Trembling Hand Trader

Weekly high and low for the Hang Seng Index (HSI)

I decided to investigate whether the weekly high and low was more likely to occur on a Monday and Friday for other markets the same as the for the XJO. Looking at the HSI it would seem to hold the same pattern as the Australian XJO index. Using data from the start of 2008 it would seem to hold the same probability of printing the high and lows at either end of the week, roughly twice as likely then Tuesday, Wednesday or Thursday.

Clearly Mondays without other information or biases is hard to guess whether the high or low is the one you should be fading but once the weekly trend is set it doesn't make sense to fight the trend within the week. It seems weekly momentum has a bias to carrying on to the end of the week.

FX tick vs true Volume.

I see that TradeGuider is pimping their VSA to FX traders saying that tick data can be used as a substitute for true volume. Now to me that seems like someone selling a product rather than a method. Changes in price do not correlate exactly to changes in volume. Sure there is a link there but is it not the whole idea of VSA to find the hidden supply & demand within the market relative to recent moves and volume?

When I first heard this idea my first reaction was surely this is counter to some of the main principles they push. For example how is a tight range high volume bar going to show up as high amount of ticks? Its not. And at the opposite end any bar that has a relative large range, or spread, is always going to show a large amount of ticks irrespective of the volume traded simply because of the many price levels it moves through. The Volume traded could be quite small yet you will get the opposite showing as ticks.

I have compared last nights pre & post Fed Funds Rate announcement as a way of investigating FX tick vs volume. I have used IB's ECN, FX Pro, to capture volume and ticks to compare them. I have changed the data to % of the maximum bar so they can be compared. Each bar is 1 minute of data. The chart action looked like this,

So from just the price action you can say that the set up pre announcement is a steady trending down market. Then post announcement is some wild up moves followed by retracements and expanding upwards range bars.

Here is what the volumes looked like during that time,

 

What I see here looking at the tick and volume is that there was relatively good volume on the fall pre announcement suggesting that there was underlying demand yet looking at the tick data it was very low suggesting no demand as prices got cheaper.

Then after the announcement as the volatility went wild the reading reversed. Ticks clearly exploded as well as the volume but the volume fell off pretty quickly suggesting a lack of selling into the post announcement higher prices. Resulting in larger spread bars on less and less volume. While the ticks went nuts and stayed relatively high. Confirming my initial thoughts that ticks will expand with spread rather than true volume. Some what counter to finding hidden supply and demand I would of thought.

This to me sees a clear example of ticks giving opposite signals to actual volume. When you have a closer look at the bars there seems to be even more evidence of the danger of trying to read supply and demand from tick values,

 

 

 

Where will the weekly high/low be?

What days provide what opportunities? Is any particular day more likely to print the weekly high or low than others. Well looking at the stats there is a big chance the high or low on Monday will be the high or low for the week, twice as likely than the high/lows for Tuesday, Wednesday & Thursday. And that the same applies for Friday.

Going back to the start of 2002 there has been 428 weeks of trading, with 239 (55%) of them positive when looking at the week open compared to the week close of the XJO (ASX 200 index). Now have a look at what day the weekly high or low has occurred on,

Clearly there is momentum carrying on throughout the week. And look at Fridays. Its very likely that if the week is positive that momentum will carry through to print a high on the last day, 135 highs on Friday almost double the 3 days before, as well as momentum for a low on Friday.

Looking at more recent period there is a similar distribution of moves from the start of 2009 to now.

So today is Monday and we have just opened at the top of last weeks range. The chances are that today's highs or lows will be one of the highs or lows for the week. If its the low, that is a positive week, we can expect a break to put us up somewhere near the January highs AND expect that momentum is likely to last until Friday. On the flip side as we probe last weeks range highs that could be it for this week, dropping us back into last weeks range.

Something to frame the rest of the weeks trades from.

This move is not yet over done

Markets are not meant to move in a straight line. Well that's the saying but as with most market cliches they let you down when they become most obvious. Have a look at the last 8 days of the XJO, up every day, straight up! Ok so you missed that move but surely we are due for a decent pull back if not the start of an all mighty fall? I wouldn't put my money on anything other than a bit of a flip flop around these levels, that's if we don't push higher still.

