DbPhoenix

Today's activity on the NQ provides a good example of price action around a pivot. First, price found support on the 23rd at a level which extends back to early December. After bouncing off, it found support there (27) again yesterday. Second, you got your "whoosh" early this morning. Third, price returned to what had been support and which might have become resistance and instead circled what became a pivot nearly all day, 7-8 points either side of it. As regards a high, low, or close, today's pivot is most closely aligned with yesterday's low.

If you have no trading plan, then you should not be surprised that you're losing. Your problem is not fear but rather that you don't know what you're looking for, much less what to do if and when you see it. There are many sources for developing trading plans, but you must begin by deciding just what it is that you want from the market. Do you want to scalp? swing trade? position trade? trade off indicators? price action? news? Do you want to make one trade a day or a hundred? Are you disciplined? Are you patient? Do you enjoy risk or avoid it? And so on and so on and so on. If you have no idea where to start, try here. If that doesn't work for you, search the site using "trading plan". You can, of course, find some system somewhere and trade that, but you are not likely to have much confidence in it since it won't be yours, and since you're subject to fear anyway, your chances of success with someone else's system will likely be slim.

What would your win/lose and profit/loss numbers have been if you had followed your trading plan?

The Nature of Risk is a seminal work for anyone who understands that self-knowledge is key for success in the financial markets, particularly at market extremes. Rather than babble about risk in general, Mamis takes this engine apart and examines its parts, among which are information risk and price risk. He explains that as one's tolerance for information risk increases (the need to know why the stock is doing whatever it's doing), one's price risk diminishes (one is better able to jump in and take advantage of whatever opportunities for picking up cheaper shares present themselves). On the other hand, if one has no tolerance for information risk and must know everything about a stock's movement, his price risk will be that much greater because the price will likely, by then, have risen to an over-extended level. Therefore, having identified these components of risk (time risk is another), one must then balance them out in order to approach the markets rationally and unemotionally. An extremely important work, particularly for the investor who is plagued by doubt, confusion, and anxiety.

Any particular reason?

Apart from the various newsletters and pundits and gurus, what does your own analysis tell you? Looking at the chart, and only the chart, without any indicators or calculations of any sort, 1. what do you see as the next level of support, if we fail to rally here, and why? 2. what is the likelihood that we will rally and why? 3. if we do rally, how far do you think we might get and why? I don't mean for this to sound like a quiz, but I'm much more interested in what you think than in the opinions of the usual professional technician. One other point. Chopping up charts in order to support a conclusion at which one has already arrived is easy to do and common and dangerous. Each bottom is unique, and one must evaluate what is happening in his own market in his own time in order to determine when and where and how the bottoming process is unfolding. There then remains the equally and possibly more difficult task of deciding what to do about it.

On the other hand, the dividends may not and will not likely hold if prices fall further. Therefore, I can't concur that this is a "good place to buy". But then, it's not my money.

A good idea. Perhaps someone could do so for the purpose of defining the terms used in the rules posting at the beginning of the thread.

I suggest this be addressed with James and the other moderators.

Nope, didn't miss it. However, another pundit stated that we would be "rocketing" higher at the red line: As for what traders, investors, etc, are doing, they've been trying to support the market since last March, so whatever buying they're doing now is not necessarily a harbinger of Spring. The market can as always do what it wants, and will, even to the extent of turning on a dime. But I would not start buying up stocks and ETFs just because the guys on CNBC are doing so or because a couple of patterns appear to match. When the bottoming process begins, there will be more than enough time to jump aboard what will likely be a very slow-moving train.

This is the trendline for the S&P.

He neglects to mention, however, that the bear market ended when and how it did due to the creation of the RE bubble. What bubble is going to save us this time?

