Gringo

Your plan doesn't mention 'test' of previous balance highs for longs does it? Gringo

Tupapa , First long is within a TR. Despite that if you wish to take the long the RET comes at 142.37 and you could enter at the subsequent rise. Second long has a RET at 142.52. Once price rises from this RET you hop on. Gringo

Hello Karoshiman, I have enjoyed reading your posts and would like to add some of my comments. These are not meant to dissuade you from from your plan but are for a healthy discussion. I like your main focus on price itself and find it to be refreshing. For the soybean I consider this trade to be a bit risky for my taste. The monthly chart shows the price was unable to go above the high and collapsed back below the 1650 level. This I would consider a sign of weakness in the longer intervals. The triangle break and retracement back to the top of it seems to be the key that might trigger a move in your favour. We'll have to see how the demand fares now. The daily is in a downtrend as shown by the downtrend channel lines I have added. I would have at least waited until the the break of the channel before engaging in a long. Nonetheless, I am sure with your stops the worst case is you'll just have to exit. Like you I also believe the coming weeks for the market are very crucial. Keep up the good work. Gringo

Q's have broken above the downward sloping trend line. The price didn't just break it and fizzle but kept moving up. It's giving some hint about the underlying strength of the market. Is this really an increase in demand or a reduction that caused the price to move up? To get another perspective we look at the volume. The volume has been on the lower side and continually dropping. Some of it is because of half a day of trading session and the holiday, but not all. Monday also had a lower volume and only slightly above the volume of Friday which was half a trading day. This low volume rise is giving us clues as to the behaviour of supply and demand. Price has been rising, although it's not because the demand overwhelmed supply but because the supply went into hiding. The price rise is price rise irrespective of whether it's the demand doing the work or supply withdrawing. The gains and losses as a result of this price rise are also real. The question here is whether this rise is temporary or the beginning of an move upwards that has some lasting power. Break above the trend line has alerted those with a short bias to the possibility of a directional change. Low volume rise is giving hints that perhaps there is a chance supply just might choose to show up at advantageous levels and drag the price down. Theoretically it is all fine and dandy. But what does a tape reader do under these circumstances? Go long? go short? stay neutral? pray? Price has already risen over 6% in the past few days. Those with the nerves of steel could look at re-shorting when the market turns down again. Why a re-short you say? didn't price just break above the trend line showing a possible change in stride? And I answer, because we yet don't know if the down move really is over. It's only in hindsight we'll know for certain whether the break of the trend line meant anything or was an aberration. But...but, why then did we bother to focus so much on the trend line? Because it will help us manage our risk! We know the down move has had quite a bit of a run. We also know there might have been some kind of or a mini-potential climax when prices turned from 61.3 as evident from the larger than normal price moves and the subsequent reaction. So, we might be closer to the bottom, but this is not a certainty. In the absence of this certainty we initiate our positions keeping in mind the new reality, the reality of price being possibly closer to the bottom than before and having a greater probability of rise. Armed with this knowledge and being the daredevils that we are, we initiate our positions but minimize our risk. We become more vigilant with our position and stay ready to run for cover at the first sign of danger. We tighten our stops by bringing them closer. By doing all this we lower our risk but still give us a chance in case the price does resume its downward course. Now, those with not so daring a disposition could wait for price to drop. Wait and see whether it turns out to be a retracement preceding the eventual rise. These cautious souls, can choose to enter if and when the downward price move stalls and reverses to the upside. They only engage when the probabilities are significantly in their favour. Cautious little buggers they are, aren't they? Oh, but there has to be a catch for being so cautious. What is it? You are right, the catch is that these zen masters will get the up move if it comes because of their patience, but they'll miss a chunk of the down move in case the down trend resumes! Before I bring to a conclusion this post, let me talk one more time about the daredevils who are shorting. After some drop in price they must be ready to reverse their position so as not to miss the advance if it comes. The costs and risks of not missing any major move are extra commissions, losses due to stops, and the extra effort and agility required for this more engaging activity. The reward is in catching the moves earlier. Now the question you must ask is which risk are you willing to assume? The risk of missing the down move or the risk of getting your stops hit a few times in case there isn't much of a down move? What are you comfortable with? What plans do you have in place to take advantage of the situations you are comfortable with? Do you even know how to recognize the situations you feel comfortable with? Too many questions I know. Happy trading! Gringo

