Follow Leading or Lagging indicators?

How do you know when a trend has started? Ended? This forum is for discussions about trend indicators and signals.
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oem7110
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Follow Leading or Lagging indicators?

Post by oem7110 » Wed Jul 04, 2007 9:05 am

If $200 is a very strong resistance for 30 years, when stock price is around $199.6, should I buy PUT option because of this strong resistance? [Leading indicator] even through, STOCH still indicates upward for current situation [Lagging indicator].
Does anyone have any suggestions to follow Leading or Lagging indicator for buy and sell signals?
Thank in advance for any suggestions
Eric

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Post by BARLI » Wed Jul 04, 2007 2:35 pm

I'd buy a stock, psychologically it's try to break through 200 and make a new high, if its not happening just get out with a small loss at around 195

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Post by efficiency » Wed Jul 04, 2007 3:59 pm

1. Obviously anticipating is not trend following.

2. Until proven otherwise, this is the price point that has failed in the past. It was not mentioned how many occasions the price repelled $200. The more occasions, the more potent. Break ABOVE a potent price point would be material.

3. Theory of round numbers. Influential to Joe Sixpacks and lemming institutional money managers. Specialists/market makers of course know and prey on this. Meaning, once successfully pierced (however YOU define success, such as intra-day, close, consecutive days) price SHOULD run.

4. As for buying a put, that likewise would be anticipating. Sometimes an edge, sometimes not, particularly with the added decay variable. Probabilities are better in-the-money. This of course implies paying higher premium.

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Post by BARLI » Thu Jul 05, 2007 4:00 pm

efficiency, you're not giving him what you'd do in this case... :wink:

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Post by efficiency » Fri Jul 06, 2007 8:58 am

What "I" would do????

Well. I would love a 30 year/3 decade LOW LEVEL base coupled with a round number. Particularly with an element of inside ownership stemming from outlays rather than options.

But $200 isn't a low level (unless there was an unlikely massive reverse split).


So what would I do?

I wouldn't consider it.

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Post by BARLI » Fri Jul 06, 2007 10:00 am

800 for beans isn't low right? you'll see how they go to 1000 and won't act...

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Post by efficiency » Sun Jul 08, 2007 2:45 pm

Yes, to paraphrase Livermore, " a stock is never to high to buy".

Note the word "stock". Given the periodic adage of "beans in the teens" why...........800 wouldn't be too high. But I don't trade beans. I do however prefer a creamy rather oily salad dressing.

The sailient point disregarded is the base, not price levels. The round number is the catalyst OR boundary as the case may be. My focal point would be the 30 years cited LEADING to the $200 price point. .

Breakouts, 55 day HHV, or otherwise are all good and fine, but one is a special one, the last one. An identifiable base lends credence to a breakout.

Lastly, related to the put, to paraphrase Richard Dennis, "why waste capital on sub-optimal trades?".

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Post by AFJ Garner » Mon Jul 09, 2007 1:41 am

Yes, to paraphrase Livermore, " a stock is never to high to buy".
Hmm all these adages are great but should not be taken too literally.

I would not quibble for an instant with buying highs and selling lows. It is what trend followers do. But don't forget timing and start dates and the pain of losing start up capital. Nothing much you can do about it - it pretty well boils down to sheer luck.

Say you want to start trading a momentum system on mutual funds or ETFs. Is the market too high to buy? Never, according to Livermore. And you probably won't lose in the long term - but you might just find yourself investing on the edge of a precipice and may have to wait through a grim 5 year stock market drawdown to get your money back let alone make a profit.

A well devised and diversified TF system using futures usually has narrower DD periods. At least in back testing.

Again, in a start up situation, are you going to enter existing futures positions or take new signals only? You will have chosen one or other method in your back testing. If you enter existing positions so as to participate immediately in the equity curve you will undoubtedly find, with hindsight, that one or other of the beans, or oil or silver or gold was indeed “too highâ€

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Post by BARLI » Mon Jul 09, 2007 4:48 pm

traders, lets not forget the fundamental side of trading commodities as well. Although most of us base our trades on technical analysis, we cannot ignore this side of trading. Remember about "traders memory" in Way of The Turtle book? Its the same cycle of traders who still have that memory of past panics and crashes, and those brand new who dont have it. It seems like a trick is to not follow into a trap of thinking in terms of too high or too low, cos as old timers would say 25 $ for Silver in December 1979 was also too high..

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Post by efficiency » Sat Aug 18, 2007 2:10 pm

AFJ Garner wrote:
Yes, to paraphrase Livermore, " a stock is never to high to buy".
Hmm all these adages are great but should not be taken too literally.

I would not quibble for an instant with buying highs and selling lows. It is what trend followers do. But don't forget timing and start dates and the pain of losing start up capital. Nothing much you can do about it - it pretty well boils down to sheer luck.

Say you want to start trading a momentum system on mutual funds or ETFs. Is the market too high to buy? Never, according to Livermore. And you probably won't lose in the long term - but you might just find yourself investing on the edge of a precipice and may have to wait through a grim 5 year stock market drawdown to get your money back let alone make a profit.

A well devised and diversified TF system using futures usually has narrower DD periods. At least in back testing.

Again, in a start up situation, are you going to enter existing futures positions or take new signals only? You will have chosen one or other method in your back testing. If you enter existing positions so as to participate immediately in the equity curve you will undoubtedly find, with hindsight, that one or other of the beans, or oil or silver or gold was indeed “too highâ€

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Post by Honeycomb » Thu Aug 23, 2007 12:59 am

If $200 is really that big a deal, then it will either do one or the other, and do it hard. There's also a chance it will start to do one, then do the other. Will you be paid a good enough premium for predicting the future?

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