Treasury may save the day after all By Jim Jubak MSN Money They're dead wrong. You've read them. Treasury Secretary Tim Geithner's plan to end the financial crisis is a disaster. The Obama administration has even less grasp of the issues than the Bush team. You've seen them on TV. The Geithner plan is folly. The administration is in meltdown. And, of course, Wall Street has weighed in, first with a 382-point drop in the Dow Jones Industrial Average that began even as Geithner was still reading from his teleprompter and second with an orgy of finger-pointing. If only the plan had more details, more originality, more money for Wall Street. Sorry. But the doomsayers, the nattering nabobs of negativism and the self-interested Wall Street experts are all wrong. The plan isn't perfect. It does represent a last-minute change in direction, and essential details are still to be announced. The presentation could have been better. (Who's Geithner's media coach? Lurch? Keanu Reeves?) And the administration should have done a better job of lowering expectations. A decent plan Despite almost everything you've read or heard, the Geithner plan stands a good chance of working. It tackles, head on, the three big problems that anyone trying to end this financial crisis must face.Of course, because it's the best plan that anybody could come up with at the moment -- the team that came up with this plan included the Federal Reserve, White House economic advisers such as Lawrence Summers and the skeleton crew running the Obama administration's Treasury -- we're really in trouble if it doesn't work. OK, you probably disagree with almost everything I've written so far. So let me tell you why I think this is a good plan. From all accounts -- and The Washington Post has done a great job at explaining what ingredients went into this piece of sausage -- discussions to come up with a plan to stabilize the financial system originally focused on two ideas: A so-called bad bank would buy up distressed financial assets to get them off other banks' balance sheets. And the government would extend more guarantees to banks against catastrophic losses on their portfolios along the lines of the guarantees already offered to Bank of America and Citigroup. Sent back to the drawing board But that plan kept running up against three problems, problems so big that they doomed it to failure, the Treasury team finally concluded: It would be so hugely expensive that the administration would have to ask Congress for more money at a time when any bailout for Wall Street and the banks was horrendously more unpopular than the stimulus package that had just scraped through the Senate. It would leave the government with the job of deciding how much any of the banks' distressed assets was worth. Not exactly an easy job when many of those assets have stopped trading. It wouldn't give the government much negotiating muscle with the banks. The banks, in fact, might still think of themselves as in the driver's seat if they concluded that the government believed they were too big to fail. That would cost taxpayers money and make it just about impossible to craft a deal with any teeth. Without teeth -- something to take a bite out of banks, their CEOs and their shareholders -- it would be impossible to sell any plan to Congress and voters. So instead of the bad-bank/guarantee plan, we have the Geithner plan, understandably vague in its details because it was hastily put forward as a replacement. But even in its vagueness, the Geithner plan promises a successful solution to the problems that sank the Bush administration plan and the original bad-bank/guarantee plan discussed within the Obama Treasury. Diagnosing banks, dispelling uncertainty First, the Geithner plan addresses the political impasse. Everybody hates the idea of giving the banks any more money. Nobody in Congress would vote for another cent to bail out Wall Street. To fix this problem, the Geithner plan relies on a risky strategy: Government regulators have just started to apply a "stress test" to 20 of the country's biggest banks that's likely to show that some of these brand names are insolvent under honest accounting rules. Currently, many people suspect this, but suspicion and belief aren't enough to carry the day. We need to know to a gut-wrenching, headline certainty. We need to turn on the TV and see channel after channel intoning, "The banks are broke."In short, we need a demonstrated increase in the seriousness of the crisis to build political support for doing something. There's no guarantee that even scarier headlines would get Congress to act or convince enough voters that the emergency requires action. That's the real risk: that the stress test will show the banks are insolvent but that no one will do anything about it. Second, forcing the crisis would change the balance of power between government and the banks. Once the assets on their books were honestly valued and banks were facing the specter of insolvency, they'd have to abandon their hope that if they just hold on long enough this stuff will be worth 80 cents on the dollar again. To buy time, they've hoarded every cent the Federal Reserve has thrown at them to build up capital so they can write down these assets a bit at a time instead of selling them off. The Geithner stress test will look at the performance of bank assets over two years instead of focusing on a bank's current condition, as bank regulators have done in the past. A bank that fails that test can't say, "After all, tomorrow is another day," with any conviction. Also, the stress test will look at assets, such as derivatives, that aren't currently reflected on bank balance sheets. And third, Geithner's idea of having the government provide guarantees against loss to private investors who buy assets off the balance sheets of troubled banks is the best and cheapest way -- indeed, maybe the only way -- around the problem that nobody really knows what this stuff is worth. And it's this high degree of uncertainty, the possibility that an investor could be paying 40 cents for something worth only 20 cents, that has kept private money on the sidelines even as banks have been desperate for capital. Potentially a profit for taxpayers By guaranteeing private investors against loss, Geithner has proposed that the government buy the downside risk in these assets. And by buying the downside, the Geithner plan would make these assets much more valuable. They would become options on the potential upside for the asset over time. This wouldn't make it any easier to calculate the "real" price of assets for which there is no actual market. And it wouldn't make the future price of these assets any less uncertain. But it would do a pretty good job of converting that high degree of uncertainty from a liability into an asset. Yes, you still might be buying an asset worth only 20 cents with your 40 cents, but thanks to the government guarantee against loss, you wouldn't worry about that possibility. What would be valuable to you would be the chance that the asset you bought for 40 cents could go up. Uncertainty and volatility would go from being negatives to positives. Of course, the government -- which, we all know, really means the taxpayer -- could get stuck with massive losses if it guaranteed a lot of assets at the wrong prices. Geithner's plan to have the government co-invest in these assets with private investors, after the government has stress-tested the assets, promises that investors would get some profits. If we were lucky or government regulators were really good, taxpayers could even make a profit from these investments. The solution that shall not be named No one in the Obama administration wants to say that some banks will be nationalized if they fail the stress test, because the term is as emotionally charged as "communist" and "Red Sox fan" are. But -- call it what you will -- taxpayers could wind up owning a majority stake in the most insolvent big banks. It's taken me a while to work out this understanding of what Geithner is up to. It sure would have been nice if he'd simply come out and explained the plan in these terms, but you'll understand why he couldn't if you think for even a minute about the political task facing the administration. If you're the Treasury secretary, you certainly can't get up at a news conference and say, "We're going to force some of the nation's biggest banks to admit they're insolvent, so we can get the money we need to fix this problem." Exactly how many points do you think the Dow industrials would have tumbled after that speech? So Geithner has to stand there and quietly take the heat . . . As regulators from the Federal Reserve and the Office of the Comptroller of the Currency fan out to stress-test the national's 20 largest banks. As regulators decide whether to expand the stress tests to more of the country's 8,500 federally insured financial institutions. As regulators look at the effects of worst-case scenarios on bank portfolios. As off-balance-sheet assets come back onto balance sheets. As the crisis overseas gets even deeper. But that's why he gets paid the big bucks, right? By the way, the secretary of the Treasury makes $191,300 a year. The position isn't eligible for a bonus from the federal government.

