“Those who have knowledge don’t predict. Those who predict don’t have knowledge.”
Lao Tzu, Chinese philosopher, 6th century BC
PAYPAL
Friday, 9 November 2012
9 Nov 2012
Markets managed to rally off the lows today, but judging from the SPX wave formations it is only corrective and Im still expecting another rally on Monday to finish off the correction. Then once confirmed we can expect another round of selling.
Thanks for your thoughts on my blog. I understand what your saying. What are your downside targets on .spx and .rut? What bugs me is the vix is not showing fear at all, and I would short when market gets overbought again. I have been burned on shorting when market is in between, since they like to do gap ups and then trap shorts. So I very cautious especially this time of year if you know what I mean. I fret end of yr performance by money managers, seasonally vix is usually down and the IWM tends to run in early December to February. So I super cautious. Also since I track the breadth myself (advancers/decliners) I can see what is dropping on and off the moving average and Im showing extreme conditions ( sold out between ( NOvember 20 to December 2), but of course that can change if we begin rallying. But if we get those extremes, I dont care what any chart says, my work would say dont short. I have learned the hard way.LOL. I can share my spreadsheet with you if you want it via email..Thanks for sharing your stuff, I appreciate it.
I'm not much into long-term forcasts anymore. One thing is that forcasting should be left to the few that "can" do it, and there are only a handful.. Not even. I have studied their techniques, and the only method that works and the most reliable is WD Gann's work. Although I'd like to say that I understand his work, I would be overstating it if I said I just starting to scratch the surface. My TARGETS (usually short to medium term) is based on my trends. As you know the Stoch. I can't stress enough how important it is to pick a time-frame and stick with that time frame as your trend. My favourite.. The WEEKLY. Why? Because it will last for weeks to months. This is where your problem lies when analysing. I hope you can picture this as I describe it to you. If you take the movements of the daily or 60min or even 5min you will see alot of ups and downs, but during that weekly time frame there is only one trend that is formed by the stoch. It will take some time to turn it in another direction. Therefore it would take a significant mood or sentiment to change the direction of a price.
Now to address your shorting shortcomings (hehe.) The reason why shorting doesnt work for you is the same thing that going long now wont either. Im not saying that it wont rebound, but your risk is greater for a loss if you are long the market right now until the trend has changed. Why? MOMENTUM, IMPULSIVENESS are the key words here. When your trend is down its like a 4 steps down and 1 step up then 5 steps down and 2 steps up. What you are doing is trying to gain on 2 steps or 1 step and getting killed by the 4 step or 5 steps down. Analyse your a weekly Stoch trend and look at its 60min chart during that time. You will notice the larger moves are in favour of that weekly trend. Until you see that weekly trend change you must adhere to that mindset of shorting the market as we are now with SPX, INDU, even NDX or NYA etc. You will also lose a few and may have to trade more often when the trend is changing. It like trying to turn the car. When your on the straight line you dont step on the brakes to much or shift at all. But when you start to turn you step on the brakes your shifter gets pushed and pulled a few times until you get into the right direction. This is the samething with trading a trend change. People mistake divergences alot. My thoughts about divergence is that its a CLUE and not a SIGNAL. There is a difference and I'm sure as you think about it .. it will eventually come to you.
I would like to address your Cyclical beliefs in that there is no "Consistant" cycle. Not every Monday is an Up day not every Friday is a sell day. Therefore not every November or December or any month will be the same year after year. Cycles do exist but from my experience they have to be adjusted every so often due to days the markets are closed (Called calendar days) and regular trading days (Trading Calendar days). External factors could also affect the market short-term, but in general there is a predetermined price structure already. This is Gann's theory and hes the only one that I know who can track it down to the last cent. I just wish I had more time to research his work.
The only thing I rely on and is one of my secrets to trading is the CPCE or the SPX:VIX ratio. If you see it day to day it will tell you precisely how accurate its stoch. are. Comparing it to the market or indexes you will find it very different. You can also look at the 60min charts to see how it reacts vs the index on that particular time frame. From all this writing the above is the most important indicators I can give you. I can post some charts that you can look at later on for reference. So if you have too much advance / declining or breadth indicators, I suggest you get rid of it, and simplify your KEY MUST WATCH CHARTS.
My system takes practice to get a grasp of it, "BUT" its not complicated at all. There are two people in this technical market:
1 - Those who ask how it works (worst traders) 2 - Those who ask how do I use it (best traders)
thanks. I fully understand your system and can see it working in action. I have very few charts I watch and only trade two indexes. My spreadsheet has the cboe ratios on there as I track them daily with a chart similar to yours. I appreciate you sharing your thoughts.
