Actually you bring up a very good point...they can buy or sell, or more often, I've noticed, sit in a price for a while until things balance out. Now I will tell you on the heavily traded ETF's I don't think it's much of an issue, but regardless of whether they are buying or not, the price and volume still tell you something. If a market maker buys at $10.00, he's going to send it up at some point, right? It acts as a magnet - the price will go above or below but it likes to stay close. The line also acts as support and resistance. If it's below and the MACD and slow stoch turns, I buy. Most of the time it's going to hit that line again, but the pivot points also come into play. Anytime it gets to one of these areas I'm cautious...depending on the volume and how many times it breaks through, plus the indicators, I will either hold or sell. Or I might buy just after it crosses the WVAP, because that is support now and it will make a push upwards. Monday, for example, with GUSH, it kept trying to break that line and it couldn't. I was sitting on a very heavy position, so I sold it to solidify my gains...as soon as it broke through I rebought. It may not make sense when I say I sold at $5.00 and rebought at $5.12, but I was following my indicators, and the 5.12 area was the breakthrough, and I continued on for another big push. Just watch, and papertrade where you think you would buy, sell, etc.
I would also say I don't think they are really that manipulated - they will always be right at 3x the unit they are tracking. Banking index up 2%, FAS is going to be in the neighborhood of 6%. If I'm carrying a large position, I'll be aware of the Fib #, moving averages, etc, and watch those as well...
I hope I explained it clearly, but I think you will pick up on more as you watch it. You may come up with something I could improve on with it...but when trading these, I try to keep my indicators to a minimum - you have to be super fast, and I don't want a lot of things to have to process at once.
Best,
Kim |
