Next Overlapping Nodes on $NDX - 3/11/10

[Mark Lytle]

This doesn't mean a trend change on this date, but like the December 28th warning which materilized after two weeks, this may do something similar...it could, however, also be early...it's random...

[Mark Lytle]

Even if your right, it's interesting that different plotting parameters show different levels of intensity on this indicator...that's worthy of a research project...

[Mark Lytle]

Yes Steven,
Nice diatribe, but the point is, do you see the difference between plotting your data weekly and daily...That's really the point...it gives different results...

Mark

[Steven Vincent]

It is because of the predominance of bearish expectations and fear among small investors and speculators that the market will continue to rise. This is contrarianism. I have seen this over and over again. The most difficult thing to do as a trader (well one of them anyway) is to approach the market without an ingrained view. In Buddhism this is called "Freedom from Views". You are not a slave to a view. You are free to accept a different view at any time. If you do have an ingrained view then you will actively seek out and even create data to support that view...and be unable to get on the right side of the market and benefit from swings within the larger trend. You will be caught flat footed every time.

You absolutely must derive your view from the market's message via the technicals ONLY. That's why I don't hesitate to change my trading position when the market's message (or my understanding of its message) changes.

It's also important to understand that there are always (at least) 2 views of the market and the market action will reflect this struggle. If you can accept that for periods of time one view will be more "right" and that later (even within the same trend) the other view will be more "right" (for a time) then you can benefit from the swings in the market and increase your returns dramatically.

The point is not to be right and "stick to it" and have the market prove that you are a genius and "right". The point is to be on the right side of the market as often as possible and to use the technicals to figure out what this is at any key point in time and any time frame.

[BullBearGirl]

Thanks for this interesting discusssion. The one thing that was concerning me on my bearish stance was that I was seeing an awful lot of puts when I pulled up option chains.

[Mark Lytle]

I see my typing hasn't improved... :}

[Mark Lytle]

These two most recent charts seem to imply a top that's not so far away. I'm basically using your method, just using a chart scale of weekly instead of daily, which I routinely do anyway, as I think daily data has too much noise in it....My overlapping nodes suggest the top could be from 1 to 3 weeks off, which is in reasonable agreement with your charts, when plotted weekly..I feel however that as manuy of these indexes reach the level of the January highs, they will get caught in a levcel which is a 'congestion zone' and won't make as much progress per unit time as in recent past. Also, note that my exponential trendlines have the change in price per time (dp/dt) getting less as we move forward in time. Although this is another discussion, really, remember noting how closely the $NDX followed my trendline price envelopes. Revisit those charts, ands you will recognize the law of diminishing returns as the evermore rounded envelopes these indexes are traveling within or supported by, have less and less chang in p per change in t...This is what real markets do, and when the rte of change becomes too low, human impatience and frustration, ends them. Those set of curves, anyway.

[Mark Lytle]

Note that this previous chart I added Williams to the top of the chart the way I presented it in my first chart to you earlier today...Now back off the time frame weekly, to a 2 period chart (2 weekly periods equaling 10 days) I get this:

[Mark Lytle]

Now if I take the same 20 period chart, change it to weekly, (and adjust the 20 period to a 4 period to get the same 20 day average on a weekly chart). I get this:

[Mark Lytle]

That correlates pretty well with your chart at the bottom of the series of four you presented...Any differences are due to slight differences in the software we are using, I think it's a close match...

Next I widened the date scale out considerably. That produces this:

[Mark Lytle]

I think I have duplicated your results on Stockcharts...but it gets more interesting when you expand the time scale at the bottom of the chart.

First, I tried to duplicate what you've done...I got this: