DbPhoenix

I disagree. While I don't always agree with the particulars, I've found their charts and lessons to be very useful. And they have far more material available for free than just about anybody. In addition, it's concrete and practical, unlike the usual philosophical and psychological piffle. Db

Same reason that the stats don't dissuade people from patronizing casinos. Db

Whether it "hugs" or not is not necessarily the most important consideration. You may have noticed that I draw my trendlines differently. That's because I want them to track behavior rather than conform to TL dogma. If they track behavior, then they'll tell me when that behavior has changed, which is what they're supposed to do. I begin the top trendline at the lower high, since the lower high suggests the trend change, either sideways or down. If and when a lower low is made, the trend change, down, is confirmed, so a parallel line is drawn from the first lower low. Thereafter, any moves outside these lines presents an overbought or oversold condition, cause for a move back toward the mean, as today. This is most recently illustrated by the chart I posted this morning. Db

Take care with this. You don't want to lose the OB/OS clues. Db

Last week, we talked about "oversold" in the context of trend channels. In that regard, the following may be of interest: On Friday, we discussed why we might be overdue for a short term bounce. That turned out to be accurate, with a modest bounce starting later in the day. If Futures are any indication, we are going to be continuing that move further today, the start of a holiday shortened week. I rarely venture into these sorts of market calls, because a) I am unconcerned with trading over the course of days and weeks; 2) no one seems to be especially good at it. When I discuss these shorter term moves, it is because I am interested in potential indicia of a major change in trend. Otherwise, I try to keep my primary focus on quarters and years. Not coincidentally, that is the time horizon of our asset management clients. Most of the commentary you will see today about the bounce will be Fiscal Cliff resolution related. Don’t believe it. The bounce is simply because markets became oversold enough that selling pressure temporarily exhausted itself enough to let stocks rise for a while. The old saw is no market moves in a straight line forever. I find the much more interesting meta-question worth discussing: Why does it always seem that when markets become deeply oversold, politicians and the Fed seem to react? Are they closet technicians or is it something else? Its something else: The most likely answer is that similar factors drive all these events simultaneously. Politicos note when markets are in a distressed phase; that shows up in all sorts of other psychological measures from Consumer Sentiment to Capex Spending and broad hiring trends. When markets go into freefall, politicians sit up and take notice. Even a milder correction of <10% such as we have had recently adds pressure to public officials’ decision-making behavior. No, Bernanke is not watching his Bloomberg concerned about the 200 day moving average, nor is he watching the DeMark indicators nor doing MACD studies. But the same sort of pain that leads investors to capitulate and puke up stocks is also at work on decision makers. We saw that at work in March 2009, when both groups overreacted to the market collapse. And we are seeing shades of that now, with the reaction (and over reaction) to this pullback. Sometimes, it is how bottoms can be formed (March 2009) or how we can set the stage for at least a short term bounce (presently). No one wants to lose money, no one wants to get fired, no one wants to ruin their career or reputation. An angry Mr. Market scares the bejeebus out of lots of people — and what we get from that are poor policy decisions, and even worse trading. Barry Ritholtz And given that, the following may also be of interest. The midpoint of a trend channel can also provide support or resistance. It's a regression sort of thing. Note here than prices have tended to congregate in the lower half of the trend channel. This may or may not continue. But that midpoint is certainly worth keeping an eye on, given where we are. Db

