In case you’ve missed it, technical analysts have been atwitter over sightings of the mystical-sounding “golden cross”. Among the latest observations from the mainstream business press are a Barron’s online article posted yesterday and a Bloomberg piece from last week, but recent talk of the fabled Crux Aurea dates back at least as far as early June, when the daily chart of the Nasdaq Composite Index showed the 50-day simple moving average crossing above the 200-day SMA. Since then the heavenly vision has…
As pictured below, equity indexes have been highly range-bound since the end of April. That trading range has been between about 470 and 510 in the Russell 2000, and 865 and 930 in the S&P 500.
I doubt that this range is likely to persist for much longer. Fans of technical analysis will note that SPX and RUT are caught in the narrow space between their respective 50- and 200-day moving averages: a break above or below either average will be…
Back in December, we considered whether the VIX, despite how fundamentally different it is from an equity or commodity, might be a good candidate for technical analysis after all. We haven’t come up with any better theory as to why this might be, nor gathered empirical evidence to prove the theory we proposed at the time—i.e., that options traders implicitly trade volatility every time they decide when and what to buy and sell, making the VIX, as a broad measure of…
One of the trading myths we noted recently has generated some questions. There seem to be some passionate proponents of applying technical analysis to leveraged ETF charts out there, and while that notion has already been debunked elsewhere, we thought we’d take a different approach, just for fun.
Here’s an argument in favor of technical analysis based on support and resistance. Define “support and resistance” however you wish, as long as the definition has to do with price behavior driven by buyers…
These are the top five trading myths that we would kill right now if we could. Since human brains are wired to remember often-repeated associations as true even if they’re false, we’ll state the true propositions.
Technical analysis does not apply to 2x, 3x, and related inverse ETFs that track the daily changes in some underlying.
You can’t trade the spot VIX; not with VIX futures, not with VIX ETNs, and not with VIX options.
Credit spreads are synthetically equivalent to debit spreads. …
Thursday, July 2, 2009
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