|
PureBytes Links
Trading Reference Links
|
-----Original Message-----
From: wes blake <amerskin@xxxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Monday, April 13, 1998 10:53 AM
Subject: opening
>Howdy,
>
>I was interested to see if anyone has ever noticed when a contract gaps
>down or gaps up. It seems that a high percentage of times when it gaps
>down it goes the other way and when she gaps up she goes the other way.
>Is this maybe the losers getting in in the morning and the pros
>finishing up the day.
>
>Is there maybe something to this.
>
>Shooting,
>
>Wes
>
The "TD TJ" indicator described in the Feb. 98 issue of Futures Magazine
("Playing with the Kids," p. 34-36) is based on exactly this premise, so not
only are you not alone in your observation, you are in the distinguished
company of acclaimed technical analyst Mr. Thomas DeMark.
The problem with this indicator, I've found, is on the days that it has been
wrong -- at least recently, since I have no other experience with the
indicator to go on -- it has been quite expensively wrong. Check the energy
(especially CLK8, HUK8, HOK8 on 3/18 and 3/26) and grain futures (CK8 on
3/30). In each of these markets, on these days, the market did _initially_
move slightly in the opposite direction of the gap, but unless you were in
the pit, there was pretty much no way you could have taken advantage of
these moves; even if you could have, the size of the move was negligible
compared to the move in the opposite direction (i.e. the original direction
of the gap).
It has been reliable during the current up-trend in the S&P, but before the
trend 'officially' began with the gap higher on Feb. 2 (basis June), the
signal was erratic at best in this market. This same erratic behavior has
been exhibited in the metals markets as well, and while the indicator in
those markets has called some very big moves, it has been fair to middling
at best when it comes to correctly picking the actual _direction_ of that
move.
If anyone else has worked with this idea, the TD TJ indicator or some
variation on it, and has some filter they use to keep from entering trades
on days when the market just keeps going in the direction of the gap -- or
if you've got anything else to say on this
gap-one-way-then-move-in-the-opposite-direction phenomenon -- I'd like to
hear about it.
BJ
|