S&P 500 Index Analysis

Discussing news from both a bullish and bearish perspective using risk/reward ideas is the best approach to successful speculation. I feel you have a tendancy to post with a bullish or bearish bias and discount the other side completely.

Some of the best trades I have either executed or observed recently involved switching gears very quicky when news dictated it. This is hard to do but I am seeing its importance in terms of preserving capital that will grow on the more successful trades. For example, the November Philly number was a game changer.
 
Dec. 16, 2010

Analysis:

Today's economic statistics continued the recent upbeat trend, and the market rose as a result. Looking ahead to tomorrow, the market will trade on technical signals, as the cross current of economic news from the US and Europe will continue the tug of war between the Bulls and Bears.

Strategy:

Hold short at 1,217
 
Nine_Ender,

On Dec. 15 you stated, “you nor I can know for sure what the future effect of news will actually be the next day.” What you mean is that even if the future news is known in advance (say, by WikiLeaks), the EFFECT of the news on the market cannot be known. Then on Dec. 16 you stated, “the November Philly number was a game changer.”

Thus I draw the following conclusion based on your two statements: At the time the Nov. Philly number was released, its effect on the market could not be known until the market could fully digest it. At the end of the day, one would conclude with hindsight that the Philly number was a game changer.

Dr. Chen
 
Quote from DrChen:

Rolled over -- long Dec at 1243.40 and short March at 1238.55
More...

Rolling over is a myth. It is closing a usually losing position and starting a new one.

So you closed the losing one at 1243, that is 27 pts loss, and shorted another one from 1238...

Just for the record, of course. YTD you are down 27 pts.

By the way, are you using SPX index suddenly???
 
Quote from DrChen:

Nine_Ender,

On Dec. 15 you stated, “you nor I can know for sure what the future effect of news will actually be the next day.” What you mean is that even if the future news is known in advance (say, by WikiLeaks), the EFFECT of the news on the market cannot be known. Then on Dec. 16 you stated, “the November Philly number was a game changer.”

Thus I draw the following conclusion based on your two statements: At the time the Nov. Philly number was released, its effect on the market could not be known until the market could fully digest it. At the end of the day, one would conclude with hindsight that the Philly number was a game changer.

Dr. Chen
More...

Actually, the November Philly number was a game changer the moment it was released. The best trades would be entered within moments after its release, getting 80-95% of the effect which continued over at least several trading days.

In order to have the conviction to make that trade, one likely would need to be aware that it might happen and be aware exactly what trade was planned to be entered beforehand. Otherwise it is hard to pull the trigger quickly.

Hindsight is not necessary the whole game is about addressing risk/reward and probabilities. You could also predict that US news is going to good ( similar to what you do ), and find a trade that you feel is 70-80% likely to succeed.
 
Dec. 17, 2010

Analysis:

Yesterday's Analysis predicted that "the cross current of economic news from the US and Europe will continue the tug of war between the Bulls and Bears." Today the market traded in a range and finished slightly higher. Looking ahead to next week, the market will be vulnerable to a downward correction, since all the bullish news this week failed to push the market above 1,251, and any negative news from Europe will cause the market to drop towards 1,228-1,230.

Strategy:

Rolled over short -- long Dec. at 1,243.40 and short March at 1,238.55
 
Quote from DrChen:

Dec. 17, 2010

Analysis:

Yesterday's Analysis predicted that "the cross current of economic news from the US and Europe will continue the tug of war between the Bulls and Bears." Today the market traded in a range and finished slightly higher. Looking ahead to next week, the market will be vulnerable to a downward correction, since all the bullish news this week failed to push the market above 1,251, and any negative news from Europe will cause the market to drop towards 1,228-1,230.

Strategy:

Rolled over short -- long Dec. at 1,243.40 and short March at 1,238.55
More...

I predict we crush the top either Monday or Tuesday. Usual late option week selling didn't occur despite a huge call/put imbalance
( according to another reader ). This suggests a lot of conviction behind bulls going into Xmas.

Good news ( US economic and earnings re ORCL/RIMM ) will take full effect on the market now that quadruple expiry is out of the way. Short sellers did everything they could to survive the week and minimize their December losses.

My recommendation to you go neutral until we top later this month, THEN go short.
 
Dec. 20, 2010

Analysis:

Today's market continued to creep higher in an otherwise uneventful day. Looking ahead to tomorrow, the market will test the 1,250-1,251 resistance but will trade in a range.

Strategy:

Hold short at 1238.55
 
Dec. 21, 2010

Analysis:

Today the market continued its upward trend. However, the RSI has risen above 70 and is indicating a short-term correction due to an overbought condition.

Strategy:

Hold short at 1238.55
 
You must log in or register to reply here.
Back
Top