Wednesday, June 30, 2010


I mentioned that GOLD was setup fundamentally for a decline and that I would show the trades I made if and when they came up. There is an entry setup for today, where I have orders in where indicated on the chart above. As I type this these orders are not filled, but we are very close to the entry price.

You can see how the trend oscillators have been diverging during this move up over the last month, both short term and longer term. We had a huge outside day reversal bar on Monday where a short entry could have been done. One of the filters I use that will not be disclosed here did not confirm that entry, so I passed on it. There is really not much else to say. At this point I do not know if this trade is any good at all, if it is, there is a chance it could turn into a big one. There is just no way of knowing that at this point. Certainly based on fundamentals I have described there is a potential for this market to fall sharply at any moment, but that does not mean it will.

This is one of the last bubbles that has been inflated, and as we have all seen in recent years, these bubbles can continue on for much longer than most of us can predict properly. I just know that I want to be short when it pops be it today, next month, or next year. I will not blindly short it just based on what I think the near term fundamental picture is, but I will take all sell signals that meet my rules.

Lets take a quick look at the stock market after yesterdays wipeout, things do not look very good. With Fridays non farm payrolls report coming up, which we know if it is reported even within a country mile of the truth, will be a bad number. There is alot of risk to the downside now after yesterday, although technically we are still holding in general the lows of this decline. We are right at the bottom, so custers last stand is right here, right now.

We can see the two main trend indicators confirming down. The third longer term Momentum indicator is getting into a flat lining sell condition, which is not good. Flat lining sell conditions are often indicative of long term trends developing. There are also no bullish divergences in the accumulation/distribution indicators ( green and purple lines ). In summary, there is now nothing saying to look to buy this market. This also comes at a time when the seasonals are pointing down and Larry Williams forecast road map is also pointing downward for a few months. This looks dicey, so I expect to see more downside action here.

The recent comments I made about looking for something down but not big were wrong. That is right I said it and admitted it. I do not know why market prognosticators never admit when they are wrong. Even the very best traders have losing trades. I was reading some commentary yesterday by one such prognosticator who I greatly respect. He had mentioned a position trade he had put on when the SP 500 got over 1100. It had been based on the market getting above the longer term moving averages again. You can see from the above chart that he basically bought the high of the retracement. It was a bad trade, so what get over it. Bad trades happen, I had a boatload of them this month. His commentary yesterday said it was exited without taking a loss, are you f....ing kidding me? Just the term position trade implies it is something you are going to hold for awhile, often months. You do not micromanage a position trade like that, you put it on and walk away.

The only way that could have been exited for no loss would have been based on a 5 minute or less intraday chart. It is just a lie quite frankly. When you put a position trade on you have to push back from the table and let it have some room to move. If you watched one through a 5 minute chart you would never be able to hold it. I must be the only guy on the web who actually admits when he makes a blunder. I will never read his commentary again, he has taken away years of credibility with that in my eyes. Maybe someone reading this blog can give me a better answer, but here is why I think people do this. They are always trying to sell something, in this case a trading service. Investors are so fickle, that there is always a fear that even one loss will cost you clients. This is actually true it will. However, do you really want to be such a whore for what you are selling that you check your integrity at the door on the way? Do you really want a bunch of clients who think you never lose? What will happen is that they will all leave immediately when the real results start rolling in. Why would anyone want that turnover? Go Figure.

Not me, never have, never will do that. I have losses, I guess I am the only one who trades who loses money from time to time.

Tuesday, June 29, 2010


As I was watching the news channels last night after having been roped in once again by my wife who always has them on in the great room that I have to walk through to move around the house, this is what I saw. Our fearless leader arguing with other leaders against spending restraint. It is absolutely shocking to me that we are now the most liberal country in the world philisophically. Germany of all the possible countries, is scolding us for irresponsible spending! Obviously, the "recovery" is a fraud and has been from the get go. I just cannot imagine the answer to financial problems being to spend more. I call this guy an embecile, and I think he is. However, what if he is not actually stupid? If he is intelligent and is ruining our country by design, it is certainly a more dire scenario. Maybe it is just an incompetent staff which he clearly has? Biden might be fun to have a beer with, but hard to believe he is first in line to become president. He is more suited to Caddyshack IV as a crazy uncle. I keep leaning toward a Tr- Lateral Commission type of theory here, that someone or a group is pulling his strings. The most shocking thing to me is how few people see the emperor has no clothes.

