Wave trading: stock market strategies

What’s on market, S&P 500 current state

mehanizator — Tue, 16 Dec 2008 20:10:52 +0000

Since the end of november S&P500 formed some kind of price channel, with slightly growing trend. Now borders of this channel are around 830 lower and 930 upper. There were two reverse on upper border and two reverse on lower, last reverse was on lower border, it was 12 december. So now it is turn to touch upper limit again, for the third time now. Usually third time is the last one, so this price channel is going to be reconstructed soon into something new. If third touch will result in a channel break, we may see strong rising wave. But actually such kind of upward channels more oftern results in a reverse on third touch and wave down. However, it is hard to expect such fine details of technical analysis to work after all that volatility we’ve came through last months. We are now just right in a middle of a channel, so it’s reasonable put probability 50/50 and wait for direction signals. Which border falls sooner, that will be new direction. Good strategy will be enter into market on the break along that direction and hold position for some not very long time with close stop.

S&P 500 current state: pressure growths, there will be something

mehanizator — Wed, 10 Dec 2008 01:15:22 +0000

It is already two days after S&P 500 got to the level 900 with wonderful strong movement of monday. And it is already two days nothing happened after. Actually, most logically after breaking such a remarkable level would be to keep going. But still nothing happened. S&P several times tried to move, but it looks like it stays with its tail glued to level 900. It always returns home. Finally, now it tries to move down from the place, but I wouldn’t be so sure this time result will be much different.

Anyway, it is very unusual to form local range right after strong movement. Usually, volatility can’t stop right where it is, normally it is a process that takes some time. So I guess this wicked two-days range will be broken soon enough. And since S&P doesn’t show any excitement about moving upside, some correction appears to be more probable variant. And if it will happen, S&P will return to december range 810-900, where after unsuccesseful break of upper border, new resistance level of this range will be like 915 or somewhere around. But anyway, if even this week’s try to break resistance will fail, there probably will be another one. It will just take some time to gather some strength. Because it’s just second touch of level. After second touch goes third touch, and only after third touch, if it fails, goes U-turn and direction change.

S&P 500 futures: current market situation

mehanizator — Thu, 04 Dec 2008 14:38:38 +0000

Ok new trading day - thursday - is going to begin, last two days s&p spent recovering from unexpectedly powerfull monday downfall. Current levels seem to be more or less stable, market doesn’t have any hidden tensions, which may possible move market right after the opening. Nevertheless, this stability sooner or later rise another strong movement. I continue to think that we don’t have enough strenght to move upward from these levels. So probability of next downfall is a little bit higher. Anyway, right now there is no need to have any opened positions, because current tendency is unclear. It would be better to wait till market finally finds out which direction is more preferable, and only after that there will be time to join the movement. So now we have borders of current context 800 from below and 900 from above. Breaking any of these levels will be a signal of context change.

Current situation

mehanizator — Wed, 03 Dec 2008 19:32:39 +0000

I still think that S&P has not finished to draw his line down and tomorow’s and today’s tries to reverse the market are going to fail. These days’ growth is all unstable and unsure. We still have to visit some levels around 800 and even a bit lower and only after that the picture will be perfect. So it’s not the time to buy yet, better wait. Or at least we have level 900 as a top resistance of current situation, so good variants are to buy on breaking 900 or lower 800. Right now we’ve stuck in a middle of nowere with unsure chances for any direction.

Current situation on S&P

mehanizator — Tue, 02 Dec 2008 18:40:31 +0000

After a week of growth we have a usual half-way return back. Now it is almost the situation when it’s time to get ready to new wave up. I say almost because I can’t be sure that this half-way rerurn is completely over. It’s become standart last time when S&P have two days long falling waves. We have 1 december falling day, so there can be another black candle to finish the job. So far we have 3% growth, but the day is not over yet.

Current situation

mehanizator — Thu, 20 Nov 2008 13:20:34 +0000

S&P finally broke the 825 support level, this time noone tryed to buy it. Mostly because last two times it was temporary solution and did not reverse the market. So now S&P has an impulse down after breaking strong level, some more levels below are to be explored in the near future.

Risk management is the key

mehanizator — Tue, 18 Nov 2008 08:01:45 +0000

The very common reason for destroying your deposit is taking risks too high. There is a limit of risks your strategy can afford, and it is usually way too lower that you’d like to think. So when you’re taking leverage just 2 times higher this limit, you’re turning profits into losses. Even if your strategy itself is good. It may work fine on lower risks.

So don’t be greedy. It’s too expensive.

One stock - one strategy

mehanizator — Tue, 11 Mar 2008 22:43:13 +0000

Some people believe that good trading strategy must show well on most of stocks. I disagree. Every stock has its own properties, unique combination of interacting groups of traders. So I can see nothing wrong if you have a strategy that works only on one selected stock and show bad results on others. It’s usual thing.

Russian stock market

mehanizator — Thu, 25 Oct 2007 23:25:44 +0000

More trends. More insiders, so even more trends and less gaps on fundamental news! Limited choise of liquid stocks (about 10-15 if you want intraday). Iven more limited choise if you want futures. Options’ liquidity is just ugly. So better forget derivatives, spot market is the best choise.

Cheap comission, counted as % of trade volume, not fixed $ per contract. Good technical solution on MICEX, fast and reliable.

Morning gaps :( USA markets and oil futures are essentials for traders, but they mostly trade when russian exchanges are closed.

Timeframes

mehanizator — Thu, 25 Oct 2007 22:59:57 +0000

Market is the battle between different strategies, different ways how to take decisions. But this battle field is not a single whole. It’s divided into small parts called timeframes. One strategie may be a winner on one timeframe, but lose on another one.