UUP the US Dollar Index looks weak. It broke the demand line and was unable to go up much and started to weaken. Weakening dollar might have implications for overall currency markets. I have included the EUR/USD from the forex to show the weakening dollar and subsequent rise in EUR/USD pair and a drop in USD/CHF. It's a weekly analysis so keep in mind the time horizon from weeks to months. In case conditions change I would attempt to bring this up again. I am practicing my skills on the foreign exchange markets and don't have much experience with them. Gringo

Good to see you back buddy. It's always a pleasure to see a comrade return back to the nest. Seems like you're very close to achieving your goal. I haven't seen anyone become proficient in such short a time. It is seriously quite impressive. Take care, Gringo

Does the rising of price above a downward sloping trend channel take it into an 'overbought' territory? or is the term 'overbought' reserved for the price going above the upward sloping trend channel? I am reading about this in W course but have not finished the whole trend section. I am sure the answer is somewhere. Gringo

Tupapa, You are right. There is weakness in XLF and if price turns down from here it might be a profitable short opportunity. The reasons for me in choosing to avoid this ETF altogether are below: Reasons for avoiding a short: 1) XLF is in the early stages of it's weakness and has recently broken the DL. If you notice though the red trend channel is still up owning to the HL and HH that's been going on. You are right it could be the early stages of a short due to a break in DL but the longer term due to the upward trend channel is not in alignment leading to a conflicting picture. 2) The drop from 16.4 to 15 represents a 8.5% drop. Although it is a reasonable drop the Q's in the same period dropped from 70.5 to 61.3 for a 13% drop. Therefore, in terms of weakness XLF is not the weakest hence the reason of me choosing to avoid it as a short. Reasons for avoiding a long: 1) 16 has provided serious resistance to the upward movement. We are very close to the same 16 level and the upside potential from here is limited. If the 16 level is decisively broken I might come back to re-asses the possibilities on the long side but until that happens longs are a no go. Time frame: 1999 to 2012 is over a decade long period. Although this could provide an opportunity to make money to the downside, my trade horizon is days to week but not years. Waiting for that long while there may be better vehicles out there isn't my style. Notice also that price never went down for a test and after Jul 2011 to Oct 2011 lows started to make HH and HL showing if not strength but at least a modicum of lack of weakness. This time I am not comparing XLF to other ETFs to see whether it went up slower than others. What I am pointing out is its own price behaviour refusing to continue downward when it had the momentum. This lack of downward progress shows lack of weakness hence another conflicting signal against initiating a short. (The red uptrend channel tells essentially the same story). It doesn't mean money can't be made by shorting it. Certainly someone with your trading skill set can find opportunities to short and even go long afterwards and still make money both ways. The risk for my personality is greater than what I am comfortable with, especially in the presence of other opportunities. Therefore, in the presence of conflicting signals and greater than desired risk I chose to avoid XLF altogether. Gringo p.s. Another point of interest is that XLF appears to be in a trading range between 12 and 16 for the past few years. It's not a very well defined range but may be of some interest for those who looking for trending environments for trades instead of range bound.

I would like to point out the benefits of doing one's own analysis after having done it for some time consistently. Although, some may find my analysis helpful, it is me who is the real beneficiary of all this effort. Just the mere act of using a set of time tested principles over and over again seems to be solidifying the concepts in my mind. Perhaps it is true that we are what we repeatedly do. Sitting back and passively learning the material has its value, but there comes a time when one needs to make a decision. Without a decision there cannot be any trading or speculating. What better way to solidify correct thinking and subsequent decision making than to daily subject one’s analysis for scrutiny. There is going to be no hiding and the ego is going to resent receiving critical blows; but it is these blows that will eventually lead to improvement in analysis, and in leveling of the ego, for a smoother and less bumpy ride down the road. The analysis of a situation and a proper entry/exit criteria are two separate things. Both require individual attention and methodical training and testing. The analysis identifies the available possibilities, whereas the entry/exit criteria determines how to take advantage of these possibilities while limiting the risk. Below is the analysis of XLF and the comments are in the charts. Our efforts and money might be better served by avoiding this sector for now. If someone has differing views I would be more than happy to hear them. Gringo