I admit that I am a conservative, but I hope to GOD that if there was ever a Conservative president that was this incompetent, I would be equally outraged. I hope we will never know. If we ever have another leader like this, we will not survive financially, if we survive him. It did hit me last night after listening to him that there is only one way to go in the financial markets and that is down. I do not trade based on opinions as readers know. Sometimes I wish I did, most of the time I am glad I don't. I did mention the other day that the markets just felt heavy and I think that is just a reflection of all that is going on. There is virtually no good news out there and the PPT cannot keep this thing aloft forever. They have done a magnificent job engineering this rally which has helped the public psyche. Can you imagine how everyone would be feeling if the Dow was a 6,000 instead of 10,000?

My trades coming into this week have not worked out well. I tightened the stops in the EURO and SUGAR based on my comments over the weekend, and both were hit. The sum of those trades was basically a wash, one win, one loss. The COPPER trade with the big open equity was exited today after giving back about 70% of the money. Still a profit, but very disappointing. No way COPPER can hold up in the face of a selloff like this in the DOW.

I shorted Crude Oil and the Canadian Dollar last night. I was looking for a way to get short something that could benefit by a downdraft since I did not have sell signals in the indexes. They were both setup correctly and on my watch list this week already.

I debated which of the energies to short and selected this due to the relative weakness in the POIV indicator in purple. I felt that fundamentally based on the COT data that Unleaded Gas was the weakest but the daily setup seemed a bit better here. It is basically the same trade either way. Notice how much lower the peak was there with price being almost at an equal high. I am not watching markets intraday anymore much other than an occasional peek in case orders get filled and I need to place exit stops. I would imagine since I heard the DOW was down a good clip that this market is probably declining also. The day is not over, so you never know what will happen. I guess all we know for sure is that the government will approve more spending today, everthing else is unknown.

Next is the Canadian Dollar, pretty much the same picture, a little bit more of an existing downtrend coming into today than was Crude, which is an uptrend and is more of a reversal trade.

Are these trades any good? Who knows. I am trying to make a transition towards less babysitting of things, holding trades longer.This has been ugly so far as I knew it would be. Changing trading styles is never seamless, and it certainly has not been this month.

I think the conclusion is obvious, it is George W. Bush's fault that I had a lousy month.

Monday, June 28, 2010


Here we are again in an eerily similar situation to where we were in November of last year. We have had another leg up driven completely by small speculators with the big boys once again selling with both hands. I know there is a tremendous marketing and media push to put your money into GOLD, but I urge caution. The last decline admittedly although very sharp held support and we rallied again. Mark my words, one of these times that is not going to happen, and this is going to waterfall. There are so many reasons not to go long right here anecdotally, but I will stick just to the numbers. I still don't hink Mad Max is going to give you much in barter for Gold, maybe for water, but that's just me.

We have as per the above graph, once again a record long position by the small individual investors. This is accompanied by the same with the Large Specs. Large Specs can expand through the use of pyramiding which is how they trade anyway, their buying capacity. As open profits rise, it gives them more margin available to buy more. This is why at peaks we often see them at their max positions. As a result, they can creep along for a bit once they reach this level. This is what we saw in November, they reached their peak in late September and nothing really happened for a month and a half. I think this could happen again due to the dollars strength. Since it has rallied alongside of GOLD, the valuation of GOLD vs the DOLLAR has not
gotten to the same extreme it did back in November yet.

What you can see is that we are again also at a similar level to where we were in late September. This will not be the perfect storm until valuation gets up there. HOWEVER!!!!!!!!!!!!! It may not get there. Markets can turn for a variety of reasons, and we rarely always get the perfect setup. We are close enough now to begin to look for sell signals. In the following chart you can see that today we might hit the 13 count in the Demark Sequential, still the best top and bottom timing tool I have ever come across. Notice how we topped one day after the 13 count last time.

Even though we do not have the valuation, we have the Demark Sequential staring us in the face. I know for GOLD bugs whether the Dodgers win with a walk off home run, or your dog pees on your couch, anything is a reason to buy gold with both hands. My posts are never going to influence them one way or another and I could care less. Those people are the ones that at some point are going to be trapped and wish they had not been so greedy. I do not know when that will happen, only that it will. I simply am pointing out a near term shorting opportunity. Whether or not it turns into a major top or not there is no way of knowing. It provides an opportunity to make money and that is all I care about.

I will post the short trades in do in this market when I do them or within a day or two depending on whether I get sidetracked or not at the time.

Saturday, June 26, 2010


The following are the 4 current trades I have on and a little commentary on each. I will also cover a couple of possible trades for this coming week.

