39 replies to this topic

[OEXCHAOS]

I don't use the daily because the history isn't long enough and is aberrated by roll-over, I think. Still, maybe you'll get more out of it than I do.

[SemiBizz]

Yes, the daily is a tough read, but here's what you can do... The information we want to know is what the volumes were in the previous activity in this price range. Pull up a 30 day hourly chart, that should give you a better view.

[OEXCHAOS]

This looks even more iffy (less Bearish). It's possible that the hourly shows more of the doubt that I saw in the 5' chart. That said, don't dismiss the 5' read generally. It works often. I'm seeing the value in looking on bigger frames, however, when there's some doubt on the 5'.

[vitaminm]

ES June 5min buy 15-30-60min buy daily sell

[SemiBizz]

I'm seeing the value in looking on bigger frames, however, when there's some doubt on the 5'

Repeat after me:

The longer timeframe signal ALWAYS takes precedence over the short timeframe signal.



Now, having said that. The SP contract is a DERIVATIVE of the SPX cash, and the underlying Index signal takes precedence as well...

Edited by SemiBizz, 29 May 2007 - 10:57 AM.

[OEXCHAOS]

Honestly, Semi, I think that the futures drive the cash. I don't think the normal derivative rule works here. Also, I'm using the 5' still and we have a position on. Volume is trying to come in on the down side, so we'll see. I'll be snugging the stop and letting it ride. Mark

[Russ]

I think that the futures drive the cash. I don't think the normal derivative rule works here.

How can this make sense, the cash index is reflective of all 500 stocks that are bought and sold by institutions and the public, isn't the value of those cash transactions greater than the futures?

[vitaminm]

ES June

5min buy
15-30-60min buy

daily sell

on 1week chart

30min sell
60min buy @1515
dly sell

[SemiBizz]

Here's the rule of thumb: VOLUME RULES. The SPX share volume is probably 100 times bigger than the implied volume of the contract. That is why when there is a discrepancy between the QQQQ and the Nasdaq for example, the Nasdaq signal must take precedence. Wherever the volume is GREATEST gives the clearest signal. In fact, just look at the SPX cash for a second. Every trading day under the 1522 low of 5/21 has been setting up a bullish spring ( tested lows on lighter volume ) Now look at today's volume, puny. That tells you that your 5 min timeframe is probably valid in a daytrade situation, but from a longer term perspective the signal is we're going to test higher... UNLESS we get a high volume down day. So whatever you do on the down side, you better be nimble - because the longer term trend signal is still UP. You ALWAYS need to be suspicious of low volume days, price gets exaggerated as the operators are able to move it like a hockey puck on the lack of liquidity. And that liquidity works both ways - from a CASH and a SHARES AVAILABLE for TRADE basis. I use a broader sense of liquidity that defines it not just shares to cash conversion, but cash to shares. (short covering).

[jjc]

Honestly, Semi, I think that the futures drive the cash. I don't think the normal derivative rule works here.

FWIW: I can say this, about that: Volume data on ES has a higher predictive content then volume data on cash.