# Market Direction? **URL:** \ **Category:** C2\ **Created:** [July 22, 2007, 11:24pm UTC](https://forums.collective2.com/t/market-direction/4987 "2007-07-22T23:24:52Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![LewPayne](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/lewpayne/32/238_2.png) [@LewPayne](https://forums.collective2.com/u/LewPayne)\ **Post date:** [July 27, 2007, 10:57pm UTC](https://forums.collective2.com/t/market-direction/4987/81 "2007-07-27T22:57:14Z")
**Tarek - There are two things I’m sorry about… that I didn’t begin having C2 track my options system years ago, and that C2 does not facilitate the entry of option spreads into the system. I’ve been trading my IRA/401k accounts in the manner you describe for almost three years now. For those three years, my success rate has been 80%. The total non-compounded return is shown on my system description, for each of those three years. Your characterization of the market as a charging bull or falling bear (like a freight train heading my way) is correct. When my system is no longer profitable, I will abandon it. Until then, I feel that the risk is minimal and manageable… and the rate of return (35-55%) well worth it. That’s really all I can say, other than “to each his own.”** ---
**Author:** ![Schmitty](https://avatars.discourse-cdn.com/v4/letter/s/e0b2c6/32.png) [@Schmitty](https://forums.collective2.com/u/Schmitty)\ **Post date:** [July 28, 2007, 1:58am UTC](https://forums.collective2.com/t/market-direction/4987/82 "2007-07-28T01:58:18Z")
Palsun/Howard wrote: \> Unless RUT hits 710 or below, you would get the \> full $1,500 from this trade. **else a write-off…** \> no big deal… Palsun/Howie, do you have even the slightest clue as to how a credit spread works? You have got to be the most imbecilic poster on the board! If RUT closes below 700, he loses $100, leaving him with $8000 in his account ($6500 in profit from last month’s trade plus the $1500 he got from writing this month’s bear put spread). That is right, he is risking $100,000 to earn $1500! This kind of trading, if done with a significant portion of his portfolio, is a recipe for disaster. In effect, it is a martingale or negative progression system, with many small gains, and a few large losses. If the spead is fairly priced, he can expect to win 49 out of every 50 times he puts it on, but if he loses early in the run (I notice he is not compounding, which is smart, considering!), will nearly wipe him out. Putting on one per month, he can go years without a loss, but one the loss comes, it will be huge. Granted, he is right about C2 not correctly accepting spread orders, he should have been able to enter a limit order for the spread at 30 cents and likely would have been filled. If the option spread were fairly valued at 30 (if 30 was the difference between the mids of the legs) then his expectaion on the trade at 30, as a writer, was LIBOR with high variance. At 15 cents his expectaion is decidedly negative. ---
**Author:** ![Schmitty](https://avatars.discourse-cdn.com/v4/letter/s/e0b2c6/32.png) [@Schmitty](https://forums.collective2.com/u/Schmitty)\ **Post date:** [July 28, 2007, 2:12am UTC](https://forums.collective2.com/t/market-direction/4987/83 "2007-07-28T02:12:10Z")
Lew Payne wrote: \> For those [last] three years, my success rate… For the last three years realized volatility has been significantly below implied and also, until very recently, has trended down. This situation has favored writers. The next three years may not be so forgiving for negative skew systems. You have reinvented Andy Lo’s Capital Decimation Partners! ---
**Author:** ![PalAnand](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/palanand/32/2923_2.png) [@PalAnand](https://forums.collective2.com/u/PalAnand)\ **Post date:** [July 28, 2007, 4:18am UTC](https://forums.collective2.com/t/market-direction/4987/84 "2007-07-28T04:18:40Z")
\>Palsun/Howie, do you have even the slightest clue as to how a credit spread works? I understand that he is risking $100,000 to earn $1500. But, it is still no big deal given the circumstances surrounding this particular trade (August expiration, which is not that far away)… \>You have got to be the most imbecilic poster on the board! I disagree. I already accepted that you are the swine… \>This kind of trading, if done with a significant portion of his portfolio, is a recipe for disaster. In effect, it is a martingale or negative progression system, with many small gains, and a few large losses. I never disputed the fact that this is a extremely high risk system… \>If the spead is fairly priced, he can expect to win 49 out of every 50 times he puts it on, but if he loses early in the run (I notice he is not compounding, which is smart, considering!), will nearly wipe him out. Putting on one per month, he can go years without a loss, but one the loss comes, it will be huge. I agree that this is the wrong way to trade options. Options depends on hitting home runs - few big wins and a large number of small losses. Lew’s strategy is the opposite of this. \>Granted, he is right about C2 not correctly accepting spread orders, he should have been able to enter a limit order for the spread at 30 cents and likely would have been filled. Maybe he is experimenting. That is why this is a closed system. As Lew says "Unfortunately, C2 has no way of handling a spread trade. Look at the charts for the option pair… the spread was as high as 65 cents. Thus, my 30 cent credit spread would have easily executed (and did, in my various 401k/IRA accounts). Instead, C2 does the individual legs at market, giving me a 15 cent spread. So let’s just live with that 15 cent spread for now, and look at the trade… " So what’s the problem? \>If the option spread were fairly valued at 30 (if 30 was the difference between the mids of the legs) then his expectaion on the trade at 30, as a writer, was LIBOR with high variance. At 15 cents his expectaion is decidedly negative. Of course. You have a great talent for pointing out the obvious… ---
**Author:** ![LewPayne](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/lewpayne/32/238_2.png) [@LewPayne](https://forums.collective2.com/u/LewPayne)\ **Post date:** [July 28, 2007, 1:26pm UTC](https://forums.collective2.com/t/market-direction/4987/85 "2007-07-28T13:26:39Z")
_“If RUT closes below 700, he loses $100, leaving him_ _with $8000 in his account ($6500 in profit from last_ _month’s trade plus the $1500 he got from writing this_ _month’s bear put spread). That is right, he is risking_ _$100,000 to earn $1500!” - Schmitty_ **How do you guys come up with this stuff? While it’s true that a $100K spread exists between the pair, and that I’m covering that spread with my cash reserves, I am not "risking $100K to earn $1500."** **With an 80% success rate, I’ve been wrong once or twice a year… and as a result, I’ve had the opportunity to observe what happens when I’m wrong. In all these orders that you see, there’s a “sell at market” stop loss if the index hits or exceeds the strike price (in this case, 710 or below). In such cases, the spread is reversed (closed) and marked to market.** **Please educate me here… how am I risking $100K through these trades?** ---
**Author:** ![PinnacleTrading](https://avatars.discourse-cdn.com/v4/letter/p/839c29/32.png) [@PinnacleTrading](https://forums.collective2.com/u/PinnacleTrading)\ **Post date:** [July 28, 2007, 7:54pm UTC](https://forums.collective2.com/t/market-direction/4987/86 "2007-07-28T19:54:38Z")
“Tarek - There are two things I’m sorry about… that I didn’t begin having C2 track my options system years ago, and that C2 does not facilitate the entry of option spreads into the system. I’ve been trading my IRA/401k accounts in the manner you describe for almost three years now. For those three years, my success rate has been 80%. The total non-compounded return is shown on my system description, for each of those three years. Your characterization of the market as a charging bull or falling bear (like a freight train heading my way) is correct. When my system is no longer profitable, I will abandon it. Until then, I feel that the risk is minimal and manageable… and the rate of return (35-55%) well worth it. That’s really all I can say, other than "to each his own."” “How do you guys come up with this stuff? While it’s true that a $100K spread exists between the pair, and that I’m covering that spread with my cash reserves, I am not "risking $100K to earn $1500." With an 80% success rate, I’ve been wrong once or twice a year… and as a result, I’ve had the opportunity to observe what happens when I’m wrong. In all these orders that you see, there’s a “sell at market” stop loss if the index hits or exceeds the strike price (in this case, 710 or below). In such cases, the spread is reversed (closed) and marked to market. Please educate me here… how am I risking $100K through these trades?” I’ll be more than happy to respond to your reply, but firstly, let’s be honest, I don’t believe what you did the last three years resemble anything like what you did with this specific trade and most importantly what just happened after you initiated the trade. Let’s break it down play by play shall we and find out what mistakes you’ve done. 1. You’ve entered a Put credit spread near the highs of a bull market rather than the lows even though you ridiculed a system vendor on 6/7/07 for no risk management by saying “A trade that eats away at 50% of the portfolio value due to draw-down, and didn’t have a stop-loss to mitigate such a catastrophic loss? Is this the sign of a mature trader who exercises diligent risk management?” and clearly told that person that the DOW is headed down by saying, “He’s down to $30K - and we have yet to hit bottom! This is a drawn-out pattern that ends the April/May corrective and resets the index. Let’s see if he keeps holding, and refuses to cut his losses until there’s a margin call.” Therefore, you clearly felt that the market has topped. 