S&P 500 - Analysis and Trading

[RichKid]

I'm surprised we haven't got an S&P 500 thread here already, hope I didn't miss it. Thought I'd kick it off. Will post some charts and info soon.

[wayneL]

I'm surprised we haven't got an S&P 500 thread here already, hope I didn't miss it. Thought I'd kick it off. Will post some charts and info soon.

Great Idea Rich, as it is the SP500 that is the "real man's" index, not that Dow rubbish the medja muppets harp on with.

Seriously, nothing wrong with trading the Dow, but I reckon it's the SP500 that should be the index analyzed as the broad measure of the US market.

A proxy that can be used is => (SPY:AMEX) the sp500 ETF, for those who don't have SPX data.

[RichKid]

Great Idea Rich, as it is the SP500 that is the "real man's" index, not that Dow rubbish the medja muppets harp on with.

Seriously, nothing wrong with trading the Dow, but I reckon it's the SP500 that should be the index analyzed as the broad measure of the US market.

A proxy that can be used is => (SPY:AMEX) the sp500 ETF, for those who don't have SPX data.

hehehe, yeah, it's the real thing alright! The Dow might have been the bellwether when there a were a handful of stocks but that is no longer the case, from what I understand it's still price weighted as well, unlike the S&P.

I find that some of the patterns and trends that I look for appear to be clearer in the most liquid markets- indices, futures, top 20 bluechips etc. Less slippage too. So the logical choice was to look at a broad market index like the S&P. Still researching it, I see that SPX and INX are codes which relate to it. Since joining IB last year I'm now in a position to actually trade it once I'm prepared. Maybe an ETF is a good way to dip my toe, thanks for mentioning it. Also came across, SDS- it is an 'inverse SPX' ETF, supposedly with twice leveraged exposure to the downside in the SPX for anoyone who's interested.

The other benefit of these US markets is that you get access to so much free info and data than in Australia, not to mention whole sites dedicated to US derivatives as well. I can see why you traded the US rather than our local Aussie market Wayne, we really are the poor relations.

[wayneL]

Just on index ETF's, here are some others for anyone that is interested.

Dow => DIA
Nasdaq => QQQQ
Russell 2000 => IWM

Also very liquid options in the above.

[RichKid]

Some info on the index:

Bloomberg-
Standard and Poor's 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index was developed with a base level of 10 for the 1941- 43 base period. See SPY US Equity for the tradeable equivalent.
http://www.bloomberg.com/apps/quote?ticker=SPX:IND
----------------

Standard & Poor's-
Widely regarded as the best single gauge of the U.S. equities market, this world-renowned index includes 500 leading companies in leading industries of the U.S. economy. S&P 500 is a core component of the U.S. indices that could be used as building blocks for portfolio construction. It is also the U.S. component of S&P Global 1200.

Index constituents exhibit the following characteristics:

* Market Coverage – Approximately 75% of the U.S. equities market
* Weighting – Market capitalization
* Market Capitalization – Minimum of US$ 5 billion
* Public Float – At least 50%
* Reconstitution – As needed basis

With more than US$ 1.53 trillion in indexed assets, the S&P U.S. indices have earned a reputation for being not only leading market indicators, but also investable portfolios designed for cost efficient replication or the creation of index-linked products. The history of the S&P 500 dates back to 1923, with an expansion to include 500 companies in 1957.

Index Governance and Policy
This index is maintained by the S&P Index Committee, whose members include Standard & Poor's economists and index analysts. It follows a set of published guidelines and policies that provide the transparent methodologies used to maintain the index.
Follow this link for a list of market constituents and other data including volatility data: http://www2.standardandpoors.com/por...0,0,0,0,0.html

This is a long term log chart in relation to the Dow (the S&P is the upper line in black):

[RichKid]

Zooming into recent history. This should be enough to give us a rough picture of where we are.

[kennas]

So, what's the go RK? Calling a bottom???

[RichKid]

So, what's the go RK? Calling a bottom???

Haha! wish I knew! Still trying to get a feel for my prey.....then will mark up some charts...since this is where the big boys hunt this little predator is likely to end up being gobbled up so I need to prepare as best I can. Who knows, it may even be a market that doesn't suit me.

My assumption is that the major weekly trend is down and that we're seeing a pullback atm, to be followed by another decline. The multi-year trend is still clearly up (see previous charts), although we may have just entered a prolonged bear market rather than a brief one; could easily be a double top of some sort- cf the 1965-1975 period too. I'm looking to go short in line with the current trend once I find a good entry into this counter-trend. I know this is pretty average quality analysis but I'll try to post something better later.

