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.
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Selling at or near resistance
SPX 5 min chart.png Maybe? that's a 5 min chart so ...
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.