Here is the Copper trade I am long. I mentioned in here recently this market was a bullish setup and we have risen nicely. At this point I am trailing stops and hoping to get into 315 or even the 325 area as a profit target. In the mean time I will just trail a stop and see what happens.

Here again is the weekly chart and why I was bullish on this market. We had strong commercial buying while open interest was declining. At the same time the Small Speculators had gotten to a pretty big net short position. We also had a seasonal up bias at the same time. This told me to look to the daily charts for a long entry. I had to wait a week or two but it came along.

Next up, SUGAR.

The one problem this trade has is one of my trend indicators has not come along for the ride yet after 5 days in this trade. I do not like that so I may not stay in this much longer. At the very least my stop is going to be close on Monday here. Sometimes I front run these indicators but they generally catch up after a couple of days when my front running was correct. This has not happened here yet. I need to give this some thought this weekend as to how I will proceed next week.


Here I went long just two days ago. I really had a bearish setup in the DX but played here because I thought it would move more. Neither one has really moved much although both have gone in the direction I thought so far. Another market I need to study more this weekend. This market had a very bullish setup fundamentally due to record commercial longs. You don't see something like this too often with the COT report.

If you look a couple weeks back here you can see the record commercial longs in red and small speculator shorts in green. This told us all the insiders were betting on higher prices and the individual investors betting on a decline. This movie ends the same way every time no matter how many times you watch it.

The cattle trade I posted yesterday so I am not going to repost that. In the equity markets I did say that I did not expect a major selloff. We certainly had a good one, more than I thought, but not what I would consider a major selloff. In general I had been looking to buy a dip, but we have declined a bit more than I would like, so I think selling a rally is likely to be my next trade there. I might try to play individual stock longs this week just due to how oversold we are, but they will have short leashes on them if I do it.

Bonds I had been looking to short but they too moved a bit more than what I wanted negating the setup. They do appear to be making a triple divergence here in a negative fashion, so I will be watching closely here for an entry setup. The short setups in the metals ( Gold and Silver ) are gone for the moment, so I do not see a trade there this coming week. Natural Gas appears to be setting up a short if we move up another day or two, and I am also watching Crude for a short.

Friday, June 25, 2010


 Here is a trade I got back into yesterday, Live Cattle. I posted the chart previously where my trailing stop was hit and I exited with a small profit. The bullish setup was still in place, so I took another long entry yesterday where indicated on the chart. You have to be prepared to get right back into a trade if you either exit it in error, or if you get stopped out and the original setup is still in place. This is not an easy thing for some people to do, and it is too easy for others. What does that mean?

Some people just want everything to always be perfect, and therefore when a trailing stop gets hit, things are less than ideal. They are not prepared to recover quickly mentally and go back into the same opportunity. The markets don't care if we are in or out, they do their own thing. It is up to us to get in sync with what they are doing. My favorite quotes are from people that say they were actually right, when prices went the opposite way they predicated and the markets were wrong. This happened alot in housing in recent years, and also in the stock market last year. If prices move the opposite of what you predict it is you that are wrong plain and simple.

There are also others that fly back in without thinking eager to "get back in the action." This is also not advisable because it often is based on emotion and not legitimate market action. For me it is an individual preference to not be too impulsive. I am not dying to "get my money back" after I take a loss. I think that is very dangerous and has led to the demise of many. The best place to be here is just even keeled and if the trade setups are still legitimate, you play them as they come along. At times that might mean getting stopped out and re-entering the same day. If that is what the market dictates that is what you need to do. Here my re-entry was one day removed. Perhaps my stop was in the wrong place trailing my original trade, but the logic behind the stop being where it was I layed out in detail in a prior post. It was sound and by my rules so sometimes this happens. I will never be perfect, that is something I can be certain of.

As for the market as a whole, it just feels very heavy to me here, although we are now into a very short term oversold condition. I do not have definitive buy or sell signals in the indexes at this juncture.

On a separate note if anyone out there has a good connection to a media person or a reporter, please email me at mktwzrd1@gmail.com. It is time to get the story out about how I treated my dog with cancer and what has happened. This could be a landmark case, and I need to get this out there. It could save countless lives both animal and people. The medical community knows what I did, but they are not going to want this story to get out because it will cost the pharma companies billions in lost profits. They do not want to cure cancer, they want to "manage" it. There is no profit in curing it, just a one time revenue stream but no annuity flows. Also, I used all natural substances which are not patentable.

