Thursday, September 04, 2008

See Homer's expression for reality check

A just plain dismal day, with the NYAD giving absolutely no sign of imminent relief in the selling.
Although the daily charts of the Qs and IWM look strikingly similar. I did notice one odd situation in relation to the weekly pivots.
(For those who haven't noticed, I've added the weekly pivots for the Qs and IWM in a panel on the right side of the blog and will update on a weekly basis for the foreseeable future.)
The Qs closed today at 43.67. . . a few pennies below S3.
IWM closed at 71.82. . . about 25% above the S1/PP pivot interval.
Despite the swoon today, for the week IWM is showing considerable relative strength.
That strength was demonstrated in the last hour of the day with IWM upslope for all but the last 5 minutes, while the Qs flashed a hairy top for the first 3 5 minute bars of the last hour and then turned downslope for the last 35 minutes into the close.
Long IWM, short the Qs is the current trend.
Let's see if that holds tomorrow, or if we get a reversal and a return to parity on the pivots.
I'm currently long the Qs (options) at the close in anticipation of at least a modest relief rally.


bill said...


out of all this methods which you have listed can you tell me which oncce you think are good to play with options. Let me know i will try some more testing and tinkering to find out what can be fine tuned.
thanks in advance for all your posts

bzbtrader said...

Well, Bill, no one can accuse you of asking easy questions. First of all, let me just be clear that I'm not trying to run a trade-a-long or teach you how to trade. . I'm much more interested in kicking out some ideas that will prompt you into thinking for yourself, within your own frame of reference, level of capital, risk tolerance, and hard-wired bias toward the markets. The odds of you being successful trading the way I trade are slim. I've taught dozens of seasoned traders to trade the way I do. Within 2 years every one of them has evolved his or her own unique perspective, style and technical tools. Most of them are still trading.
That being said, the goal of all the systems, whether oscillators, time variable, trend tracking or whatever is to find an edge in the markets . . sometimes that means identifying support & resistance, sometimes event driven moves, and most often . . momentum.
All the systems I profile have different cycle frequencies and different risk parameters. Just as with the Kit of Parts concept I've been talking about recently,
you get to be the creator of your own trading "system" . . I'm just providing a toolbox. If the ideas I present in the blog can help achieve that goal, or if the links and achives I've attached can help in that endeavor, then I've been successful. Trading is not easy. I've spent over 20 years doing this and I'm still changing the way I trade to reflect changing market conditions and trading technology & dynamics.
I know you were expecting a direct answer, like "follow the RSI2 system". Unfortunately, trading just ain't that easy.
Hope that helps.