Pivot Points on the Indices -- Useless?

Discussion in 'Technical Analysis' started by rukuz, Dec 5, 2008.

  1. rukuz


    Specifically, looking at the RUT and its Pivot Points, it popped into my mind that this isn't even a tradeable instrument; can pivot point analysis possibly be of any use???

    What are your thoughts? This would apply to other indices as well. Further, to some extent, this would lead me to question the validity of using pivot points on the index futures as well...
  2. Surdo


    Let's see if today's 872 R1 provides any resistance in ES?
  3. joemiami

    joemiami Guest

    rukuz, I use pivots, fibs alot daily, but dont expect them to work ALL the time.
  4. rukuz


    Thanks for the feedback guys, but what I'm getting at is since the indices (not the futures, but the futures are derivatives of the indices) are simply a summation of the stocks they represent, how could the price action give any respect to the pivot points? It's not the index that is traded, but hundred to thousands of stocks that make them up...
  5. joemiami

    joemiami Guest

    Surdo, care to explain it to him? Im dozing off here....
  6. Surdo


    I have a really good Buddha Bar mix going here with incense burning and I am drinking a nice glass of wine.

    Calculate the Pivot Points of TFZ08 since it trades Einstein, and let us know the significance of R1, S1 etc.....RUT is The CASH.

    I trade ES almost exclusively, why would I give a rat's ass about Pivot Points on $SPX, The cash index of The S n P 500, cahpeesh?

    Have a nice weekend!
  7. Lucrum


    I know a couple of traders I respect that use pivots. But personally I think they are too arbitrary to have any intrinsic value other than maybe a self fulfilling prophecy type of thing because, like certain MA's, they are widely watched.

    I read somewhere, wish I could remember where, that the retail traders use of pivots is not how they were originally intended to be used. IOW the pivots are/were not intended to be S/R' levels but merely stop loss levels. Which makes since to me. I mean how would an arbitrary equation, which isn't even universal, establish true supply and demand?
  8. rukuz


    Surdo, I understand that the futures index is tradeable and that is the instrument you trade. However, given that the /ES is a derivative of the Cash Index, the value of the futures index is based on the value of the cash index and the value of the cash index is based on the value of the stock comprising the index:

    Combined Individual Stocks = Cash Index = Futures Index

    For someone to put any faith in the pivot points on the futures index implies that the cash index, which is not tradeable (in the case of RUT), will respect the pivot points.

    I can more readily accept that pivot points on an individual stock could have a higher influence on the stock's price but the index futures shouldn't be influenced at all by its own pivot points (I'm speaking theoretically, as pivot points do appear to have an influence on the futures price)
  9. Surdo


    What are you saying, please tell me!

    Can we do it at a bar with hot drunk babes to look at?