Thursday, June 24, 2010


Why is it the proper play to fade bullish sentiment? The simple reason is that when you have a situation like what we have above in Live Cattle at the recent top, everyone ought there who could buy had already done so. Where was the buying going to come from to propel this further upward? Prices fall due to a lack of buying, not from aggressive selling. The aggressive selling during mass panics can accelerate the moves, but it does not start them. Here is one very current example of what happens when the majority of people agree on something, Barry got elected. We all can see now how that worked out, the single biggest disaster in the history of the world.

Another example that is taking place in my life, is the miracle recovery of my one dog from cancer due to my supplements I gave him. The consensus in the veterinary community and I have had some of the top vets in the country involved in this, was the was nothing else that could be done. He was terminal. In fact had I been a doctor, he would not be here now because I would have been trapped in the paradigm of what the vast majority feels is the proper treatment of this disease. I would have not given him what saved him, it would not even have been considered. Now the "majority" want to know how in the world I pulled this off! They want to do Xrays blah blah blah. I have told them no. There will be a time if this continues where the world can benefit from this as it appears to be a landmark case. Until then I will let the "majority" shake their heads in disbelief. It is already proven that what I did is a quality of life improver with no side effects. How far beyond that it is still is yet to be determined. It certainly appears to be a possible cure but I think it is too soon to tell. One thing I am not going to do is let this dumbkopfs put him through a bunch of tests stessing him out. The facts speak for themselves.

This reminds me of all the experts paraded out everyday, none of whom predicted the stock or real estate crashes. Now they are predict a recovery. Hmm...... gives you something to think about doesn't it?

It is always cute to be a wise ass at parties and have contrarian views on things, but you better be prepared for what will follow. I will never forget back in 2006 telling everyone wherever I went the housing market was going to crash and it is the reason why I sold my Newport Coast Mc Mansion and cashed in. I went back often to parties in the old hood, and will never forget my one neighbor telling me I was nuts and that he was making 35% a year in retail real estate. Of course I told him it would not last, and obviously he has been wiped out by now I am sure. He was piling alot of money into that. I think his scenario specifically was a ponzi scheme of some type due to it's "guarantee" of returns. However, it does not change a thing, the basic concept is we want to fade the herds at extremes. Of course in this prior example that was a local realtor running that cute little, "they are not making more land" skit at me. I was not a professional and therefore knew not what I spoke of. Oh really? She is no longer in the Real Estate business today.

We do not want to fade the herd in the middle

That is the $64,000 question, how do we know when we are in the middle? Although we can never know for sure, the best way to view sentiment is comparing it to prior activity in it. For example just because we have a bullish stance by a large majority, we do not just go out right away and sell. It is important to compare it to what happened the last time sentiment reached current levels. Also, we want to make sure we are not comparing it to such a short prior history that it is just a wiggle in the data. Generally I use 6 month and 3 year lookbacks. This gives me enough of a time element that I am not getting trapped looking at what just might be an acceleration in the very near term in consensus. Short term changes will often accelerate trends, so you do not want to jump in front of too many of those.

In the above case, that bullishness did not represent a historic high, but it did represent a several month high, and the market was also in a weekly downtrend, so it was a nice combination of trend and fundamentals. I suggest you research this and find your own patterns, I have given you the basic premise here. The above example in real estate is also an example of the power of a trend. We did have excessive bullishness at historic levels for a long time before things came crashing down. However, be assured of one thing, when everyone is that bullish on anything it will ultimately build a bubble that will be followed by a crash. It is just a matter of time. Gold Bulls are the next victim, the question is just when not if. It could be a year, 2 years, I have no idea. I do know though that when that crash happens it will be talked about for decades, and you will want to fade that sentiment.

Wednesday, June 23, 2010


Here we have Gold, a market I shorted this morning. You can see we have a triple divergence in the Trend Oscillator. I think Larry Williams students are familiar with what this is. We also have a very clear trendline that was broken when todays outside day was formed. I went short at that point. This market is clearly in a strong uptrend, of that there is no question. We do have some fundamental things in the COT report saying a turn could be coming downward, but not enough to just run out and sell. Maybe this is just another pullback in an uptrend, but I want to be positioned in case it is more. Just another trade basically, as per the title of today's post.

Here is one thing I know for sure, my opinion is not worth jack! This is not a trade based on an opinion, it is based on a triple divergence, that is occuring at a time when we also have commerical selling and small speculator buying. As a result, it is a trade to do.

