Has the S&P 500 futures hit bottom?

[NihabaAshi]

Quote from gqguy2003:

Perhaps I should clarify.

Techncial analysis to me means running your indicators on the right data.

That data means the trin, the vix, the S&P premium, the Nasdaq premium and the Russell premium. If you are watching those indicators you don't need to listen to the news because how the news is being interpreted by institutional investors is being reflected in that data. How institutions crunch the news may bear little resemblance to how the news is being viewed by small traders.

Good news doesn't mean the market will rally any more than bad news means the market will sell off. It all depends on how program trading will affect volume either to the sell or to the buy side and if you dont know what the program trading firms are doing, the news alone is meaningless. Program trading generally makes up more than 50% of the volume on any given day.

By watching the right indicators you know how the big money is interpreting the news and what the big money is doing is all that matters. Good news could mean a great opportunity for program trading firms to short sell stocks that are heavily weighted to the sell side and if enough program trading firms view it that way, the market will short the good news and leave the individual trader out to dry who thought it was a great opportunity to buy.

Reading the right indicators the right way, is what technical analysis means to me. The right indicators have already crunched the news with the right bias. Technical analysis viewed in this way most certainly does move the market. News alone does not move the market until it has been interpreted. The process of interpreting that data is clearly a matter of intense technical analysis. And until the news is crunched by the big money the small investors view point has little better than a 50/50 chance of being consistent with the big institutions.

My view of technical analysis is not a matter of running bollinger bands, chaikin oscillators, stochastics, gann fans, the MacD, RSI or any other indicator on price data. That kind of technical analysis is agreeably rather pointless and has no more impact on the market than a caboose has on the direction of a train.

Perhaps after all is said, we are really on the same page.

Hi gqguy2003,

I strongly agree with you when you say the following...

...Good news doesn't mean the market will rally any more than bad news means the market will sell off...

With that said, I'll repeat...

News, geopolitical events, FED events, economic events, rumors, influences by other key markets et cetera...

They are the true movers of the markets (usually not one event all by itself on a consistent basis).

Notice how I did not say that News Alone move prices because I agree with you.

In addition, technical Analysis is only a tool being used by many to help explain or visualize the above key market events impact on supply/demand itself.

Thus, for clarification, technical analysis does not cause swing points.

For example, take a look at any given swing point caused by 0830am est key economic reports.

To say that TA did that and not the key economic report is odd.

Yet, TA can be used to visualize what has occurred at 0830am est and to make trade decisions.

TA can also be used to help explain what has happen but that explanation doesn't imply its the reason why that particular price action has occurred.

Regardless, if your making consistent profits doing it your way...

Keep doing it because I'm a strong believer that there's more than one way to make money in this market.

However, I myself prefer to know when these key market events are going to occur so that I can be better prepared to react to the price action that results from the key market event.

Therefore, key market events and understanding how much of an impact they have on the market is very important to my trading along with it dictating how I use technical analysis.

Last of all, anybody with access to intraday data along with looking at the key market events at the below links can easily see on a consistent basis (not every single time) when a swing point or strong continuation price action will occur.

http://fidweek.econoday.com/calendar/US/EN/New_York/year/2007/month/08/day/20/daily/index.html

http://www.forexfactory.com/calendar.php

How far price moves in a particular direction after the event and if a trader has the ability to exploit the price action is a different story.

This answers all those common threads where we see being asking here at ET...

* What moves the markets?

* How do you know when volatility or volume will show up?

* When are swing points, reversals or strong continuation price action most likely to occur?

* What's price action only trading?

* What do price action only traders use?

Mark

 

[NihabaAshi]

Quote from Vtechno:

^^^

Excellent post with a well written thought process of events leading to the Fed's action on Friday.

Sorry if this has been asked before, but what specific markets do you look at besides gold and oil for your intermarket analysis?

* Treasury Yields or futures

* Eurex DAX and Euronext CAC-40

* U.S. Dollar Index or Forex EurUsd

I use market breadth indices (ex. VIX) only to help manage a trade after entry or for help with position size management decisions.

Mark

 

[whitster]

VIX is not a market breadth indicator.

Adv/Decl is

tick is.

VIX is a measure of the premium that traders are pricing into options.

it is not a breadth thang by any reasonable definition of the word "breadth"

TRIN, TICK, Ad/Decl etc. are breadth

VIX is not

 

[NihabaAshi]

Quote from whitster:

VIX is not a market breadth indicator.

Adv/Decl is

tick is.

VIX is a measure of the premium that traders are pricing into options.

it is not a breadth thang by any reasonable definition of the word "breadth"

TRIN, TICK, Ad/Decl etc. are breadth

VIX is not

I use the VIX as a market breadth regardless to the fact that it measures premium that's priced into options.

Simply, as I stated, I use the VIX to help with my after entry decisions or for help with position size management decisions.

That alone should imply I do not use the VIX as most traders use it nor does my use have anything to do with its actual design.

I've been using the VIX this way very successfully for many years regardless to what it actually measures.

Just the same, I'm also a heavy user of the Advance Deline line but I not use it as it is intended but that in itself has nothing to do with my intermarket analysis.

Thus, a question was asked of me about my intermarket analysis and I mention what I used without going into any details about how I use it regardless what others see them as.

Mark