Not saying if we've seen a top or not, but just curious where all the trend followers will say the trend is finally broken? One can keep saying "buy all dips" till the cows come home, but there has to be a point where those purchases must be dumped. I'm guessing most will be brave enough to keep bidding down to 1450 NDX or so, and that 1420 will stop them out. Anyone else?
Then 1450 is where smart money will come in Check out the thread I just put on QQQ/DJIA bullishness, "No top yet"
at your basic moving averages for the answer to your question. A 40 or 50 DAY MA can tell you when the trend is broken, confirmed by WEEKLY MA's as well.
This is something you have to define for yourself beforehand, though if you're a position trader, you generally have plenty of time if you can put your wishes and wants aside. First, a trend "change" is not the same as a trend reversal. A trend change may be a pullback, a consolidation, a downshift in momentum. The change is defined by a break in the trendline. The YM, ES and NQ have all broken their "short-term" TLs. For a reversal, the price must at least close below the last reaction low, but even here there is no guarantee as you may end up in a trading range. At the very least, however, you're justified in tightening your stops. If the price does not in fact break, watch for a failure to make a new high. Technically, this has shown in the NQ. As to whether the ES and YM will make another try at a new high, who knows? But if the ES and YM do attempt new highs and fail, the last reaction lows then assume added importance, and one could expect big things from that level if and when prices reache them.
I should also point out that that little pullback in the NQ and "test" of the high is due largely to the SOX. But there's more to the Naz than the SOX. So one could argue that there has not yet been a true test of the high.
Not necessarily. If the MA coincides with price support, then support may be found. But the level of the MA alone is largely irrelevant. Note, for example, that there is multiple price support in the Naz in the 2000 area, which just happens to coincide with the 200MA. But the support is provided by previous price levels, not the MA.
I use 3 moving averages on an hourly, daily, weekly, and even monthly basis. I really don't want to get into what I use for "inputs" but I have found them to be extremely useful over the past 20 years. As a result, I would beg to differ with you as to their relevance and significance. Just my observation, and opinion.
Since MAs are trendlines, they act as support or resistance in the same way that trendlines do, i.e., they are strongest when coincident with price S/R. But if you feel differently, that's your choice. It's all in the charts. Anyone who wants to do the work can make up his own mind.
The COMPX has a 50% retracement of the 260 point rally of the recent lows coming in at 2120.00 Guess what? The 40-day MA is coming thru today at 2123.00