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Saturday, January 17, 2009

Does INDU lead market?

Hey, my "brother" keeps lecturing me about how impossible would be that general (INDU) leads the market. And here is his lecture:

DJI usually does not lead real moves; DJI usually leads FALSE moves.

There's an old saying Generals (General Foods; GM; GE; etc) do not lead; they follow.  That also goes for the other large cap industrials in the DJI not named "General _ _ _"

Well, I'm a pure chart-ist (is this a real word? I know word "chartist" but it seems irrelevant form my English Chinese Dictionary with chart-ist). So here are my principles:

1. I see everything through the chart, I don't care if it sounds logical or not. So don't tell me, well, the world is going to end so this kind of breakout is a trap.

2. I try my best no to think that this time is different. Everyone knows that there aren't any 100% correct indicators, so many times we tend to think this time is different and therefore use this as an excuse to justify the trade that is against what the indicator says.

3. If an indicator works in the past, until proven wrong, I'll keep using it.

Hmm, I just realize that it sounds like all my principles are actually about: Try not to be smart.

OK, enough lecture. Let's see what makes me think that INDU leads the market. As usual, a chart. And again, it might not work this time, but hey, I'm not a smart guy. Happy long weekend!

INDULeadsMarket

Posted by Cobra at 2:20 PM

10 comments:

  1. AnonymousJanuary 17, 2009 at 2:27 PM

    Cobra, nicely demonstrated.

    $NDX supposedly leads both $INDU & $SPX, and $SOX supposedly leads $NDX. I wonder if this is true in the same period?

    ReplyDelete
  2. YQ (lcheng8@gmail.com)January 17, 2009 at 2:45 PM

    Great chart!

    Co-ask questions from aka_ces.

    Thanks.

    ReplyDelete
  3. CobraJanuary 17, 2009 at 2:55 PM

    Check my chart 1.2.6, the original chart has COMPQ as well. So basically INDU leads all the other indices.

    About $NDX leading role, I have another chart which says everything, please check chart 7.0.2.

    ReplyDelete
  4. AnonymousJanuary 17, 2009 at 7:29 PM

    I don't mind you quoting me because i really appreciate the generous royalties that you pay me.

    However, you should cede to a higher authority http://www.msnbc.msn.com/id/28627355/wid/11915773?GT1=31037

    That is me. Is it you ?

    Regards,
    dave

    ReplyDelete
  5. CobraJanuary 17, 2009 at 7:44 PM

    Interesting. It seems that I have a longer ring finger.

    ReplyDelete
  6. AnonymousJanuary 17, 2009 at 8:28 PM

    i knew that your mkt acumen was no accident.

    Regards,
    dave

    ReplyDelete
  7. 2centsJanuary 17, 2009 at 11:39 PM

    Cobra,
    You are 100% right. I am an OEX option trader and believe it or not, I always have the Dow real time chart as part of my screen no matter what I trade. You can always see the Dow moves first then OEX then ....

    2c

    ReplyDelete
  8. AnonymousJanuary 18, 2009 at 1:05 AM

    So is he saying the market is going down or up?

    ReplyDelete
  9. ValeriobrlJanuary 18, 2009 at 5:35 AM

    Good Chart.

    ReplyDelete
  10. AnonymousJanuary 18, 2009 at 8:41 AM

    $INDU:$SPX

    When ($INDU:$SPX) is going higher, $SPX is going lower.

    http://tinyurl.com/86lq65

    ReplyDelete

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