2. The trade was executed when the VIX was trading around 17-18 and in the beginning stages of an up-trend clearly identified by the crossover of the 28/50 exponential moving average. The VIX currently is at a three year high and trading at 24 a 30% increase from just a week ago. In addition, the spread on the bid/ask has doubled thus forcing you to pay up dearly in case you decided to bail. 3. You’ve entered the trade with at least 4 weeks to go even though you chose a “safe” strike. 4. You chose the weakest index to initiate the spread on. 5. Last but not least, you bet and tied up the entire account of 100K to earn a measly 3% in 1 month a risk to reward ratio of a whopping 32.33 to 1. Now you ask how could you lose and have a drawdown when your strike is so far away, and how is it at all possible to happen to you when you’ve been right 80% of the time?? The answer is quite simple, there’s no such thing as a sure thing when it comes to trading, more so when you trade debit/credit spreads. If you bet the whole wad and are wrong, you will lose the whole wad no ifs, ands or buts about it, and you can’t bail out gracefully when things turn ugly. Let me give you this highly probable scenario that can take shape at any moment, and I’ll let you be the judge: A. The Dow has a fake rally on Monday of 100 points. B. Tuesday morning, the DOW meanders throughout the first half of the day, and sells off severely the rest of the afternoon and finishes off by -390. VIX is at 27.75. C. Wednesday morning, the DOW opens down at –550 and by afternoon, circuit breakers kick in after predetermined levels set by the exchanges are touched. At the end of the day, the DOW is off by –1275 points. VIX is at 36 and the bid/ask spreads in these options are at . well, you don’t want to know J D. The market touches your strike and your stop loss gets triggered. Guess at what price you’re safely out with Trust me; you really don’t want to know. If you think that this scenario can’t take place in a time span of one week, then you haven’t been trading long enough. Now how much will you be out of that 100k??? I’ll let you figure that one out. The bottom line is this Lew, is it worth betting the farm for 3%, when there are much better and safer trading strategies to earn that from than the one you’re using? Tarek ---
**Author:** ![SamCook](https://avatars.discourse-cdn.com/v4/letter/s/e274bd/32.png) [@SamCook](https://forums.collective2.com/u/SamCook)\ **Post date:** [July 30, 2007, 12:35am UTC](https://forums.collective2.com/t/market-direction/4987/87 "2007-07-30T00:35:16Z")
\> there is no such thing as support during a bearish move. I’m not sure if this is a Seykota’ish quip: “bearish moves don’t find support until they become bullish moves”, or if you really believe markets don’t interact with previous patterns when they are in moves like the one we are in now. Clearly markets react to previous swing highs and lows and/or trendlines even if they don’t hold. The previous swing lows near 1493 (ESU) turned into nice sell pivots after they were broken. So did the broken trend line near 1517. Even if the weekly trendline under 1460 (near 1455 for Monday) doesn’t hold, it is a good thing to be aware of. When “support” near 1493 gave way the next “support” acted like a magnet. If you are short Friday knowing the market is likely to test next “support” is a good thing to know. Will it hold? Time will tell ( I really don’t know). But it’s better to know that trendline exists, and that some traders may be watching it, than it is to ignore it, or be oblivious to it, or to _assume_ that it will not have any effect on price action. ---
**Author:** ![Username](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/username/32/238_2.png) [@Username](https://forums.collective2.com/u/Username)\ **Post date:** [July 30, 2007, 12:42am UTC](https://forums.collective2.com/t/market-direction/4987/88 "2007-07-30T00:42:43Z")
""I’m not sure if this is a Seykota’ish quip: “bearish moves don’t find support until they become bullish moves”, Gotta love Seykota… ---