I sure wish there was a Barry Index that I could short. I am sure there would be a sell pattern in any indicator tracking this blockhead. Now he has his top general essentially telling us what we already know, he is an imbecile. He is also suing a state that he is at the same time blackmailing basically. I would bet the farm on the shortside of the Barry Index. However, one thing I have just recently become convinced of is this. This country will survive his one term and eventually get back on it's feet. He is ruining the world and trying to pick up the pace before November. However, if my dog can beat bone cancer, we can beat whatever terrible things he puts in place, as long as we get him out after one term. I did not think this before, and if he does get a second term, at age 50 I will not live to see all the bad things he is doing get fixed.

Message, vote for Repubs in November just to try and nuetralize this idiot.

Next is the Cattle trade that I had great hopes for that poofed yesterday.

You can see where I entered, and where I got stopped out here. This was a gain of 50 points, so basically a lousy trade. It is still bullish by the trend oscillator, so I might buy again tommorrow if we close down today. It is too soon to tell on that. I had moved up my stop more aggressively after the big gap up day's high was exceeded the next day. When that happens, the low of that gap day should not be breached the next day if the market is really strong. I had my stop there with the logic being that if it were taken that day, the strength of this market was in question. It was taken, so that is that as they say. We still have uptrends in the oscillators and a very bullish COT picture here, so I am looking for another long entry to setup.

Frank to address your question on open interest, I am not sure why we have a difference. As far as I can tell what I posted there in that Copper trade was correct. It does not matter, that is not material to the setup in my view anyway. Genesis has some issues going in at the moment so maybe my data is wrong.

Tuesday, June 22, 2010


Here is an example of a typical trade in any market. This is the Live Cattle trade I mentioned a couple of days ago, a trade I assumed was going to get stopped out for a scratch yesterday. Low and behold even though we had closed right on the low Friday, and it seemingly was a lock that low would get taken out where my stop was resting, we had a huge up day yesterday right from the get go. My stop was never threatened and it "was" looking good. Alas as you can see now we have a reversal bar down working now for today. I have moved up my stop now to where indicated and once again have the expectation that this will get hit. Again, you just never now what will happen. Here we had something that seemed destined to be a scratch, then to be a big win, now destined to be a marginal profit it appears.

This is what makes trading so challenging, yet so exciting at the same time. The future is for the most part unpredictable, so we just try and capture moves that we can predict. I am not watching intraday price action much nowadays just because it adds so much stress to trading. Watching thousands come and go is not an easy thing to do day in day out. Also my change in my trading style that I have explained opens me up to alot more of this type of thing so I have to accept the good with the bad and deal with it. However, that does not mean I have to ride the roller coaster up and down with every 5 minute bar. One of the things I always tell myself is to "get out of my own way." By this I mean that I need to let my trading techniques determine my fate, not my emotions.

Why spend weeks, months, or years researching and developing things just to override them on an emotional whim in the heat of the moment? I have done that at times, but not too often, and wish I had never done it. At times it has served me quite well, others times not so well. It is correct to use discretion to make decisions, but that discretion should not be emotional. This is especially true when you find yourself in the middle of a lousy month like I am having right now. It is even more likely that your emotions will override good thinking in a situation like this. I have to accept that I am going to have a loss this month at this point, so why get hung up in it? It is time to be ultra disciplined and set the stage for the next big up leg in my account balance. That begins with good discipline and not "poor me I lost money this month" etc..

At one point yesterday when the Copper trade was moving big in my direction, I was actually almost back to even this month, but that benchmark means nothing. It is arbitrary and in my mind only. The market does not know or care where my profits or losses are. I could have arbitrarily taken profits in both trades and made myself almost whole. However, I had embarked on a plan to go for longer trades and larger wins, so I could not just take the money on the table emotionally just because it "got me back to even." That might be a way to avoid losing, but it is not a way to win big. There is a big difference between those two things.

In the stock indexes yesterday we had that big reversal after the gap up opening in the pit session. This was certainly no surprise. However, I don't think we are at a point that we are going to reverse back down other than for a day or two. I think a dip here is a buy at the moment. I think if we get sell signals for a hold it will be from a higher price level. Just my two cents, which is more than I have made this month!

Monday, June 21, 2010


Here is a market that is setup very nicely, and one in which I took a position last night on the long side. Frequent readers know I have railed on the COT report recently as to it's ineffectiveness. However, at the same time I have mentioned there are certain circumstances where it can be very helpful still. This is one of those. Look at the very sharp open interest decline, you do not often see this. That is the blue line on the middle graph here. In general lower levels of open interest are bullish and higher levels are bearish, but there are 48 asterisks to that comment, which I will not get into here. You can see though that Open Interest was at a low at the price low on the chart, and a high level at the high. We have now spiked way below the level of Open Interest that was present at the low, yet price is substantially higher. This is very bullish.

