efficiency, You seem quite obsessed with this issue. I canât imagine why I would care to argue with you considering you missed the point of my post. Since most here are not professional traders, I am relative certain any ensuing discourse between us would fall on deaf ears. Since you inferred incorrectly, you have my heartfelt blessing to interpret my post and volume in anyway that makes you content.
I'm not obessed with anything other than extracting money from the stock market on a routine basis. Through thick and thin. Not futures, not options, not forex, not bonds, not mutual funds, ..........equities. This would include "tools" that, in my opinion , have some predictive qualitiies. In turn this would include shunning perceived tools that, again, only in my opinion, have little predictive qualities. As far as missing your point, the focal point of this thread is VOLATILITY (or shall we say the present lack of it) rather than volume. It twas you that went off on a tangent. I just merely responded accordingly. When you can't express yourself beyond generic "tidbits" such as "gosh, it must mean sumpthin" then inferences are necessary. IF mine were incorrect, must be because I'm not blessed with mind-reading skills. In a positive vein, I will say, you didn't bring up 40 year old virgins (another, but less pertinent tangent). Ditto for your reasonable post count.
No, it doesn't make sense in the context you're implying . You're indicating "stocks" are "doing just as well as in 2007 (when then economy was "at it's best") as now with unemployment and foreclosures. It's an utter contradiction. What it demonstrates is a very loose correlation between the market and the economy. So.......why bring the economy up? In a volatility thread? Unemployment? 10% 17% To each individual whose without a job, it's........100%. Does this have bearing on equities? Are rates really low? Yield curve is the steepest it's EVER been. For the sake of brevity, let's avoid real rates adusting for inflation (whether it's the CPI, PPI, or reality). The Fed only controls the short end of the curve via open market operations and moral suasion (the discount window). Banks rarely borrow from the window, opting for correspondents or repos (with widely fluctuating overnight pricing), thus making the Fed Funds rate moot. One theory could be "low" short rates forces savers (particularly the elderly) OUT of money market instruments, and into the market. Keep it buoyant. Not working to a large degree. Well, not yet. Exodus from safe instruments could have some bearing on me (the stock market). But not foreclosure nor unemployment. So what do these matters have to do with this thread???????? You will find, those low rates are eventually going to be the root of a few economic problems. Adjustable mortgage rates pegged to some low rate that's re-priced would be one example. Lightning fast unwinding of carry trade could be another. The Chinese and to a lesser extent Japanese eventually demanding (via auction bidding) higher yields verus keeping the short end artificially low to prevent the mortgage (both residential and commercial) arena from further decay. Something's gotta give. Not just a generational low, an all time low. Do perceived low .........eh...........rates have bearing on the stock market? With a whopping 9000 posts, surely you can stretch for one more and answer that. Alternatively, why don't "we" just stick to volatility. It's what traders want, isn't it? My position size is based upon it. So are my mental stops. And, most importantly, my profit(s) stems from it.
efficiency, just curious : why 20 days for the ATR? Why not 14 or 22, etc;? (Not arguing, just asking).
No reason why I couldn't use 14, 22, or any other timeframe. Basically, 20 days is a close proximaton to a month. I don't have time to compute twenty (or whatever number) individual TR's The website barchart.com provides (3) timeframes : 9 days, 14 days, and.....................20 days. Thus pre-computed for me. Richard Dennis, along with Eckherdt, the incubators of the Turtles in the mid-1980's used 20 days. Seemed like a good idea to me, particulary since William Eckherdt has a Phd. in mathematics. The ATR, irrespective of timeframe, I find to be an amazing dynamic measure. It "breathes".
1200 posts in just over a year. SHEW. Go away. Some of us actually have moola (not Allah) at stake. Well kiddies, isn't quite quiet now, is it? The trough on the 20 day ATR of a swing move can only be determined in hindsight. It's safe to say that occured on January 14th at 1.16%. SPY closed at $114.03. Doesn't matter, price peaked two days later and we're talking volatility. Range expansion. Present 20 day ATR is 1.43% Earnings season makes a great alibi. Has market direction been determined? Nope, not necessarily. We do have a weak market and many issues rolling over. Until the number of new lows gets to 50ish, this (the present period and deeply over-sold) would be a great place to spring a bear trap in stocks with high short interest. Identified prey for the ax. Their numbers have been growing in recent days. "They" are obligated to cover at some point (period) and hence thee most predictable in their actions. What we do have is a valuable tool for the remainder of 2010 namely the January 31st high. Pssst, in this instance, due to the calendar, it would be the 29th. I'm, not going into why this date is important. Too much typing. But going forward that price point can serve as a line of demarcation. This weekend, you might go through your stable of tickers and note the January 29th high for each. As a special sidenote to those with their cap on backwards, a Mountain Dew near at hand and introducing irrelevent 40 year old virgins and such, a "stable" refers to a group of stocks that you follow closely, some you own, some you don't own, some you have owned, some you trade actively. You "know" them. This is in contrast to running a scan and flitting from flower to flower only to get eventually wacked because you're not familiar with the stock's personality. Yes Virginia, stocks have personalities, reflecting the underlying players and market makers. Personalities often can be quantified BY volatility. As I write, with the exception of stocks that closed AT their highs (unlikely) virtually all stocks are BELOW their line of demarcation. As time progresses, this will change. Stocks worthy of long consideration will eventually emerge (and remain) above this line. This may occur Monday, next week, next month, 6 months from now, 9 months from now, etc. Likewise, other stocks will find that line to be formidible resistance. and never breach it. It's alot like tape reading. You have a reference point to work with. It is a FILTER, not a signal. The line of demarcation for SPY is $109.80. A focal point.