suport/resistance-fact or myth

mbradley: “...if I got a "runner" in my favor, I'm looking at the next numbers ahead and if we are getting close to some number that is important, I'll tighten my stops to lock in a bigger chunck instead of dreaming about some huge gain that probably won't hapen.”

Excellent method of incorporating S/R into trade management.

 

I use S/R not by themselves but in conjunction with other aspects of my trading system.

For example, I use a 1.5% stoploss on my S&P trades. What I do is scan for S/R within 1.2-1.7% and will use an S/R point instead if one is found. Depending on your risk factors you should use a different range.

 

Anyone familiar with Murrey support / resistance lines? Anyone using them? Are they any good?

http://www.murreymathtrading.com/

Cathy

 

The last four days have been a pretty good example of support and resistence. Unable to move up or down. Four NR days in a row. This thing is going to make a great move one way or the other pretty soon. All we need is some news.

 

If you want to see support, take a look at Tuesday thru Friday of this week. The gap from Monday to Tuesday held very well. There was selling from the highs down to it but not through it. Each time the market came down you could see the congestion building and the eventual bounce off that area. If you were short there, you probably got steamrolled.

The resistance this week at the top of the range (in my opinion) was not an area to be viewed as the absolute top. Since we have been in an uptrend, you can't rely on this area to stop the advance even though it does tie into some significant longer term technical points.

Traders overall have been rewarded recently buying the dips rather than selling the rallies. Although selective shorting does work, it isn't like it was earlier this year. That in itself makes it feel different than the past rallies.

 

I'll vote for a move down in the market. All the fools getting back into the market recently when it technically should have sold off. Big car sales with 0% financing will haunt their financials down the road...Huge personal debt has to backfire eventually. I guess trying to predict the market is stupid but thats my two cents for the investor crowd.

 

ddefina, I also don't try to 'predict' and in trading I only react. However since I enjoy the markets and find it an interesting exercise in analysis, I do form opinions. My current one is similar to yours

 

dedefina and babak--I agree wholeheartedly with you both on this fools rally--however-I've been the fool for not partcipating more- there are too many fools out there so the rally will continue-and I will join as I move some long term stuff out of cash and back into equities. This market is obviously not all retail(schwabers) pushed. Wall Street wants a bull mkt-

 

Don't count too much on support and resistance at this time--keep it in mind-but don't count on it-we're still in unknown territory-nobody knows-no history to help us here- so ta is less effective. One day soon it will resume its importance.