TIMING IS EVERYTHING
One of the habits I have gotten into just simply from getting burned doing the opposite, is waiting for the short term momentum to turn in my direction before entering a trade. This means when I buy my orders are above the current prices and when I sell, they are below. This way in order to get filled, I have to have the short term momentum going in my desired direction before I get in. I know some of you based on emails, just enter at the market when you think a setup is in place. Let's be clear, there is no "only" way to trade. For those skilled enough to be able to pinpoint the exact turning points, market entries would actually be superior in that you would get far superior trade location. I have experimented enough over the years to know that this is beyond my abilities, so I enter on stops in most instances. The only time I don't is when I miss an entry and try to get in on a retracement.
Here in the above Cotton market, I was looking for a sell signal, and had my orders as indicated on the chart, below yesterdays low. In my mind we were in an uptrend that would have been broken had we traded down to that point which we did not. We got a limit up move today, so anyone in at the market on the short side without a trend change confirmation, got beat up today. This happens more often than not. I like having a defined risk, so I can objectively determine how many contracts to trade. In this case, I had about a $1500 per contract risk, so I can apply that to my account balances and determine how many to trade. I usually choose 2% of my equity per trade or less. In the above example waiting for the break that did not come saved me basically 2%.
As we look forward to the end of the week, it might just work out that President Intern winds up "causing" the next decline. I do not for a second think this idiot has anything to do with what happens other than maybe causing a brief spike here or there when he does something that is more destructive than what he typically does. The markets are lining up in my world for a Friday short if we hold up until then, and if that happens he will be blamed for the new spending he proposes etc.. The real reason for a decline if we get it is apparent on the chart above.
You can see via the purple line, the market is actually undergoing distribution not accumulation on this rally. We are very close to the lows in that indicator to where we were when price was much lower, and on the rebound we have not rallied much in accumulation. You can also see my Synthetic COT not moving at all upward, indicating no big player buying taking place. When I combine these two things they tell me to look south and that has nothing to do with some political speech. As much as it is clear to my readers that I think this guy is the biggest mistake in history, I do not believe he will be to blame for a sell off if it comes at the end of the week. The market is in a downtrend and it is bouncing, sell the rallies and forget the chatter. However, keep in mind the idiot in chief is good for business ( ours anyway ), so he ain't all bad.
Here is the Lean Hogs market, one I have been sitting on looking for a buy entry, which I still do not see. You can clearly see we are at the time of the year for a seasonal rally, but price is not cooperating yet. For my taste we are going to have to at the very least break this down trend before I will be taking any longs unless some type of trap pattern sets up which I do not see on the horizon yet. Nonetheless, this market is on my radar for longs.
The last chart for today is that of Copper. I know Larry Williams in his weekly video was bullish on this market, but I see a sell signal when I look at the chart if yesterdays low gets taken out. If you are long I would imagine that is where your stop is anyway. As with all my setups, they require movement in the desired direction before a fill. This is not a sell at the market situation, mine NEVER are that.
The markets are very quiet pre-open today, so it appears the world waits for the speech we know is going to be a big let down. Let's guess, new spending programs to support Unions? For you wacky liberals who like to run your mouths without thinking, infrastructure spending is just a big union subsidy program. If you disagree, study the words prevailing wage, those are what are required on these projects, in other words union workers. So we overpay to get these infrastructure projects done just to get votes, wonderful. As I have stated in here, and it is becoming abundantly clear now, it is time to pick a side. You are either for personal accountability and responsibility, or you are for entitlements, it is really that simple. Just listening to the rage in people from unions who lash out at those of us who are not when we suggest that we are tired of subsidizing them, says all that is needed to be said. The fact that the thought that they might lose the ability to take our tax dollars to fund their free rides gets them violently angry, should be a wake up call, but sadly for many they are still asleep at the wheel. It is just like trading, you have to pick a side to trade on. I have to give it to this kid, he is great at marketing, but as with all front end guys, the execution is always the problem. As we know in trading, it is all about the execution not the idea.
The short term things I watch are somewhat unclear right at the moment, so I will just need to see what today brings before I will know if the sell signals I am looking for are there for Friday.