Thanks for your thoughts on my blog. I understand what your saying. What are your downside targets on .spx and .rut? What bugs me is the vix is not showing fear at all, and I would short when market gets overbought again. I have been burned on shorting when market is in between, since they like to do gap ups and then trap shorts. So I very cautious especially this time of year if you know what I mean. I fret end of yr performance by money managers, seasonally vix is usually down and the IWM tends to run in early December to February. So I super cautious. Also since I track the breadth myself (advancers/decliners) I can see what is dropping on and off the moving average and Im showing extreme conditions ( sold out between ( NOvember 20 to December 2), but of course that can change if we begin rallying. But if we get those extremes, I dont care what any chart says, my work would say dont short. I have learned the hard way.LOL. I can share my spreadsheet with you if you want it via email..Thanks for sharing your stuff, I appreciate it.
ReplyDeleteI'm not much into long-term forcasts anymore. One thing is that forcasting should be left to the few that "can" do it, and there are only a handful.. Not even. I have studied their techniques, and the only method that works and the most reliable is WD Gann's work. Although I'd like to say that I understand his work, I would be overstating it if I said I just starting to scratch the surface. My TARGETS (usually short to medium term) is based on my trends. As you know the Stoch. I can't stress enough how important it is to pick a time-frame and stick with that time frame as your trend. My favourite.. The WEEKLY. Why? Because it will last for weeks to months.
ReplyDeleteThis is where your problem lies when analysing. I hope you can picture this as I describe it to you. If you take the movements of the daily or 60min or even 5min you will see alot of ups and downs, but during that weekly time frame there is only one trend that is formed by the stoch. It will take some time to turn it in another direction. Therefore it would take a significant mood or sentiment to change the direction of a price.
Now to address your shorting shortcomings (hehe.) The reason why shorting doesnt work for you is the same thing that going long now wont either. Im not saying that it wont rebound, but your risk is greater for a loss if you are long the market right now until the trend has changed. Why? MOMENTUM, IMPULSIVENESS are the key words here. When your trend is down its like a 4 steps down and 1 step up then 5 steps down and 2 steps up. What you are doing is trying to gain on 2 steps or 1 step and getting killed by the 4 step or 5 steps down. Analyse your a weekly Stoch trend and look at its 60min chart during that time. You will notice the larger moves are in favour of that weekly trend. Until you see that weekly trend change you must adhere to that mindset of shorting the market as we are now with SPX, INDU, even NDX or NYA etc.
ReplyDeleteYou will also lose a few and may have to trade more often when the trend is changing. It like trying to turn the car. When your on the straight line you dont step on the brakes to much or shift at all. But when you start to turn you step on the brakes your shifter gets pushed and pulled a few times until you get into the right direction. This is the samething with trading a trend change.
People mistake divergences alot. My thoughts about divergence is that its a CLUE and not a SIGNAL. There is a difference and I'm sure as you think about it .. it will eventually come to you.
I would like to address your Cyclical beliefs in that there is no "Consistant" cycle. Not every Monday is an Up day not every Friday is a sell day. Therefore not every November or December or any month will be the same year after year. Cycles do exist but from my experience they have to be adjusted every so often due to days the markets are closed (Called calendar days) and regular trading days (Trading Calendar days). External factors could also affect the market short-term, but in general there is a predetermined price structure already. This is Gann's theory and hes the only one that I know who can track it down to the last cent. I just wish I had more time to research his work.
ReplyDeleteThe only thing I rely on and is one of my secrets to trading is the CPCE or the SPX:VIX ratio. If you see it day to day it will tell you precisely how accurate its stoch. are. Comparing it to the market or indexes you will find it very different. You can also look at the 60min charts to see how it reacts vs the index on that particular time frame. From all this writing the above is the most important indicators I can give you. I can post some charts that you can look at later on for reference. So if you have too much advance / declining or breadth indicators, I suggest you get rid of it, and simplify your KEY MUST WATCH CHARTS.
ReplyDeleteMy system takes practice to get a grasp of it, "BUT" its not complicated at all. There are two people in this technical market:
1 - Those who ask how it works (worst traders)
2 - Those who ask how do I use it (best traders)
Which one are you.
thanks. I fully understand your system and can see it working in action. I have very few charts I watch and only trade two indexes. My spreadsheet has the cboe ratios on there as I track them daily with a chart similar to yours. I appreciate you sharing your thoughts.
ReplyDelete