Here is a some stats from a similar situation last year in July,

So the bears got the shaft last week but surely this week they will fight back and smash the market? Well maybe not. Since this Bear market has started in late 07 we have had 11 weekly gains greater than 4%. The week after such gains has averaged -0.5% against the average weekly loss for that whole period of  -0.28%. So there is a bearish bias there but looking at the figures a little more we can see that there are 5 down weeks and 6 up weeks. Most interesting is we have two weeks that are right in the savage part of bear market in late 08. Weeks where I don't think we will see down moves again for some time. Without those two weeks the weekly move after a 4% or greater gain would be a 0.66% gain!!

I don't see any great edge in being bearish because of the gains last week.

I see now as a similar position. That is that we are not "over bought". And any pause for a few days will reload the spring, readying the indexes for a further push. Have a look at my super duper never fail squiggly line prediction meter (yep I'm taking the piss on TA)

The way the market stands at the moment the falls from late January to early February created a very over sold market. Then we had a nice bounce back into the middle of the 6 month range with a 1 week pause. That 1 week pause has been the key to where we are now. At the end of that week we had a huge range down day. The SPI moved 100 points down intraday and washed out many stops from positions that had been built up from the early Feb bounce, adding to the bulls pain has been a wrong footed signal to the bears. Perfect situation for a push higher, bears short and bulls in cash. And we are neither over bough here or over sold looking at the Adv/Dec line. Plenty of room to move higher over the next 4 or so days.

 
 

 

More excel ideas

Here is a quick one following on from this post about using excel as a start to back testing. Today the SPI gaped open from yesterdays close by more than 1%, in fact it was 1.4% from my calculations. So as a start it is not a bad Idea to have access to where the edge lies in terms of how similar days have played out. Here is a quick spread sheet I banged together in about 5 minutes.

Results are for a day when the SPI opened greater than 1% from previous cash close from 24th of July 07 up to yesterday. There has been 106 opens greater than 1%. Out of those 106 times the close on the day has been lower than the open on 62 occasions, 58%. Average day move is -11 points. So a mild negative bias. The SPI is now 25 odd points above the open. lets see how this one plays out.

The problem with the ASX Indexes

Ever noticed the lack of Gaps on the ASX Indexes? Have a look at the three charts below of the S&P 500, the HSI and the All Ordinaries (XAO).

Notice in the first two, S&P 500 & HSI, that there is all sorts of gap games going on. Gaps and continual moves and gaps and rollovers to fill on the same day etc. They don't look all that dissimilar to the average stock chart. Now have a look at the third one. A lot of the bars actually start where they left off the day before. Most have the tiniest of gaps. Out of 276 days since the start of Jan 09 there has been 176 days (63%) with an overnight gap of 10 points or less and 108 days (39%) with an overnight gap of 5 points or less. That means the index data suggest that it is a two out of three chance to open 0.215% within yesterdays close and a one in three chance of opening within 0.1% of yesterdays close! BS!!

Compared to the S&P 500 taking similar % moves you get 26% and 14%. Half the chance?

Whats going on? Well it isn't that the ASX is less volatile or sluggish on the open. They both move about the same range per day. The problem with the ASX indexes are two fold. Firstly because of the staggered open from 10:00 to 10:08 the opening tick of XJO/XAO is not the true value of "opening price" of all index constituents, this is unique to ASX. In fact the data from 10:00 to 10:08 is really twilight zone stuff.

Secondly and even more strange is sometimes the first tick that the ASX provides for indexes is magically exactly the same as yesterday close, to two decimal points?? Now that would only be possible if all 400 or so stocks, particularly the big caps, that open in the first round at 10:00 am (A to B) traded at their closing price. It doesn't happen! Where this comes from is that the opening auction is at 10:00 am +/- 15 secs BUT if its say 10:00 am +12 seconds the ASX will still take the index quote from 10:00. If you have a look at the data post February 08 virtually every open tick for the ASX is exactly the same as yesterdays close. In fact only 5 of the opens were not exactly the same as the previous close of all of 07's and to two decimal places. It seems that the ASX from February 08 has changed slightly their method for quoting the first tick for indexes but it still doesn't get around the problem of the staggered open.

If you think gaps are at all significant you cannot us the ASX Index charts for a reference. There is simply 100s more gaps in the index than what shows up on the Dodgy charts. The better reference to find gaps for the ASX is the ASX200 SPI chart without the overnight trading. Here is an XJO chart and a SPI cash hours only chart. Notice all the twilight data (circled) in the ASX XJO chart that never actually happened.

