WHOOOAAAA! SPX and my conversion

I have decided to watch the S&P 500 index (SPX) today and see what is going on South of the border as it relates to the market in general.

I have watched many video clips, read a huge number of studies and blogs on the SPX and always lamented the fact that I was not trading that index so all this plethora of information was not really very relevant.

But I kept reading and watching anyway as there were always a few gems in how these various people carried out their analysis, I was still learning something...and who knew, maybe I would end up trading that market anyway.

I am glad that I have kept up. I expect that all of what I have learned while playing in the TSX will be applicable in the NYSE and AMEX.

Back to the chart watching for a bit. In Global Gold I was trading in a relative vacuum. I had the index, of course, the bull and bear ETFs and two stocks in the index as well as my regular charting indicators. I used the TSX Tick accumulation but it was not reliable in any sense.

Today I watched the SPX for a short bit. The Cumulative tick was a very relevant indicator and my normal charting stuff still stands. There are a nice selection of ETFs in the 1:1 and leveraged arena. There are some great daily commentaries from some respected traders and one nice twitter feed that I have been following that gives nice overall information (no trade signals, I wouldn't use them even if they did do that)

I called one trade and watched it as it moved my way after crossing the 200sma, bounced cleanly off of the pivot point and returned to bounce again off of the 200sma. Using bull and bear ETFs that would translate into 40 cps and 20 cps moves (the 20cent move is in an ETF that is 1/3 the value of the ETF with the larger move...at least double the position size so the result would be the same). I think that technical indicators may have a larger effect on trading due to the much larger volume.

Keep in mind that these moves were small, 0.6% and 0.8% respectively based on the prices but this is a slow range trading day so far. Yesterday, using only my 200sma entries there were three trades all day. 35cps, 12cps and 71cps. I figured 10 cent stops to start and using only the 50 sma for moving stops once in. I will need to do some backtesting on this then work out other scenarios but it looks promising.

Downside, larger spreads, larger ETF valuation which means larger capital allocation and possibly larger allowable loss figures. I may go looking for smaller valued issues but I don't think I will find them. 10 cent stops or even 20 cent stops are within my loss allowance given the price of the issues so I am OK with that.

Well, that's all for now. Back later with some charts I expect.

If anyone is following along I hope my shift from Global Gold and the TSX altogether isn't disconcerting. I am trading in an RRSP right now so all tax implications are deferred, and I plan on switching over to the TFSA later, once I get settled, comfortable and gain some level of consistancy in these new markets.

For reference:

Index: SPX
Bull ETFs: RSU, SSO, SPY
Bear ETFs: RSW, SDS, SH

Jeff.