12/5/07 Dow YM Analysis

[Soultrader 12]

Brief follow up on my expectations and key levels on the YM.

 

Chart below shows Dow and Nikkei in comparison.

 

 

Dow traded in a range most of yesterday but a close in the lower range of the bracket. Key resistance was 13337 - 13340 and will continue to be a key pivot level. Premarket shows a little resistance right now as well.

 

 

Today, Nikkei trended nicely to the upside to recover all the losses from the previous session. Evening session Nikkei is trading above previous day high.

 

There is a close correlation with the US markets and the Nikkei. On most occasions, the US markets will lead the Nikkei. If Dow, S&P closes positive... Nikkei is likely to gap up the next day and end positive as well.

 

However, yesterday was a range day with slight weakness. Nikkei gapped down slightly then broke out of its morning range to trend up all throughout the remainder of the day. This inverse relationship makes it interesting.

 

Todays Asian Markets: Hange Seng +1.61%, TOPIX +0.73%, Singapore +0.91%, Shanghai +2.58%

 

There is a good chance the Dow will break yesterdays high and move into higher value placement. Key pivot will remain at 13340. My bias is a potential rotation towards 13380's.

 

However, most importantly will be to see how price reacts at the US open around the 13340 area. (do not want to see prices retrace back below 13300)

[monad 10]

Well Soultrader since everybody and his brother appear to be bullish, it could turn out to be an interesting day, hope there are no nasty surprises. when there is a general consensus, markets have a tendency to do opposite:roll eyes:

[walterw 10]

James, this was an excellent analisis for today and it really worked as predicted... I asume the asian open will gap up... thanks for this analisis, if posible, keep them coming.. thanks Walter.

[Soultrader 12]

James, this was an excellent analisis for today and it really worked as predicted... I asume the asian open will gap up... thanks for this analisis, if posible, keep them coming.. thanks Walter.

 

Hi Walter,

 

Thanks. Asian markets did gap up today. Usually on a big gap day the Nikkei does nothing but trade in a tight range. This is the reason this contract can be one of the most boring contract in the world.

 

Last year, most of the movements came in the form of gaps. Intraday movements were minimal.

 

Will see it plays out and will post a few thoughts for todays upcoming US session.

[walterw 10]

That will be great James... I asume this contracts only trade on session hours, would that be the case ? cheers Walter.

[Soultrader 12]

Nikkei trades from 9:00am to 11:00am and then from 12:30pm to 3:10pm.

 

Evening session begins at 4:30pm to 7:00pm but the liquidity is very low.

[walterw 10]

I see, so they dont have 24 hours market like the globex on US markets...

 

you mention that after gaps, they consolidate, would the oposite be true, if no mayor gap, they trend ?

[Soultrader 12]

I see, so they dont have 24 hours market like the globex on US markets...

 

you mention that after gaps, they consolidate, would the oposite be true, if no mayor gap, they trend ?

 

It has been the case lately. Over the past 2 years up until around September of 2007 the Nikkei trended roughly 23% of the time intraday. However, since the credit crisis and the high volatility it has been trending at approx 35% intraday. (Taking September - Present 2007)

 

I havent done enough study on this yet but just from my observation for the past few months trends tend to occur more often when the gap is not that significant. The larger the gap, the less likely the Nikkei will move intraday.

 

Here is a snapshot of todays morning session on the Nikkei.

 

 

It shows approx 150yen gap up and then a complete range.

 

Below is the Dow chart showing the Tokyo session. Notice the similarities? The Nikkei is constantly on a leash by the US markets in my opinion.

 

[walterw 10]

so this market when it trends it sure will affect the US session as happened on wednesday... something I will really add to my arsenal... thanks James for this great info, I will apreciate if you keep this thread alive on this topic so we can improve the learning curve on this issues.. cheers Walter.

[Soultrader 12]

Hi Walter,

 

I have found the biggest clue to be when there is an inverse relationship between the Asian and US markets. (except Shanghai)

 

The US markets it the leader so when the Nikkei moves up when the US fell the day before, this will bring optimism into the US session. Im watching for anything that is outside of the normal market behavior. (does not happen often)

[Maverick0325 10]

James,

 

What data feed do I need in eSignal to watch the Asian markets each day to start to see a correlation to the US Equities?

 

Also, what times do they open and close? i heard they have an AM and PM session? or was that the DAX?

 

Any pointers on WHEN to trade this market, related to the EST-zone?

 

Thanks for the great work, it goes noticed!

 

J

[Soultrader 12]

James,

 

What data feed do I need in eSignal to watch the Asian markets each day to start to see a correlation to the US Equities?

 

Also, what times do they open and close? i heard they have an AM and PM session? or was that the DAX?

 

Any pointers on WHEN to trade this market, related to the EST-zone?

 

Thanks for the great work, it goes noticed!

 

J

 

Thanks Maverick. For the Nikkei you will need access to the Osaka Exchange (OSE) which I believe is like $3 a month.

 

The opening is at 9:00am to 11:00am and then from 12:30pm to 3:10pm Tokyo time. The evening session starts from 4:30pm to 7:00pm but not much liquidity yet.

 

The most active time for the Nikkei is from 9:00am to around 10:30am and then from 12:30pm to about 1:00pm and then again from 2:30pm to 3:10pm. (Tokyo time)

[Maverick0325 10]

thanks for the info!