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I use Prem as a s-term indicator for the S+P's under a few situations. It
is helpful as a sort of sentiment indicator, and I display it using
painbars. I basically look at the past couple days, and set the paint bar
levels where they will hit maybe 20% of the time. I am not trying to be
exact as to where I set the levels, since I am only looking at relative
comparisons rather than absolute. However, I do plan on researching into
setting these levels more objectively.
As to where I find it useful-
1. it is a great indicator when the market is doing that slow creep higher
after 10:00, and sucking in a lot of people shorting the market. Most
people look at the slow momentum as the market creeps higher, and look to
sell, but if the prem bars are showing low prem, with no downside movement,
it is saying that the cash market is leading, and to ignore the low
momentum. This sort of action frequently occurs after 10:30, esp. when the
market has been unable to get anything going.
2.It is also helpful as a general indicator for trend changes. Frequently,
if the market is moving down, it will be printing low premium paint bars.
Once a bottom is formed, if the bounce paints a few bars with high prem, it
indicates buying coming in, and can be another confirmation tool.
That's about the only use I've derived from the Premium. I'd be interested
to hear any other ideas.
Chris Lober
>Hi all,
>
>Just wondering if anyone out there is using PREM as a short term
>indicator for daytrading? I'd be interested in hearing your thoughts on
>interperetation, if you want to share them...
>
>Thanx in advance,
>
>Dave
>
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