These charts could go in several threads, but since eyes have turned toward the eventual "bottom" in the markets, I'll put them here. The first is an update to the chart I posted two weeks ago: Those who don't understand basic technical analysis would most likely view all of this as a series of failures: price fell more than 50%, the support that the top of the last trading range should have provided didn't, the support that the midpoint of that TR didn't, the bottom of it didn't, the trendlines didn't. But to those who understand basic technical analysis, i.e., the relationship between demand and supply, that's the point. Supply has been in charge since the market made a lower high. Those trying to "catch the bottom" and failing to properly assess the imbalance between demand and supply would be burned again and again. Most recently, price failed to reach the top of the trend channel. But so what? These are just lines. But the fact that price could not stage even so feeble a rally tells us something, again, about the imbalance between supply and demand. The fact that the decline in price has steepened tells us even more. And if by chance price rallies here and reaches the top of the trend channel after all, that will tell us something about the imbalance between demand and supply as well. (If one is new to the Forum and doesn't understand what it is that these movements are telling him, he can start with the Stickies.) If such a rally does take place, however, volume may not be as dramatic as one might expect since, so far, the dynamics have revolved around support and resistance. This next chart backs off a bit to the more substantial trading range created last year. Those who understand what support and resistance are all about will recognize that this trading range is not inconsequential. But even they may have missed the fact that the midpoint of this TR represents a 20% decline. Whether or not there will be "climactic volume" and/or a climax in price movement at this level remains to be seen. But the purpose of determining these levels, as you all know, is not to set up an automated buy but to tell one where to look for a buying opportunity. Db

In the U.S.? Not necessarily. But that's a subject for another time and another place. Db

Eventually it will become self-evident, though who knows how long eventually will take. Equally useful would be means-testing for Social Security. Why are the wealthy collecting Social Security checks? Db

Unfortunately, it's not America alone. The English, the Germans, and the once-Soviets (outside the Bolshoi) are not well-known for being lithe, and other cultures -- including Eastern -- are quickly catching up. Ever see Wall-E? Db

My condolences. I had no idea. His contributions were valued by everyone. And as long as TL exists, they will be here to benefit others. Db

And a cooperative Congress. Db

May be time to revisit this thread, four years later. Whether anybody wants to follow the 90% thing or not is up to them. But I want to point out the difference between climactic action in volume and climactic action in price. In 2008, for example, the climactic volume occurred in October. Price did not reach a selling climax until November. And the test did not occur until the following March (the Dow and SPX behaved somewhat differently). There were also climaxes in 2010 and 2011. Studying these will be of benefit when evaluating where we are currently and what we are doing. If nothing else, even the most casual observer will note that current volume is pretty lame. Db

Or we could legalize drugs and live off the taxes. Db

One might hope that the public would eventually figure out that they aren't ahead by relying on for-profit insurance companies and employer-provided coverage since it all must be paid for one way or another through higher prices and higher premiums. But they aren't likely to figure it out any time soon. Thus we will eventually have the same type healthcare provision that other major countries have, perhaps by making Medicare available to everyone and giving people the choice of that or private insurance. Those who want private insurance and can afford it, great. But those are probably more likely to go the concierge route. As for "high taxes", please. Db

Israel's been fighting with somebody or other since 1947. *yawn* Db

It's worth backing up a bit:

The future may be different in the details, but that's about it. And while I enjoy the whining of the Republicans in particular and, in general, the whining of those who want everything but aren't willing to pay for anything, I'm content to let it all play out. We are well into the second generation of those who have become addicted to debt and they don't know any other way. They'll either adapt or they won't. It will be interesting to see who does and how many. Db

But this time it's different... Db

Like maybe the Catch A Falling Knife people. Db

I suspect that no one took me seriously when I said that we could see 2520. Past that, the most likely target is the correction low at 2434. Ignore the hysteria being expressed in various posts and watch for climactic action. Db