 

  

Using excel as a first stop to back testing

I have posted plenty of times about how I use excel to find out what is to be expected. A good example of  the way markets moves is here.  To do these types of charts, which are really more helpful than a static candle chart, I thought I would run through an example.

I mostly trade the HSI futures on the Hong Kong stock exchange. There is another index future that moves very similar, the HHI, Hang Seng China Enterprises Index. Its currently at 11540 while the HSI is almost double the value at 20300, both futures are $50 HKD per tick. I have noticed that recently the daily range has almost matched that of the HSI in points, which would mean double the % move. Now that's not a huge relevance as the fut is the same per tick but still its of interest, not to mention that the brokerage is cheaper on the HHI so more bang for the buck.

Anyway how to go about finding the range  and % range to compare in excel? These file are the day OHLCV for the Dec & Jan futs combined HSI and HHI. Download and save each to file then open each in excel. When you open select all files to fine the text data file you saved. See these steps if your not sure how to get it into excel, 1 2 3 4 .

This is what you end up with for the HSI, note I have added a heading line to make it clear what each column is.

 
 

So do the same for the HHI and then paste them into the same worksheet. Making sure the dates align and you leave some room to work on the data.

Ok. First step is to calculate the daily range: High - Low. So in cell H2 type =C2-D2 and press enter. You get the daily range.

Then "grab" the little box on the right had corner and drag down to the bottom of your data. This is a vid of the next few steps of finding the range and the daily range.

 

 

Now we have to have a way of comparing them. I like to do this by charting the averages to see how the data changes over time. Since we are only working with 41 days of data I will plot the 5 day averages of the % to see what type of relationship there is between the two. Here is the graph once you have the data.

As you can see the HHI has larger moves as a percentage and seems to be gaining in % range over January. You can also compare the average range with that data.

So yes the HSI has a larger range expressed in points but there is only a small difference and then maybe the cheaper brokerage or margin may make it worth while having a look at. Either way we now know how they move in hard stats thanks to 10 minute spent with excel.

Here is the spreedsheet that I used if you need to play around with it.

There is of course a hell of a lot more to do with simple OHLCV data and excel. Brett Steenbarger's book "The daily trading Coach" has a whole chapter on ways to use this technique to find edges in the market. I will show some more examples soon, Any suggestions?

  

 

Macquarie Bank

 

Maybe they should stop thinking about "moving forward" and look what is behind them from time to time, Watch he guy in the background.  
Classic!!

 

 

Why social media is 99% rubbish.

My year 9 physics teacher was wonderfully susceptible to running off on tangents mid lesson. Much to our delight, on the smallest prod from a disinterested classmate, the planned lesson, I assume there was one, would be replaced by a wide ranging discussion about his favourite topics or his gripe de jour. We didn't learn the whole year 9 physics syllabus but we did learn some interesting things about sailing, motorcycles, green house effect (back in the late 80s mind you!) and the poor quality of media and how we would be dumbed down and unable to think and learn if we believed the ever increasing rubbish on TV (back in the late 80s mind you!).

One of his many points, or what seemed like the grumbling of a tied old fool back then, was the law of quantity degrading quality. His fear was that the soon to be added 3 more TV stations to the airways would be wasted energy because it would not give extra quality just more rubbish. Of course this didn't sit very well with year 9'ers who only had access to 2 channels in the bush and ultimately didn't prove to be true at that time. But if any warning was ahead of its time (besides the small matter of the greenhouse effect) it must have been more information will make it harder to find the good information. What is valued now as information in the new world of social media and the every person has a voice in the narcissistic twitter culture is starting to stink. The more information out there it seems the less value it has.

Can you take the often thrown around stat that 90-95% of people lose at trading and apply it to internet discussion about trading? More and more I think it's on the money. Most people although reasonably intelligent fail at this game. Would it be reasonable to believe that what ends up on the internet in Blogs like this one and forums on trading is weighted towards the collection of work from the 5% that are successful, or is it closer to the representation of the collective participants? Being greatly outweighed by the losers?

