14 replies to this topic

[maineman]

First, "classic" chart theory reminds us its all about the close... One more box tid bit... If a break out above a long, horizontal "box" (consolidation) fails, and price closes back within the box, then the odds are very high that the market will retrace not only the height of the box but that distance again on the downside. .. example: if the SPX has travelled in a 50 point range for weeks on end and closes ABOVE its upper range, the market should then run 50 points higher. If it fails, and closes back in the original 50 point range, the odds are good it retraces those 50 (goes back to the bottom of the trading range) and then another 50 to boot. When this happens, and it does, as you can tell its pretty dramatic. One of the most profitable trading patterns I know. FWIW, the SPX has yet to close above its 2007 trading range "box". mm

[youmast]

not true... SPX moves by 40 points. I call them "steps". It could be "One-step", "Two-steps" etc moves. It is correlated with the profits on the futures market. For example prev low 1507... prev high 1547... and 40 points in between. Magic? Watch how low we can go. If this morning low is a bottom, then add 40 points to 1537. We may expect the next high at 1577. I do a lot of comments regarding this subject on my website.

[maineman]

I appreciate your comments, but I can't understand your "not true" jab. What I am describing is a very old technique used by commodity traders for decades. I've used it myself for 30 years and it works every time. Want some more examples? THe SPX traded all spring from roughly 1480 to 1540. If mid July it broke to the upside. It "should have" run at least 60 points. Instead, after a few wierd days (5 actually) it closed back inside the upper end of the break out(below 1540) and VERY PROMPTLY retraced back to 1480 and then promptly collapsed another 60 points (in this case it panicked one day in mid August, too). I use this on the daily and weekly charts for position trades. I use it on intraday charts (15 to 60 min) for scalp trades. Already used it this morning... Always happy to share. mm

[eminimee]

3X40=120, 1560 - 120 = 1480.......1556 - 120 = 1476.



http://www.traders-t...showtopic=76961

[youmast]

I'm sorry, maineman. It wasn't a jab. Nothing personal. I'm just telling that SPX is a different animal than other stocks. "Classic" TA doesn't work here. This market is moved by derivatives. We have to analyse SPX having in mind the futures ("steps")... and options ("strikes") markets. I always say on ssignal stuff like "one-step rally", or "full-strike retracement"... Have a great day...

[maineman]

WHen I first learned about this it came from very old commodity traders... guys who had no computers... but every Saturday when the Chart Book came out, they'd sit down with their rulers and pencils and draw away. Trades were entered the following week when breakouts were discovered. I agree with you. I was skeptical about using a technique that worked for corn futures on the SP. But, in the longer time frame it still works great. It works REALLY great for T-bond futures. Really. When the SPX breaks out from a month's long pattern I'll use the SPY to trade. The few times I can use it on a short term basis, like this week, off the 15 minute chart is, in my opion, risky and lucky. It doesn't happen that often, but when you "See it" you can profit. Look at the 15 min SPX for this week. Looked like nice sideways "box" to me, so this morning when we fell back to MOnday's consolidation range (the lower end of this particular 15 minute "box") I took a stab at a short term long, hoping to profit from a return to the upper end of the 15 minute box. I'm already out, having gotten a profit and lost my patience with the short term trade. SO it goes. But to carry the analogy further, if we bust above the upper end soon, The market should move another 10 points or so above the range. If we slide back below 1537 then we should drop another 10 points or so. Just the kind of things my little brain keeps focused on during the day.. mm

[youmast]

when you "See it" you can profit

Thanks for your comments. I agree... The trick is TO SEE THAT. Unfortunatelly very few see what's going on.

P.S. Russian market broke to new highs this week. Insiders tell that "outside capital" is comming back to Russia. Yeah, the Western investors buy Russian stocks full of polonium and dioxin..., they buy Putin's "tyranny"

Time will come, and they will buy American democracy too.

[jack]

First, "classic" chart theory reminds us its all about the close...

FWIW, the SPX has yet to close above its 2007 trading range "box".

mm

thanks for box update maineman

[arbman]

I am sorry Youmast, your approach is a valid, but incomplete trading approach since the prices will go to the fair price, whether there are underlying derivatives or not. Derivatives can tell you the balance of the demand and supply better than the volume at times, BUT the fair price will be always achieved and it includes the formation of the cycles, trendlines and patterns (R/S levels, H&S, boxes or what not). Focus on the price first, the price is king.

[youmast]

Do you mean that the stock prices are RATIONAL? How about GOOG that priced as much as WMT or the whole Warren Buffet's empire? Only few billions to J&J, Vodafone, Chevron, Cisco, Toyota.... and already ahead of AIG, Intel, IBM, Pfizer, Nokia, Altria.... well ahead of JP Morgan Chase and Wells Fargo! What a hell is GOOG anyway? I search on Yahoo, and what? YHOO cost FIVE TIMES LESS than GOOG. Is it fair?