Author Topic: S&P500  (Read 25915 times)

PipMeHappy

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Re: S&P500
« Reply #375 on: October 10, 2021, 09:08:52 AM »
@Peterma Funny that, I took a long S&P500 position
just days before you, in that my experience of EUR/USD
has been awful  - compared to last year - therefore I
want to bet on something that moves mostly in one
direction, whether the gains be modest or small.

My hunch is that the Fed may not raise rates until
potentially a year from now, and possibly only once, and
for that reason the US stock market has nothing to
worry about (from that point of view). There were
taper tantrums in Bernanke's final months too, but
it all boiled down  to nothing much: this index continued
to climb.

Of course, energy prices are rising and wages are
meant to be pushed up as post-Covid workers will be
in demand, or so they say (it could be sector-specific
and not enough to be a global concern), which
could hike other prices up and raise inflation, which
in turn would (at long last, one may add, from an
Austrian economics standpoint) force the central
bankers' hands in having to raise rates by more
than those much-feared-yet-measly 0.25%
amounts...

But, until then, the US stock markets have
digested the news and are  continuing higher.

With no fear of arrogance, one could say that
this train is continuing unabated on its journey.

:)

Kaitsu

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Re: S&P500
« Reply #376 on: October 10, 2021, 11:07:42 AM »
I took a long S&P500 position
just days before you, in that my experience of EUR/USD has been awful  - compared to last year - therefore I want to bet on something that moves mostly in one direction, whether the gains be modest or small.
Hi @PipMeHappy! That's quite a change for you! :) Glad to see it and I wish you every success with it! :D

But I just thought I'd stop by to add a comment that even the SP500 is not a one-way street. Although it has generally increased over the years, and this year is no exception so far, there are times of negativity and when they occur they are big and expensive to hold through if one intends to.

Right now I would say that the SP500 index has been in a consolidating, directionless phase with above-average daily ranges in both directions for the last few months. And it is not at all certain that it is going to go higher from these levels or whether we will still see room on the downside first.

I do agree that the long term outlook is most probably higher but there are numerous concerns at the moment that could cause some negative volatility along the way. We are into an earnings period that could produce some negative surprises, energy prices are rising (as you mentioned), the US/China situation is still an issue and is further aggravated by the situation in the East and Taiwan, etc. The Republican/democrat politics around the US debt ceiling increase may cause worries even though I doubt anyone seriously thinks the US will actually default on its debt repayments for the first time in its history. There are also possible repercussions from the recent 136-country agreement to implement a minimum 15% corporation tax that will affect large international companies that benefit from moving profits into low-lax regions.

I don't know what time frame you are looking at, but playing the short term 4H/1H from the long side has been very effective during these recent months compared with just sitting and holding.

Here's an indicator-free daily chart that shows the recent sideways movement.

Wishing you every success in trading my favourite instrument! :)
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Peterma

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Re: S&P500
« Reply #377 on: October 10, 2021, 09:28:42 PM »
Hi PMH - it's a while back since I mentioned Yazz on BP - I think maybe about 7 years - anyways the lyrics have proved true since.

One thing I've learned over this past 40 odd years in business is that regardless of circumstance somehow business overcomes the obstacles and often they are many. Maybe it's a reflection of people's endurance when the chips are down.

The thing about the S&P is there is only one driver - risk - and not only any old risk, it's investors' risk - the guys who already have money and are seeking more.

Scott Peck spoke of a self made millionaire who in the early days stayed focussed because he was always aware of 'the wolf at the door'

Strange thing Peck wrote was many years later that same then now rich millionaire believed that the wolf was still at his door.

So it is with the investor - price will always drop faster than it rises :)


PipMeHappy

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Re: S&P500
« Reply #378 on: October 11, 2021, 08:26:30 AM »
Hello both, and what a welcome surprise from @Kaitsu!

@Peterma  yes, price does indeed drop faster - people getting out of
a building on fire also move faster than under normal circumstances -
so it is indeed  a question  of, as @Kaitsu  mentioned, understanding the
instrument-specific risk, e.g. gloabl risk headwinds but also the specifics
of trading vs. investing, e.g. whether treating an index  such as this as a
CFD on (typically) shorter-term timeframes or as a buy-and-hold.

