- New Science in old markets -

S&P and DAX trading hints

In the August 24th edition of AlphaMail we suggested trading out-and-in again of the long position in the S&P that we had recommended earlier in the day. That tactic has proved extremely effective and there have been 5 chances to liquidate and re-establish the same position for a 25 point advantage and 3 chances to do the same for 40 points. This trading range may last for even longer but we now advise simply staying long and not attempting to catch these 1-1.5% moves, tempting though it may be. Here is a short-term chart with our first 'buy point' shown at the arrow:

S&P short-termThe advice for European stocks given in the August 25th edition of HEDLines was to 'buy a decent dip' at any time in the next few days and to favour the DAX over other candidates. That advice was given when the DAX futures were trading at 10,176, shown at the arrow. Later the market fell back by a little over 400 points and that dip ended in the range bounded by the two red lines shown here. The lower is placed at the 50% retracement point of the upmove from the absolute low of the move at 9320 to the high at the arrow and the higher is the 50% retracement of the upmove from the next low points at around 9540. Either line would be a 'decent dip' from the point of the arrow so we assume that long positions were adopted there and then. Stops and profit-take threshold levels will follow:

dax points and levels