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Lady Market and Intangibles – October 27, 2011
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[B]“Again, I’m just a trader…so what do I know? I would prefer a REAL market with REAL stock setups and REAL leadership, but for now, we simply have to make adjustments based on the intangibles and take what the market gives us. It’s what keeps this game interesting, right?”[/B]Joe Fahmy - [url]http://joefahmy.com/2011/10/25/plunge-protection-team/[/url]
Don’t miss this latest blog post by Joe Fahmy. It suggests to me that being a disciplined trader (like the robot) is not bound to be much rewarded for a while… Intangibles are just too numerous at present but absent from any rational and historical framework of lessons learned from the past.
I’ve spent 30 years doing my best to become a consistent and profitable trader. It’s been all about systematically practicing good professional behaviors. Lady Market taught me to only try to kiss her when there was a high probability to be welcome, when she was in the mood and well positioned (setup) and near the exits in case she would turn suddenly angry at me.
Today, only bad behavior is rewarded. You just rush in impulsively, forget about all the rules and make a million overnight for raping the girl! Oh yes, Lady Market is not herself anymore, she’s become the toy of liquidity manipulations, intangibles and politicians.
The Brussels accords have, once again, just bought some time for rewarding more bad behaviors.
IWM is now in a position to go testing the 200-day moving average (77.89). Weekly R3 (75.90) is within easy reach with light floor selling pressure. The robot will respect his code of good conduct and stay in cash. Make your own discretionary adjustments if you wish to take what Lady Market is giving right now, but don’t fall in the trap of believing for one minute that she will be a good teacher for your future trading practice.
Billy
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Can the IWM robot only get long after first making a trip to oversold 20D MF terittory?
Hi Billy & Pacal,
Based on current circumstances, can you guys confirm (or correct) my understanding that the 20D MF will only signal a long entry after we have 1st moved to oversold conditions and then retraced back up?
So, if the market moves immediately higher from here without pause or their is only minor pullbacks that does not bring MF into the oversold range, can the IWM robot get long? I guess this would be sort of over-ruling the 20D MF?
btw - I spoke with Fahmy last night, he seems convinced the US (or, PPT) is intervening on the long side. Also, I double checked the Operation Twist start date - see [url]http://seekingalpha.com/article/298379-is-operation-twist-juicing-the-stock-market[/url] This references says the first purchases were made Oct 3 and then again on Oct 4 ... interesting coincidence with the Oct 4, last 45 min end of day 7% run in IWM?? Someone how I missed this date/information and should have been more on guard for the snap back.. Maybe we are back into a psuedo-POMO trading regime??
Thoughts?
Shawn
Please look at the Price charts
[QUOTE=Pascal;18075]Only price counts to make money.
A topping pattern will take time to form.
As of now, big money does not chase this gap, but it could chase it in the next days.
In other words, do not chase this up, but do not short either.
Pascal[/QUOTE]
I have been using P&F charts for over 30 years, a subject which is not discussed here very often. I believe in this approach to identify intermediate and long term trends. I would suggest that people take a look at most if not all recent P&F charts of North American indices Dow,S&P, Rut, NASDAQ, TSX and you will notice that the bearish resistance line has been BROKE UP which essentially means that the trend is now UP and thus shorting is not a very good idea as mentionned by Pascal.
IMHO, buying the forth coming pullback is therefore the less risky trading plan.
Pierre Brodeur
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About The Resistance line Breakouts in North America
[QUOTE=grems8544;18086]Pierre,
I see it, but could you please post the charts for all to see? Do you have good experience that the breaking upward on the P&F will not whipsaw?
Thanks,
pgd[/QUOTE]
First of all sorry for the delay.
It is the first time I upload a file to this web site. Hope I did this well.
There is no guarantee of a whipsaw back down towards lover levels. I "specialize" in the Canadian market and thus I can only speak about that market as an "expert" trader in that market. If you look at the TSX chart, during the last bear phase you will notice at least two (2) bull traps. Typically on the traditional Box and REV, whipsaws will be after 1 or 2 "X"s after the breakout. This is not the case right now thus my conviction of a new opposite trend upwards.
I believe another person compared P&F with your system. I don't get the comparison; nor do I get the point that it uses (or is a function) of other indicators. Yours is a MA and derivative MA system while P&F is a Support and Resistance identification system. The philosophies behind their design is IMHO dramatically different I believe. P&F is a breakout/ breakdown trade system and therefore is imperfect on its own. It allows for target projections which if done well can be helpful. One needs to add its own indicators to confirm "trade targets" which are not the standard double top or double bottom break out/downs. I have been using cycle analysis to complement my P&F trading decisions with what I call channel support and resistance points. And I keep it very simple.
Hope this anwers your question
Pierre Brodeur