A quick flick through a forum recently came up with this gem of a topic:

The single, most important thing you've learnt as a trader

Interesting enough discussion. You would expect some pearls of wisdom to be dropped in the 100 odd posts from some wise old heads. In fact the person that started the topic from his blog stated he was "a professional stock market trader" who is "available to speak at organizers events internationally ". WOW sounds just like the type of informative discussion that someone looking to learn trading would need. Towards the end of the discussion the original poster even put together 25 of "the most important things" raised in the thread. Great. Except it was a woeful listing of clichés and regurgitated same old same old bullshit that you hear from losing traders. Here is the list:

1. Money management
2. Taking losses while small
3. Positive expectancy
4. Importance of time out
5. Market can do anything anytime
6. Recognize your mistakes
7. Never indulge in hope
8. Keep things in perspective
9. Concentration, patience
10. Being humble
11. Ride the trends
12. Define what success is, for you.
13. Do your own research
14. Use sound risk management
15. Lock in your profits when they're there
16. Accept that you'll be wrong.
17. Keep it simple you stupid!
18. Sticking to your plan
19. Contrary opinion
20. Always have a good exit strategy
21. Knowing when to stay out of the market
22. Control your emotions
23. Never average down.
24. DISCIPLINE!
25. Pyramiding profitable positions to maximize profits in the trade.

Ignoring that some points have a contradicting counterpoint (like 11, 15 & 25) we are supposedly talking about the most important thing. Now there's one unbelievable omission from the single most important thing list - it's the 1st and only rule that all businesses have, including trading: knowing how you will be profitable and why you will be profitable. Testing, break-even analysis, sales projection (back & forward testing for trading) these are the "most important things" when starting a business. Knowing that you will be profitable. You will get nowhere in the widget business selling widgets into the market that cost more to make than the sale price. Or the amount you have to sell to reach break-even is three times what the market will absorb. Or knowing how price increases of raw materials will affect profit. Or the size production you need to get over breakeven (small account anyone?)

Same with trading. If you don't know before you start that your cost of doing business (sum of losses & expenses) will be less than the sum of profits from winning trades, then you shouldn't be in business. If you don't know what makes that profit then you are clueless as to when your system is broken and likely to blow up. If you don’t first succeed on sim then you won’t do better live. Positive expectancy is no good if it doesn't get you over your running & living cost.

It’s amazing that the same old rubbish that gets spewed out by forum traders as to what is important. You would never get a business owner stating that the most important thing in business it to pay suppliers (take small losses #2). Thats not the most important thing, its just business, like opening the door in the morning on time, its just taking care of business. Yes the list has things in it that if ignored you will die in this game, like money management, but come on. How can so much "collective wisdom" be spewed up without one person stating what every business owners knows.

Income from Sales > Cost of expenses.

Doesn't matter about anything else if that's not true you will be broke very quickly. No matter how disciplined you are or how good your money management is you will still be broke.

Now there was one post saying with great sadness that no one has pointed out the need to test for profitability but it was just washed over in the tidal wave of what I suspect is people's own reflections of their failures. Just as Google will return a search of the most popular pages on a topic, not the "most true", and news pages can be customised to "feed" you the news you "want" but end up feeding you more of what you have already seen. I am afraid that web 2.0 is actually "feeding" more of the collective failures to the next lot of traders about to fail. Very little of it is authoritative, tested and proven successful information. Most of it is just like a Google search of the most popular and what's very popular in trading is failures.

Is popular all that matters at the moment?

SPI range

Since its a buy and hold type of day, even for a scalper I've had some time to waste. This is what I've done with it. The changing daily range of our markets. Below are two charts of the 20 day average of the cash hours SPI since mid 2007 (that is between 9:50 am & 4:30 pm). As you can see times have changed. In fact times are always changing. Thats just another example of why this games is full of torment. Just as you become use to a certain type of market and refine an approach to really push it is also just about the time its going to change on you.

 
And expressed in percentage terms,

 
 NOTE: I have excluded data from one day in DEC 08 when there was a stack of trades scratched after a fat finger resulting in a 400 point sweep.

Reviews

I have an ideal way I like to enter for scalps, flicks against me, but after 50 - 100 or more trade per day its not practical to review the trades. And its not like every trade I'm entering or exiting with the same 'pattern'.  To review all entries will just have me chasing ideas that don't lead to more profit. In fact I know that I just about always get out too soon. So I after reviewing of trades the logical thing would be to try and hold for longer. Milk them a bit more. But of course thats always the Scalpers problem, you always leave a fair bit on the table if not what you end up doing is becoming a longer term intraday trader. And then I become conflicted. So after review I just accept that. Trying to change it results in less profit.

