Below all three moving averages...now what?

[steve46]

Hate to leave people hanging

Above 1270 on the S&P, I figure we could continue north about 10 points

Below 1256 on the S&P, I figure we are going to visit the area south of 1230 and on down to 1220.

This market is "acting like" a bear market in that it shows sudden impulse moves up, then the move fails, and the market gives it all back. The moves up are meant to wash out the weak hands (retail). The moves down are meant to freeze the longer term "investors" in place, where they become "support"..

Figure it out.

Steve

 

[Walther]

Quote from cashmoney69:

When a stock is below all your MA's but has recently had big moves, do you

1. Wait till it rises above an MA

2. Short when stocks are below ma's

3. Avoid the stock all together

---

example --> yahoo

thanks

- Nathan

Yahoo is a bad example. Gapped down big time , for the reason. You must wait for yahoo to establish some kind of range at this level. Only way to play yahoo safely now is to sell puts at strike you would like to own it. If it goes to your strike you will be assigned and own it on better price then it is now. If not ,you collect premium.

 

[dandxg]

Quote from cashmoney69:

Ok, well what would you use?..and why are they worthless?

Ma's are fine, that's just his bias, don't worry. Here is what I would do. Wait for a bounce to the low side of you ma crossover that doesn't break the 35,50,etc and then look for a reversal signal and short it.

 

[Miragers]

Wait for prices to regress back to your 2 longest MA's if they regress to them and then close back below then short. If they break through and start moving above them then go long if the trend does not look to be stalling out. Use 14 ADX to measure the strength of the trend at that point.

 

[Lamont_C]

Listen to Steve . . .

 

[humble1]

Quote from steve46:

Hate to leave people hanging

Above 1270 on the S&P, I figure we could continue north about 10 points

Below 1256 on the S&P, I figure we are going to visit the area south of 1230 and on down to 1220.

This market is "acting like" a bear market in that it shows sudden impulse moves up, then the move fails, and the market gives it all back. The moves up are meant to wash out the weak hands (retail). The moves down are meant to freeze the longer term "investors" in place, where they become "support"..

Figure it out.

Steve

Can you explain what you mean by freeze the longer term investors? Thanks.

 

[steve46]

Yes of course I can

I view the market in a specific context as follows;

I believe that big players ("smart money", "institutional money", "hedge funds" etc) orient themselves to the markets in a very different way than short term speculators (including so called "dumb money", "noise traders", "retail traders", etc). These participants differ not only in terms of time frame, but in terms of how they recognize opportunity (value) in the market.

In addition to having a different view of "value", the participants also differ with regard to access to capital, skill level, access to information and sheer experience.

The net result is that the bigger players tend to accumulate net long or short positions by "scaling in" over longer time frames. In order to accumulate "inventory" at a minimal cost, they buy when "retail" sells and vice versa. Because they operate on a larger scale than the public trader, the moves they generate are often of a larger magnitude. The net efffect of these moves is to "strand" the retail or public trader at a specific price point, creating support and/or resistance.

If you take a moment to scan left on a chart using daily bars you can easily see the places where professionals have "stranded" the public before. Then if you scan to the right (I am talking the S&P market now) you can see how this market likes to re-visit these areas. So what do you think happens when retail traders have been stranded for days or weeks at a specific price point, hoping to get back to break even?

Steve

 

[humble1]

OK, I see the same thing. Thanks.

 

[steve46]

Here are the charts I operate from as follows

First the Daily chart showing my modified support lines

What you might see on a chart like this is that this market has been consolidating for a while

BUT

inside this consolidation there have been several moves up, all of which have failed.

 

[steve46]

Here is a slightly different look at price using 60 min candles

It is a little easier to see where support is on this time frame