Also, if you look at the red line which represents commercial buying, you can see a sharp increase taking place. This means that a very high percentage of Open Interest is commercial long positions, this is also very bullish. The third part of this is the green line, which it Small Speculator activity. This level is not at an extreme, which would have been ideal, but it is at a level that indicates low buying interest relative to where it has been in the last 6 months. This is also bullish.

Next, if we look at the seasonal graph at the very bottom, you see a tendency for a price rally for about the next month. If you put all of this together, we do have a market that is fundamentally setup to rally. This does not mean you just run out and buy, but what it does mean is that you definitely need to take any long setups that come along, and hold them for larger than normal targets. When you have the wind at your back, and then you get short term price structure to support it, you really have the best of both worlds. It is setups like this, and the potential for larger than normal gains, that I have been changing my trading style somewhat to attempt to capture.

The problem with day trading, and also very short term trading ( just a couple of days hold time ), is that you have to do so many good trades to ever get anywhere. The pressure is on day in day out, month in month out to make a ton of accurate decisions. To give a baseball analogy, you have to hit .300 every year to get consistent money. Although there are exceptions, there are very few day traders that make huge money. What there is alot of is representations of people as to how much they make. You rarely see proof via account statements of those claims.

The really big money trading is made in capturing large moves, not wiggles. It was my decision that in order to go from making in the hundreds of thousands a year to millions, I had to catch larger moves. I am willing to experience some short term pain to get this done. I from time to time get to see account statements of top traders that I know, and the one thing that jumps out at me when I see them, is the large credits that show up. Often I see 50k, 90k, 60k wins, then losses of 8k, 15k, 6k etc.. This has made me realize that when people look at my statements in contrast they see a higher win percentage, but more like 22k, 15k on the wins. That has to change for me to get where I want to get.

We are being blessed with quite a bit of volatility right now, which for traders presents the opportunity of a lifetime. It is not time to pull back the reins, it is time to move forward and grab the money that is available. As traders we dream of price moves like what we get now, so go get some of it!

Saturday, June 19, 2010


As I watched my only current futures trade go south on me yesterday, I realized that this presents a unique opportunity. I am currently in the worst losing streak of my 20+ year career in terms of just raw wins and losses. However, many of these trades are very small losses. This is so important, keep your losses small. This is likely to be the worst losing streak I will ever have as a trader, so I am actually excited that I have not lost a devastating amount. I typically trade at about a 65% level of accuracy. This has been consistent for awhile now. At this point when I exit this trade on Monday for a small loss I will have 9 consecutive losses, a statistical anomaly with a winning percentage that high.These are the types of streaks that wipe out ultra aggressive traders who do not have tight risk control. This is a case study on how you HAVE to manage your money.

The unique opportunity is sharing this openly in a blog and how I am handling it. In addition, what I am doing to try and break out of this streak.

First, you have to remain confident in your approach. It is so easy to be confident when things are going great, it is entirely another to be so during a stretch like this.

Second, review every trade you do. I print them all out and keep them in folders, so I can always go back and review them post mortem. At times this is very helpful. I have found a few things I could have and should have done differently here, so that would have saved me some anguish here.

Third, make sure your method is sound. This obviously ties into point #1. It is one thing to be confident, but your techniques must be sound. Review what you are doing to make sure how you are approaching things is sound. If your approach is flawed, no amount of confidence will make it successful.

Four, the glass is half full. Assuming you have had good stretches, look back on them and feel good about what you have accomplished. Drawdowns are part of this, so that is something that must be accepted. In spite of this 9 loss streak, the drawdown is still under 8% which is fantastic.

With all that being said, lets look at what caused this on my part. I mentioned I am trying to change to hold things longer. Many of these trades during this streak were wins had I exited them in 2 or 3 days. The wins would have been small, and that is why I have chosen to use trailing stops with them in an attempt to capture larger gains.

If we look at that Cattle trade above, you can see there were 3 straight up closes after I entered. I typically exited trades after 3 wins when against the trend in the past. This would have been a 5k profit in this case. I have chosen to use a 3 bar trailing stop, which is why this trade will be a small loss. I was trying for a target of more than double where we went to, so it was not even close to getting there. We are setting up another buy opp, so it is possible I will get stopped and re-enter this the very next day. This does not mean I should move my current stop down. That is again a mistake people often make, hanging on to something too long. This is how losses get out of hand. You establish your parameters for how you will manage a trade prior to going into it. Then you follow those rules period. My parameters were to go for a particular target, and use a 3 bar trailing stop, so that is what I will do.