Having tried the latter approach  on EUR/TRY for many, many months and seen
my returns eaten by negative carry,  I tried shorter moves on EUR/USD
but, as you both know, there  can be months of choppy waters where
some traders thrive and others do not. I think I am better suited to
trend-trading, based on years of trials, and that is why I am (carefully) trying
out the S&P500 again, to see how it moves, how fast, whether to trail-stopmy way
up, and in what way, for example  - basically, I want to understand how
to tolerate risk on trading this  instrument, how expensive it is with my
broker, what dividends are paid, etc.

I see that the FAANG's earnings (Facebook, Amazon, Apple, Netflix
and Google (Alphabet)) are due not this or next week but the following
one, as per:

https://www.ii.co.uk/investing-with-ii/international-investing/us-earnings-season#calendar

It  will be interesting to see what happens to the S&P500 based on what
comes out of the releases. Also, in terms  of @Peterma 's Yaz reference: when studying
for my CMT Level 1  last year I came across the  concept of survivorship bias
in the stock market, which  someone doing backtesting would need to consider, meaning
that an index backtest for, say, twenty years in the past would have  to be
done by researching which companies failed and were weeded out of
the index, and when, because the chart will only reflect the winners, indeed
the survivors...which is not the whole  story.

Great discussion! I am on a train, difficult to do your posts justice!




Kaitsu

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Re: S&P500
« Reply #379 on: October 11, 2021, 10:00:00 AM »
what a welcome surprise from @Kaitsu!
Always happy to talk about the SP500! :)

I think this is one "commodity" that really does merit following on a TA basis because it is such a broad indicator of the overall health of both the US and the entire global economy. Therefore, there are incredibly many factors that can and will impact on its development with varying degrees of relevance at varying times. But, in spite of that, it only has one core characteristic which, as @paterma said, is investment gain and the risks associated with it.

I think that in this instrument, more than any other, the core value of TA is at its most relevant: i.e. identifying what the majority of the investment/trading community is actually doing with its money. In this sense, it is really worth just following the current fundamental issues and knowing when relevant data is being released rather than actually using fundamentals to analyse and form an opinion of where the market is going. The financial world is full of professional experts who are constantly analysing every single molecule of the US stock market. We cannot hope to match that so surely it is best to base our trading decisions on just measuring what they are doing with their money rather than why they are doing it - adn then look at the "why's" alongside? :)

This week is an interesting one. We start with a US holiday today (Columbus Day) although I believe the stock market is open. then midweek we have inflation data and FOMC minutes and we finish the week with retail sales for Sept! All of that is going to be relevant.

This is all why I think it is important to watch the daily charts, whether the market is trending or consolidating or sometimes even declining. And then to use shorter term charts to decide when to "invest" in the market and when it is worth jumping out and waiting for another step up.

Trailing stops can be difficult to manage because the SP500 tends to be spikey and a quick up/down of 100-300 points is not unusual. This means a trailing stop has to be well under the price to stay clear of these spikes but that means a good amount of profit is foregone when the market does actually turn around.

I guess the first major question concerns whether one is looking for a synthetic, leveraged, long term investment vehicle or simply identifying and trading the upside moves within the assumed overall longer term market growth.

As an example, I currently see the daily as consolidatory, the 4-hour as mildly bullish, and the 1-hour as mildly bearish - which is what I would expect from an indecisive NFP ahead of a three-day weekend. So I am waiting for some direction from this week's data before doing anything other than some short term day-trades.

I really think this instrument will suit your interests and trading biases and I hope you do well with it - you have certainly worked hard for it1 :D   
« Last Edit: October 11, 2021, 10:03:52 AM by Kaitsu »
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PipMeHappy

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Re: S&P500
« Reply #380 on: October 12, 2021, 02:37:56 PM »
@Kaitsu  thanks for that analysis and, to summarise, your insights (in my own words), as follows:

1- trailing stops (must be quite wide, or else...)
2- conflicting lower/higher time-frames means a consolidation period, possibly (monthly chart is a doji)
3- TA works best as pros with more money/time/tools pour over earnings'/Fed's details more than we could
4- trading short-term but in the direction of the trend (momentum strategies/buying the dips) would be advised

Food for thought

:)

Kaitsu

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Re: S&P500
« Reply #381 on: October 12, 2021, 04:40:34 PM »
to summarise, your insights (in my own words), as follows:
Yes, I guess that just about sums it up - and in a lot fewer words! :D (but this is just my own take on it!).