Bears and bulls locked in trench war By Jon MarkmanMSN Money Can it really be only mid-February? The stock market this year has featured enough left turns, spinouts, reversals and explosions to fill out a NASCAR race card. It's one of those years so far that only a day trader could love because the concept of a multiday move in one direction has become quaint, as trends are lasting about as long as President Barack Obama's nominees for commerce secretary. The feeling in the market is much different than in 2008, a year that featured pitched battles between bulls and bears ranging up and down the countryside at full gallop. This year has been all about trench warfare, as optimists and pessimists opted to battle over a narrowing stretch of territory: the 802 area of the Standard & Poor's 500 Index on the bottom and the 867 area on top, with one excursion at the start of the year to 940. Now the battlefield looks ready to shift lower, to the still-narrow range of 740 to 820. To keep it simple on your score card at home, the median, until Tuesday, was 850: If bulls could have pressed their advantage in early February and kept the market above that line in the sand for a week, we would have seen an explosive rally that moved toward January and even October highs. But the longer we spend below it, the more likely the index will test November's lows and then, after a brief bounce, probably drop well below. According to independent credit analyst Brian Reynolds, bonds are already trading at levels that are the equivalent of the 600 to 700 area of the S&P 500. Why have battle lines narrowed since last year? In 2008, there were big differences in bulls' and bears' opinions, while this year the differences are relatively minor. Scary as it seems, bulls and bears are starting to agree about two things: that the global economy is truly a mess and that earnings at big companies are likely to get worse -- possibly much worse -- before they get better. Puzzling, uninspiring leadership Last year, you may recall, bears had high conviction that stocks were overvalued and likely to be hit hard by slowing revenues and thinning profit margins. Bulls, in contrast, had conviction that the bears were out of their minds, and they were happy to try to take advantage of big dips in March and July to buy stocks with abandon, causing two-month squeezes. Don't forget that, until autumn, bulls were so sure of their point of view that they were still insisting there was no recession and complaining that the Federal Reserve should start to raise interest rates to keep the economy from overheating.Now there is consensus that the Fed is likely to keep rates low all year and continue to pump money into the system. The difference between bulls and bears now has narrowed to the questions of what size boost the economy will get from the stimulus package and lower interest rates, and when that might happen. The bears continue to think that stimulus measures will have a very modest effect, while the bulls think that the stimulus will energize the economy to the point that we'll see positive gross domestic product growth in the third quarter. These differences of nuance are a lot smaller than they were last year, with bulls now mostly dispirited and bears mindful that they could be wrong, so the two sides are willing to squabble over a much smaller amount of territory. One of the maddening things about this development is that, with general agreement that business is awful, the debate has shifted from topics with which investors are comfortable -- product innovation, market share growth and earnings -- to the devilish swampland of politics. And even worse, investors need to be able to judge not only how the new administration is thinking of changing the rules of the game but how major overseas fund managers and creditors would react to that. The sense I get from talking to fund managers and veteran analysts, as well as watching price and volume trends, is that investors fear that the new president has lost control of the stimulus package to Congress, lost control of the bank rescue package after hitting resistance from both banks and the Fed, and lost control of his hiring process after losing four key high-level nominees on personal and philosophical issues that should have been worked out in advance. Managers don't understand why Obama did not insist that Treasury Secretary Tim Geithner come up with a specific, easy-to-understand plan for the banking system, and at the same time they don't understand why Obama let congressional leaders write the stimulus package instead of his own staff. It's all very puzzling and uninspiring, and neither of those emotions are conducive to any confident urgency about betting on a quick U.S. economic recovery and buying stocks. Compounding the concerns over confidence is a rising sense of dread over what might happen if Geithner goes ahead and throws a bank loan party in a public-private partnership, as proposed last week, and no one comes. Or even worse, investors are wondering what may happen if politicians and bureaucrats exercise their newfound populism by imposing really Draconian limits on banks that decide to sell their lousy assets to the feds in exchange for new leases on life. Current thinking is that a newly recapitalized banking system that is run mostly by the government would return to the pre-2000 and even the pre-1990 culture: It wouldn't lend money to anyone who needed it. Not 'great' -- and not good Another source of concern making the rounds is that there will be far fewer creditworthy corporations left in expansion mode by the time the banking system is functioning normally again. And because leverage will be much tighter -- with no "shadow banking system" of hedge funds and structured investment vehicles to provide a lot of low-class money via securitization -- there will simply be a lot less credit to go around. At that point, the concept of cheap money generated by the recycling of petrodollars and the Chinese trade balance will be as old-fashioned as a Wall Street ticker tape. If this ends up being the case, trillions will have been invested in the U.S. banking system with little to show other than a restoration of some retro version of the early 1980s, replete with mean, miserly, squinty-eyed loan officers and demands for 20% down. That's not good, by the way, as it means you can say goodbye to deals that allow you to buy now and not pay for three years, or to use your primary residence as collateral for a summer home, new furnishings or a boat. We may feel like we've paid a lot of money for a faded antique that doesn't work as well as we remember. Now you can see why the battle lines in the market are so close together: Bulls don't think they have much to be optimistic about even in a best-case scenario, and bears recognize that the situation now is so grave that a desperate, emboldened, populist government could do something crazy, like nationalize the banks, or at least change the rules in an unexpected way. So as we go forward, don't get too excited about a move higher unless it surpasses the 870 area of the S&P 500, and don't get too excited about a move lower unless the S&P 500 falls below 740. Here in the middle, where we may stay for quite some time, it's a sort of increasingly apathetic wasteland that will ultimately wear down the resolve of one side more than the other. Indeed, as you watch the bulls and bears slug it out, perhaps you should think of it not as investing but as a special financial entertainment for our special kind of depression -- one that is much different than the Great Depression of history books. It's a depression without vast poverty, due to government assistance programs, and without deflation, because the Fed knows how to neutralize that. But it's certainly a prolonged recession featuring deleveraging within a secular bear market, which makes narrow-gauge trading emblematic of our very own Not-So-Great Depression. The next phase of concern, and potential for new leg lower, will be despair over poor first-quarter 2009 profits, which ought to kick in around the third week of March. If you want to play it safe until bulls prove their case and any stimulus money kicks in -- and trust me, there are plenty of major investors doing just that -- keep your investment portfolios at an allocation of 20% diversified big-cap stocks and 80% high-quality Treasury, muni and corporate bonds, or simply wait this out in cash. Conservative investors will add to stocks only on a sustained move above the 870, 940 and 1,125 levels of the S&P 500, and cut stock allocation to zero on sustained moves below 800. In short, there will be plenty of time to take advantage of the next bull market soon after it begins, so unless you're a seasoned, nimble risk taker, there's still no need to be a hero and jump the gun.

