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Politics : Idea Of The Day
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To: fuzzymath who wrote (30043)12/11/1999 9:05:00 AM
From: JDinBaltimore  Read Replies (1) of 50167
 
Fuzzy,

Here is something to burn some analytical neurons on. First I've learned NEVER go against these levels that IKE post. When I started following his post my trading took a 180% turn. But, when a support or resistance level is being approached, there is a "Momentum" associated with the movement. I've been trying to fine tune a mathematical indicator, that calculates strength of a move wile in a "target" range. I've looked at premium spreads between a group of calls and puts, similar to the VIX, but which calculates premium spreads between the calls and puts when the index is in the range of resistance or support. As the bid ask ticks converge on either a put or call one would think weakness is occuring as the ask price is lowered to attract buyers, and conversely to attract sellers. But the model matrix becomes more complex as options closer to the money can slide "linearly" up or down without the spread changing, or only for a few ticks in one direction or the other. As with any modeling it is hard to convey a concept. Point being if one had a indication of relative strength moving into resistance or support it would be of tremendous value. In IKE's post yesterday he indicated that "something didn't seem right" which what occured was a classic head fake ie. hit resistance back off then penetrate deeper only to sell off.

Regards
JD
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