Tuesday, January 03, 2012


The above chart is that of Coffee and it illustrates one of my New Years Resolutions. My main computer crashed and I am operating from my backup notebook computer. I do not have all the same software on this machine, so the blog entries might be a bit sloppy here for a few days until I get back in business with my Tower Computer.

I entered a long in this market at 222.90 last week when we broke the down trend line that is on the chart. I noticed after being in the trade for a few days, that we were really more at a end of a retracement in a down trend than what looked like the first leg of an up trend. One of my rules for this coming year is to always confirm my trades with a few fixed larger time frame influences. Although I won't state all of them for protection purposes, one of them is not to trade against cycles and seasonals unless I really have something else like a strong COT setup backing the trade. In this case I just don't see anything strong enough that over rides the fact that we are at what should be a short term seasonal peak. When I noticed this I put in limit orders for today 40 points above last weeks close and also a stop below Friday's low in case it just went straight down. I did the orders OCO. I was lucky in that my limit orders got filled before we went down to where my stops would have been hit, so I got some money out of the trade. I felt at the time of entry I still had a small little seasonal influence upward that could help me in the trade for a few days. At this point I would have to say that logic was correct, but it had run it's course. We have come back up now and made a new high forming an outside day, so maybe this will go, but it will go without me if it does.

Here is my list in no particular order

1) Filter all entries with larger influencing items
2) When all the filters are met trade aggressively - I did too much nitpicking once all my parameters were met and missed some biggies last year as a result
3) Trade stocks differently than I trade futures - trying to pair up ETF trades with futures trades does not work due to all the overnight moves, gaps etc, you just can't get good entries
4) Launch my website again - I have been dragging my feet for too long on this
5) Continue to build my blog readership but trying to provide the best quality postings I can. It would be nice to get 1,000 readers a day
6) Get my golf game back to respectability - 2011 was the worst I  have ever played since I have been an adult, only two sub par rounds the whole year and about a million trees hit in the process
7) Gain 5 pounds of muscle not fat - I at times just get too lean from working out the way I do, and it makes me too injury prone
8) Develop the best mechanical trading system I can with my COT Synthetic Tool
9) Save another dog from a rescue - this past year was horrible with all the animals I lost, but it reinforced why I to what I do for them
10) Get another Carrera - I sold my last one and gave my wife the money to buy a horse, time to reload. Most of my buddies thought that was a lousy trade
11) Write a book - I have already been writing the draft for it, need to finalize it
12) Tune out the noise - I did get distracted some by politics last year because of how much they have influenced the markets, no mas this year
13) Overall, be the best human being  I can be, this is a goal every year. I don't always accomplish this but I try my best
14) Make 100% or more returns in my accounts except stocks. Stock accounts just don't allow the leverage to make that kind of return. I am shooting for 40% in the stock accounts I trade.
15) Eliminate typos from the blog

Now that all of this is behind me, here are some setups.

The first one is Hogs. Here is a chart of Hogs and this appears to be a buy on just about everything I study. My COT Synthetic has been in the buy zone down here for awhile, we have a nice trend line break, and we have the seasonal bias going upward. My other short term entry tools I do not show are also saying higher, so this is a trade I am looking at.

The Sugar market is another one with a very similar setup, and it a long I am considering.

The big stock market move to start the year is kind of what I expected, although I guess I would have been better waiting another day to exit my trade in the retirement accounts. Overall I am looking at a short term market peak being made in the next few days to a week, so I did not want to push a long too far. I think the best buying spots are going to be lower prices, most of the weekly things I look at are telling me sell in the indexes not buy here. Most of the stock trades with my new method are giving me sell signals here.

I spent a lot of time over the holiday studying my new methodology using my COT Synthetic Indicator and a short term overbought and oversold condition. I found that from 2004 to present, in just the DOW 30 stocks, there were 76 trades with 61 being winners, or 80% wins. This was just on the short side. I find this particularly significant because most sell signals in stocks over time do not work due to the overall upward bias in the stock market over the last 100 years. The buys always test better in everything I have ever studied. Due to the fact that I am looking for a stock decline here, most of the signals at the moment are spitting out sells not buys. I did not have any for today that were new that met all the rules. The CPT trade which is still on and upside down, has an exit of 61.65 or lower today if we close there or below. That will most likely make it a loss if that is hit unless the market really rolls over big today which seems unlikely at press time here. 61.12 was the entry in that one.

I will post the trades I am doing in some of these, but not all of them, and we will just watch them live and see how they do.

One of my loyal readers brought something to my attention this weekend, and as much as it aggravated me, I had to admit it had merit. I have changed my site some to display the disclaimer in a second place right at the top of the blog. In  this world we live in, it would just be par for the course for someone to try and come after me for a losing trade they blamed me for getting from a free blog. In order to fully protect myself, I am going to have to be a bit more guarded in how I discuss things in here. I started off just wanting to help people by talking about my trading and what I do, but in this world of lawsuits and shenanigans, I have to be careful. I  make no money off this blog, so I have no reservoir of money from daily viewing to fend off lawsuits.

It needs to be clearly understood when reading my words here that I describe what I do and what I do only. It falls solely upon readers what they choose to do with the information. My comments are not intended to be in any way explicit or implied, as recommendations to do anything. When I launch my website it will be required to acknowledge that this is understood before access to the page with the actual trades. I had not really thought much about this in terms of the blog until this was brought up to me.

I am looking to get short in this rally here in the stock market, and also at individual stocks to short as well.
That is all for today, sorry for the late post. Technology problems are always a pain in the ass.

Good Trading


klh said...


just want to say I have been following your blog - less than religiously - and I think you have a marvelous gift as a trader obviously, but also as an educator. much appreciate your time and effort and yes, that disclaimer thingy is important for you - remember the woman and millions from a spilled cup of coffee! Only in America!

All good luck on your impressive New Years resolution - but the horse may have been a good trade:)

Chris Johnston said...

thanks, best of luck to you this year as well