**Author:** ![SamCook](https://avatars.discourse-cdn.com/v4/letter/s/e274bd/32.png) [@SamCook](https://forums.collective2.com/u/SamCook)\ **Post date:** [July 30, 2007, 11:12am UTC](https://forums.collective2.com/t/market-direction/4987/89 "2007-07-30T11:12:30Z")
\> ""I’m not sure if this is a Seykota’ish quip: “bearish moves don’t find support until they become bullish moves”… So Ed doesn’t get mad at me “bearish moves don’t find support until they become bullish moves” is _not_ a Seykota quote. It is my version of what I expect he might say. \> Gotta love Seykota… Er, uh, OK… ---
**Author:** ![CraigBender2](https://avatars.discourse-cdn.com/v4/letter/c/90ced4/32.png) [@CraigBender2](https://forums.collective2.com/u/CraigBender2)\ **Post date:** [July 30, 2007, 11:39am UTC](https://forums.collective2.com/t/market-direction/4987/90 "2007-07-30T11:39:06Z")
I thought this forum discussed market direction? I saw someone said it would hold around 1460. It seems to have some support around there. Its tried to bounce a few times, but hasn’t had much success. Anyone have an opinion? ---
**Author:** ![GilbertArevalo](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/gilbertarevalo/32/193_2.png) [@GilbertArevalo](https://forums.collective2.com/u/GilbertArevalo)\ **Post date:** [July 30, 2007, 12:06pm UTC](https://forums.collective2.com/t/market-direction/4987/91 "2007-07-30T12:06:59Z")
Hi Craig, It looks to me like the SPX has NO SUPPORT at the 1460 level other than the last few hours where bulls and bears BOTH are lacking ANY conviction either way. You will (imho) see the SPX zig-zg its way slightly or perhaps more than slightly lower until it indeed regains or forms new support at some level. Just pull up a two year chart and see. The sudden retrace/vault back to the upside (like we’ve seen more than once lately) are mostly anomalies - indicative of a late stage bull market where bulls bid up prices without ANY regard (see late 90’s). Many investors have only been in the game the last 4.5 years and are have not been “scared straight”. But the higher we “float” the harder we’ll fall…so it all works out. But as far as “finding support” at 1460 - don’t know where that comes from (chuckle). Perhaps wishful thinking. Gilbert ---
**Author:** ![richard\_haines](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/richard_haines/32/618_2.png) [@richard\_haines](https://forums.collective2.com/u/richard_haines)\ **Post date:** [July 30, 2007, 12:11pm UTC](https://forums.collective2.com/t/market-direction/4987/92 "2007-07-30T12:11:58Z")
I didn’t originally say support at 1460 but I do see how it could come to play. Looking at the last 2 weeks of Feb. Resistance often becomes support on the way down. ---
**Author:** ![SamCook](https://avatars.discourse-cdn.com/v4/letter/s/e274bd/32.png) [@SamCook](https://forums.collective2.com/u/SamCook)\ **Post date:** [July 30, 2007, 12:16pm UTC](https://forums.collective2.com/t/market-direction/4987/93 "2007-07-30T12:16:48Z")
\> I thought this forum discussed market direction? I saw someone said it would hold around 1460. No I did NOT say it would hold. Please read carefully. I said: “we could close below that trendline today and that would be potentially bearish for 15-50 ES points (the next magnitude trendline is under 1460, higher support easily viewed on the weekly (Feb. highs / June lows) is 1492-93.” \> It seems to have some support around there. And I said if the "trendline under 1460 (near 1455 for Monday) doesn’t hold, it is [still] a good thing to be aware of." Usually moves of this intensity don’t turn on a dime and/or without a retest. Breadth is improving and volume is waning: that’s bullish. But price is king. I would only scalp long here and even then I would want to be with the microscopic trend (like the one minute). Also, more often than not, there is “trow over” on a trend line test. Jessie Livermoore liked big numbers and major factors. 1450? I also said: "how about a “turnaround Tuesday”… after a new low on improving breadth." Let’s see. I wouldn’t bet on it yet (today is Monday ;-)). ---