I am sure some readers who just happen by here will leave now that they see I have admitted to having this bad streak. Good riddance. So many are just looking for the short cut, the holy grail. They think they can make millions off 5k. This has been done, but rarely, and you will not learn how to do that here. The whole purpose of this blog is educational, an attempt to help others from what I go through day in day out trading. This current losing streak is a reality of what can happen, people need to be aware of this aspect of the business.

Sorry for the lack of market analysis, it is my blog so I get to determine what I talk about. I do not see anything setup so strongly that I am looking for any reversals of this weeks action. I think we will continue upward in most of these markets this coming week.

Have a great weekend

Friday, June 18, 2010


Listening to these punks in Congress at times makes me feel embarassed to be an American

The grandstanding talk after the fact is so hollow you really have to be a moron not to see through it. I am fairly sure these people do not fool the American public for a second. Look at how tough I was on BP, don't I command your respect now and hence your vote for re-election? I suppose that must be the mindset of these guys. If I was the BP guy I would have asked these chumps to relate similar situations and decisions they made when they were running fortune 500 companies. Of course it would be crickets because none of them have so silence would abound. I do not defend BP, but this circus accomplishes nothing at all. Nobody intentionally did this, it was an accident.

These are the people running this country, is it any wonder we have problems?

Looking at the stock chart of BP I find there is actually a buying opportunity here. You can see the trend oscillators have now crossed into uptrend modes, so I am looking for an entry down here. Why not make money of this disaster if you can? When things get pushed to extremes like this, you often get opportunities for the reversions when they happen. This is one to keep an eye on.

Here we have the SP 500 chart and you can see how we are moving up nicely, with the trend indicators confirming the upward move. I do still feel we are in pullback mode on a weekly basis, so I will be looking for short entries in another week or so most likely. For now it is hold your longs, move your stops up to protect your gains, and let it ride.

Nothing else much to discuss today, other than there was a continuation long entry in Soybean Meal today that I passed on even though the Grains are moving higher. It is the third buy, and generally I like to do the first 2 in a trend change and not the third. Below is a snapshot of that market.

Thursday, June 17, 2010


One of the main points that I hope comes across in this blog is the following: I am a real trader, I trade real money, and I give you real results. There is so much BS on the web you would think noboby ever takes any losses. The title of today's post is based on what is happening in my trading this month. Last year during the month of July I was in the midst of changing my trading style a bit, and my results showed it. I got my ass kicked during that month. It was the single worst trading month of my career. It wound up being worth it because from that point forward, the changes took, and I had a very good run to finish out the year.

This month, I have undertaken another change to hold things a bit longer for larger gains. Also, this month I am getting my ass kicked during the transition. I knew this would happen, so surprisingly it does not bother me at all. I know the reality of trading is that at times you lose money. I never want to lose, but you have to accept that drawdowns are part of the business. The key is keeping them in check. I personally don't like to go beyond 8% in any one month. There are times that no matter what you do you just can't buy a win. Often there is not real logic to explain why, but I have had this happen enough times over the years to just accept it. I am right about at that 8% now, so I probably will not trade much the rest of the month unless I see something that is so "perfect" that it can't be passed up. I know I can handle 8% in a month, but can't handle 16% for example, or even 20% etc..

The most important thing for me to stress to people just getting started is this. When you take a loss or series of losses, do not get that mindset that "I have to get this back fast." This has caused more people to get blown out than anything I know of. I have the utmost respect for the markets, so I tend to go the other way after losing. I like to walk away for a few days or even a week or two. The markets will be there tommorrow. If I am losing it is my fault and I am out of sync with what is happening. My dad loves to blame the referees for every loss the teams he roots for have. I do not share that blame someone else mentality. I just have to look in the mirror for who is to blame. I am out of sync right now and until I can get back in sync, I am going to be very careful.

Below is an example of a trade I just got stopped out in today trying for a larger gain, BONDS. You can see the arrow where I entered, and the one where I got stopped out today.

Since I am bearish on Bonds I was trying to hold this for a much larger gain, even though it moved down for me just like I wanted initially. Previously I would have taken out a $7,000 or $8,000 gain on this move and gone to the sidelines. However, I thought there was much more and in reality this is setting up another short entry now. I will likely be going back into this trade in the next day or two. I have just seen far too many large moves come around in the last 2 years, that I have gotten less than I should have out of them. As a result, I am going to stick to larger targets and live with what happens. I know alot of trades like this will occur. You have to accept the limitations with your approach. In going for larger gains, alot of marginal trades are going to play out like this, so I know that going in.

