Steve,
I know it must be hard for you to anticipate how any of your
listeners might misconstrue your analysis, so I am not criticizing
- merely explaining my reasoning so we can all learn where I went
wrong. At the close on Thursday March 12,
we had just finished 4 consecutive up days, we had reached
upper resistance at S&P500 741, and we were supposedly
"overbought". So, I went short at the end of the week. At the start
of the following week, the Daily SPX 5,3,3 full stochastic started
to signal a bearish cross - I have noticed this to be your most
reliable swing trade indicator from the nightly report (which is
all I have time to analyze each day). So, I felt good holding the
short position. But, we never saw a bullish cross or strong Buy
trigger, so I held that short until I caved today after we broke
above 804. I guess the lesson is that reaching upper resistance is
not a sufficient sell signal, so I had entered a short position too
soon - it just seems that selling at resistance works for others
here. In any case, I am not nimble enough to day-trade - I can only
react to major signals like the 5,3,3 full stochastic crosses. Any
other guidance? Thanks!
Posted by dodgerdog on 23rd of Mar 2009 at 07:11 pm
Selling at or near resistance is very prudent but we were NOT
overbought on most time frames. The Daily takes precedence
when swing trading. You also needed to see a TRIGGER to short
besides just being at resistance - for example when we get to
resistance do you see the TICK chart or something else going
negative confirming a reversal is likely? If not, then the
chances of reversing are minimal. Further, you should of had
a STOP in place just above your entry since you viewed that as
resistance which was broken - this alone would have limited your
losses allowing you to re-enter at higher prices. Lastly, the
5,3 Stochastics were on a BUY signal at that time and NEVER came
close to crossing back down after March 9th. With that said,
this indicator alone is not infallible and it's prudent to have
confirmation from other indicators. While we thought at the
beginning the rally could be just a Minor Wave 4, we clearly stated
that a break over 780 must be construed as positive.
Hopefully, this helps. Let me know if you have further
questions.
OK, I see MY MISTAKE. I simply took the test of the upper
resistance (along with much bearish sentiment) as a Sell signal and
went short big-time at the close on
March 12. There was no confirmed Sell signal - my bad. The
Daily SPX 5,3,3 full stochastic started to signal a Bearish cross a
week later (you posted a Warning
on 3/18 and it appears to have crossed down the next day),
but at much higher levels. Had I shorted there at that valid
Sell signal on 3/19, I would have experienced a much smaller loss
today. Instead, I took comfort in that Bearish cross on 3/19 and
held my imprudent shorts until we were solidly above 804 today. So,
I did learn from this.
Due to my schedule, I can only react to major reversal signals
that you show on the nightly update, such as the 5,3,3 full
stochastic crosses. Next time:
1) I will adhere to the 5,3,3 full stochastic more strictly to
decide which day to act - i.e. I will not Sell halfway between the
last Bullish cross and the eventual next Bearish cross.
2) I will look at the daily $NYMO oscillator to decide which day
to act - i.e. it looks like we are nearly overbought now.
3) For timing intra-day, it sounds like the $TICK chart might be
a good indicator of a reversal. How much does StockCharts charge
for the rights to see that?
I have switched to a heavy long bias at the end of the day.
Hopefully, tonight's update will give some clues if I should hold
my longs. Thanks!
Posted by dodgerdog on 24th of Mar 2009 at 12:35 am
Stockcharts is quite cheap - like the cost of a few trades and
the charts can save you a bundle if used effectively. Anyway,
be careful chasing this market on the long side up here as well
since we could get a deep pullback fairly soon. I prefer to
buy pullbacks but if long keep stops in place.
As a newbie on trial, I'd just like to say thanks. I
followed your guidelines re SPX and the 780 level. As a result, I
went long, and actually made some money ! First time in a long
time.
I have also felt that recent nightly recaps were leaning to the
downside, and have exited my longs from the watchlist/triggered
list, unfortunately. I hate to beat a dead horse, but many of us
don't have the funds to daytrade, or set up the automated systems
on srs/skf, which seem to be so profitable. They can be offset with
ure/uyg without using up a daytrade, if one only knew when these
systems crossed. (Matt, I thought you mentioned a while back that
you were going to set up some kind of alert on your site for
exactly this. Yes/No?
Posted by dodgerdog on 23rd of Mar 2009 at 07:20 pm
Bruce that was the case as of the middle of last week when we
paused and pulled back from strong resistance on the initial
attempt to get through the 805 level. We did get a two day pullback
and we remain overbought but I also stated last night that a break
of the SPX downtrend line could begin a rally attempt and once we
took out resistance (took 3 attempts) the market was likely to move
to the next resistance levels. Taking some profits on a move from
below 666-700 area up to strong resistance (SPX 805) is prudent but
if you're a long term swing trader with large risk tolerances then
give it a wider stop. For example, if you're comfortable with the
SPX pulling back nearly 40 points (which it did late last week)
then that's fine. But you have to have a stop in place in
accordance with your risk tolerance and trading objectives in case
it keeps going down. For swing traders, we are not looking to
chase this market up but rather buy on deeper pullbacks.
Newsletter
Subscribe to our email list for regular free market updates
as well as a chance to get coupons!
Steve, I know it must be
SPX 5 min chart.png Maybe? that's a 5 min chart so ...