**Author:** ![LewPayne](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/lewpayne/32/238_2.png) [@LewPayne](https://forums.collective2.com/u/LewPayne)\ **Post date:** [July 30, 2007, 1:07pm UTC](https://forums.collective2.com/t/market-direction/4987/94 "2007-07-30T13:07:29Z")
**Tarek - you’re being purposely disingenuous in your reply, with regard to your characterization of the trade as earning 3% in one month. Despite all the prior discussion on here about how C2 does not faciliate the entering of spread trades, despite the comments that appear in the trade itself telling “subscribers” to enter it as a 30 cent credit spread, and despite the fact that charts support an even higher spread (60 cents +)… you insist on using a crippled figure in your analysis of risk/reward ratio, etc.** **If you were to follow the directions _published with the trade_, it would be worth between 3 to 6 percent/month (36% to 72% annualized). If you insisted on _not following directions_, then there’s no point in trading the system. Now, with regard to your other points…** **1. The account started with $100K, and currently has $108K in cash (per C2). The current trade generated $1,500. Mark-to-market right now is -$10,500. Add in the $1,500 and realized loss would be $8,000. That is 8% of portfolio value. Your comment about my comment of another vendor experiencing 50% portfolio loss is irrelevant. Your thinking that I thought the market had topped is naive. I analyze the market daily, making intra-day projections and synthesizing longer term possibilities. The fact that today I might think “XYZ” may happen long-term does not preclude adjustment tomorrow. I adjust with the market, trading short-term while keeping an eye out on the long term.** **2. Again, your characterization is exaggerated when you say “forcing you to pay up dearly.” At this moment, that amounts to $8,000 per C2. At my stop-loss, it would amount to roughly $12,000. Or did you forget that both options gain value and offset each other, less their deltas?** **3. What’s your point? I enter most of these trades roughly four weeks prior to expiration (and wait a week on the five week ones). In this case, there were two possible scenarios unfolding… a bullish and a bearish. I chose to enter rather than let it get away from me. You may not like my entry points, but I do… they are in keeping with my goal for this system.** **4. I typically trade the SPX. I’ve seen the money shifting from small and mid-cap to blue chips over the past four months. I chose the index that was best suited for this trade (the RUT this time), and that has the best spread combination available along with least probability of striking out.** **5. Disingenuous. Follow directions that were published with the trade. The spread is 30 cents minimum, and the fill is even better. 6% in one month, not 3%. Risk of my strike hitting is less than 3% for this trade. If the strike hits, I will not lose the whole wad, even at mark-to-market.** **Regarding your “A, B, C, D” scenario… let me give you a different one that is going to unfold (I got this one from the same magic hat you got yours… therefore it is just as valid):** **A. The index sputters sideways until Wed. It then wastes its time in a volatile upward consolidation, gaining some ground here and there.** **B. It finally has a spiked upward rally, followed by another tug-of-war which wastes more time and loses some ground.** **C. Existing lows are re-tested, weeks from now. If broken, the index hits near 712.50 as a low but comes back up.** **D. My options expire worthless, and profits are secured.** **If you think this scenario can’t take place in a time span of four weeks, then you haven’t been trading long enough. If you think there are much better and safer trading strategies to earn 35 to 55% annually, then you haven’t traded systems on C2 long enough.** ---
**Author:** ![LewPayne](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/lewpayne/32/238_2.png) [@LewPayne](https://forums.collective2.com/u/LewPayne)\ **Post date:** [July 30, 2007, 1:52pm UTC](https://forums.collective2.com/t/market-direction/4987/95 "2007-07-30T13:52:32Z")
**Tarek - Since you’re fond of using C2 stats verbatim, here’s something for you to chew on:** _Pinnacle Trading_ _Open P/L: ($424,449)_ **Isn’t that roughly half, maybe more, of your current portfolio value?** _Max Drawdown: 87.68%_ **By comparison, my $12,500 (per C2) current draw-down is negligible, representing 8% of portfolio value after mark-to-market and credit.** _Compound Annual %: 93% over 1318 days_ **That seems like a lot of risk (87.68% per C2) for the return.** ---
**Author:** ![GilbertArevalo](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/gilbertarevalo/32/193_2.png) [@GilbertArevalo](https://forums.collective2.com/u/GilbertArevalo)\ **Post date:** [July 30, 2007, 3:06pm UTC](https://forums.collective2.com/t/market-direction/4987/96 "2007-07-30T15:06:04Z")
\>I didn’t originally say support at 1460 but I do see how it could come to play. Looking at the last 2 weeks of Feb. Resistance often becomes support on the way down. Hello Richard, In this case (imho) I don’t think this is the case. I see now that you are going back to the highs of February. However, at that level…the S&P 500 Index did not “base” (or traverse for a prolonged period) at that (1460) level. If it