I use stockcharts and it's a standard feature. CTRL + Mouse click. Gringo

RIMM has been going up strongly. The demand line is intact and there hasn't been much sign of slowing down. A lot of it now is dependent on how the general market behaves. If serious weakness develops in the market then individual stocks would find it harder to hold their grounds. Keep an eye on a change in momentum, by observing the the demand lines. This long position in RIMM is going against the trend and as a result is fraught with serious danger. Due to this inherent risk involved keeping stops closer and staying alert to demand fizzling is prudent. While US market were closed, north of the border in the Canadian markets RIMM propelled even higher. I am expecting that would cause a gap up in the stock today when US markets open but we'll have to see. In summary, keep your eyes on the demand lines and any development of weakness in the market and the stock and stay alert to exiting. Were the trend not downwards as exemplified by the downward sloping trend channel in Q's, holding onto RIMM would have been easier and reasonable considering such a base of accumulation. This stock does look like a textbook Wyckoff stock with months of accumulation and leading to a markup as the market rebounded from the oversold condition. It is a bit tougher for those who have accumulated large number of shares to exit easily. In case the market doesn't seriously weaken expect more rise and eventually an orderly distribution where stock may stuck in a trading range after this markup. In case of the market fizzling fast there's a possibility of an outright dumping of the stock or it forming a trading range. In case of the market retracing at a slower pace, the stock might drop a bit with a possibility of a subsequent rise as the market finds its footing. We don't know in advance which scenario might take place or if another scenario might materialize in reality. To avoid paralysis we stick with following the price, which so far is pointing up, and staying alert to any signs of weakness in both the market and the stock as they develop in real time. Gringo

Price is approaching the top of the trend channel. The next potential resistances are around 64.5 and 65 but we simply observe where price may decide to turn if at all. The upside move has been reasonable and we're close to finding out whether demand can keep this going or not. A sign of strength would be for price to go above the trend channel and stay out of it for a few days and then retrace down slowly. Price poking above for a brief time and then dropping heavily would indicate weakness. Inability of price to go above the trend channel also would indicate weakness. So far the intermediate trend is still down with price having a normal reaction after a drop. We have reduced holiday trading hours today. It is in my opinion a bit easier to manipulate the markets when there is less participation. Looking at the 2 hr chart it appears that price has some strength to go higher as it's resting under 64 with higher lows. Gringo

Following Db's suggestion I have gone back to the trend channel drawn earlier. This time around I have attempted to draw the trend channel based on how he draws it. His method has less vagueness to and I like it this way. Demand has been pushing the price up. We don't know whether it is new buying, short covering or any the many other reasons. What we do know and care about is that demand has been pushing the price up. Demand asserted itself around 61.4 area which is close to the support/resistance area as shown on the chart. Coupled with this area being a potential support level the price was also oversold (because of supply pushing price down even below the trend channel low). Being below the trend channel low doesn't mean price is automatically supposed to go up. What it means is that the probability of price rise has become higher as supply 'might' be approaching a temporary exhaustion point. When supply is exhausted it is naturally easier for demand to take over leading to a rise in price. Note also the delay in the rise. Price was below the trend channel for few days before supply was overwhelmed by demand. The down move and the subsequent reversal could be a potential climax, but it can only be confirmed in hindsight. Volume has been higher recently but not so high as to clearly be identified as being climactic. Those who attempted to just take the price falling below the trend channel as a signal to go long without waiting for strength to develop had to deal with a nasty drop two days ago before price reversed to the upside. In real time this would have caused a serious heartache for those holding onto losing positions. Some may have dumped and bolted with losses, and others held in hopes of getting a rebound. The rebound did end up coming that day but it may not have - leading to even more losses and heartache. This is where a plan comes in handy for a person to know in advance under what conditions to enter, hold and exit. Our focus now is on whether the demand is sufficient to materially take price above the top of the trend channel. A paltry poke above and then return into the channel would give a different signal than a decisive break above it with some holding power. Supply reasserting itself and taking price down again would also give information regarding the relative strength and weakness of supply and demand. We have not resorted to news, or government planning, or what the world economy is experiencing so far. It certainly has not been a long enough span to convince the most ardent follower of news, but it has been long enough to at least give a glimpse into the possibility of trading without resorting to news. I hope everyone is learning as much as I am from this daily analysis. All the best. Gringo