It's common for those who are new to a given profession to ask those who appear to be proficient to tell them how it's "done", how it "works". This is true from engineering to medicine to law to cabinetry. But trading doesn't work that way. There is no one way to do it. There is nothing that "works" independent of the practitioner. There is, therefore, no one "best" indicator. If you want to limit yourself to one indicator, I suggest the MACD since it can be used as both a trending indicator and an oscillating indicator. If you don't know what "trending" and "oscillating" mean, then you have identified the starting point for your investigations.

Regarding comments made in chat, this is where I'm getting my "targets" for the Dow. I've taken snapshots over time using more or less the same timeframe so that one can see where the final trendline comes from. If we do reach 6000, one should keep in mind that reversions often overshoot, and we could go all the way to 4000, something like jumping off a diving board, diving underwater, then swimming back to the surface. One hopes that none of this will occur, but the possibility should be at least entertained.

This is almost a parable for the country as a whole: --------------------------------------- Death of the Dream California has come back before, but 'hysterical greens' aren't helping. Joel Kotkin NEWSWEEK From the magazine issue dated Mar 2, 2009 For decades, California has epitomized America's economic strengths: technological excellence, artistic creativity, agricultural fecundity and an intrepid entrepreneurial spirit. Yet lately California has projected a grimmer vision of a politically divided, economically stagnant state. Last week its legislature cut a deal to close its $42 billion budget deficit, but its larger problems remain. California has returned from the dead before, most recently in the mid-1990s. But the odds that the Golden State can reinvent itself again seem long. The buffoonish current governor and a legislature divided between hysterical greens, public-employee lackeys and Neanderthal Republicans have turned the state into a fiscal laughingstock. Meanwhile, more of its middle class migrates out while a large and undereducated underclass (much of it Latino) faces dim prospects. It sometimes seems the people running the state have little feel for the very things that constitute its essence—and could allow California to reinvent itself, and the American future, once again. The facts at hand are pretty dreary. California entered the recession early last year, according to the Forecast Project at the University of California, Santa Barbara, and is expected to lag behind the nation well into 2011. Unemployment stands at roughly 10 percent, ahead only of Rust Belt basket cases like Michigan and East Coast calamity Rhode Island. Not surprisingly, people are fleeing this mounting disaster. Net outmigration has been growing every year since about 2003 and should reach well over 200,000 by 2011. This outflow would be far greater, notes demographer Wendell Cox, if not for the fact that many residents can't sell their homes and are essentially held prisoner by their mortgages. For Californians, this recession has been driven by different elements than the early-1990s downturn, which was largely caused by external forces. The end of the Cold War stripped away hundreds of thousands of well-paid defense-related jobs. Meanwhile, the Japanese economy went into a tailspin, leading to a massive disinvestment here. In South L.A., the huge employment losses helped create the conditions conducive to social unrest. The 1992 Rodney King verdict may have provided the match, but the kindling was dry and plentiful. This time around, the recession feels like a self-inflicted wound, the result of "bubble dependency." First came the dotcom bubble, centered largely in the Bay Area. The fortunes made there created an enormous surge in wealth, but by 2001 that bust had punched a huge hole in the California budget. Voters, disgusted by the legislature's inability to cope with the crisis, recalled the governor, Gray Davis, and replaced him with a megastar B-grade actor from Austria. Yet almost as soon as the Internet bubble had evaporated, a new one emerged in housing. As prices soared in coastal enclaves, people fled to the periphery, often buying homes far from traditional suburban job centers. At first, it seemed like a miraculous development: people cheered as their home's "value" increased 20 percent annually. But even against the backdrop of the national housing bubble, California soon became home to gargantuan imbalances between incomes and property prices. The state was also home to such mortgage hawkers as New Century Financial Corp., Countrywide and IndyMac. For a time the whole California economy seemed to revolve around real-estate speculation, with upwards of 50 percent of all new jobs coming from growth in fields like real estate, construction and mortgage brokering. As a result, when the housing bubble burst, the state's huge real-estate economy evaporated almost overnight. Both parties in the legislature and the governor failed miserably to anticipate the impending fiscal deluge they should have known was all but inevitable. To many longtime California observers, the inability of the political, business and academic elites to adequately anticipate and address the state's persistent problems has been a source of consternation and wonderment. In my view, the key to understanding California's precipitous decline transcends terms like liberal or conservative, Democratic and Republican. The real culprit lies in the politics of narcissism. California, like any gorgeously endowed person, has a natural inclination toward self-absorption. It has always been a place of unsurpassed splendor; it has inspired and attracted writers, artists, dreamers, savants and philosophers. That's especially true of the Bay Area—ground zero for California narcissism and arguably the most attractive urban expanse on the continent; Neil Morgan in 1960 described San Francisco as "the narcissus of the West," a place whose fundamental asset was first its own beauty, followed by its own culture of self-regard. At first this high self-regard inspired some remarkable public achievements. California rebuilt San Francisco from the ashes of the great 1906 fire, and constructed in Los Angeles the world's most far-reaching transit system. These achievements reached a pinnacle under Gov. Pat Brown, who in the 1960s oversaw the expansion of the freeways, the construction of new university, state- and community-college campuses, and the creation of water projects that allowed farming in dry but fertile landscapes. Yet success also spoiled the state, incubating an ever more inward-looking form of narcissism. Even as the middle class enjoyed "the good life"—high-paying jobs, single-family homes (often with pools), vacations at the beach—there was a growing, palpable sense of threats from rising taxes, a restless youth population and a growing nonwhite demographic. One early expression of this was the late-1970s antitax movement led by Howard Jarvis. The rising cost of government was placing too much of a burden on middle-class homeowners, and the legislature refused to address the problem with reasonable reforms. The result, however, was unreasonable reform, with new and inflexible limits on property and income taxes that made holding the budget together far more difficult. Middle-class Californians also began to feel inundated by a racial tide. This was not totally based on prejudice; Californians