Gold is taking off today along with Silver. I guess I wish I was long, I was long Silver earlier in the week. However, when I look at what everything is telling me here, GOLD is setup to be a short entry. As a result I am waiting to see if this trade sets up. It appears that if we close today where we are now, I will likely try to short this tommorrow where indicated. This is pretty close to a "perfect" setup in my world, so it will qualify as something too good to pass on despite my drawdown.

I hope this post adds credibility. At times this year I have had such great runs where I have had virtually no losses that I am sure some readers might have thought I was not telling the whole story. I was then and I am now. This is how trading goes in the real world. I wish I could just click the mouse and have every trade be a win. There is nobody who does that in spite of what some people represent.

Wednesday, June 16, 2010


Here is a trade I am trying to get into today, a short in GOLD. We have a long ways to travel to reach my entry point, but you just never know. Since the majority of the action happens overnight nowadays it is doubtful this will move enough during the day for the order to be executed. We have quite a bit of divergence here on the trend oscillator, a 3 point divergence. When we couple that with the daily picture, which is a market setup for a decline, it is a trade I have to take a swing at.

I have mentioned in recent weeks that we have had commercial selling and more importantly, Small Speculator buying again reaching close to the levels we had prior to the last top. As a result, I am not running out looking to sell, but I am on the lookout for sell patterns. This is one. If we go sideways to up without breaking here for a few more days, this setup on a short term basis may be invalidated.


We have certainly had a nice run upward in stocks, and even though we have pre-opening weakness today, I do not expect to see any major declines.

You can see very strong upward momentum in both the accumulation/distribution indicators, as well as the trend oscillator. This should mean that pullbacks are buys in the indexes and individual stocks. I still think the overall trend is down, and on a weekly basis I am looking for a sell to setup on this rally, but so far there is not a signal on this chart to short this.

Next is a chart of the EURO and you can see why I was bullish on this market at the lows. We have a 3 point divergence in the trend oscillator. It occurred at a time with record commercial buying, hence for me an obvious look to the long side. I would not buy it here now, but dips should be buys here.


This is an off topic subject, but more important than anything I have ever posted in this blog. If by chance you know anyone who is suffering from cancer, investigate this natural supplement. I am a nutrition and fitness nut, so taking products like this has been part of my daily life for a very long time. However, that is not the case for most people. I have not even had a cold in so long I cannot remember. My wife gets food poisoning, I eat the same thing and never miss a beat. Why am I mentioning this?

One of my dogs was diagnosed with terminal bone cancer and "was" deteriorating so quickly that on two different occasions I had made appointments to say goodbye to him. He was limping so severely that it was becoming obvious to me that he was suffering too much. I had been on a mission to save him trying every single natural product I knew of or found, no effects. One day I went in to the office of the Nutritional company I buy my products from, ROEX in Irvine, California. I know the family well that owns this company, so I know the whole operation and the level of quality they have in making their products.

The receptionist happened to tell me that they had a client who had cured his dog of terminal cancer by giving him 4 ROEX products, all of which I have taken myself for years. They were not among the things I had tried, so I decided to take one last shot at this just to see if anything happened. A MIRACLE HAS HAPPENED. The very next day his walking was improved 50%, beyond incredible. Now about a month later he runs around like nothing is wrong, and the swelling that was in his joint where the cancer was growing is gone. I have no idea how to explain this when radiation and every other thing including maxing out pain medications had no effect at all. He has no signs whatsoever of the illness at this point. I do not know of a single case where this disease has been cured.

You can be sure that if this continues onward, I will make it my mission to get this story out so others can benefit. What has happened already is proof that this product is effective in treating cancer, with no side effects. It is a natural supplement. I have found during my studies that there have been some instances of cancer cells being completely eliminated by Oleuropin in 9 to 12 days, and I think that has happened here. There is simply no other explanation at all for this. Also, I discovered that a major Pharma company tested this against multiple forms of cancer 10 years ago, and it killed every one of them. However, since it is a natural substance it could not be patented. They tried to modify it so that it could be, and the variations were ineffective, so they WALKED AWAY FROM IT. No money no interest. They are interested in $$ not saving lives.

I don't make it a practice to give out advice on matters such as this, but I do think it is imperative to help others whenever I can. If for some reason anyone reading this can benefit from this, even if it is just one person, it was worth stating this.