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36 responses so far ↓

• 1 Berkeley Square // May 4, 2009 at 11:56 am

  posted this before the open @ 8:13 am on “Nicked It”

  @ LovesBeta,

  Looks like we won’t get any follow-thru on the downside today. OTOH, must admit that it’s difficult to fathom a 9th straight upweek on the Nasdaq, but there has been a degree of internal correcting within the upchannel despite the overbought situation.

  Hate mkts that DRIFT up or grind. Sideways may even be better & hate those too.

  We may get a little acceleration since we’re on the North side of the 200D for NDX/Q’s & it’s day #2 of a new month.

• 2 wwshep // May 4, 2009 at 12:29 pm

  repeat after me… “the trend is your friend”

• 3 Berkeley Square // May 4, 2009 at 12:34 pm

  @wwshep,

  It’s a very simple concept that many traders don’t understand in practice. I say the trend rescues near-term mistakes.

  Never have been able to understand the objective of scalping 1 1/2 pts against a trend when one has missed 10 pts with the trend.

• 4 wwshep // May 4, 2009 at 12:37 pm

  Chris,

  Would you mind posting an update in the Weekly chart? In hindsight it certainly appears that the weekly net line buy signal last month was a VERY important event. At the time it was hard to imagine but now it seems to me that a tag of the upper weekly band is probably on tap before the rally ends. In my experience with market timing once must consider multiple timeframes and it is usually best to start at the higher timeframes and work downwards from there. That would explain why the upper hourly and even daily bands have so far failed to produce a meanigful sell-off thuse far, since the weekly is on a buy signal and still far from it’s upper band. Would be interested in your take on this?

  TIA,
  Bill

• 5 wwshep // May 4, 2009 at 12:43 pm

  @Berkeley,

  Exactly!… Think how hard bears have had to work and the amount of time consuming analysis required to pinpoint these hourly tops and then if blink your profits from shorts are gone and the market is higher. Meanwhile for bulls you can just buy it blind and are assured to in the money within a few hours worst case. It is the mirror opposite of last Fall yet traders are stubbornly clinging to bear market tactics and getting crushed.

• 6 Berkeley Square // May 4, 2009 at 12:52 pm

  @wwshep,

  I’ll write more about this later. I call it the mkt has been “throwing the ball at the spot where they have been swinging” as opposed to they have been swinging at where the ball has been thrown. Proof of that is when the trend changes direction they’re still swinging at the same spot, but the mkt isn’t throwing the ball THERE anymore. So it wasn’t skill it was luck, or rather the broken clock syndrome.

• 7 wwshep // May 4, 2009 at 12:59 pm

  @Berkeley

  Very nice analogy. Another way to put it is “don’t confuse genius with a bull/bear market”. There are alot of traders out there now that consider themselves to be geniuses because the made tons of $$$ during the crash last year, but the majority of them will give it all back and then some during this rally. Same thing happened to the bull “geniuses” that made so much in 2007 and got destroyed in 2008. I guess that is where that statistic comes from regarding 90+% of traders lose money. So few can quickly adapt when the market changes the locks…

• 8 Berkeley Square // May 4, 2009 at 1:11 pm

  @wwshep,

  I know a very active site where the admin gloated & bragged thru March; ridiculed those with opposing views (not to me though). I was going to try warn the other participants, but they were so abusive towards others that i kept my mouth shut to let mount their losses. They were acting like dittoheads.

  What gets me though is that were innocent newbies who looked up to the admin & when they asked him specific questions about his losing positions that they also had. He wouldn’t address them because he couldn’t admit that he’d been wrong.

  Later, Bill, got to knuckle down for these last two hours.

• 9 Berkeley Square // May 4, 2009 at 1:22 pm

  @wwshep,

  “…best to start at the higher timeframes and work downwards from there” Great point, can’t understand why some were using rising wedges on 5 minute charts to get short in latter March or early April.

  Use higher timeframes to make decision; only use shorter to time entry or exit.

  Later

• 10 wwshep // May 4, 2009 at 2:25 pm

  @Berkeley,

  Well put!… And I think I know the bear blog you are referring to. Is the Admin’s name the same as a famous Hun?

• 11 Berkeley Square // May 4, 2009 at 2:38 pm

  @wwshep,

  No, LOL …”MT” & I mean major GLOAT

  see group rotation today; also large cap action. That DJTA & crude are BOTH up says optimism about business activity.

  Also think low volume may lead to spike when money managers who have been waiting for the train to back up throw in the towel.

