I read John Murphy's book Intermarket Technical Analysis over the last couple of days, and I found it quite intriguing how all those markets interact and fit together. It seems reasonable (or at least interesting) to use at least some of these ideas in an attempt to get the "big picture": where the markets are headed in the next couple of months or even years and why. Actually, I thought the same when I read Larry William's book about the COT data some weks ago: if you really understand that stuff (and I mean not just the theory behind it, but when you have incorporated it into your view of the market as a whole) then you are just a little ahead of most other guys out there. Same goes for some other things like Put/Call ratio, VIX or market breadth in general. So, is anyone of you actually using this sort of information? Is it a fixed part of your trading plan or are you ignoring it completely (and if so, why)? Where are you getting data, charts, comments from? What books can you recommend? Or is it all rubbish?
its very hard to understand the big picture in accordance to reacting and not predicting. I think that is most peoples down fall. plus with most trading methods it is irrevalent anyway.
Watching the VIX is a large part of my daily trading. I use it for confirmation or divergence to what I'm seeing on equity charts. As a general rule I don't make trades against the trend of the VIX. Trackstar is 100% right. The best method is not to predict, but to react. That's the best advice you will ever hear.
I don't think these methods are about predicting the market, but more about anticipating it. Look at how Murphy explains the major signals that preceded the 1987 stock market crash in his book. His whole point is not about predicting what will happen on an exact basis. The methods he's using give warnings that there may be something wrong about a trend, so you're not caught off guard.
yeah right... Everybody's a genius AFTER the event. Forget Murphy, he's a loser. The advice I've given you above is the best I've found. Good Luck
If you think about it, that's almost 100% useless. The vast majority of investors recognized the tech bubble and the housing bubble. They weren't "caught off guard" and still they lost their ass. Hell, Schiff's predictions were almost spot on, and the word is he took a beating in '08, just like the average investor. Timing is everything. When we're in a bubble, everyone with half a brain knows it and they also know it will pop. But when? You can sit on the sidelines and play the perennial bear while everyone else is making money, but what good does that do you? In my humble opinion, predictions are for suckers. Stay light on your feet and learn how to react fast.