Technical Analysis by Request

[tsptalk]

Whether you are a beginner or an expert, use this forum to discuss technical analysis. Chart patterns, trend lines, MACD, stochastics, PMO, moving averages, etc., etc,...

[Aslan]

Tom- Thank you very much for starting this thread, this should be interesting and informative. Thank you.

[Aslan]

Tom-

What do you make of this chart for the S fund after today?

http://host.businessweek.com/businessweek/GR-D-DWCP-20-0-1-0-130-595-381-s_104_d_d_d_d_s_204_d_d_d_d_s_210_d_d_d_d_-40271C7BFD067632E5D364920DE52ADBE7F652B6.gif

Price slightly down and the volume was smaller than yesterday. I was hoping to see up volume and higher prices, of course. What do you make of that? Also, where do you see the new support being? Is there support at all just because a new high was set? The old high of around 512 seems to me to be the new support. Thanks for the insight. Remember I'm just a beginner.

[tsptalk]

http://www.tsptalk.com/images/x.gif

Yeah, it seemed to have held up near the old high. It's not strong support and I have a feeling it (512) won't hold. But there is much more support below. Overall it is still in a strong uptrend. The main concern I see is the MACD divergence. When an index makes a new high, you'd like to see the MACD also make a new high. This is a sign that it may be running out of steam.

I drew in some other support lines. I would guess about 495 is the worst casescenario on a sell off.

Hope that helps some.

Tom

[Aslan]

Tom-

How do you draw in those lines? That was cool. So far it is down today as well, even staying below the support. Very interesting stuff. Thanks.

By the way, I'm surprised more people have not chimed in on this so far. Right now a lot of it is way above my head, but I'm learning.

Also, if the selling starts, wouldn't you see above average volume as the price went down? Thanks.

OH yeah. Because this is an index of 4500 stocks, do thesecharts act differently, for instance, if it were a single stock, psychology would seem to take over a little as people in those stocks or wanting those stocks would buy/sell depending on the price, and volume would change. Yet with an Index, unless a lot of people are buying into the index itself and following it, psychology of the 4500 stocks individually and then put together would seem to not follow the patterns as well. In other words, it would be hard to put it all together with so many stocks involved. Do this make sense?

[Aslan]

Tom-

figured out the drawing part, paste graft into Microsoft Paint, etc, etc. and add lines, circles, etc. Cool.

[Mike]

Aslan wrote:
Also, if the selling starts, wouldn't you see above average volume as the price went down? Thanks.

OH yeah. Because this is an index of 4500 stocks, do thesecharts act differently, for instance, if it were a single stock, psychology would seem to take over a little as people in those stocks or wanting those stocks would buy/sell depending on the price, and volume would change. Yet with an Index, unless a lot of people are buying into the index itself and following it, psychology of the 4500 stocks individually and then put together would seem to not follow the patterns as well. In other words, it would be hard to put it all together with so many stocks involved. Do this make sense?



I ignore volume considerations - I don't think they have any merit as to which way the market is heading. The net result of all that trading is what matters. Really - what's the difference if the market is flat with 1 billion shares trading hands vs. 500 million?

As for chart behavior, the same principles apply to an index as they do for a stock. You still have support lines, resistance, trends, etc. Psychology is applied the same way as well - though it involves a lot more investors and many more stocks... it could simply be viewed as the sum total of all trading activity involving that indexand itscompanies. Remember, when you buy a fund representing an index (ETF or mutual fund), that fund is buying shares of every company stockwithin that index in a proportion thattries to match the weighting of that index.

I also believe the S fund is overvalued. Once the I-fund hit $15.60, it quickly fell back to earth. The S could do likewise as rates continue rising.

[Aslan]

Mike,

I'm just learning this stuff, but what I'm learning is volume is very important. If the market is flat with huge volume, that to me would mean equal amount of selling and buying, no one really has the momentum. Just my thoughts as I'm trying to learn this.

Also, with head and shoulder patterns, double tops, etc, volume seems to be very important when looking for predictable reversals, downtrends and uptrends. On uptrends with huge volume, that would tell me that the big institutional investors (mutual funds, etc like Fidelity, Vanguard)are buying shares, which would increase the demand, and drive the price up. This makes sense to me but maybe in the real world it is bunk.

By the way, thanks for the other info on the charts. The S Fund may be overvalued right now. If the S fund finishes sideways or down today, I'm out COB monday with a smallshort term gain, hopefully. Thanks for the insight and I welcome more.