Posted by sethbru on 23rd of Mar 2009 at 06:31 pm
Steve,
I know it must be hard for you to anticipate how any of your listeners might misconstrue your analysis, so I am not criticizing - merely explaining my reasoning so we can all learn where I went wrong. At the close on Thursday March 12,
we had just finished 4 consecutive up days, we had reached upper resistance at S&P500 741, and we were supposedly "overbought". So, I went short at the end of the week. At the start of the following week, the Daily SPX 5,3,3 full stochastic started to signal a bearish cross - I have noticed this to be your most reliable swing trade indicator from the nightly report (which is all I have time to analyze each day). So, I felt good holding the short position. But, we never saw a bullish cross or strong Buy trigger, so I held that short until I caved today after we broke above 804. I guess the lesson is that reaching upper resistance is not a sufficient sell signal, so I had entered a short position too soon - it just seems that selling at resistance works for others here. In any case, I am not nimble enough to day-trade - I can only react to major signals like the 5,3,3 full stochastic crosses. Any other guidance? Thanks!
Selling at or near resistance
Posted by dodgerdog on 23rd of Mar 2009 at 07:11 pm
Selling at or near resistance is very prudent but we were NOT overbought on most time frames. The Daily takes precedence when swing trading. You also needed to see a TRIGGER to short besides just being at resistance - for example when we get to resistance do you see the TICK chart or something else going negative confirming a reversal is likely? If not, then the chances of reversing are minimal. Further, you should of had a STOP in place just above your entry since you viewed that as resistance which was broken - this alone would have limited your losses allowing you to re-enter at higher prices. Lastly, the 5,3 Stochastics were on a BUY signal at that time and NEVER came close to crossing back down after March 9th. With that said, this indicator alone is not infallible and it's prudent to have confirmation from other indicators. While we thought at the beginning the rally could be just a Minor Wave 4, we clearly stated that a break over 780 must be construed as positive. Hopefully, this helps. Let me know if you have further questions.
Steve, OK, I see MY MISTAKE.
Posted by sethbru on 23rd of Mar 2009 at 10:44 pm
Steve,
OK, I see MY MISTAKE. I simply took the test of the upper resistance (along with much bearish sentiment) as a Sell signal and went short big-time at the close on
March 12. There was no confirmed Sell signal - my bad. The Daily SPX 5,3,3 full stochastic started to signal a Bearish cross a week later (you posted a Warning
on 3/18 and it appears to have crossed down the next day), but at much higher levels. Had I shorted there at that valid Sell signal on 3/19, I would have experienced a much smaller loss today. Instead, I took comfort in that Bearish cross on 3/19 and held my imprudent shorts until we were solidly above 804 today. So, I did learn from this.
Due to my schedule, I can only react to major reversal signals that you show on the nightly update, such as the 5,3,3 full stochastic crosses. Next time:
1) I will adhere to the 5,3,3 full stochastic more strictly to decide which day to act - i.e. I will not Sell halfway between the last Bullish cross and the eventual next Bearish cross.
2) I will look at the daily $NYMO oscillator to decide which day to act - i.e. it looks like we are nearly overbought now.
3) For timing intra-day, it sounds like the $TICK chart might be a good indicator of a reversal. How much does StockCharts charge for the rights to see that?
I have switched to a heavy long bias at the end of the day. Hopefully, tonight's update will give some clues if I should hold my longs. Thanks!
Seth
Stockcharts is quite cheap -
Posted by dodgerdog on 24th of Mar 2009 at 12:35 am
Stockcharts is quite cheap - like the cost of a few trades and the charts can save you a bundle if used effectively. Anyway, be careful chasing this market on the long side up here as well since we could get a deep pullback fairly soon. I prefer to buy pullbacks but if long keep stops in place.
As a newbie on trial,
Posted by macbeth on 23rd of Mar 2009 at 10:35 pm
As a newbie on trial, I'd just like to say thanks. I followed your guidelines re SPX and the 780 level. As a result, I went long, and actually made some money ! First time in a long time.
I have also felt that
Posted by bruce2 on 23rd of Mar 2009 at 07:11 pm
I have also felt that recent nightly recaps were leaning to the downside, and have exited my longs from the watchlist/triggered list, unfortunately. I hate to beat a dead horse, but many of us don't have the funds to daytrade, or set up the automated systems on srs/skf, which seem to be so profitable. They can be offset with ure/uyg without using up a daytrade, if one only knew when these systems crossed. (Matt, I thought you mentioned a while back that you were going to set up some kind of alert on your site for exactly this. Yes/No?
Bruce that was the case
Posted by dodgerdog on 23rd of Mar 2009 at 07:20 pm
Bruce that was the case as of the middle of last week when we paused and pulled back from strong resistance on the initial attempt to get through the 805 level. We did get a two day pullback and we remain overbought but I also stated last night that a break of the SPX downtrend line could begin a rally attempt and once we took out resistance (took 3 attempts) the market was likely to move to the next resistance levels. Taking some profits on a move from below 666-700 area up to strong resistance (SPX 805) is prudent but if you're a long term swing trader with large risk tolerances then give it a wider stop. For example, if you're comfortable with the SPX pulling back nearly 40 points (which it did late last week) then that's fine. But you have to have a stop in place in accordance with your risk tolerance and trading objectives in case it keeps going down. For swing traders, we are not looking to chase this market up but rather buy on deeper pullbacks.