S&P 500 Index Analysis
- Thread starter DrChen
- Start date
Dr. C - I usually don't comment on other thread author's posts but why close a short with a big loss then turn around and short the market again within 1 point. What market dynamics changed since you booked that loss? I also noticed that you are very news driven. Is this your trading style?
EWT,
Thank you for your comments.
The answer to your first question is in the Analysis, namely, "the IMF lowered its forecasts for US growth this year and next, and the ADP survey cast doubt on the sanguine employment expectation of private payroll increase on Friday." If the market is bullish, it will simply shrug off this news and build on the previous day's momentum, but I saw the market try to pull back towards 1,150, so I sold short at 1,157.
As to your observation that I sold within one point of offsetting the previous short position, that is a pure coincident, because the new trade has nothing to do with the old trade, which ended when "I can only tolerate the loss to 1,150" in my response to Optionpro007 on Sept. 20. (If you read my response, you will see that I meant above 1,150 on a settlement basis, and I had no control over how much higher the market would close above 1,150 at the end of the day.)
The answer to your second question is that I trade on my own analysis of the market, which derives its factual basis in news events. Thanks.
Dr. Chen
Thank you for your comments.
The answer to your first question is in the Analysis, namely, "the IMF lowered its forecasts for US growth this year and next, and the ADP survey cast doubt on the sanguine employment expectation of private payroll increase on Friday." If the market is bullish, it will simply shrug off this news and build on the previous day's momentum, but I saw the market try to pull back towards 1,150, so I sold short at 1,157.
As to your observation that I sold within one point of offsetting the previous short position, that is a pure coincident, because the new trade has nothing to do with the old trade, which ended when "I can only tolerate the loss to 1,150" in my response to Optionpro007 on Sept. 20. (If you read my response, you will see that I meant above 1,150 on a settlement basis, and I had no control over how much higher the market would close above 1,150 at the end of the day.)
The answer to your second question is that I trade on my own analysis of the market, which derives its factual basis in news events. Thanks.
Dr. Chen
Oct. 7, 2010
Analysis:
Today the better-than-forecast Initial Jobless Claims failed to lift the market, and the market made another attempt to drop below 1,150 in a day of consolidation. Looking ahead to tomorrow, the private payroll increase will disappoint because the consensus of 75,000 increase is a lofty expectation. Any number short of 75,000 will send the market back below 1,150, while a number below 50,000 will send the market to retest the 1,131 support. On the other hand, a number above 90,000 coupled with today's positive earnings report from Alcoa will pull the market decisively away from 1,150.
Strategy:
Hold short at 1,157
Analysis:
Today the better-than-forecast Initial Jobless Claims failed to lift the market, and the market made another attempt to drop below 1,150 in a day of consolidation. Looking ahead to tomorrow, the private payroll increase will disappoint because the consensus of 75,000 increase is a lofty expectation. Any number short of 75,000 will send the market back below 1,150, while a number below 50,000 will send the market to retest the 1,131 support. On the other hand, a number above 90,000 coupled with today's positive earnings report from Alcoa will pull the market decisively away from 1,150.
Strategy:
Hold short at 1,157
Oct. 8, 2010
Analysis:
Yesterday's Analysis predicted that "the private payroll increase will disappoint because the consensus of 75,000 increase is a lofty expectation," and today the increase turned out to be 64,000. Upon the release of the news, the index futures dropped to as low as 1,148, but after opening the market spent the rest of the day climbing on the optimism that the Fed will conduct QE2 in Nov. Looking ahead to Monday, the market will consolidate while digesting the employment numbers.
Strategy:
Hold short at 1,157
Analysis:
Yesterday's Analysis predicted that "the private payroll increase will disappoint because the consensus of 75,000 increase is a lofty expectation," and today the increase turned out to be 64,000. Upon the release of the news, the index futures dropped to as low as 1,148, but after opening the market spent the rest of the day climbing on the optimism that the Fed will conduct QE2 in Nov. Looking ahead to Monday, the market will consolidate while digesting the employment numbers.
Strategy:
Hold short at 1,157
Oct. 11, 2010
Analysis:
Friday's Analysis predicted that today "the market will consolidate while digesting the employment numbers." Today the market traded in a range and finished flat. Looking ahead to tomorrow, the market will again trade in a range with a downward movement, as the optimism of QE2 will give way to the concern that the Fed's initial asset purchase, while a "done deal," will be insufficient to support the market priced at this level.
Strategy:
Hold short at 1,157
Analysis:
Friday's Analysis predicted that today "the market will consolidate while digesting the employment numbers." Today the market traded in a range and finished flat. Looking ahead to tomorrow, the market will again trade in a range with a downward movement, as the optimism of QE2 will give way to the concern that the Fed's initial asset purchase, while a "done deal," will be insufficient to support the market priced at this level.
Strategy:
Hold short at 1,157
DrChen,
What's your academic background or professional background ???
I ask because I'm curious to find out if it's related to economics or to something (common) related to the key economic reports that you follow as being important in your trade decisions.
Also, have you consider trading a different trading instrument that arguably may be more sensitive or reacts better to economic news ???
Thanks for the journal. It's nice to see someone not bragging in their journal or bashing others because those types of journals are usually short-lived because I think the journal starter (author) runs out of gas sort'uv speak.
Last of all, hope you can turn it around in your trading.
Mark
What's your academic background or professional background ???
I ask because I'm curious to find out if it's related to economics or to something (common) related to the key economic reports that you follow as being important in your trade decisions.
Also, have you consider trading a different trading instrument that arguably may be more sensitive or reacts better to economic news ???
Thanks for the journal. It's nice to see someone not bragging in their journal or bashing others because those types of journals are usually short-lived because I think the journal starter (author) runs out of gas sort'uv speak.
Last of all, hope you can turn it around in your trading.
Mark
Mark,
Thank you for your comments and for your compliments.
I do have training in economics, although even a brilliant economic mind does not necessarily translate into success in trading, as the Nobel Laureate Robert Merton sat on the investment committee of the ill-fated hedge fund Long Term Capital in 1998. Last week, the author of The Black Swan suggested that investors should sue the Nobel Committee for awarding the Nobel Prize to economists whose theory allegedly formed the foundation for the financial crisis.
As to your second question, I found that the S&P 500 index is more sensitive to the overall economic statistics than any other futures contract and is less affected by one particular corporation's earnings.
As to your third observation, it never ceases to amaze me that some people believe that just because they can remain anonymous, they can treat others with little or no respect, such as bashing other people or accusing them of wrongdoing. I am determined to foster a sense of dialogue where people can share their thoughts frankly and at the same time with respect to one another.
Finally, I also hope that my trading will become profitable.
Dr. Chen
Thank you for your comments and for your compliments.
I do have training in economics, although even a brilliant economic mind does not necessarily translate into success in trading, as the Nobel Laureate Robert Merton sat on the investment committee of the ill-fated hedge fund Long Term Capital in 1998. Last week, the author of The Black Swan suggested that investors should sue the Nobel Committee for awarding the Nobel Prize to economists whose theory allegedly formed the foundation for the financial crisis.
As to your second question, I found that the S&P 500 index is more sensitive to the overall economic statistics than any other futures contract and is less affected by one particular corporation's earnings.
As to your third observation, it never ceases to amaze me that some people believe that just because they can remain anonymous, they can treat others with little or no respect, such as bashing other people or accusing them of wrongdoing. I am determined to foster a sense of dialogue where people can share their thoughts frankly and at the same time with respect to one another.
Finally, I also hope that my trading will become profitable.
Dr. Chen