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Saturday, April 05, 2008

S&P500 Analysis (AMEX:SPY)

Summary:
The path of least resistance is down (at least for the next week or so).

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While the S&P500 (SPDR Trust, AMEX:SPY) has performed quite well in the past week, there are a lot of warning signs that I see in the above chart:
- short term RSI is in overbought territory. While it certainly can remain in overbought territory, recent patterns suggest a reversion back below 70 as the market takes a breather.
- There is a red brick wall of resistance at 137-138 which SPY has been unable to overcome all of last week. The coming week's economic events (GDP report, ISM index, and non-farm payroll reports) do not suggest a viable foundation from which SPY can rally further. That said however, any upside surprise in the economic numbers could be the catalyst to spark a rally.
- There is an open gap at 132. This reminds me of the middle of last month, where the market meandered around like a directionless nomad before deciding to go down to test Jan/08 bottom.

So, basically, what I'm seeing is some directionless hesitation right at resistance. My bias is towards the downside, as I see more signs pointing towards the downside than I do see signs pointing towards the upside.

As for Visa, I have decided to move my stoploss up to $60 - my risk on this swing trade is now is $0.80, I think I can live with that.

6 comments:

Tyro said...

V is looking good, wish I put on some shares. Have you been doing much other trading besides this?

Has your job left you with much spare time for trading or maybe even building an ATS?

Phileo said...

Hey Tyro,

Yeah, I haven't been trading actively. I'm waiting until after I move before I start trading again.
By then, I should have more spare time between work and the kids.
ATS? I hate Perl too much to build an ATS. I am trying to learn some C# at work, so I might know enough to work on an ATS soon.....

Tyro said...

When is the move? I can't remember, have you found a new place yet?

I've stopped thinking of cobbling together something out of string and duct tape (or Perl, same diff) so am going with NinjaTrader. It's all C#-based which is brand new for me and so has been slow going. If you're learning that at work, you should have more than enough skill & trading expertise to put something together.

I thought I recall that your personality type is easily bored, which is much like me. Much better to do the research ourselves and let the computer do the boring bit of actually trading it :)

Good luck, always good to hear from you.

Phileo said...

Hi Tyro,

We haven't made any offers on any places, so no, we have not moved yet. This might take a little longer than I thought (maybe another 3 months?), since there is not much inventory available in the neighbourhoods that we are interested in moving to.
But yeah, every time I see Ugly rack up coin (or R's) on his ATS, it does make me want to program my own ATS. While I am learning C# at work, it's not like they are sending me off on a course, it's more like I am teaching myself. There's a lot of C# (and the black hole that is called .NET) to learn, though I will know when I am ready to take on the task of programming an ATS.

By the way, why did you decide to take your blog off the 'Net?

Tyro said...

I read a report that said the average detached house price in Van rose 12% in the first quarter of the year! That's pretty incredible. The g/f and I are thinking of buying as well, but we're probably going to wait until next year. If we keep waiting, we'll have to move to Langley to find a place that we can afford :)


Writing strategies are a lot easier than you might think and you only need a superficial understanding of C# grammar, not their libraries. I was productive within a day or two, and that was without ever having written a line of C# in my life. Check out NinjaTrader if you're interested - it's free as long as it only does backtesting or runs in simulation mode. The UI sometimes feels like it was written by 14 high school students who never used Windows before and never spoke to one another, but when you figure out how to work around its peculiarities, it's a powerful tool. (OpenQuant has a much nicer UI but is missing some functions and only issues 30day trials.) They both give a lot of samples for you to get started with, good documentation and best of all, you don't need to know .NET!


I killed the blog after a few weeks of posting virtually nothing and getting tired of hearing myself talk. Didn't feel like talking about my trading results either positive or negative, and thought it was silly to keep blathering about non-trading topics on a "trading" blog. Perhaps it was hasty. I figured that I'd still swap e-mails with the handful of other traders like you that I know on a personal level. Who knows, I might start up another blog somewhere, try out WordPress or TypePad for a change.

Matt said...

Hey Tyro!

You should never kill a blog just because you're feeling like you are your only listener....You should kill it when you are your only responder too!

But on a serious trading note, I thought I'd pass along a quick note that I'm gathering up NinjaTrader indicators and putting them together into one big repository. Currently I have an assortment of TradeStation indicators, but my focus is now shifting to provide free NinjaTrader Indicators. Take a look at the NinjaTrader article here for more of the juicy details.

Keep up the posting, and ignore the voices in your head!