• 12 Berkeley Square // May 4, 2009 at 2:45 pm

  Daily VIX looks poised to breakdown…upside down or inverted cup ?

• 13 rich // May 4, 2009 at 2:46 pm

  @wwshep,

  All the famous short only funds were wiped out in the late 80′s & early 90′s. Failure to adapt killed them all.
  Something similar has been happening to the long only funds over the last year and a half.
  I’ll be happy when we are back in a bull market. Easier to make money. I don’t think this is it though, as I think we are likely to see one last ferocious downleg in this bear market. Some of the permabears will be wiped out waiting for it to start by the look of it though

• 14 Berkeley Square // May 4, 2009 at 2:48 pm

  bought some SLB for pending crude rally & move towards large caps

  chart is technically good, too

• 15 Berkeley Square // May 4, 2009 at 2:54 pm

  @rich,

  “…bull market. Easier to make money”

  Remember first week of Oct how the govt was throwing all kinds of saving maneuvers at the mkt making extremely volatile intraday only to have prices plummet anyway ? Anyone who didn’t experience it in live time thinks it was easy just looking at charts.

• 16 rich // May 4, 2009 at 2:58 pm

  @wwshep,

  In swordfighting, I’ve read that the first priority is always to defend yourself, and only after that, to attack when a good opportunity presents itself.
  The same is true for trading to a certain extent, the first priority is never to lose more than you can afford, and to consider the risk/reward balance carefully on any strategy.
  My primary goal in this bear market at the beginning was simply not to lose any money at a time when staying long only looked very dangerous indeed. Making money in this market is only my secondary aim, though that has gone very well so far. Treacherous market though.

• 17 rich // May 4, 2009 at 3:05 pm

  @Berkeley Square,

  I remember it well. What a rush! Like white water rafting must feel like.
  There were some wild ups as well as the downs though. The announcements lifted the market temporarily, just not for more than a day or two.
  The effect of gvt bs seems to be lasting longer since March 9. lol.

• 18 Berkeley Square // May 4, 2009 at 3:10 pm

  @rich,

  The mkt has also shrugged off some bad news, too.

  Re: swordfighting, etc. Last night Sun Tsu’s The Art of War was on the History Ch & will be repeated this weekend. Good head stuff for traders & investors, too.

• 19 rich // May 4, 2009 at 3:13 pm

  BTW, I’ve got a market channel on my spx daily chart that the rally has stayed within since March 16.
  The top channel was at 905 and the spx just closed above it at 907. Breakout to the upside? Or perhaps just reaching the very top of the channel before turning down. We’ll see tomorrow. Given recent strength, this could be a breakout.

• 20 wwshep // May 4, 2009 at 3:13 pm

  @Berkeley,

  Oh, yes “MT” is a real bear den… Have you seen the blog I mentioned? Watching “the Hun” and his lemming followers trade is like watching a slow motion train wreck LOL!… The have been holding long FAZ since 3/9 YIKES!

• 21 Berkeley Square // May 4, 2009 at 3:16 pm

  @rich,

  There are 2 bromides i like about bad news: 1) The mkt has discounted everything except the end of the Western world; 2) Art Cashin’s “Don’t bet on the end of the world. It can only happen once.”

• 22 rich // May 4, 2009 at 3:17 pm

  @Berkeley Square,

  The market has shrugged off a lot of bad news, last week’s reaction to the gdp news was simply amazing.
  The gvt bs I was talking about though was the pitch that regardless of any bad news, we have turned the corner and things are getting back to ‘normal’.
  Most people are still thinking that the bubble over the last few years was normal, and that is bs. Normal in the next few years will feel rather different I strongly suspect.

• 23 Berkeley Square // May 4, 2009 at 3:21 pm

  @wwshep,

  Don’t know the Hun. Although i’ve been a trader a long while, i never looked at a message board til this yr. Was totally turned off by what i’d seen on Yahoo. Pimpled testosterone …”Is, too !” “Is not !”

  “The have been holding long FAZ since 3/9 YIKES!” Their best friends are margin clerks or rather have become

• 24 rich // May 4, 2009 at 3:21 pm

  @Berkeley Square,

  A bit like my joke about the afterlife, which is that you might as well believe in an immortal soul and an afterlife, because if you’re wrong, you’ll never know. Equally if you bet on the end of the world & win, you’ll never collect.

• 25 Berkeley Square // May 4, 2009 at 3:29 pm

  @rich,

  SPX “Breakout to the upside?” See daily VIX…inverted cup ?