But what I can review is patterns of my behavior. Just like patterns repeat in the market so I have discovered I repeat patterns. That's why I follow my equity curve during trading. Yesterday classic example. All morning I couldn't get a runner, every win was around 1R. Now this is my second day trading after nearly 4 weeks off so I'm a little rusty and a little keen to pay back all the Beer $'s I spent. After 20 trades of going nowhere the frustration got the better of me and the next 9 trades were reactive rather than my normal entry style of taking opposite positions to DOM movements. Result? 8 of them losers! So after a quick break and cool down (and grumble at the dog) I got my stuff back together and got the equity curve positive.

By then it was lunch break on the HSI. During the break news from China about tightening was pushing all the other Asian markets down so the plan was to play short from the arvo open. Which was working out nicely as the equity keep going up. Until I got onto what I though was going to be a nice runner to make the days effort worth while. BUT In moving a limit order I fat fingered it!! and got long on the biggest sweep of the day that I was an instant before perfectly positioned for!! Grrrrr! FRUSTRATION. End result? see for yourself.

 
 
A wasted day. So like I said I'm a bit rusty and a bit pushed to start swinging it again. Today's efforts will be to concentrate on the trade ideas and getting the right entries while keeping a very close eye out for building frustration.

The back end of a bull?

This is what the back of a bull looks like.

And I think so does this,

This looks like distribution - not a healthy pause before the next run.  Fewer and fewer stocks are participating in the upward momentum. My last post was about looking for direction when the inevitable bounce came from the falls from yearly highs and its been disappointing. Maybe Santa can save the indexes by holding up a couple of big Caps but underneath them less stocks are rewarding holders and it would seem more are heading for the exits. AUD could bring back some specie juice if it takes the highs out. But I'm only watching that as an "if" at the moment. Not trading it like I expect it to happen with any gusto.

Interesting Rollover on the cards?

Many an internet Guru has lost their Guru status on calling for falls this year and been given the cucumber rumba as the indexes continued on a relentless climb. But is this rally finally losing momentum? We will be down today but will this develop into something more? I actually think we have chance here to see a deeper fall than we have had on previous pull backs. Have a look at the chart below of the 10 day average of the advancing stock minus the declining stocks. This chart gave me a good heads up of the end of the bull run back in December 07. The problem with the Indexes as an indicator of market strength is that a few big caps can hide the underlying weakness in the broader market. Just like we got back in 07.

The blue lines are the points where we have had divergence from the broad market index this year and what great signals again they were. The first one was a ripper. As we were making possible generational lows the downward momentum had well and truly come out of most stocks months before the low was reached on the index. Then we got some significant divergence on each push up to new monthly highs in May and June signaling the 8% fall we had in late June. Now we are at a similar point in October where the index has made new yearly highs yet the adv-dec has made 2 lower highs. These are signals of weakness in the broader market. The money isn't chasing higher prices here. A decent pull back would actually be healthy.

If we get a good pull back the bounce from any such fall will tell us a lot about the health of the market for the next medium period. If you're a Bull you would be looking for something like I have marked on the chart below of the same 10 day Adv-Dec (red) and the XAO (blue).

So you want to be a trader?

Oct. 8 (Bloomberg) -- Neill Junor remembers the exact moment he decided to quit snorting cocaine. On a chilly December afternoon in 2005, the former equities analyst took a stroll in London’s deer-filled Richmond Parkto select the tree from which he would hang himself. 

Interesting article on Traders and Bankers in the City. Just about sums up the live.

All the trading rules you will ever need.

As hard as people want to make this game here are all the "rules" you need to fill your hand with aces. From no less than some old dude my Dad would sing to while my sisters and I would scream in merciful agony to PLEASE stop, Kenny Rogers. Maybe my Old man was teaching me more than I realized, LOL.

"every hands a winner and every hands a loser,"

There's a lot in that line. Big wins can mask danger and losses can be big winners if treated the right way. By taking some sort of info from them, whether that is about the condition of the market or your interpretation of the market or application of your trading.

USD vs the World

So if you haven't notice by now there is only one trade going on. It's basically USD versus everything else. In the 08 meltdown it was a carry trade unwind versus everything else. You could pretty much throw your bets on anything inverse the JPY on a minute to minute basis. Now its the USD weakness or relative strength versus everything. Obviously commodities and precious metals but also or especially equities.

Now the sweetly ironic bit in the play that the tin hat brigade has been warning of since 1999 is that gold isn't the best one of the "everything else". Not yet, maybe tomorrow, maybe in two months, maybe in two years but not yet, not since the March lows. That's funny, who would have thought that an obvious trade wouldn't be the best one?? Who would have thought that swallowing the rhetoric of the religious gold followers would have you lagging when their predictions start to turn true? Well half of it anyway, the weak USD half. Funny how this game doesn't reward followers.