The price was drooping so much below the downward sloping DL that I wasn't sure whether it was the price so weak or the DL not at the right place. Will go back to the tightly hugging line in the next update. Gringo

Market is attempting a rebound. We are still in an intermediate term down trend and the trend channel is very much intact. The larger term trend that started the bull market from Mar 2009 is still up. At this juncture it's unclear whether the down move so far has been just a pull back in the larger bull market trend or a drop that signifies the initial stages of a bear market. Since we have not witnessed a rise in volume or a buying climax, I am inclined to still not give credence to a full fledged bear market. More evidence is required to come to such a conclusion. Price behaviour is still operating on the higher high and higher low basis indicating the continuation of the larger term trend (see weekly chart). In the mean time, we can still base our decisions on the supply and demand dynamics and continue to profit. Intermediate as stated earlier is down but price is staging a rally. The strength, depth, and sustaining power of this rally will give us some clues as to how serious the demand is in halting this drop. I keep brining demand in the analysis and not much supply because of the lower volumes in the Q's. Price dropping on low volume indicates demand not putting up a fight and supply easily pushing prices down. Had price been dropping with high volume I would have concluded that supply is overwhelming demand which isn't the case this time around, it's just the absence of conviction in demand leading to the price heading lower. Is the rally going to be based on supply just easing off and taking profits or demand asserting itself? As of now we don't know. I generally don't pay too much attention on volume but once in a while it does help to have some idea regarding the intensity behind the supply/demand dynamic. Lets keep an eye on 63 and 64 areas for potential resistance to this price rise. I have also widened the lower TL line to keep price within the channel and for visual ease. SL has been left unchanged. It's the break of TL that would show the possibility of a change in trend and so far the TL is very much intact. Gringo

Hi Tupapa, Price appears to be in a trading range. Why not wait for the extreme before trading? In my opinion A and E appear to the areas with somewhat lesser risk. Gringo

After the 2008 selling climax study, I am attempting to raise some questions regarding the current environment. As Db, had pointed out the volume has been paltry during this price drop; what I had failed to grasp was how great the reduction in volume actually was. Using the weekly intervals allowed for an easier comparison of current volume levels with those of the past and the difference is simply put like night and day. Having this broader perspective about relative condition of the volume as compared to previous intermediate term climaxes made it a bit easier for the naked eye to readily see the differences. Please keep in mind this is all hindsight analysis, hence, some liberties were taken in colour-coding the areas deemed significant which in real time would not have been so obviously clear cut. An attempt was made to make this accessible to those who may not be steeped in price/volume behaviour analysis as taught by Wyckoff. The focus here mainly has been the selling climax, mainly to identify and remind ourselves the behaviour inherent in price/volume action when an intermediate term bottom is reached. So far the price has been dropping without a significantly identifiable rise in volume. This is indicating that demand hasn't bothered to halt this drop or attempted a significant resistance so far. In terms of price behaviour this would give the edge to the supply side. Now it must be borne in mind the shorter term price rises are not uncommon as even the supply needs a breather now and then. Could it also be that the volume won't be giving us significant clues regarding intermediate term bottoms this time around? I believe it is possible, but as tape readers our primary focus is price and volume comes a distant second (my opinion). Nonetheless, we are still in an intermediate term down trend and volume might show up somewhere along the path. Remember, as shown in the previous analysis of Oct 2008 bottom, volume might not exactly show up at the lowest price point. We need to be alert to the rise in volume throughout the down wave. Previous studies done by our fallen comrade "erierambler" about volume of more than 80-90% of the average showing up regularly closer to bottoms may also be kept in mind. There are many ways to quantify the rise in volume, but for now just a significantly identifiable rise is what I am 'hoping' to see to give me a bit of a heads up. Gringo