seemed to accept legal immigration. But millions of undocumented newcomers provoked fear that there were no limits on how many people would move into the state, filling emergency rooms with the uninsured and crowding schools with children whose parents neither spoke English nor had the time to prepare their children for school. By 1994, under Gov. Pete Wilson, the anti-immigrant narcissism fueled Proposition 187. It was now OK to deny school and medical services to people because, at the end, they looked different. Today the politics of narcissism is most evident among "progressives." Although the Republicans can still block massive tax increases, the predominant force in California politics lies with two groups—the gentry liberals and the public sector. The public-sector unions, once relatively poorly paid, now enjoy wages and benefits unavailable to most middle-class Californians, and do so with little regard to the fiscal and overall economic impact. Currently barely 3 percent of the state budget goes to building roads or water systems, compared with nearly 20 percent in the Pat Brown era; instead we're funding gilt-edged pensions and lifetime guaranteed health care. It's often a case of I'm all right, Jack—and the hell with everyone else. The most recent ascendant group are the gentry liberals, whose base lies in the priciest precincts of San Francisco, the Silicon Valley and the west side of Los Angeles. Gentry liberalism reflects the narcissistic values of successful boomers and their offspring; their politics are all about them. In the past this was tied as much to cultural issues, like gay rights (itself a noble cause) and public support for the arts. More recently, the dominant issue revolves around environmentalism. Green politics came early to California and for understandable reasons: protecting the resources and landscape of the nation's loveliest landscapes. Yet in recent years, the green agenda has expanded well beyond that of the old conservationists like Theodore Roosevelt, who battled to preserve wilderness but also cared deeply about boosting productivity and living standards for the working classes. In contrast, the modern environmental movement often adopts a largely misanthropic view of humans as a "cancer" that needs to be contained. By their very nature, the greens tend to regard growth as an unalloyed evil, gobbling up resources and spewing planet-heating greenhouse gases. You can see the effects of the gentry's green politics up close in places like the Salinas Valley, a lovely agricultural region south of San Jose. As community leaders there have tried to construct policies to create new higher-wage jobs in the area (a project on which I've worked as a consultant), local progressives—largely wealthy people living on the Monterey coast—have opposed, for example, the expansion of wineries that might bring new jobs to a predominantly Latino area with persistent double-digit unemployment. As one winegrower told me last year: "They don't want a facility that interferes with their viewshed." For such people, the crusade against global warming makes a convenient foil in arguing against anything that might bring industrial or any other kind of middle-wage growth to the state. Greens here often speak movingly about the earth—but also about their personal redemption. They have engaged a legal and regulatory process that provides the wealthy and their progeny an opportunity to act out their desire to "make a difference"—often without real concern for the outcome. Environmentalism becomes a theater in which the privileged act out their narcissism. It's even more disturbing that many of the primary apostles of this kind of politics are themselves wealthy high-livers like Hollywood magnates, Silicon Valley billionaires and well-heeled politicians like Arnold Schwarzenegger and Jerry Brown. They might imagine that driving a Prius or blocking a new water system or new suburban housing development serves the planet, but this usually comes at no cost to themselves or their lifestyles. The best great hope for California's future does not lie with the narcissists of left or right but with the newcomers, largely from abroad. These groups still appreciate the nation of opportunity and aspire to make the California—and American— Dream their own. Of course, companies like Google and industries like Hollywood remain critical components, but both Silicon Valley and the entertainment complex are now mature, and increasingly dominated by people with access to money or the most elite educations. Neither is likely to produce large numbers of new jobs, particularly for working- and middle-class Californians. In contrast, the newcomers, who often lack both money and education, continue in the hierarchy-breaking tradition that made California great in the first place. Many of them live and build their businesses not in places like San Francisco or West L.A., but in the increasingly multicultural suburbs on the periphery, places like the San Gabriel Valley, Riverside and Cupertino. Immigrants played a similar role in the recovery from the early-1990s doldrums. In the '90s, for example, the number of Latino-owned businesses already was expanding at four times the rate of Anglo ones, growing from 177,000 to 440,000. Today we see signs of much the same thing, though it often involves immigrants from the Middle East, the former Soviet Union, Mexico or South Korea. One developer, Alethea Hsu, just opened a new shopping center in the San Gabriel Valley this January—and it's fully leased. "We have a great trust in the future," says the Cornell-trained physician. You see some of the same thing among other California immigrants. More than three decades ago the Cardenas family started slaughtering and selling pigs grown on their two-acre farm near Corona. From there, Jesús Sr. and his wife, Luz, expanded. "We would shoot the hogs through the head and sell them off the truck," says José, their son. "We'd sell the meat to people who liked it fresh: Filipinos, Chinese, Koreans and Hispanics … We would sell to anyone." Their first store, predominantly a carnicería, or meat shop, took advantage of the soaring Latino population. By 2008, they had 20 stores with more than $400 million in sales. In 2005 they started to produce Mexican food, including some inspired by Luz's recipes to distribute through such chains as Costco. Mexican food, notes Jesús Jr., is no longer a niche. "It's a crossover product now." Despite the current mess in Sacramento, this suggests some hope for the future. Perhaps the gubernatorial candidacy of Silicon Valley folks like former eBay CEO Meg Whitman (a Republican), or her former eBay employee Steve Wesley (a Democrat), could bring some degree of competence and common sense to the farce now taking place in Sacramento. Sen. Dianne Feinstein, who's said to be considering the race, would also be preferable to a green zealot like Jerry Brown or empty suits like Los Angeles Mayor Antonio Villaraigosa or San Francisco's Gavin Newsom. But if I am looking for hope and inspiration, for California or the country, I would look first and foremost at people like the Cardenas family. They create jobs for people who didn't go to Stanford or whose parents lack a trust fund. They constitute what any place needs to survive: risk takers who are self-confident but rarely selfish. These are people who look at the future, not in the mirror. Kotkin is a presidential fellow in Urban Futures at Chapman University and executive editor of newgeography.com. He is finishing a book on the American future for Penguin Publishing.

