Son of If You Can Draw a Straight Line . . .
- Thread starter dbphoenix
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If we all ignore him, I bet he'll go away. Unfortunately, the torch and pitchfork mob will no doubt send replacements soon enough. I would think it best if we ignore them as well. Let them each have their one post, and move on. It seems as though the mistake is actually engaging them in their hysteria.
I wanted to check the condition of the Dow Jones US Heavy Construction Index. This was to gauge the current condition of heavy construction as compared to the pre-crash era.
There is quite a lot of activity that needs to pick up before price can get to the pre-cash highs. Currently price is attempting to push beyond the 500 level. We don't know how it's going to pan out. Considering the stock indexes are reaching somewhat closer to overbought levels it will be interesting to see how this index pans out. What if in a few months we get into a full blown recession? The demand line is holding and the rise came on a higher low. The highlighted rectangular boxes are trading ranges.
I am sure there's going to be a new crop of traders who haven't traded through the previous crash. I wasn't completely into price trading in the Wyckoffian sense so this will be my true first test if a crash does come. In any case price wise it doesn't really matter which way price is moving, the method and the logic are all the same.
So for those who haven't paid much attention to this DJUSHV, enjoy this chart. Who knows, it might actually become interesting after a few months. We only look at price here, but heavy construction possibly requires high leverage and problems in the credit markets and loans shrinkage theoretically should cause some pain to these heavy constructions. Thankfully, for a pure price trader the reasons are not necessary for profitable trading, the only requirement is that one follows price diligently.
Notice that price needs to go about 40% or so higher to get to pre-crash levels. That's quite a bit of a distance!
Gringo
There is quite a lot of activity that needs to pick up before price can get to the pre-cash highs. Currently price is attempting to push beyond the 500 level. We don't know how it's going to pan out. Considering the stock indexes are reaching somewhat closer to overbought levels it will be interesting to see how this index pans out. What if in a few months we get into a full blown recession? The demand line is holding and the rise came on a higher low. The highlighted rectangular boxes are trading ranges.
I am sure there's going to be a new crop of traders who haven't traded through the previous crash. I wasn't completely into price trading in the Wyckoffian sense so this will be my true first test if a crash does come. In any case price wise it doesn't really matter which way price is moving, the method and the logic are all the same.
So for those who haven't paid much attention to this DJUSHV, enjoy this chart. Who knows, it might actually become interesting after a few months. We only look at price here, but heavy construction possibly requires high leverage and problems in the credit markets and loans shrinkage theoretically should cause some pain to these heavy constructions. Thankfully, for a pure price trader the reasons are not necessary for profitable trading, the only requirement is that one follows price diligently.
Notice that price needs to go about 40% or so higher to get to pre-crash levels. That's quite a bit of a distance!
Gringo
Whatever action you get will likely come from other support and not the "hinge". According to Schabacker, price should exit the hinge no longer than 2/3rds of the way to the apex. If it doesn't, it's more likely to dribble off into a trading range, which makes sense, and I've found it to be true in most cases.
I don't know that it will matter since construction -- housing in particular -- didn't fuel this particular bubble. The last one was a different story, which is why the housing construction index gave me so much notice, more than two years. Plenty of time to take full advantage of it.
This is not to say that following the sectors is not a good idea. In fact, Wyckoff encourages just that. I introduced it at TL but didn't pursue it because only a couple of people cared, and it's not all that difficult to do, and one doesn't have to do it that often, maybe once a month. But sectors and group rotation really aren't the subject of this thread, so I haven't brought it up.
I should point out, of course, that volume is key at tops and bottoms, and volume has been virtually nonexistent for a year. There will be plenty of warning.
While it would admittedly be asking a lot of someone who has already given so much (and having had to take a lot of sh*t in return), I would welcome a discussion thread with a more comprehensive view - trends and channels, of course, but also volume, sector and group rotation. I have resisted starting my own internet journal, and I've been happy to basically piggy back on your stuff. Maybe this is the area I could journal about and make a real earnest public attempt to learn this big picture stuff. It really is the area that remains a mystery to me (which in itself makes starting a journal problematic -I know that I don't know, but I know so little, I am hindered by the where and how to start of the matter) - volume, sectors, leaders, laggards. I mean, I can tell a leading stock from a lagging stock. But how to interpret the changes and what these changes imply for the broader market's Bull or Bear status. I am confident that the charts alone will keep me on the right side, but I would like to learn how to analyze volume as well as the drawing of straight lines.
I suppose a journal would be the way to go since there's really no place else to put something like that. However, I wouldn't expect much participation. On the other hand, there's nothing especially difficult about it, particularly since BigCharts began providing all the sector and group and subgroup (and sub-subgroup) charts years ago. Even if you follow only the nine sectors themselves (http://bigcharts.marketwatch.com/industry/bigcharts-com/default.asp), you'll be considerably ahead of practically everybody else.
As to volume, since you know so little about it you'll probably pick it up much faster than others who've tried since you won't have so much nonsense to unlearn.
There're also Mamis' suggestions about new highs and lows and volumes of advancers and decliners, but these aren't of much use for major turning points. "Turning points" can take quite some time. Look at 2003. That took seven frigging months.
If you decide to open something up, let us know.
Db,
It's a good idea. I'll start a journal. I also need to clear my mind regarding these sectors and industries. Perhaps the journal will give an opportunity to fine tune the sector analysis for later trading. This EOD trading does get slow and non-existent for certain stretches, and I am beginning to feel the need to expand beyond the QQQ, Gold, and Silver universe. With more options more opportunities might become possible.
Considering 40D is also interested at least it won't be too lonely an existence
.Gringo
Quote from Gringo:
Db,
It's a good idea. I'll start a journal. I also need to clear my mind regarding these sectors and industries. Perhaps the journal will give an opportunity to fine tune the sector analysis for later trading. This EOD trading does get slow and non-existent for certain stretches, and I am beginning to feel the need to expand beyond the QQQ, Gold, and Silver universe. With more options more opportunities might become possible.
Considering 40D is also interested at least it won't be too lonely an existence
Gringo
Yes, I remember you being one of the two who was interested. Out of "85,000 registered traders"?
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