Mon 10 Nov 2008
Update on S&P 11-10-2008
Posted by ray under Written Plan
In S&P and Processing Incoming Information, I set out my long-term views for the US stock market (i.e. the context to my trading). In today’s blog, I’ll update the short term picture.
Chart 1 shows the 13-w picture (quarterly trend). We see a series of price and time targets at the 10/10/08 839 low. This suggests the possibility of a bounce i.e. a directional line change. If the 13-w changes its line direction, we’ll have a possible 18-d change in trend.
Chart 1 13-w S&P
Chart 2 shows the 18-d picture (monthly trend) . If the market can clear 1044, we have a possible move to 1256 to 1193 (the break down point).
Chart 2 18-d S&P
Chart 3 is a picture of the close line chart equivalent to a 3-d swing. This shows a possible head and shoulders pattern. The 3-d H&S shows a minimum target to a possible 1082 and probable target of 1158. This does not help because it’s a long way away from the Chart 2 target.
Chart 3 3-d S&P
Finally the seasonal pattern starts with a low early next week for a rally in the first fortnight in December.
The alternative will be a move down to retest the lows at 839. If this occurs we’ll need to watch the average volume per bar. Average or above average volume as the market drops will suggest a breach of 839 and a move to the 12-M 2002 low at 768. Below average volume per bar will suggest a successful retest and an upmove to follow.
November 11th, 2008 at 7:52 am
Ray
You also touch on ‘Seasonality’ and it may be timely to put it in perspectives when using it as a tool in trading.
Caveat as I quote:J Wyckoff:
I want to start out by emphasizing that seasonality or cycles, by themselves, do not make good trading systems. However, they are great “tools” to add to your “Trading Toolbox.”
……………………….
…..I would classify seasonal tendencies as “secondary” technical indicators in my “Trading Toolbox.” I do follow seasonals, but they are not my “primary” trading tools. I have seen much hype in the marketplace regarding seasonals. I remember one summer hearing a radio advertisement from a futures brokerage that went something like this: “Colder weather is just around the corner and heating oil demand will increase. Thus, you should buy heating oil futures now, and profit from the increase in demand.” If only futures trading were that easy! Every professional trader and commercial firm knows that heating oil demand rises in the winter–and even in the summer months they have already factored that rise in demand into the prices of the farther-out (deferred) futures contracts. The same is true for other markets’ seasonal price patterns. The professional traders and commercials all know about seasonals in the markets, and position themselves accordingly. It is always good that we speculators have as much information on markets as possible. Seasonal price patterns are just one more bit of information to factor into our trading decisions. Unquote
November 11th, 2008 at 12:01 pm
Hi Ray, i was unable to open charts 2 & 3. chart 1 opened ok. I’ll check back in later. Hope you are well,cheers baz
November 11th, 2008 at 12:27 pm
charts are AOK,maybe was my end. cheers baz