• 26 nostalgia1983 // May 4, 2009 at 3:35 pm

  @rich,

  so what is your take at this level? did you switch side from bear to bull now?

• 27 rich // May 4, 2009 at 3:54 pm

  @nostalgia1983,

  Yes, bullish now, though with caution as I still think that this is only a bear market rally & that the big opportunity this year will be on the next leg down.
  Bought heavily at 865-870 & sold at 895-900.
  Small channel trading short taken out at 905, but very cautiously. Stop at 912 I think.
  I’m bullish until 940 once the spx closes over 910, but I’m reluctant to take any large position until after the stress test announcement, as that could move the market a lot in either direction. If we close above the 200 day moving average, probably at 950 when we reach it, then I’m bullish until 1000.

• 28 rich // May 4, 2009 at 4:02 pm

  @Berkeley Square,

  That could be an inverted cup, though there could be a bear wedge there too.
  The spx daily since jan shows an interesting inverted h&s formation with the neckline at 878, now convincingly broken to the upside. I think that we might really make 1000 on this rally.

• 29 wwshep // May 4, 2009 at 4:18 pm

  @rich,

  My expectation is 1120 SPX which is 50% retrace of bear market…

• 30 rich // May 4, 2009 at 4:25 pm

  @wwshep,

  You could well be right. At this rate we could be there by the end of June.

• 31 wwshep // May 4, 2009 at 4:31 pm

  @rich,

  Or the beginning of June

• 32 wwshep // May 4, 2009 at 5:17 pm

  Record # consecutive up weeks for Nasdaq is 15, so we have 6 more up weeks to go after this one

• 33 Berkeley Square // May 4, 2009 at 9:55 pm

  @rich,

  the VIX inverted cup that i’m referring to is mid-April to present

• 34 Berkeley Square // May 4, 2009 at 10:34 pm

  @wwshep,

  “Record # consecutive up weeks for Nasdaq is 15″

  The Nasdaq was unusually down 8 consecutive days from Dec 26, 07 to Jan 8, 08 normally a seasonally strong time of the year.

  We didn’t realize at the time why the Nasdaq was down so powerfully; but by 10-12 months later we would & it was no accident. There is a message in extraordinary events (even though we may not understand them at the time).

  I sent to friends & clients the following in my “Looking Forward to 2008″ statement at the end of December 2007: “While some people are expecting a further rally in the mkt this yr of +20%; AT THIS POINT IN TIME, i do NOT see such a scenario. I believe that the mkt is vulnerable to quite the opposite at some point this yr…perhaps/probably as early as in the first quarter of this yr. This 5 yr bull market is very long-in-the-tooth & very vulnerable to such a deeper decline.”

• 35 wwshep // May 5, 2009 at 12:27 pm

  @Berkeley,

  That was a very prescient call. And good point about extraordinary events and the hidden message they send.

• 36 Berkeley Square // May 11, 2009 at 9:04 am

  @wwshep,

  I’ve met very few traders or investors that i feel more attuned with about the mkts. Am not speaking about specific buy or sells nor levels, but in philosophy & approach which is probably more important. I most probably will not subscribe when this becomes a subscriber site. One of my main reasons for not doing so is i have never known an analyst; “guru” (a term i hate); or blogger who ever addresses when they have been wrong; but they never fail to trumpet their good calls. In the meantime, the reader is left hanging waiting for them to address a mistaken call. This goes doubly for those who cite cycles.

  Bill, i just wanted to tell you how much i’ve enjoyed interacting with you in case my access is cut off. I wanted to leave the message for you here so as not to be overtly rude to our host.

  Although i have been at the mkts a bit longer than you have, i learned a very subtle but important thing from you recently. One of the things that i have always loved about mkts is that one is never finished learning. And if one thinks otherwise they will soon be . . . finished.

  You wrote “Then I learned to spend my time ‘listening’ to the market rather than telling it what to do.” I have often told clients or aspiring traders that the mkt will speak to them if they have an open mind.

  You wrote “The point is the market is going to humble everyone eventually no matter how smart you think you are and how much you are ‘certain’ of.” When i first got started in the mkts, i asked the broker who wrote the daily mkt letter for the firm of which i was a customer to recommend some books to me. One of the first three books that he recommended to me was Adam Smith’s “The Money Game”. I believe it was in the forward that the author aka George Goodman dedicated the book to Procustus …how apt.

  Regards

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