The following is a copy of a post I just made to the TBP thread. I've copied it here because it is particularly pertinent to trading intraday trends: A question arose yesterday regarding Wyckoff's instruction regarding interday trends and the intraday trader and my own modification of it. The following is an attempt at clarification. Wyckoff wrote that the trader's actions should be based on judgment of the technical position: Supply and demand --support and pressure. No news, earnings or other corporate or fundamental statistics are considered; we use only those which relate to the factors: Price Movement, Volume and Time. The active trader who is a Tape Reader is concerned only with the immediate trend of the small moves in the market. This trend can be detected by this Method soon after the opening of the Stock Exchange... This form of trading disregards the long trend of the market, as well as the intermediate trends. It takes instant advantnge of the technical rallies and reactions that promise to yield a profit in the same stock market session, on either the long or the short side of the market. This instruction, of course, must be understood within the context of tape reading, i.e., trading ticks. There were no bar intervals as there were no bars, just ticks (transactions). There were no charts other than those drawn by hand by the trader, hence the utility of point-and-figure. There was of course no "zoom". The primary value of the interday trend in this regard would be to alert the trader to the conditions for a possible reversal, i.e., when price approaches or bounces in the proximity of one side or the other of the trend channel, as below: Otherwise, for intraday trading, this information is of little or no use. My own comment on the matter -- "interday trend is largely irrelevant to the daytrader unless some important level that might affect the intraday trading is nearby" -- was made in appreciation of the fact that the modern-day trader has many other tools at his disposal, including digital intraday charts that can display data in a near-infinite variety of forms, at the very least showing intraday trends and trading ranges, hence the second part of the statement: unless some important level that might affect the intraday trading is nearby. If, for example, the daytrader is tracking an upmove, he'd be wise to consider that he's approaching a trading range from a previous session, a range which might well offer important resistance. This hinge, for example, formed two days ago, has offered resistance twice, once yesterday and once this morning: To ignore such information simply because it is from a previous session would be self-defeating. Therefore, even though whatever interday trendlines the trader might come up with may be irrelevant to an intraday trade, particularly since it is the trader who came up with them, the levels and zones provided by trading ranges, since they are "drawn" by the market, may have an important influence on price's movement and the profitability of the trade. Db

A question arose yesterday regarding Wyckoff's instruction regarding interday trends and the intraday trader and my own modification of it. The following is an attempt at clarification. Wyckoff wrote that the trader's actions should be based on judgment of the technical position: Supply and demand --support and pressure. No news, earnings or other corporate or fundamental statistics are considered; we use only those which relate to the factors: Price Movement, Volume and Time. The active trader who is a Tape Reader is concerned only with the immediate trend of the small moves in the market. This trend can be detected by this Method soon after the opening of the Stock Exchange... This form of trading disregards the long trend of the market, as well as the intermediate trends. It takes instant advantnge of the technical rallies and reactions that promise to yield a profit in the same stock market session, on either the long or the short side of the market. This instruction, of course, must be understood within the context of tape reading, i.e., trading ticks. There were no bar intervals as there were no bars, just ticks (transactions). There were no charts other than those drawn by hand by the trader, hence the utility of point-and-figure. There was of course no "zoom". The primary value of the interday trend in this regard would be to alert the trader to the conditions for a possible reversal, i.e., when price approaches or bounces in the proximity of one side or the other of the trend channel, as below: Otherwise, for intraday trading, this information is of little or no use. My own comment on the matter -- "interday trend is largely irrelevant to the daytrader unless some important level that might affect the intraday trading is nearby" -- was made in appreciation of the fact that the modern-day trader has many other tools at his disposal, including digital intraday charts that can display data in a near-infinite variety of forms, at the very least showing intraday trends and trading ranges, hence the second part of the statement: unless some important level that might affect the intraday trading is nearby. If, for example, the daytrader is tracking an upmove, he'd be wise to consider that he's approaching a trading range from a previous session, a range which might well offer important resistance. This hinge, for example, formed two days ago, has offered resistance twice, once yesterday and once this morning: To ignore such information simply because it is from a previous session would be self-defeating. Therefore, even though whatever interday trendlines the trader might come up with may be irrelevant to an intraday trade, particularly since it is the trader who came up with them, the levels and zones provided by trading ranges, since they are "drawn" by the market, may have an important influence on price's movement and the profitability of the trade. Db

I was wondering why those particular numbers. I don't see them on your chart. Which doesn't necessarily mean they aren 't there. Db

I agree, and perhaps one of the reasons why gurus tend to come up with such cutesy names for their setups (another is to give potential subscribers the impression that the setups are something new). But there is also the issue of communication. I've seen threads go on for hundreds of posts without anybody ever troubling to define just what it is they're debating. But if one has no interest in communicating with anybody else, he can call what he does glommitching, and who's to argue? Db

Well, it is pretty basic Trading 101. I'm sure whatever beginners read this thread will be able to determine what has a link to reality and what does not. Which I suppose brings us full circle back to the OP, more or less. Db