Before The Open - Friday 2 December
Can the market make it to the end of the week before committing acts of self-harm?
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Then allow us to explain what these Before The Open posts are all about
With these charts we try to lay out some parameters within which the near term movements of market indices are likely to take place. The idea is to set some context for longer-term investment decisions (eg. is it a good idea or a bad idea to be accumulating index ETFs right now?) and for short-term trading decisions (is the Nasdaq at support or not and if so what might I do about it?).
We use our usual Elliott Wave / Fibonacci method. The tools together can work well. Using a wave count gives you some pattern recognition to say, how many moves up or down can a security take before buyers or sellers get exhausted and the trend reverse; and using Fibonacci extensions and retracements helps you measure the likely size of the moves up or down. None of this is pre-ordained and it may turn out to be very wrong, but more often than not you can use the wave counts and extensions / retracements to better inform your decisions.
We use the futures charts for equity indices, because futures trade most of the time whereas ETFs snooze between 2000 and 0400 Eastern. So we can glean more insight about short-term sentiment from the futures than we can from ETF movements. You can use the futures movements to assist with ETF decisions - if the S&P futures are up by 1% then SPY will be up by near enough to 1% to make little difference to most people. And so on.
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