The Last Hour...

Corey said: "One of my biggest issues with daily technical indicators is that they take into account intra-day trades. Now, that sounds stupid, but my issue lies in the fact that most technical indicators try to be emotional thermometers -- and sometimes day traders have no real sentiment towards a stock, but are just buying into an intra-day wave -- or short an intra-day fallout. Therefore, you can get days with shadows that don't really correlate to the true market sentiment of the stock -- they just occur because day traders drove the price up or down to create profit. For someone like me, who is interested in inter-day pricing, and not intra-day, this creates a problem, because the shadows may be false indicators. Therefore, I am thinking of trying to adjust my indicators to use only the last hour of trading. I call it the 'hour of truth' because there isn't really enough time left for day-traders to take risks, and therefore the people buying are showing more of their 'emotional' hand -- they are choosing whether to sell out or stay in over night. What do you guys think about this? If I am trying to create a sentiment thermometer, does it make sense to ignore intra-day price fluctuation? It makes gathering data a whole lot harder -- but I think it might be worth it (conceptually, at least). Is there some value of keeping the rest of the day's data? Thanks, Corey"

SporeMonger said: "[QUOTE=Corey]One of my biggest issues with daily technical indicators is that they take into account intra-day trades. Now, that sounds stupid, but my issue lies in the fact that most technical indicators try to be emotional thermometers -- and sometimes day traders have no real sentiment towards a stock, but are just buying into an intra-day wave -- or short an intra-day fallout. Therefore, you can get days with shadows that don't really correlate to the true market sentiment of the stock -- they just occur because day traders drove the price up or down to create profit. For someone like me, who is interested in inter-day pricing, and not intra-day, this creates a problem, because the shadows may be false indicators. Therefore, I am thinking of trying to adjust my indicators to use only the last hour of trading. I call it the 'hour of truth' because there isn't really enough time left for day-traders to take risks, and therefore the people buying are showing more of their 'emotional' hand -- they are choosing whether to sell out or stay in over night. What do you guys think about this? If I am trying to create a sentiment thermometer, does it make sense to ignore intra-day price fluctuation? It makes gathering data a whole lot harder -- but I think it might be worth it (conceptually, at least). Is there some value of keeping the rest of the day's data? Thanks, Corey[/QUOTE] Man, that's a tough nut to crack. I would look at the open/close and the day high/low. Everything else is just noise. IMHO"

Corey said: "My thought is that the H/L might just be noise too -- hence why I would use the O/C and H/L of the last hour -- because I think there is 'less' noise in that hour than the rest of the day. I dunno. Always lookin' for that edge, you know? Might be worth just trying it to see if it helps."

Rickster said: "I think you are on the right track. Many feel that the only data that matters is the close. On a similar track, I have a preference for the noon point when things seem to settle down. The problem (and advantage) with using the noon point is that it is not recorded as a distinct point and the data disappears when intraday data disappears. Random thought: As a general rule, I have found that longer term data is more meaningful than short term data. It seems that most new traders (and I was no different) try to solve their confusion by zooming in to minute by minute (or even tick by tick) data. To me, this is like trying to get an understanding of a forest by looking at the leaves with a microscope. I have had better luck going to 50,000 feet to see what it looks like. Bill Gann said in one of his books that a trader should only look at price quotes once per week."