Especially those that buy their lattes in AUD,

Where are the moves?

You often hear statements such as "FX is volatile that's why I trade it". So just to put some numbers to the idea I had a look at the daily ranges expressed in % moves of ASX20 stocks, FX and Equity Index futures. This is what I found taking data from June the 1st this year to now.

 

 

So it seems that again a trading cliche doesn't stack up to reality. Its clear that FX is not volatile by the amount of leverage that people have to use to make the smaller moves meaningful for profit and loss. Of course that's doesn't make FX the worst instrument to trade nor is daily range the best or only indication of a good instrument to trade. I would consider trading cost, tick size and spread far more important.

One often selling point by FX brokers is that its a 24 hour market. For me this is actually the biggest negative for a couple of reasons. Firstly this game is addictive and tiresome. Having your market open all the time removes the necessary break and time away from endless hours at the screen. This cannot be underestimated. A lot of the learning comes once you step away from doing and focus on what you have done, in a calmer state. You cannot do this while the quotes are flashing changes in front of your eyes. Especially if you are going through a draw-down. And maybe the biggest changes happen when your market closes and you are in a disgusted state from your seemingly stupid actions. If your market is still open and you are in a distressed state your likely to just add to your problems. But at close time that is a great opportunity to start the "never again" planning while you cannot do any more damage to your equity and head.

The other negative of the 24 hour market for me is actually the time that the action is spread over. Take the HSI. Its only open for 4 & 1/2 hours yet you get at least the daily range that most FX instruments take 24 hrs to do. The closing and reopening of equity markets for a daytrader is where the opportunity lies. When you have lots of money being put to work in a limited time. Your trades are on and they are either proven right or wrong quickly. Then you can move on to the next idea or better still walk away from the screen and have a life.

Do not waste your time with TA

Big statement, especially from a trader who uses TA as a tool but its true. Technical analysis is rubbish as a predicting tool. Especially if you are new to markets. Technical analysis will not give you an edge in predicting where the markets is going. What it does do is confirm your biases. Its a tool for confirmation bias.

Now if you have five to ten years of experience of how your fellow traders act given certain previous events that's an advantage. If you have built up a huge database of implicit knowledge that's something that will work in your favour. BUT if you are new, all it will do is have you acting on prior price action in the false belief that what just happened will be repeated to some degree in the future. Classic example is this sorry thread on Aussie Stock Forums of head and shoulder patterns. The calls are running at a disastrous 6 correct out of 26. What works is not so called classic patterns from some dudes who found them 80 years ago in a different market over a different time frame. Or some overbought/oversold indicator. What works is recalling the right pattern at the right time. Using a squiggly line at the bottom of your charts will not help if you dont have the large mental database to know when the pattern you are looking at is likely to be wrong.

A good example is the arse whipping the bears are taking at the moment. Have a look through any forum and for the last month the most common type of comment you hear is,

"the market has moved 1 way the last XXX, looks overbought here and is due for a bull back, have a look at the RSI/stochastic/MACD"

Really?? What about this,

 

Yes that chart is upside down! Its the XAO from Jan 08 record breaking move. That's why this game is so farggin hard. You have to act on something. On some bias that enables you to take risk on an uncertain outcome. People use TA for that. Where they fail to approach it correctly is they think that TA has some sort of predicting qualities. NOPE. It just gives you an "if- then" type of problem solving tool. Where traders get a real edge from TA is that through experience your biases towards outcomes become a little more accurate. Instead of taking cues from that squiggly line at the bottom of your charts your subconscious deals with what weight you will give that info.

To that end here is a recent example. For the last 3 weeks I have been pointing out to any punter that cares to listen on ASF that its clear that global funds are in a risk seeking mode.That overbought indicators are not going to serve you any good when funds are flowing. That a straight up play is not out of the question. If one took the time to study how markets moved forward, especially indices, you would see that 3 to 5 days is all that is needed to work off any oversold/bought states. Indies push and pull, consolidate and retrace to various 50% levels then take off again. Whether thats forwards to new territory or back to where they have just came.

 

In the current market any overbought state you feel the market is in will be worked off with a simple 3 - 5 day consolidation. Not when your RSI rolls over.