As you are no doubt aware the SP500 moves a long way very quickly and, as a rule of thumb, I tend to think of it as a 100-point move on the SP500 is like a 20-pip move on, say, EU. I don't mean in monetary terms since the pip value is the same. Rather, if one uses, say, a 30 pip stoploss in EU then this would be something like 150 points on the SP500. Naturally, the ATR gives a better feel for that.

I certainly think it is worth trading in the trend direction and mainly from the long side, as you say, buying the dips. Going short can be quite dangerous as the bounce back can often be really wicked!! (which is another way of saying that buying dips can be rewarded very quickly - trouble is identifying the base of the dip! :) )

Are you trading live?


Ships are safe in harbour - but that is not what ships are for......

Kaitsu

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Re: S&P500
« Reply #382 on: October 13, 2021, 06:36:32 AM »
@PipMeHappy  - regarding the "buy the dips" approach, I thought you might be interested in these comments from DailyFX:

"EQUITIES LOSE MOMENTUM AS INFLATION CONCERNS RISE
Concerns are growing about the continuation on “buying the dip” as analysts are predicting less support from the Federal Reserve during this economic recovery given this is not a normal business cycle recovery, nor are inflationary pressures as we face a greatly distorted labor market amid uneven demand for goods and services.

There are also health factors involved and until those are cleared don't expect monetary and fiscal policy to have all the answers. In the face of this, the technical calls for a 15%/20% drop in stocks as the Fed has got the transitory call wrong may be starting to come into play, with the S&P 500 failing to close above a descending trendline despite breaking above it during the session.

US yields continue to pick up and the move in energy prices only seems to be adding fuel to the fire."


My own charts are all neutral/negative and there is a clear vulnerability for more downside right now - BUT - we have seen this many times before, only to see the market spring back in fine form!!! Will this be the same....

But it DOES underline how important the CPI number will be today. Could be a watershed day. (We also have the FOMC minutes later in the day!). We also start the earnings season soon with bank 3rd qtr results - which could also cause some spikes when the market is looking for something/anything to make a move on! :)

"JPMorgan Chase will report third-quarter earnings ahead of Wednesday's market open, kicking off a huge week for bank financials. JPMorgan is among several major U.S. banks expected to report mixed Q3 earnings this week. On Thursday, Bank of America, Citigroup, Morgan Stanley and Wells Fargo report. And Goldman Sachs reports on Friday."

Just edited to add the attached daily chart. I thought it was interesting to note a lot of long tails in recent months in the price range just under where we are now. We are sandwiched between this possible support area and the minor downtrend line above the market....

« Last Edit: October 13, 2021, 07:42:56 AM by Kaitsu »
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Max

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Re: S&P500
« Reply #383 on: October 13, 2021, 04:16:52 PM »
All this talk of the best ways to trade the SP500 reminded me of a video I saw about a week ago. Basically, earlier this year a guy made some changes to his pet hamsters cage. He marked the hamster wheel with members of the SP500, put 2 tunnels in the cage (1 marked 'Buy', 1 marked 'Sell') and has been trading according to where the wheel stops and whether the hamster goes into the Buy or Sell tunnel first.
To date, I think he started around June, the hamster is beating the SP average.

Kaitsu

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Re: S&P500
« Reply #384 on: October 13, 2021, 05:21:42 PM »
All this talk of the best ways to trade the SP500 reminded me of a video I saw about a week ago. Basically, earlier this year a guy made some changes to his pet hamsters cage. He marked the hamster wheel with members of the SP500, put 2 tunnels in the cage (1 marked 'Buy', 1 marked 'Sell') and has been trading according to where the wheel stops and whether the hamster goes into the Buy or Sell tunnel first.
To date, I think he started around June, the hamster is beating the SP average.

What they don't tell you is who trained the hamster. (hint: the hamster is a regular reader of Not The Noobs  ;))
« Last Edit: October 13, 2021, 05:44:08 PM by Kaitsu »
Ships are safe in harbour - but that is not what ships are for......

