty strong support. We've moved up since then so that doesnt mean we arnt going to come back down and go test that again. Lets let the market decide ...
Perhaps I should clarify. Techncial analysis to me means running your indicators on the right data. That data means the trin, the vix, the S&P premium, the Nasdaq premium and the Russell premium. If you are watching those indicators you don't need to listen to the news because how the news is being interpreted by institutional investors is being reflected in that data. How institutions crunch the news may bear little resemblance to how the news is being viewed by small traders. Good news doesn't mean the market will rally any more than bad news means the market will sell off. It all depends on how program trading will affect volume either to the sell or to the buy side and if you dont know what the program trading firms are doing, the news alone is meaningless. Program trading generally makes up more than 50% of the volume on any given day. By watching the right indicators you know how the big money is interpreting the news and what the big money is doing is all that matters. Good news could mean a great opportunity for program trading firms to short sell stocks that are heavily weighted to the sell side and if enough program trading firms view it that way, the market will short the good news and leave the individual trader out to dry who thought it was a great opportunity to buy. Reading the right indicators the right way, is what technical analysis means to me. The right indicators have already crunched the news with the right bias. Technical analysis viewed in this way most certainly does move the market. News alone does not move the market until it has been interpreted. The process of interpreting that data is clearly a matter of intense technical analysis. And until the news is crunched by the big money the small investors view point has little better than a 50/50 chance of being consistent with the big institutions. My view of technical analysis is not a matter of running bollinger bands, chaikin oscillators, stochastics, gann fans, the MacD, RSI or any other indicator on price data. That kind of technical analysis is agreeably rather pointless and has no more impact on the market than a caboose has on the direction of a train. Perhaps after all is said, we are really on the same page.