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Archive for July, 2008

 

Symmetry is a beautiful thing.

The month end battle was fought late in the day to a split decision.

With GDP news already baked into the cake, the premarket double top high was never touched again during normal market hours, and remains there as a target for the longs.

The bulls would have preferred the 1275+ closing, and the bears are satisfied with the smackdown but certainly have not won the battle yet.

By my count it was two days up one back, so the next few day’s action will give us more information as to the next major move.

Twenty-five point range days at least give us plenty of room to work some decent trades in both directions.

Whatever time frames you utilize, trade accordingly. Don’t become an investor if your style is day trading. Go home flat rather than take overnight risk, trapped into a position you may not want to be holding.

It is said that amateurs play the open, and the mechanics play the close.

Stay awake after 2:30 EST, looking for their footprints. Some of the best trades occur after traders are lulled into complacency.

 

The mechanics of symmetry

The mechanics of symmetry

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Early in my career, I remember learning from a trader named Ernie Roseman. I read a book and listened to an audio by him, and his main thesis was quite simple: Be a lover of the market, not a fighter.

That was probably one of the best lessons I ever learned. Go with the current trend and look for logical turning points.

Smoke and mirrors are part of the game, and clueless traders are constantly lead to slaughter by chat room leaders who coninually get it wrong, since they have no idea how the market really moves.

If you want to win at this game before you lose all your capital, seek out competent mentorship, not novice gurus.

There is a game that is played, and once you understand the rules, you can play with the big boys giving you a lift. Get on base and let the power hitters in clean-up position help you score.

High fives to all, from Christian.

 

End of Month Markup

End of Month Markup

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Punch drunk and reeling, the bulls got up off the canvas and delivered an uppercut of their own today.

The approximate 1290 to 1230 range had a pullback today to the middle area (1260 +/- for any math challeged traders).

As Betelgeuse would say:”It’s showtime!”

One of the most important pieces of the puzzle is never addressed much in the textbooks: determining which chart is the most important on any given day.

Our system allows us to see today’s MOC high possibilty. If you know the secret code, you wouldn’t have been surprised at all when this magic threshold was crossed.

If you were shorting and got stopped out twice, remember to honor your daily loss limit to prevent blowing up your account in one bad day of trading. Be ever vigilant against the risk of ruin.

Buying cheap calls at the end of the day yesterday was one way to play this reversal. Trade them, don’t stay married to them.

Bear markets have vicious rallies, until the rally runs out of steam. Probe for the reversal with a jab or two, but be careful ducking into an uppercut.

 

End of month Showtime

End of month Showtime

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in the streets…

AJ Monte has put the importance of stop losses into this great article.

Take a look at today’s chart and imagine the pain being experienced by the longs who added to losing positions the past few days in an attempt to “average in”.

Remember Nucleus Accumbens?

 

Head and Shoulders Breakdown

Head and Shoulders Breakdown

 

The longs got hammered today after a weak attempt to convince the shorts they weren’t in control anymore. They showed the same respect for that idea as the Tijuana Tornado showed Migel Cotto Saturday.

The megaphone is shouting; is anyone listening?

In this post we suggested a head and shoulders top had formed the prior day. “Learning to see incomplete patterns before they are fully formed” is one of our key beliefs. The longer it takes us to recognize and act on a valid pattern, the less profits will be available to us.

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Yesterday’s trend down action left the longs underwater and the shorts out of breath.

The boys left town early today and lathered up under the hot summer sun while the market was put on simmer. It was low volume behavior for the end of the week as both sides agreed to a temporary truce.

Why take five days to do what you can in four?.

An advantage of scoring big yesterday is that we can choose to play half day, or not at all today.

Recognizing a range day early allows us to buy low and sell high. After the Box was established, fading the breakouts was the game plan until you were proven wrong.

If you played that strategy, you were rewarded well for hanging out for an hour or two. 

 

The pause that refreshes

The pause that refreshes

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This age old question, and it’s obvious counterpart “where am I going?”, are some of life’s mysteries.

To the astute trader, however, the rear view mirror gives us clues as to where we are going.

Previous support, when broken becomes resistance. Previous resistance, when broken, becomes support.

This tends to work in all time frames, and the market has a distinct memory in certain time frames.

This is part of the core methodology we use at eminiwizard.com to help frame the secret code of the illuminati.

35+ points were available to our traders who understood these dynamics and coasted downhill. Today’s scalp long guessers got crumbs while the trend traders sat back and let the bobsled run.

Note in today’s chart the continuation entry was the key. Then all that was necessary was to keep your hands in your pockets and away from the mouse as only small bounces were available. Take this ride all the way to today’s logical bottom.

The head and shoulders pattern that began yesterday left a lot of late longs underwater.

Once you learn these patterns, the wind is a tool for you to use.

Do you have a favorite chart you would like to share?

I leave my proprietary indicators off these charts but show the general concepts. Our students get access to all of my favorite tools.

Check out this excellent market technician for more insights.

 

head ans shoulders reversal

head ans shoulders reversal

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Squeezes are a fact of life.

The only question is, will you fight them or join the winning team?

How do we know when high is “too high” or low is “too low”?

Whatever our pet indicators are saying, we need to protect ourselves from ourselves.

This theme is repeated often here because it is the all-important rule that saves us from our irrational behavior. I read this book to understand why someone would pay $240 for a $20 bill; something that I am hoping to avoid doing myself.

No system is perfect. Stops aren’t either. Sometimes we get stopped out and then the trade resumes in our favor. Sometimes the stops save us from minor damage. Such are the facts of life, like skinned knees and failed relationships.

You do wear a seat belt, don’t you? I also presume you have homeowner’s insurance.

Although we hope to never have to need these safety nets, we use these tools to protect ourselves from catastrophic events from which recovery will be difficult.

Today’s early morning continuation high was a classic case of gap and trap both sides.

Many chat room leaders forget that “sideways” is a direction that catches many novice traders who over-react to news events likes today’s beige book report. Gullibly, they blindly follow the emotions of the room leader, and are usually a step behind the market.

Sound familiar?

Here is another expert worth studying; integrate their ideas into your own workable system.

new high and consolidate

new high and consolidate

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