PipMeHappy

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Re: S&P500
« Reply #385 on: October 13, 2021, 09:53:21 PM »
All this talk of the best ways to trade the SP500 reminded me of a video I saw about a week ago. Basically, earlier this year a guy made some changes to his pet hamsters cage. He marked the hamster wheel with members of the SP500, put 2 tunnels in the cage (1 marked 'Buy', 1 marked 'Sell') and has been trading according to where the wheel stops and whether the hamster goes into the Buy or Sell tunnel first.
To date, I think he started around June, the hamster is beating the SP average.

Insane and true...

https://www.theregister.com/2021/09/28/hamster_crypto_trader/

PipMeHappy

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Re: S&P500
« Reply #386 on: October 14, 2021, 07:54:01 PM »
Not as uncluttered a chart as @Kaitsu  's...

but  it shows the move today, a solid candle

(almost a marubozu) back above both the 100-day MA

and the upper band of a 2-standard-deviation Bollinger.

All time-frames (1H, 4H, and D) looked  bullish today,

throughout the European  and American sessions,

which means that the next few days will be crucial

for confirmation.

Your thoughts, @Kaitsu  ?

« Last Edit: October 14, 2021, 07:56:06 PM by PipMeHappy »

Kaitsu

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Re: S&P500
« Reply #387 on: October 14, 2021, 08:46:44 PM »
Your thoughts, @Kaitsu  ?
Hi PMH,

Well, I haven't consulted my dog yet, and I haven't even got a hamster to watch but, yes, those long tails under the daily candles on my last daily chart did seem to indicate a good support area and the market was just waiting for the CPI, FOMC minutes, etc to decide the next move.

I did sell it at an early stage yesterday for a 100-pip gain and then bought it towards the close last night on a good buy signal on my hourly chart. But I didn't hold it all day so I've missed the top end of this move.

Out of the things I watch, we first broke above the mid-point of last week's range yesterday, and the 14-period RSI on the hourly chart confirmed my EMA crossover, so it was a buy. The fact that the buy signal came after the CPI figures confirmed an easing in the overall market concerns about inflating energy prices, supply chain problems, etc. My target from this buy signal was the high of last week's range at around 4430 and the 4-hour 200SMA, which came in at the same level. This is where we are now, although I was already out earlier due to a heavy programme today and I preferred just to bank some profits.

I think it is too early to say we are back on a strong uptrend yet but I think we could still reach 4475- 4500 in this move. However, I would anticipate a few reverse hourly candles before that since RSI is already high on the hourly chart and we have a whole string of up candles there since yesterday, Maybe we will hang this 200SMA/last week's high combo overnight.

But we also have Retail Sales data tomorrow and that is another hot subject and will see us into the weekend. If that is a lot weaker than expected then we might see a quick return to the lower levels!

Well I guess that is enough waffle to throw the hamster into a tailspin so I'd better stop! So briefly: Daily is neutral, 4-hour is positive, 1-hour is positive but maybe overbought in the near term. :) 
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PipMeHappy

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Re: S&P500
« Reply #388 on: October 14, 2021, 10:56:03 PM »
https://www.dailyfx.com/forex/video/daily_news_report/2021/10/14/Dollar-Reverses-Despite-High-Inflation-and-FOMC-Taper-Talk-Where-to-Next.html

(I am  on holiday,sorry I cannot do your post justice, @Kaitsu !!)

Kicklighter's article (and video) from last night
says a lot about where markets are at...

Kaitsu

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Re: S&P500
« Reply #389 on: October 15, 2021, 07:20:54 AM »
(I am  on holiday,sorry I cannot do your post justice, @Kaitsu !!)

Kicklighter's article (and video) from last night
says a lot about where markets are at...

Have a great holiday @PipMeHappy ! Its a great time to spend with family instead of markets! :D

I thought that was a very balanced and realistic article from Kicklighter, thank you for sharing it :)

See you when you are back from your holidays! :D


PS, I had never heard of the candlestick description "Marubozu" before, so thanks for that, too! :D

« Last Edit: October 15, 2021, 07:27:08 AM by Kaitsu »
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