[Birchtree]

Aslan,

I've chosen to stay away from the S fund - trying to make my gains in the C fund. The point I would like to make is that just because the S fund may be overvalued doesn't mean it will drop tomorrow. Overvaluation can last an extended period of time - usually until more investors are pulled into the sure play - then the drop will come. It can be sudden trapping everyone - or it can be gradual with intermittent rallies that pull even more investors into the sure play - this movement of back and forth may transpire over several months - until the day of reckoning arrives.

[Aslan]

Tom,

Here is the latest S fund Chart COB 7/8/2005:





Latest Quotes

Open: 517.760
High: 524.630
Low: 517.760
Last: 524.510
Change: +6.71

P/E: N/A
Earnings: $0.00
5Yr Growth: 0.0%
Price/Sales: N/A
Market Cap: N/A

Bid: N/A
Asked: N/A
Volume: 1,635,901,700


http://host.businessweek.com/businessweek/GR-D-DWCP-16-0-0-0-130-495-348-s_104_d_d_d_d_s_204_8_17_9_d_s_208_30_1_d_d_s_210_ 14_5_d_d_-688E3C5168DC7817640339883BB260D92CA1C614.gif

This is amazing. Note the volume # at over 1.6 billion, and the S fund sets an all time High! This is a billion shares more than were traded yesterday. What do you make of this people?

I keep harping on this volume thing because that is the highest number in the 2 1/2 months this site has been tracking this. Note also that the S fund is up 6.69% for the year if you buy/hold. This HUGE volume, to me, with the price rises 1.33% today seems to say that MANY buyers came in to these companies, with the buyers far outweighing the sellars, and demand went up, and hence the price. Am I off here?

[Aslan]

Correction:

I made a mistake on the volume, today. I stated volume at 1.6 billion which was data from businessweek.com. I independantly checked 3 other web sites who had the volume at 976 million. Still above average. I will no longer us businessweek for my volume data, sorry about the mistake.

By the way, anyone interested in some cool charts for the S Fund. Go to www.google.com (http://www.google.com) type in "Volume for the Wilshire 4500" and the top 3 websites have excellent charting for the S fund, and they all seem to agree pretty closley with the volume numbers.

Tom-you should consider one of these sites instead of Yahoo because they give better information back farther than 5 days for the S Fund. I'm not sure how that works, just a thought.

[mbehr55]

What program are you using to chart the TSP funds? Can we cut/paste the prices from the TSP website, or do we have to fat finger them in?

What about an overlay of the corresponding index/ETF?

[tsptalk]

Aslan wrote:
Tom-you should consider one of these sites instead of Yahoo because they give better information back farther than 5 days for the S Fund. I'm not sure how that works, just a thought.

I like those little Yahoo charts as links to the big charts. But you are right, the others are better for TA.

Sorry I haven't chimed in more Aslan. I'vebeenbusy and the posts get moved down as others accumulate new posts.

Volume has been OK, but it's summer time and it's not unusual to see a slow down.

That MACD sure came to life :).

[Bullitt]

Anybody want to take a stab at the Baltic Dry Index for me? It's either sitting on support (bullish) or it broke an uptrend line (bearish).

[Birchtree]

I believe that it broke the support line and went down to 2575 and has now turned back up probably heading for the December peak at 4635. I read somewhere that ships were being taken out of storage in preparation for more global growth in trade. I still own several shippers that I'm hanging onto.

[alevin]

http://www.rubbernet.com.sg/baltic.gif

Was this what you were looking for?
http://www.rubbernet.com.sg/baltic_indices.htm

[fedgolfer]

Anybody want to take a stab at the Baltic Dry Index for me? It's either sitting on support (bullish) or it broke an uptrend line (bearish).

Bullitt, your global transport indicator appears to have dried up...

http://finance.yahoo.com/banking-budgeting/article/108953/baltic-drying-up-as-a-gauge?sec=topStories&pos=8&asset=&ccode=

[Bullitt]

Yeah I read that in the paper this morning FG. I found it humorous how that crook said the index is misleading. It is what it is and right now it looks pretty bearish. Actually, it looks like a burst bubble!

[fedgolfer]

Just as the news man says its irrelevant it bust 4% in a day....

http://stockcharts.com/h-sc/ui?s=$BDI&p=D&b=5&g=0&id=p49558466750

its one to keep an eye on though since it has bearish crosses in the major moving averages and as EFA is showing a rounding top.