My last topic has had great responses so I thought I would try again. Like I said before I have mostly traded Nasdaq stocks in the past and have recently switched to trading NYSE stocks. Someone else mentioned in another thread (which I also find true) that in a lot of cases NYSE stocks do not follow the S&P 500 futures that well. Even the bigcaps, top volume NYSE stocks will move complete opposite the index for extended periods of time. Most large cap, big volume nasdaq stocks follow the nasdaq 100 futures really well. So in some ways you are trading the stock and in other ways you are trading the futures too because they map each other so well. So my question is what is the best leading indicator to trade NYSE stocks off of? Do sector indexes work better than the S&P 500? For the purpose of this discussion I am talking about liquid NYSE stocks. Low volume stocks on both Nas and NYSE do their own things a lot of the time. I would like to get input from those that scalp NYSE stocks and those that do more intraday position trading. Some of my biggest winners in my NYSE stocks have been just trading off the intraday stock chart of large cap stocks. However it always feels weird since I got so used to trading with the futures index direction on Nasdaq.
First the overal mkt, S+P, then get into sectors. You have to know your sectors, i.e. AMGN has the ability to pull the whole sector down or pump it up.
Due to the decimalization of the marketplace and the tremendous proliferation of ETF's, PROGRAM TRADING is now having an even bigger effect on short-term market activity. In fact, last week the program trading on the NYSE as a percentage of big board volume was running at 30%. As a result, I find it hard to believe that big-cap, blue-chip NYSE listed stocks are not moving with the S&P. This would be totally CONTRARY to the statistics that are showing up in the program numbers each and every week.
The fact that there is a lot of program trading is what is throwing me off. I know last week several stocks that were top 20 in volume on NYSE were not necessarily following the S&P. I have seen it in HD, WMT, and TXN just to name a few. This could be a good trend move that lasted 30 min to an hour in the stock that was opposite the market. I am not saying that they don't ever follow the market but it seems they don't follow it enough to make me wonder how good of an indicator the S&P 500 is and if I should be considering other things to focus my attention on.
In these trading markets, I first look to the ADX for overall market sentiment and then to bollinger bands to determine the state of individual stocks. I am mostly looking for stocks at the bottom of their channels, but with some strength left for a bounce.
I see the same thing that downtickboy was talking about especially when the futures indexes are consolidating. There are some still nice trend moves in stocks although the indexes are just chopping around. Big moves in the futures seem to pull all the big cap stocks. This afternoon HD trended for 60 cents, at the time of this post, while the futures jut chopped away.
Is anyone really using the PREM or SPINX much anymore to time entry's on NYSE stocks? I ask because I have it up and I look at it but I can't tell that it makes that much difference most of the time. My thinking is maybe it used to and doesn't as much anymore or maybe I'm reading it wrong. Also to revisit the large bid large offer game that a lot of traders are playing one last time. Are most of you finding that it is best to just eliminate the to 50 highest vol stocks from the one's where you lean on bids and offers as of late. i.e. there is just to much competition bidding and offering a penny infront of size lately on the big caps? It seems like the large bids and offers get covered up 1 cent higher and lower as fast as they appear these days. Parasitic trading techniques the only thing working consistently it seems. Anyone have current thoughts on NYSE scalping? Would really be helpful to me if someone could give an example or two of their favorite setups as several posters did before a few months ago. It seems like the best trade is often to try and buy the last part of a large bid or offer that has been moving up or down but that involves fading the move and while I understand that is how the game is played by many, would someone like to share a way to play a low risk nyse scalp with the trend for guys like me that prefer to go with the flow instead of fade. Thanks.