I've further edited some of the posts made to this thread in order to veer away from personal animosity. I haven't changed anything that OAC did, just gone a bit further. Moderating threads like this is not easy, largely because the subject matter gets people hot, and when people get hot, they tend to regress and to say things that are only marginally on topic, dragging their agenda baggage into what might otherwise be a rational discussion. Attacking Washington, Wall Street, the Military-Industrial Complex, various and sundry -isms, and even the public at large, while often adolescent, is not in itself off-limits. Attacking each other, however, takes the participants and the forum down a road whose end can be seen on other sites which are generally, shall we say, unmoderated. One of the chief advantages to discussing trading is that one's own prejudices, cynicism, inexperiences, ignorance, bigotry, paranoia, intelligence, age, sex, and various pathologies have nothing to do with the movement of price, however one chooses to view it (charts, T&S, etc). I've known people who've traded off laptops, in bed, while dying, discussing all the while the charts, the markets, and particular trades with people young enough to be their great-grandchildren, all discussing these aspects at the same level, with the same general goal: to make money. As long as they avoided veering off into personal issues and stuck to the behavior of price, Hitler and Gandhi could interact quite well on a trading board, as could Mother Teresa and Dakota Fanning. I myself am not immune to this impulse. I'd love to address some of the remarks made here. But they have nothing to do with price movement and even less with the bill. So I'll edit instead. I will, however, suggest that the public is not irrational; it is merely self-serving, just as we are. Nor is it monolithically self-serving. Every individual has his own needs, his own wants, his own views on how those needs and wants can be met. When an individual's needs and wants coincide with someone else's, even though the coincidences may be shallow and spotty, alliances begin to form. If the coincidences go deeper and become more consistent, those alliances can also go deeper and broaden. This is where "parties" -- and any other interest group based on common needs and wants and goals -- come from. To view the public as a "herd", therefore (or a mob or a crowd or as being single-minded in any regard), is to become far more ineffective than he might be by understanding the multi-faceted nature of what appears to be a united effort. This applies whether one is studying the political and/or social scene or he is studying price movement. This thread, therefore, needn't turn into "chat". There is much of value that can be said regarding this bill and the issue it attempts to address. And all of it can be said without attacking anyone, on this forum or anywhere in the broader out there.

