The Market

[manucastle]

So far the LEV for DIA SPY MDY IWM QQQ is negative.

Will we see buying later ?

Trev

[Pascal]

Better look at the inversed ETFs, because these will be the first to show a reversal.



Pascal

[Karin]

Stupid beginner's question: which ones are the inversed ETFs?

[Karin]

Never mind. I figured it out. Thanks.

[Pascal]

I watch the most popular ones and only the double inversed: SDS, QID, SKF and TWM.
The main idea is that when a trader has a position and that position is at risk, then he will close it fast, because he wants to cut risk.

However, when opening a new position, a trader will take his time: traders are slow to add risk.

Hence, when the market bounces from an oversold conditions, short traders will feel the pain and will move much faster than new long investors/bargain hunters.

We can see below that the EV patterns of these inversed ETFs do not indicate much eagerness to close the current short position.

I however still believe that we will move higher by the end of the week, with probably a 20DMF Buy signal being issued tonight.



Pascal

[Karin]

Thanks for the explanation Pascal. I’ve learned more during the past two week on this website and reading your book, than I have trying to sort through confusing information about the stock market during the past 6 month. Feel like I finally see the light :-)

[manucastle]

The investors in the 3x funds such as TNA and TZA are even more jittery at market turns and maybe an even better tell ?

Trev

I watch the most popular ones and only the double inversed: SDS, QID, SKF and TWM.
The main idea is that when a trader has a position and that position is at risk, then he will close it fast, because he wants to cut risk.

However, when opening a new position, a trader will take his time: traders are slow to add risk.

Hence, when the market bounces from an oversold conditions, short traders will feel the pain and will move much faster than new long investors/bargain hunters.

We can see below that the EV patterns of these inversed ETFs do not indicate much eagerness to close the current short position.

I however still believe that we will move higher by the end of the week, with probably a 20DMF Buy signal being issued tonight.



Pascal

Attachment 18958Attachment 18959Attachment 18960Attachment 18961

[Pascal]

Yes, Indeed. Volume also matter though!

Also, most fund do not use triple leverage, so these might just be speculator/day traders instead of long time investors.


Pascal

[Chern]

Thanks for the explanation Pascal. I’ve learned more during the past two week on this website and reading your book, than I have trying to sort through confusing information about the stock market during the past 6 month. Feel like I finally see the light :-)

Be careful! Those of us who have done this for a while have learned that often when we think we have seen the light it is in fact the headlights of an oncoming train that runs right over us!!!!! Good luck and best wishes on your trading.

[Karin]

Be careful! Those of us who have done this for a while have learned that often when we think we have seen the light it is in fact the headlights of an oncoming train that runs right over us!!!!! Good luck and best wishes on your trading.

That's funny :-) (Or not.....) I hope I'll learn to recognize the difference. Thanks for the warning Chern :-)