SmilingSynic's ES journal--observations and trades (Page 3 of 475)

great observations, smilingsynic.

I made no trades today, just watched.

I teach history.

Back in summer Jul 2002, frantic clients kept the phones ringing wondering when would the selling
end. I looked at 1987 crash to generate data that pinpointed (within 1 day), the Jul, 2002 low.  I
don't have that report, but I remember the basis of the calculation,

Please do not post this anywhere.

I can't do the following calculation on the ES because I have real problems believing the continuous
contract prices (ES) generated by Trade Station, so I am using the SPX cash.
But a simple measure of envelopes of normalcy is calc price divided by 200sma of price from previous day (on a percentage basis).

like this
measurement = ((C/average(C[1],200)-1)*100

the "*100" makes it a whole number in terms of expressing percentage move.

At the July bottom in 2002, SPX cash was 26.98% below its 200sma (200sma calculated as of previous day's close, that's what the "C[1]" represents in the formula)

Yesterday, 10/07/08, as of the close, SPX was 24.84% below its 200sma[1].

when I solve for a 26.98% drop below 200sma, equivalent move would be cash print/close 966.16. for today,Wednesday, 10/8/2008.

Estimate for a low print (if we mimicked 2002 Price Action)

these are measurements of extreme envelopes of selling induced by fear. This is a measurement of the last time markets experienced the Frank Burns (M*A*S*H), "SELL EVERYTHING AT MARKET REGARDLESS OF PRICE!) fear induced selling.

we are in the ballpark of a short-term bottom today,10/8/2008
Certainly (in my opinion, not the bottom, but a tradeable bottom).

To get an idea of what downside intraday risk for today and tomorrow would be, the formula can be
re-written using Low to replace the first C in the formula above.

solving for that, low print for today (if we mimicked July 2002 intraday cash action) would be
equivalent to an intraday low print ON THE CASH, of 964, tomorrow would be 940.76 low print. (This is only if we mimicked the 2002 drop, it's hypothetical, this whole thing could unfold today.)

so we could see a recovery intraday,
Back in Jul, 2002 there was still some emotional spillover on the following day, which would be
roughly equivalent to a low print SPX cash for tomorrow of 940 area. (940.76).

History never repeats exactly. These are only numbers that represented an equivalent / similar move relative to the drop back in 2002 (and 1987 was my model for 2002), does this apply to today's markets? (for me YES, but truly, I don't know and you don't know. I am putting on long positions with 1/3 size)

What else do you have to go on?

Considering how much faster price moves are now, this could all unfold today.,

BTW, in 2002, 7/24/02, the rebound day, that was the day after the Jul 23 low close;  Jul 24, 2002
saw a gain of 8.7% from the it's low that day (the emotional spillover selling low).

the close on 7/24/02(the rebound day) represented a gain of 5.7% from the close of 7/23/02

Back in 2002, market was net positive for 6 trade days for a closing gain (from close of lowest close
day, Jul23, to close of 7/31/02) of 14%, then retraced a little more than 50% over the next 3 trade
days before taking off again, the second leg higher lasted for another 13 trade days,

that second leg to the upside, the final 13 day lift, represented a gain of roughly 15% from the
retracement low.

The entire rally, from the 7/23/2002 close to the 8/22/2002 close represented a 20.6% gain. The
entire run was a 22 trade day net positive move.

***Reminder of historical studies, study of 2 weeks before and 2 weeks after presidential election
day (I did this study, my  memory is pretty good, but I can't remember whether it was 2 weeks after
election day or 4 weeks after election day. either way, historically, best performance came  by
buying the close of the 6th trade day BEFORE pres election day. Equivalent this year Means Buy close
of Friday, October 24th.

I don't know what's going to happen and neither do you. If you have something better than this, post
it.

Fear is FEAR. These are only measures of the price swing relative to the 200 day simple moving
average of price that marketd the end of selling at one point in time in July 2002. It's enough for
me. 
*******************
Please do not post this anywhere.

I posted this at ET last night.  Here is how I see the so-called "big picture":

"Several months ago I said 1150, but that level barely put up a fight.

They are ultimately, within the next twelve months, taking it to the bear market low of 2002,. Yes, a full retrace.

That would be right around 770 on the S&P, around a 23% additional drop from here.

900 as a short term bottom, maybe, but I would say 960 is a better guess.

Yes, I said GUESS.

1150 is now resistance.

960 to 1150 would be a 190 point move, and then 380 (190 X 2) down from there would be around 770."

How am I using this?

First, I am not adding to any positions.   I have enough exposure.  I have the funds to add, but that would not be prudent money management.  I started too soon--I readily admit that.

No, I did not add anything in the 960's.  I have built my position, and the long-term stuff will be dumped above 1100 up to 1150. 

At around 1150 I will reload and will build a short position looking for 800 first, and then a touch of October 2002 lows.   Not sure yet how I will build it, but OTM time spreads and ultra short ETFs are at the top of my list right now.

I tend to agree.

not if you bring B1S2 lol who always is first in line with his stops..

If it fails at the pivot (992.75--right now), then 972.

Pivot is being tested again, right now.

A strong bounce suggests a strong rally.

EDIT: Clearly a tug of war.  NQ strength favors the bulls, but intraday trading absolutely requires stops, esp in this schizo market.

Last edited by SmilingSynic (2008-10-09 06:19:50)

Gap filled, and retest of 971 imminent.

Higher low, no go.

I have to leave for the next 1 hour and a half to proctor a test (professor called in sick).

Retest imminent.

Good call on 960  SPX hit 960 it was the 082202 high on that hump

Thanks--didn't know that.  Came to 960 through another means.