Considering all that has eventually to be unlearned by so many traders who go the indicator route, I urge you to at least skim the following thread: http://www.traderslaboratory.com/forums/f30/price-action-only-5074.html Even if you incorporate indicators later, understanding price action will enable you to understand them and make the most of them.

Like this?

Misplaced Confidence Confidence can be an important psychological tool for the trader - important enough to make the difference between a winning trade and a losing trade. When you develop your trading plan, it is obviously important that you have confidence in its accuracy and usefulness and in your belief that you can follow your plan closely and execute it successfully. Often, traders fall into a mental "I know it all" trap, where they use their confidence to nurture their ego instead of using it to be appropriately decisive in their trading and investing decisions. Such misplaced confidence can be crippling to trading success, because any potential influence from the environment (media, others' opinions, etc.) that could sway the trader from sticking to his trading plan will have far more power. When a trader is caught in this type of trap, his ability to question his opinions and ideas diminishes. If his initial reaction to a suggestion is to accept it, he loses the capacity to question his acceptance; and if his initial reaction is to disagree, then he loses the capacity to question his disagreement, which can cause even the slightest suggestions from news, colleagues, and other influential sources to be magnified in the trader's psyche. If you're caught in this trap, you'll tend to make these magnified suggestions your own. When you do this, you give yourself logical reason and justification to act on them, even if it means you have to sway from your trading plan. Falling into this trap is characterized by being confident about things you really don't know, instead of being confident about the things you know well, such as your trading plan. Alternatively, when you have the right kind of confidence, you empower yourself to stick to your trading plan and deflect fear and doubt. Before making a trading or investing decision, be certain that you're confident about what you're confident about. The key is not to be confident about what you don't know (especially when it comes to others' opinions) but to be confident about your knowledge of objective facts and the trading plan that you have so laboriously developed. To prevent misplacing your confidence, review decisions that you've made confidently but that turned out to be incorrect, evaluating exactly where your confidence was placed. Most of the time, you'll discover that your decision was based on a suggestion not your own, but that you had made your own. --Innerworth

