Calling TA experts

[KW]

I had the All Ords breaking 4800 as a support level, but what is the next technical support level?

[Halebop]

Not an expert and don't have time to post a chart but 4,300 (or a tad under) looks like the most compelling support level from here.

[Shrewd Crude]

AA,
where are you...
KW is asking for the experts...
Dont even act like you aint one buddy...
;)
.^sc

[Hoop]

I had the All Ords breaking 4800 as a support level, but what is the next technical support level?

Colin Twiggs (Incredible Charts) has TA target of 4300 :( for the All Ords as well. Check out his latest Trading Diary posting (5 days old.. new post due in a couple of days) here
(http://www.incrediblecharts.com/tradingdiary/2008-09-13.php)

[Phaedrus]

http://h1.ripway.com/Phaedrus/ALLODA919.gif

[STRAT]

Hi Phaedrus,
Would it be fair to say those support lines are pretty fragile at best?
About as much support as you could expect from the plate glass window in a shop as you watch a car driving strait at you.

[Serpie]

I can understand lines of support and resistance for individual stocks, but am not 100% convinced that these can be applied in the same way to indexes.

This is because we all know what price we paid for a share, but do we necessarily remember (or record) the level of the index when we bought or sold? So can the psychological factors of support and resistance be applied with the same accuracy to an index number?

Does the larger sample, in this case the index, make the graph more or less accurate and valid when compared to an individual stock?

I did a stats paper years ago which would suggest that the larger the sample the more accurate the result, but that was based on polling definitive answers to questions, rather than trying to measure herd mentality.

I'm not sure that I've my point very well, so apologise in advance if it sounds a bit wishy washy.

[peat]

Elliot Wave theory which is a form of TA believes that an index reflects the mass psychology better than individual stocks.
Some EWI emails I received recently stated this quite clearly.

[h2so4]

I did a stats paper years ago which would suggest that the larger the sample the more accurate the result, but that was based on polling definitive answers to questions, rather than trying to measure herd mentality.

I'm not sure that I've my point very well, so apologise in advance if it sounds a bit wishy washy.

"stats can prove anything, 14% of all people know that",...Homer Simpson

[Phaedrus]

I agree with you 100% there, Serpie. To draw a line on an Index chart to aid the comparison of lows or highs is one thing. It is quite another to ascribe support or resistance to those lines in the way that we can and do with stocks. One has a real, meaningful scale ($$$) while the other has a "synthesized" scale that is little more than just numbers.

[Serpie]

And with the wild swings in the indexes any index support or resistance lines that do exist are getting brushed aside pretty quickly.
Thanks for the feedback.

[Technical.Trader]

Support is simply any line below the price... generally drawn at the previous swing low point or a point of congestion in the past....price may stop at support or continue through it.. so it is generally 50/50 in terms of odds. If you can back up a support area with something else..say the support line you choose is a point where most technical analysts would get short.. on the break, yet you have a valid reason for a rally in the stock, like the upcoming dividends in the abnks or the seasonal rally in gold, you can be the breakout to the downside and yu have a pretty good short term trade.. NCM was a great example, along with the banks yesterday.

A prime example was yesterday when we saw the break lower on the banks, my view is that with dividends coming up, I was looking for a point at which to get long..prefereably when the stock is oversold, and after a point at which TA's would be getting short..i.e. yesterday.

Of course this could still be a dead cat bounce, hence why you should use a stop loss on all trades.. but on average this strategy makes money.

[yogi-in-oz]

:)

Hi folks,

Serpie touched on "trying to measure herd mentality" and using TA on indices
is a visual representation of that measure, but using support and resistance
levels is only giving us, HALF of the story.

HALF of the story, because support and resistance levels only look at the
vertical price/value axis on our chart and totally ignores the TIME element,
represent by the horizontal axis on our chart.

It matters not how we evaluate the information on the chart, if we ignore
half of the information available from the chart, then our analysis and
interpretation of the chart will suffer, too.

So looking ahead, here's some expected DOW cycles, using some simple
analysis of the TIME axis, which can be used as a complementary tool
for our regular TA, in an effort to measure herd mentality and determine
WHEN important market swings may occur:

2909-07102008 ..... DOW likely to be strongly negative here

..... and to add a little more for the next couple of months:-

DOW ..... if you think it has been bad recently, just wait
until 17-27102008 !~!

(New Moon 28102008) ... start of the next lunar cycle

And just in time for the US elections:

More negativity expected, as we will be watching, around:

03112008-19112008 ... 3 negative time cycles during this period

11112008 ... expecting a strong market reaction here

(Full moon 13112008) ... halfway through the lunar cycle

Hopefully this will be of some help, in "trying to measure herd mentality" ... :)

have a great day

paul

:)

=====

[Jay]

Something I read recently about support and resistance lines:
The more times they are hit and bounce off the more accurrate they become.
However, this is really only over a time period or 3 - 6 months from memory