Update for RIMM. The hinge has broken to the upside. This is as close as it gets to getting a tip before the event. Thank good old W for this. Gringo

Inspired by Db's call to arms, here is my analysis of the QQQ Daily for the 2008 period. There is lots of information and anybody and everybody is welcome to add their comments and views so that we all learn from it. The line chart was used instead of a bar chart to show the flow of price better instead of getting bogged down in bar by bar analysis. With all the colouring effects, the chart does appear a bit like an artist's rendition on a canvas. Gringo

Tired of this doom and gloom, I stumbled upon an old forgotten friend: RIMM. Have a look and make up your own minds. At least know how to play a hinge before diving in heard first. This stock is showing quite a bit of strength and as is clear from the base has been accumulated already. Perhaps the recent plunge in Q's is keeping it in check, otherwise it seems it's ready to fly. Gringo

Market again dropped proving the value of not going long until strength manifests first. Since price has been dropping and quite strongly, keep an eye out for some kind of climatic action. For us simple folks, break of supply line is the event that would get our minds to start searching for possible longs. Of course shorts have to be careful with such significant drop. 59,60 and 62 areas are potential support levels. Drop has been far steeper and faster than many could have anticipated. It was harder to stay in short positions and avoid initiating long positions because every dropped looked like an opportunity to get in before the rebound. For educational purposes this has been a perfect opportunity to learn the value of inaction as a weapon. The idea is to let someone else use their money to find the bottom. Let the demand and supply show their hand before betting. Does this mean if there's a furious rise from here we might miss out on that rise? Yes, we might miss the rise if the rise ends up coming in the from of a V bottom. To enter at the most opportune time is more important than entering at the bottom. It's the price we play to reduce our risk. As a wise trader reminded me recently: Cover the risk and the reward will take care of itself. You control the risk. The market controls the reward. Gringo

USD/CHF Weekly: Longer term demand line was broken in September. Price is attempting to head back to the previous high at 1.0000. From the fanning, to me it appears it might get difficult to do so as momentum seems to be waning. Notice the lower low before breaking above the supply line. There wasn't much of a pause during this drop from 1.0000 high. A sign of some weakness. A short would be reasonable when price weakens during this rise. Ideally, I would prefer the price to rise a bit more, but it is already trying to break above the potential resistance level 0.95 right now. Price could tumble if this level or a bit higher supply showed up. 0.9000 and 0.9250 levels could be potential S/R levels below the current price level. I am only comfortable with possible shorts here. Longs at the moment are not looking feasible to me at least on the weekly chart. Perhaps looking closer up at the dailies might show shorter term longs. Gringo

Updates on Light Crude Oil: Notes in the chart. Gringo

This analysis is for Lowes Corporation. I should have probably checked the group behaviour as well. Maybe later I'll have a look. I am just pushing through analysis after analysis. Gringo

This is an analysis of Dow Jones US Heavy Construction Index. I came with a heavily negative bias towards the housing market. It took a little bit of adjustment to accept what price was showing than forcing bias on the analysis. You may notice a bit of downward bias earlier in the analysis on my part. By the time I reached the end some clarity of mind was beginning to emerge. This is the first time I am attempting to analyse this index so there are bound to be points that I might have missed. I am not even sure who of if anyone even looks at this but it's my attempt at getting used to the housing market behaviour. Top down approach: Monthly -> Weekly -> Daily chart analysis. Notes are within the charts. Daily analysis surprised me with the better behaviour than the Q's. The upside is twice as fast and the downside is comparable. Who wouldn't want an index skewed to the upside. Gringo