"Have to" was not the best choice of words. But much depends on the objective of the seller. Just as "buying" can be comprised of not only buying with the intention of holding but also include short-covering, and in a range, even a triangle, you very likely have both. Similarly, with "selling", you have people that are eager to unload what they've got because they're underwater and panicky, people who are short (in which case you want to "sell" at the lowest possible price), and people who are taking profits. In stocks, you can also have those who are orchestrating the movements either to accumulate the stock for an eventual markup into higher highs or to distribute what they have for an eventual drop into lower lows. This last can be detected by sudden withdrawals of either buying interest at tops or ranges or selling interest at lows. Even within the ranks of buyers and sellers, then, one can have intramural conflicts. But none of that really matters here. Nor does motivation itself. What is important is the continuing shifts in weight between buying power and selling power and how they affect the movement of price. You may not know why price reverses at a certain point, but you can easily gauge the degree of participation (the volume) and the relative strengths of buyers and sellers (price movement). And if the first paragraph still niggles, just delete it. It's not important to the course of buying and selling throughout the triangle.

I guess I qualify as a someone, so I'll give it a try. It may help to remember that triangles of all sorts (including wedges) form because sellers can't get the prices they want at the bottom (and so have to sell higher) and buyers aren't willing to pay what's being asked at the top (so sellers have to lower their prices). Sometimes this is nice and tidy. Sometimes it's sloppy. In any case, the prelude: you've got a lot of supply coming in at that first major swing low about a third of the way in. But you've also got a lot of demand to meet that supply head on. Hence, (a) the high volume and (b) the halt of the decline. After that, supply is less, enabling price to rise on not much volume. But there's not enough demand for a sustained advance (though 17 points is nothing to sneeze at). So sellers, smelling blood, come pouring back in again, and they even manage to accomplish a lower low. But now buyers come back in force, for whatever reason, and the volume comes in on the upside, not enough to reach the last swing high, but clearly buyers mean business. The question is, have they been doing their pushups and their cardio or not? Price then makes a higher low and finally reaches the last swing high. But buyers don't have enough strength to absorb the supply and push price higher. So they take a breather and try again. They are able to manage an even higher low and a break past the last swing high, but this is quickly aborted by sellers who swamp them with supply (by this point, the pattern has become obvious to more people). By now, buyers are tired, and they allow price to drop back below the last swing low. But they're not done. They dance along for a bit, creating a slightely higher low, then give it another shot. This time they give it a running start, hence the volume off support (or the "demand" line). And more people have seen what's going on and elect to participate. Is the increase in volume also indicative of greater seller participation? Of course. Buyers have to have somebody to buy from. But buying pressure (or buying power, or whatever one wants to call it) has the upper hand. How do we know that? Price is rising. We also know, however, that even though buying pressure has the upper hand, it's also pretty feeble, just barely able to tip the balance. The biggest volume results in a pretty small bar, one which also falls back toward its low. After this point, buyers strain to push price higher, but sellers don't have to try very hard to retard the advance. Hence the decreasing volume (if they had to try harder, volume would be higher, unless buyers gave up, in which case price would not be rising). The positive note for bulls, however, is that price is finding buyers at higher and higher levels, which is why this recurring drama is considered bullish. But when push comes to shove (which is pretty much what triangles are all about), buyers have to pull it together at some point or else price will simply dribble off sideways, which it often does. The fundamentals of whatever this is just may not be conducive to providing more support than is necessary for price to hold more or less where it is, like the market's been doing for the past four months.

We seem to have gone quite far off topic here due to what forsearch originally took from post 31 and Sherlock's further misinterpretation (which may have been based on forsearch's comment rather than the original post). I earlier referred back to post 31, the point of which had nothing to do with trading less per se but with eliminating marginal trades. The task of eliminating marginal trades has nothing to do with timeframe or bar interval or even with whether or not one uses charts at all. There's no psychology required here, just reviewing trades and finding out why some fail and some succeed and incorporating all of that into the strategy.

But production's been cut, workers are being "laid off", and financing is generally unavailable. Even entire plants are being shut down. This translates into less product and less demand for parts. Dealers are going out of business every day due to lots full of cars either nobody wants or nobody can afford to buy. Whether the autos go formally bankrupt or not is largely beside the point. The issue is not unlike the banks, which are insolvent, but as long as they can pretend that the mortgages on their books are worth far more than they are in reality, they can also pretend to be solvent. The movers and shakers in govt don't want to be blunt with the public about this stuff because they believe that the public can't handle it, which is probably true. But the banks are no different from the trader/investor who believes that as long as he doesn't sell the stock that is trading at a fraction of the price he paid for it, he hasn't really lost anything.