WORKING THE TRICEPS
I have decided to use my tricepts to push me away from the trading desk in the wake of my colossal mistakes this week that now have cost me to miss over $100,000 in profits in trades I should be in. It is what it is, the single biggest blunder of my trading career. The more I stay in front of my computer, the more my anger just boils up again wondering how in the world with my level of experience I could have ever made these blunders. The problem with what I have done is not just that I missed a few trades, that will always happen. The real problem is that these trades were in markets in blow off phases where they could run for weeks. The will not be a second chance to get on these moves, they are gone without me. The metals markets now have just open space above, who knows how far they might go.
It is perplexing in that there has never been a trade in my lifetime where the huge public majority has been so right for so long. All the rules of engagement are out the window in the GOLD market and nothing matters but price action. That says to be long as clear as it could say it. I have been wrong and my 25 years of learning what drives markets has steered me completely wrong in the metals.
Above is the Sugar market, which is an example of a possible preview for the metals. One thing that is in place now in this market is a Tom Demark Sequential sell signal. I will not go into the details of what that is, you can read his books if you don't know what it is. He has a pretty good way of mechanically measuring moves like this as to when they will end. We just within the last couple of days hit the sell count here. We also hit it in the Yen this week, the Aussie dollar, and interestingly enough, GOLD. Gold however does not have a super high ADX reading, so I am not sure it means much there, these other markets do have high ADX readings. I have marked the high ADX reading with a red arrow on the chart also. We have gotten over 60, a typical level for a top to form.
We are in a blow off condition in alot of places now so for me I know better than to chase these types of things. When you do inevitably you buy the high or sell the low. I missed the moves so I will just go play golf for a few days and come back to the markets and see if there is anything there for me. I was trying to short Copper today, but it has gone up along with everything else so that trade is not going to trigger now. It is probably the most closely linked to stocks of all the metals historically. One of the things other than money management that I would suggest people do going forward is just throw out everything that has historically had an intermarket relationship with something else. None of these mean a damn thing anymore. This climate is ignoring every fundmental that has ever meant anything. In my own personal trading I will no longer pay any attention whatsoever to any of those things.
The reason for this is most likely the extreme market manipulations by governments that is going on, but it does not really matter why. What matters is the what, and it is time to throw most conventional relationships away. If they ever do come back again, we can begin to pay attention again. Looking at them has cost me money this last 2 years without a doubt.
As to the stock market, although we are now back up at the top end of the recent range, I do not really see any clear sell signals here, so we may just power higher. I would not let any big picture economic views con you into getting heavily short in stocks. We should get a dip here at some point into October, which as far as I can tell might set up a major rally. Maybe it makes no sense, but neither does most of what is going on right now for that matter. Stocks are completely divorced from the economy now, so just accept it even if it makes no sense. It is what it is.