Intra-Day-Trend vs Over-Night-Trend If you split an equity index time series (for example the Dow Jones or S&P500) into two parts a) intra-day (from open til close) and b) over-night (from close til next days open) the following can be said about the 90ies: 1) markets moved sideways intra-day 2) markets gapped to the up-side overnight 3) all the performance of equities in the 90ies was obtained overnight For the last three years, the following proved true: 1) markets moved sideways (no trend) overnight 2) markets tended downwards intra-day 3) all losses of 2000, 2001 and 2002 happened during the day-session (on average) This statistic is valid for equity markets all over the world and also valid for the futures. What to learn? On average it doesn't pay to be short equity-index-futures overnight Good trading, Oliver
Yes, Given the magnitude of the 2000-2002 break it was simply amazing how "forgiving" futures were to overnight longs. Every day used to see some retracement into the prior days range, and not necessarily shallow filling either. Often one would hear of the "commoditization" of the indices because of futures, but the price action at least as far as overnight gaps, bore little resemblance to traditional commodities or even Treasuries. My best guess is, the advent of Global trading hours on U.S. equity indices has led to price stabilization overnight, rather than reevaluations predicated on dislocation. One can see a similar pattern on the CBOT bond contract before it's being dual listed on the LIFFE and then on Project A (ACE). In the mid 80's T-Bond gaps of a half point were frequent. Now much less so.
I would think the opposite-- when all you have in the market is sophistocated professionals, the markets become more efficient. When the dumb money enters, that's when the inefficincies pop up.
Here's the support. you need a list ofstocks to see how it's going. 1. do the charts on the left column by applying your methods to them. 2. See if you can get entries and exits with your method. If not go to 3. 3. Use my results in the right columns for time held and profits made. 4. If you method gets better results share it. If it gets poorer results dimp it and figure out a better one. As the future unfolds, I will be posting the stocks before they breakout. As they break out, I will post the BO at the close or in the AM if nothing is going on. Buy the next day or just watch for a few months as we do it every day . Good luck.
Corso I disagree that professionals are necessarily sophisticated. Todays smart money may be to-morrow's dumb money. Or visa versa. Like that quote from Horace.(the philosopher, not some ET member, LOL) The market, at least as expressed by a percentage of volume, is always the domain of "professionals". We all know how the pro's fare against monkey's with darts. For example the "dumb money", the guy on the street, the rube...was the guy who refinanced his mortgage last Spring. The pro, the MBA trading MBS's was the guy who failed to shift duration in his firm's portfolio as bond's broke 20 points in weeks. The public often overwhelms the normally more knowledgeable market participants.
Neutrino, I would think that before launching into a long discussion, someone would have bothered to ask you what kind of swing trading you are referring to! (As so often happens here on ET, otherwise well-intentioned folks will often build a 20 page thread without ever answering the question.) So I'll ask. What kind swing trading are you referring, because that will determine the answer to your question.
Thanks for the question lindq! As your signature says, I tried to "keep it simple" and not to get into specifics I refer to trading NASDAQ stocks with an average holding period of 3 days. That would be stocks with daily ATR about 5%, prices above $5.00, volume above 0.5 mln but these are just preferences I guess. I hope this will give a better framework for the discussion...
================== SPY open thru close price- 4/1998-9/1998=$110.31-$110.75 SPY open thru close price-4/2003-9/2003=$88.25-$99.95 SPY had a real price shocker drop of about 14% in 8/1998; with more hedge funds in now, [IF] that happened now, might see a bigger drop. Might recover quicker also because ; 1st year bull market close to reelection some buy on better earnings War ,including Iraq battle, tends to be bullish,especially with long term, medium trends UP & UP. Dont confuse high probability with infallibility-Daryl Guppy -Australian stock trader. =============================== The diligent find freedom in thier work-Solomon,trader king