Below is the VIX (volatility index), it might help me assess different strategies, this is the type of free data that is hard to find in Australia.

PS All these charts will give a new reader of this thread some sort of starting point. It's also a quick refresher for others. We might end up with several SPX style threads if sufficient interest appears (eg for different strategies).

[treefrog]

recent from carl swenlin
"The following chart helps put current events into an historical perspective, showing the earnings crash that accompanied the last bear market, as well as the current earings decline. I don't know how anyone could be optimistic about this picture.

(read yellow chart)

Now let's turn to the technical market picture. The chart below shows that the long-term sell signal is still in force; however, a nice looking bottom has formed and could be a solid base for a medium-term rally. As I write this the market is still open on April 4 and the S&P 500 is trying to break out of a three-month trading range. Also, most of our medium-term indicators (not shown) have reached very oversold levels and have formed positive divergences. Finally, we have medium-term buy signals on most of the indexes and sectors we track. Evidence is pretty strong that we are beginning a rally that will challenge important overhead resistance, possibly around the area of 1450 on the S&P 500.

(blue chart)

Bottom Line: The earnings picture is abysmal, and there is a solid long-term sell signal in progress. Playing the long side looks promising, but keep a tight reign on long positions because we are in a bear market until proven otherwise. Remember: "Bear market rules apply! The odds are that support levels will be violated, and, if against those odds the market manages to rally off support, odds are that the rally will fail before it can change the long-term trend.""

[wayneL]

recent from carl swenlin
"The following chart helps put current events into an historical perspective, showing the earnings crash that accompanied the last bear market, as well as the current earings decline. I don't know how anyone could be optimistic about this picture.

Thanks for that tree frog. That confirms my contention that the market is veeeeery expensive, even still. Without the prospect of strong earnings growth, this market is overvalued by what, say 30 -50%?

Mein Gott!!!

[Kauri]

Data or earnings?? my Vindicators are tentatively pointing to a slight bias towards leaning in the general direction of a possible weighting for data?? I thunk..

Cheers
Y ...

[treefrog]

http://www.aussiestockforums.com/for...215#post271215

awhile back I posted here of the similarities developing between the current downer (white fibs)and the previous one (blue fibs) suggesting if it continued to mirror, we could expect the dead cat to bounce from the 38% white back to the red downtrend line.
It made the run OK and seems now to be showing signs of weakness.
Note the original target stalled at 50% up of the first down leg (black fibs amid blue fibs) and the current retrace is also at that point (black fibs amid white fibs)

[gazelle]

SP500 timing dates into either Fri 13th June or Mon 16th June .
Will position according to trend around these dates .

[Kauri]

Haven't bothered... yet... looking at the bigger pitcher, but the dailies look to be showing an A=C 50% correction... or not??
Cheers
............Kauri

[CanOz]

I want to use the S&P 500 index and look for monthly and weekly pivot opportunities, but actually trade the SPY or the SPDR S&P 500 index ETF. The reason i want to do this is leverage, or lack of. The ES mini is really too rich for my blood at this stage.

Can anyone think of any reason that i could not effectively trade this in this way? I've not traded ETF's before. The SPY is long and short.

Cheers,


CanOz

[CanOz]

I want to use the S&P 500 index and look for monthly and weekly pivot opportunities, but actually trade the SPY or the SPDR S&P 500 index ETF. The reason i want to do this is leverage, or lack of. The ES mini is really too rich for my blood at this stage.

Can anyone think of any reason that i could not effectively trade this in this way? I've not traded ETF's before. The SPY is long and short.

Cheers,


CanOz

Anyone care to speculate on whether or not i can speculate on this?

[CanOz]

Still replying to myself here...

Another reason not to trade the SPY (ETF) out of hours..check out these bars, taking out stops is cheap.

Cheers,


CanOz

[Kauri]

Haven't bothered... yet... looking at the bigger pitcher, but the dailies look to be showing an A=C 50% correction... or not??
Cheers
............Kauri

If above works itell oot... then 3 is the big one ???

Cheers
............ potteen

[Kauri]

If above works itell oot... then 3 is the big one ???

Cheers
............ potteen

the scratcher beckons...
auto-pilot on...

Slainte
................Kauri

[Kauri]

Haven't bothered... yet... looking at the bigger pitcher, but the dailies look to be showing an A=C 50% correction... or not??
Cheers
............Kauri

well well... there she goes..
Cheers
...........Kauri