did…I think you’d be right in that it wold have become (at that time) overhead resistance - to now become a support or floor for the broad index to grapple with. That (Feb) was simply a high point - temporarily reached at the end of an uptrend - from where stocks decidedly, well…plunged. Therefore…on the way down, the S&P will have to ‘grapple’ with buyers from the previous uptrend (pre-Feb) - that could be (very temporarily) at the current level…or the previous peak or a bit longer athe previous (since it hit that resistance level twice) - or any number of “support” levels from the previous uptrend. It really has to have a prolonged base of multiple buyers at the same level to be thought of as support. For now the S&P will languish on up and down volume until intstitutions produce a surge of buying. At what level that will be is anybodies guess. But I don’t feel 1460 will provide any support (to speak of) from which to make much of a bounce. Gilbert ---
**Author:** ![GilbertArevalo](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/gilbertarevalo/32/193_2.png) [@GilbertArevalo](https://forums.collective2.com/u/GilbertArevalo)\ **Post date:** [July 30, 2007, 3:12pm UTC](https://forums.collective2.com/t/market-direction/4987/97 "2007-07-30T15:12:35Z")
…in fact, the ONLY reason (I think) the indexes are pausing at these levels is that they basically move in tandem and have all seriously breached their levels - except for the Dow which hasn’t broken (yet) the 13, 320 level. It has support from this level and is in fact providing support (at this time) for ALL the major averages - SOON (imho) to be violated. It is simply making a minor bounce at the moment. But I have recently seen stranger things. All of a sudden some news comes out to excite bulls and we are off and running again to new highs (lol). Gilbert ---
**Author:** ![richard\_haines](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/richard_haines/32/618_2.png) [@richard\_haines](https://forums.collective2.com/u/richard_haines)\ **Post date:** [July 30, 2007, 3:22pm UTC](https://forums.collective2.com/t/market-direction/4987/98 "2007-07-30T15:22:52Z")
Gilbert it is hard to say. It is for sure subjective opinion. I see it as some fairly strong support. Mostly because it hit this area several times from 2-14 to 2-23 and then went down. From some of my studies I have learned the more times a issue hits a area either support or resistance the stronger that support or resistance becomes. If on the way down the area of 1460 is as hard to penetrate as it was in Feb then possibly it won’t go through it at. It may then go up and hind sight would then show us it is support. ---
**Author:** ![SamCook](https://avatars.discourse-cdn.com/v4/letter/s/e274bd/32.png) [@SamCook](https://forums.collective2.com/u/SamCook)\ **Post date:** [July 30, 2007, 3:38pm UTC](https://forums.collective2.com/t/market-direction/4987/99 "2007-07-30T15:38:51Z")
\> I didn’t originally say support at 1460 but I do see how it could come to play. Looking at the last 2 weeks of Feb. Resistance often becomes support on the way down. Sorry. You and Gil need a better chart service. The Feb. resistance (which I mentioned before) is 1493 (not 1460). The support here is the weekly trend line (using the March 07 and July 06 lows) and a fibo 1.618 (of the June decline) measured off the top. ---
**Author:** ![GilbertArevalo](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/gilbertarevalo/32/193_2.png) [@GilbertArevalo](https://forums.collective2.com/u/GilbertArevalo)\ **Post date:** [July 30, 2007, 4:05pm UTC](https://forums.collective2.com/t/market-direction/4987/100 "2007-07-30T16:05:39Z")
@ Richard To NOT draw any trendlines (thx Sam) from 2006-2007 - charting services/Fibo withstanding…you are right, the 1460 level was touched during the said time period _for 6 straight days_, however that does NOT indicate support. I don’t have a really good exmple (since I am running behind as usual) but pull up a 6-month chart for PPCO. It has developed some fairly strong support (buying with volume) at about the 12.5 level. Each time it (recently) goes above that level and comes down…it finds support, since there are many buyers at above or at that price level. Not the best example, but perhaps the gist has been lent. But there is a case with regards to 200-day moving averages (hence Sam’s trendlines). Support may be found there. However…the drawn trendlines from lows from any 2+ data points (lows) has altered over the last 3 and even 4 or 5 years - so your case is shaky. [Previous page](https://forums.collective2.com/t/market-direction/4987.md?page=4) [Next page](https://forums.collective2.com/t/market-direction/4987.md?page=6)