|
PureBytes Links
Trading Reference Links
|
--- In gannsghost@xxxxxxxxxxxxxxx, "topos8" <topos8@xxxx> wrote:
--- In gannsghost@xxxxxxxxxxxxxxx, David Blaschke <dblas@xxxx> wrote:
> Carl,
>
> I don't trade bonds, but I have found, like you just
> did, that points/targets are simply events and not
> support or resistance.i.e. a significant event will
> happen at 114. It could be continuation, reversal or
> the start of a trading range but I don't know which.
David:
I have found no such thing.
I trade bonds and S&P's and every one of my trades starts by fading
the market when it reaches support or resistance. Of course, if I am
stepping in front of a strong trend I might wait a while (5 minutes
to an hour or...) to see if anyone else has the courage of my
convictions. If they do the market will trade sideways without
breaking support/resistance by much and this will give me reason to
take a position.
If I am fading a reaction against a strong trend I can be more
aggressive. One of my favorite tricks is to fade a breakout from a
small trading range on the 5 minute charts if there is
support/resistance just past the breakout level. Another trick is to
wait for a wide range, 5 minute bar indicating a buying/selling
climax and a possible end to the reaction. If the extreme of the bar
is on support/resistance I take a postion at the close of the bar.
The whole point to making trades at support/resistance is to get free
exposure to the market for some limited amount of time. This means
that for a limited time any loss is likely to be minimal and the
profit potential of getting things right is many times the risk.
In the case of the bonds at 114, the fact is that I took no position
when the market first hit that level on July 15 for two reasons.
First, the downtrend was a very strong one and there was absolutely
no hesitation when the 114 level was hit. Second, the 114 level
itself was intermediate term support. Typically the market will not
stop exactly at such a level. This would make things too easy and
obvious. Instead, the market typically stops at short term support
or resistance a bit ahead or a bit past the intermediate term level.
In the case of the bonds at 114 the corresponding short term level
was 113-08. I did not take a position the first time 113-08 was hit
but did so the second time. The bonds continued down to 113-04 then
rallied to 113-16. I had to get out when the market broke below 113-
00 because this itself was a downside breakout from a 113-04 to 113-
18 trading range which had lasted about 90 minutes. This range formed
right at short term support but the downside breakout meant that
there were not enough buyers there to halt the downtrend.
To assert that there is no such thing as support or resistance is
deny the existence of the very phenomenon that allows markets to
work. There are lots of traders who, like me, are looking for a
change to buy when the market is relatively low and to sell when it
is relatively high. Each is looking for a price that will give him or
her the confidence to step in front of a trend and fade it. It is the
activities of these sorts of traders that keep markets orderly most
of the time and provide the liquidity needed to accomodate big
orders.
There are many ways to calculate such prices. There are a few that
work reliably. But nothing works with 100% certainty. All you can
hope for is the ability to identify temporary stopping points in
trends. If things work out such points will mark the start of a
substantial move in the opposite direction. If they don't, you take a
small loss and go on to the next opportunity. That is what trading
is all about.
Carl
> Logic tells me that there should be a way to figure
> this out, but so far it has eluded me. If anyone has
> any techniques as to the range of a move, please post
> them.
>
> --- topos8 <topos8@xxxx> wrote:
> > Last Tuesday, in GG # 22675, I said that the bonds
> > would probably put
> > in a strong rally from the 113-05 level and move up
> > into the 117-118
> > range before resuming the bear market down to the
> > longer term target
> > of 105-107. This forecast was based on the fact that
> > 114 showed up as
> > strong, square of 9 support and that my price-square
> > time analysis
> > showed corresponding support just above the 113
> > level.
> >
> > In the event the market blew right through these
> > levels that very
> > day. The fact that we have traded a full three
> > points below 114 for
> > three days now establishes the 114 level as strong
> > resistance. I no
> > longer expect any rally from current levels to go
> > much past 114.
> > Instead it looks like the bonds have to drop all the
> > way to the long
> > term target of 105-107 and the notes to their
> > corresponding target
> > range of 109-111 before any multi-week, multi-point
> > rally can begin.
> >
> > However, my analysis also says that sometime in the
> > next 2-4 years
> > both these markets will be back at historical highs
> > (historical lows
> > in interest rates). I fully expect to see the 10
> > year notes trading
> > at 1.50% and the long bond trading at 2.50 - 3.00 %
> > at the next
> > cyclical low in interest rates. That will in all
> > likelihood end the
> > bull market in bond prices that began in 1981 when
> > the long bond
> > yielded 15.40%.
> >
> > Carl
> >
> >
>
>
> __________________________________
> Do you Yahoo!?
> SBC Yahoo! DSL - Now only $29.95 per month!
> http://sbc.yahoo.com
--- End forwarded message ---
------------------------ Yahoo! Groups Sponsor ---------------------~-->
Buy Ink Cartridges & Refill Kits for Your Epson at Myinks.com
Free shipping on orders $50 or more to the US and Canada.
http://www.c1tracking.com/l.asp?cid=5705&lp=home/epson.asp
http://us.click.yahoo.com/brYXfA/_xWGAA/ySSFAA/zMEolB/TM
---------------------------------------------------------------------~->
To unsubscribe from this group, send an email to:
realtraders-unsubscribe@xxxxxxxxxxxxxxx
Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
|