S&p 500

[kumara_xl]

To all traders out there:

It would be very helpful if those of you who trade EOD in the S&P 500 stocks would post your comments and thoughts here.Thanks and good trading.



S.K.:)

[jswin]

To all traders out there:

It would be very helpful if those of you who trade EOD in the S&P 500 stocks would post your comments and thoughts here.Thanks and good trading.



S.K.:)

Hi Kumara_Xl
I want to trade the S&P stocks with my MTP EOD. I am not particularly experienced and I have a question regarding the purpose of the S&P analysis in each daily report. I assume that because it is there, it is of some importance, and therefore it would be relevant for me to understand it as an MTP user.
Does the S&P chart in the daily report reflect the collective price movement of the constituent stocks and is therefore useful for ascertaining which direction to trade individual shares, or does it also reflect trading on the actual S&P future?
If it reflects the combined stocks' movements it would seem logical that I could evaluate the S&P chart for the purpose of trading individual equities. But if price on the chart was affected by the buying and selling of the S&P index future, then what would be the good of it in terms of trading stocks?
The only answer I've been able to get so far is 'both'. Does anyone have anything more enlightening?
Hope this has made some sense and anyone's comments would be immmensely appreciated.
Thanks,
J

[mrkam]

It is a "standard" trading practice to look at the next higher time frame to endeavor to determine a "larger-degree trend". This is the 'ol trading axiom of "trading WITH the trend, not AGAINST it." Steve addresses this in several ways in several places in his manuals, and would be worth the read.

To your question.... The S&P chart in the daily report is called a "continuous future", which is an index futures that does not have an expiration date. By the miracle of modern math, somehow they "figure" a way to make a continuous chart out of the multiple futures charts thru the year. As such, it "sort of" gives us a view of what people "think" the index (S&P) will be doing in the near future. This is to (maybe) give us an indication of where shorter term time frames may go. In particular, one of the last week reports was GREAT in this, in that the daily chart showed us reaching a MTP identified WPT. So, we think, hey, looks like resistance may unfold here, let's look for short trades... and that is exactly what happened. We STILL use the shorterterm (for me, 3min/5min) setups as identified by MTP to trade, per the rules, BUT, we have a little "edge" on what to look for by using the daily continuous futures chart analysis.

Other ways are to use moving averages on the larger degree chart (see MTP manual), or even to use two moving averages on the same degree chart (again, see MTP manual). For you, since you want to trade daily, you could look at weekly charts to see where in a trend you are falling.

Please keep in mind we may or may not get anything at all with this type of analysis. And even if we see something in the larger degree, it again may or may not hold true. We are still talking about probablilities here, and all we are trying to do is increase our probibility of our trade. Larger-degree trend analysis is just one tool to doing it. Over time, with good larger-degree trend analysis, our trades will be overall higher probability than if we didn't use it.

That's the idea anyway!!

Good success to you....

[jswin]

It is a "standard" trading practice to look at the next higher time frame to endeavor to determine a "larger-degree trend". This is the 'ol trading axiom of "trading WITH the trend, not AGAINST it." Steve addresses this in several ways in several places in his manuals, and would be worth the read.

To your question.... The S&P chart in the daily report is called a "continuous future", which is an index futures that does not have an expiration date. By the miracle of modern math, somehow they "figure" a way to make a continuous chart out of the multiple futures charts thru the year. As such, it "sort of" gives us a view of what people "think" the index (S&P) will be doing in the near future. This is to (maybe) give us an indication of where shorter term time frames may go. In particular, one of the last week reports was GREAT in this, in that the daily chart showed us reaching a MTP identified WPT. So, we think, hey, looks like resistance may unfold here, let's look for short trades... and that is exactly what happened. We STILL use the shorterterm (for me, 3min/5min) setups as identified by MTP to trade, per the rules, BUT, we have a little "edge" on what to look for by using the daily continuous futures chart analysis.

Other ways are to use moving averages on the larger degree chart (see MTP manual), or even to use two moving averages on the same degree chart (again, see MTP manual). For you, since you want to trade daily, you could look at weekly charts to see where in a trend you are falling.

Please keep in mind we may or may not get anything at all with this type of analysis. And even if we see something in the larger degree, it again may or may not hold true. We are still talking about probablilities here, and all we are trying to do is increase our probibility of our trade. Larger-degree trend analysis is just one tool to doing it. Over time, with good larger-degree trend analysis, our trades will be overall higher probability than if we didn't use it.

That's the idea anyway!!

Good success to you....

Thanks Mkram, I understand that using larger timeframes on a particular market can add strength to decisions regarding potential support and resistance areas etc, but is the S&P continuous contract you mention also a good way of deciding when to go long or short or pay particular attention to support or resistance etc when trading the constituent stocks on the same time frame - in my case daily - rather than the index itself on an intraday basis? So, if the daily S&P future had just bounced off a Wave C low and looked to be on the rise, should I be looking to go long on the stocks that comprise the S&P and avoid going short?
Cheers :)

[mrkam]

... and maybe some more experienced daily stock traders will chime in here (I do indexes only....). But, I'll always have a couple of cents to toss in the pot...

For any particular stock, it would seem to me that the SP-067 would be way too broad of an indicater. As you know, individual stocks may go way up or way down, while the SP067 goes up/down/sideways with no particular correlation to any specific stock, since it is a conglomerate, and a derived future at that!!

Back in my Fib/Elliott mentorship days, my teachers would take a cursory look at the stock indexes (not the futures, the $COMPQ, $INDU, $SPX) to get a VERY broad feel, then go to the specific stocks for setups, and if setups are found, or found to be developing, check the larger time frame of THAT stock... Still, the trade is based on that particular stock, in your time frame, per Fib/Elliott/MTP, using any larger time-frame or index views as confirmations only. Even then, things may be just right for your stock, regardless of what the indexes say, and the trade would be a go..

Enough blather from me,... maybe somebody that knows something will post!!!

[jswin]

... and maybe some more experienced daily stock traders will chime in here (I do indexes only....). But, I'll always have a couple of cents to toss in the pot...

For any particular stock, it would seem to me that the SP-067 would be way too broad of an indicater. As you know, individual stocks may go way up or way down, while the SP067 goes up/down/sideways with no particular correlation to any specific stock, since it is a conglomerate, and a derived future at that!!

Back in my Fib/Elliott mentorship days, my teachers would take a cursory look at the stock indexes (not the futures, the $COMPQ, $INDU, $SPX) to get a VERY broad feel, then go to the specific stocks for setups, and if setups are found, or found to be developing, check the larger time frame of THAT stock... Still, the trade is based on that particular stock, in your time frame, per Fib/Elliott/MTP, using any larger time-frame or index views as confirmations only. Even then, things may be just right for your stock, regardless of what the indexes say, and the trade would be a go..

Enough blather from me,... maybe somebody that knows something will post!!!

Hi Mkram,
Where do I send your cheque :D ???
That was a real help. I will perhaps try to find a way of looking at sectors in the S&P as broad-based indicators and then narrow down to constituent stocks for a clearer and more specific overview. Cheers mate!