S&p500

[Buylowsellhigh]

BHSL,

I agree with the "soon". I will soon be staking my bet on a large financial collapse- or at least a collapse in stock prices before the end of the year, probably concentrated in August and September. I think the game that has worked so well for so long is nearly over.

Lots of students of stock market cycles would agree. And we find the general blindness to the big risk baffling. But the low cost of "insurance" (ie. puts) makes hedging against the risks we see through puts look very compelling. They are incredibly cheap. Even cheap than they were last September when I made a nice score betting on a dump in the US and Uk markets. I reckon this years drop will be much bigger.

Have said that, I dont think we are at the highs just yet. A few more days or weeks to go

Buying the Put's are the way to go for sure. I use a simple averaging formula to identify 'high probability low risk' trades, but there are no guarantees with it, so the Put's are a good insurance as you say.

This is the formula; Square root of ((Time x time) divided by (Price x price)). This value can then be compared with the values that preceeded it. This is a far more accurate application of Fibonacci ratio's. For example, the June S&P500 has hit resistance at 1310. By applying the averaging formula from the low at 744.90 on the 24th of July 2002 to the high of 1162.30 on the 5th of March 2004, we get a value of 468.15. Applying the same formula from the same low at 744.90 on the 24th of July 2002, to the most recent high of 1310 on the 11th of January 2006, we get a value of 649.26 ...which is 1.386% of 468.15. Normally this would be strong resistance, but the longer term numbers do not correlate so well ...so there is a chance that prices could continue a bit higher. The next decent resistance is at 1329, and as you can see, the numbers here look better;

It's a bit of an ask for prices to rally 350 ticks so late in the game, and over so few trading days, but stranger things have happened. The daily looks like it could confirm also;

On the weekly chart there are some very long term 1.618, 1.414, 1.382's, which often signal a major turning point. No guarantees of course, but the December S&P500 Put's look very tempting.

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[jonpo]

A beautiful pristine rising wedge - textbook explaination - a reversal pattern, short on the break down

Edited March 14, 2006 by jonpo

[cbs7]

Buying the Put's are the way to go for sure. I use a simple averaging formula to identify 'high probability low risk' trades, but there are no guarantees with it, so the Put's are a good insurance as you say.

This is the formula; Square root of ((Time x time) divided by (Price x price)). This value can then be compared with the values that preceeded it. This is a far more accurate application of Fibonacci ratio's. For example, the June S&P500 has hit resistance at 1310. By applying the averaging formula from the low at 744.90 on the 24th of July 2002 to the high of 1162.30 on the 5th of March 2004, we get a value of 468.15. Applying the same formula from the same low at 744.90 on the 24th of July 2002, to the most recent high of 1310 on the 11th of January 2006, we get a value of 649.26 ...which is 1.386% of 468.15. Normally this would be strong resistance, but the longer term numbers do not correlate so well ...so there is a chance that prices could continue a bit higher. The next decent resistance is at 1329, and as you can see, the numbers here look better;

It's a bit of an ask for prices to rally 350 ticks so late in the game, and over so few trading days, but stranger things have happened. The daily looks like it could confirm also;

On the weekly chart there are some very long term 1.618, 1.414, 1.382's, which often signal a major turning point. No guarantees of course, but the December S&P500 Put's look very tempting.

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Hi BLSH, very interesting chart patterns - I'm a bit of a novice TA at the moment, but am keen to learn and am aware of the importance of fibonacci relationships. However I'm a bit stuck at wondering what software to look at for drawing charts. i don't mind spending some money if it will be useful, but similarly don't want to throw away a few hundred pounds when I'm not sure what I need. Are there any packages you can recommend?

thanks

cbs7

[Buylowsellhigh]

Hi BLSH, very interesting chart patterns - I'm a bit of a novice TA at the moment, but am keen to learn and am aware of the importance of fibonacci relationships. However I'm a bit stuck at wondering what software to look at for drawing charts. i don't mind spending some money if it will be useful, but similarly don't want to throw away a few hundred pounds when I'm not sure what I need. Are there any packages you can recommend?

It might be a idea to wait and see if it works first before buying the software, yes ? The 1330 area might be just a bump on the road, maybe not even that.

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[Buylowsellhigh]

The chart I am posting is the June SP500 Future, which made a high of 1321.30 last week, so it's only 87 tick's away from my first target.

But spx-1310 looks like it marked a top, not 1330

The chart that you are looking at may well have marked a top. As the 'time' element in the averaging formula progresses or extends, the 'price' element decreases, and vice-versa. That is; the longer the 'time' interval between the two reference point's, the less the 'price' difference between those two point's will be...and the greater the price difference between the two reference point's, the less 'time' it takes to get there. The price could continue sideways for a while at the 1320.00 level, basis the June Future, until the 'time' element has progressed enough to raise the value to 1.414% of the last bear leg(674).

I bought my Dec Put's last week anyway, but I'm hoping the June Future touches 1329.00 or thereabouts within the next week so I can short the futures also. You're as well hung for a sheep as a lamb

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[Buylowsellhigh]

The June SP500 Future did'nt make it to the 1330 level (1322 so far), which suggest's that it could go higher yet. If it continues sideways for much longer then the momentum from this could take it through the 1330 level, but we will have to wait and see. I've been buying the dip's for a couple of weeks so my SPX Put's are paid for ...just in case it goes higher with the Dow;

DJIA June '06 Future

No guarantees.

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[Buylowsellhigh]

your charts on intriguing, but did they cause you to miss the high near SPX-1310?

DrBubb,

No. I still have my Put's ...as I said, and they are payed for. I'm focused on getting onboard the next long term stocks bear with a decent sized position, while at the same time protecting my capital, rather than quick daytrades. I'm also in the middle of some fairly major renovations at the moment, major for me anyway, and I'd rather not do both at the same time. Have you any experience with a hammer ?

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[Buylowsellhigh]

As I had hoped, the June SP500 Future made the 1330 level then dropped like a stone. It traded at a high price of 1331.20 on Friday 5th May. I was off a little with the timing, but considering I was going by an 18 year and an 8 year cycle, I don't think being a couple weeks off is too shabby. The important thing is the price, because that's what affects your pocket ...and the price was spot on.

The chart is now starting to look biased towards the down side. The day trading pit needs to trade below 1293 after it opens at 2:15pm BST. If it does then prices will likely continue lower. Here's hoping.

Full Chart;

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