Tuesday, January 31, 2012

V's are Wild

The above charts are somewhat typical of what has happened this year so far, all the turns are V tops or bottoms. This is somewhat odd. We do always have these types of things from time to time but rarely do I recall so many happening in such a short amount of time. Some of my tools occasionally pick these turns, but they have not thus far this year. January although profitable, was a sub par month for me. I did not make as much as I normally make in a month due to the above phenomena. Aside from being greedy, this does not really bother me too much. I know to stick to what I know, and I am not good at fading extremes. I tried to learn how to do this many years ago under the tutelage of Kevin Hagerty, and although hitting some beauties, never achieved consistent success doing it. As a result, I don't try anymore.

The stock indexes to me do appear now to be a day or two of up closes away from potentially being a sell on a short term basis. However, I have to wait and see how my tools look if and when they roll the days out. We do have the NFP ( No Frickin Possibility ) that it could be accurate, report coming out Friday. That will be good for some laughs. I wonder if Barry and Co. will have the nerve by the end of the year to tell us all through manipulating the numbers in this baby, everything is going gangbusters? I just had a fight recently with one of my sisters, a wacky political science major liberal over politics. I was not willing to take the comment that I was another non thinking dumb republican. I asked her if she wanted to take an IQ test against me if I was such a dumb ass? This shut her down quickly but in hindsight was not the best of ideas!  My mother was exceptionally bright so I got good genetics from her. One point to make about this. There have been numerous studies on this, and being highly intelligent does not equate to being a great trader. I don't know if being a dumb ass does either? I do know that nothing in life can make you feel dumber than a losing trade, but if you happen to have them it does not mean you are stupid. If that were the case my IQ which be sub zero.

As it is with trading so it is with politics and religion. I never stand in judgment of others in these areas. I always frustrate my religious friends who try to "convert" me. I do that because I never disagree with them so they never get a point to clobber me on. I have nothing against them, and I really have no opinion on their beliefs. It is none of my business. I do have my opinions on politics and I am vocal at times with them, but I never think those who don't agree with me are idiots. I do think there are dumb politicians, but I don't think they are dumb because they don't agree with me. I think they are dumb because of what they do which is entirely different. 

You know what they say about politics and religion. I do feel that this coming election is the most important one in a generation, so I decided it was time to make a stand. Hopefully I can patch things up but who knows, it needs to be a two way street etc.. The governments manipulations of the Dollar through lower rates is causing some of these abnormal market patterns I have shown above. I heard my favorite Mortgage guy on the radio again yesterday. His slogan is "it is the biggest no brainer in the history of mankind." I laugh every time I hear it. I think this kid needs to redo the rest of the commercial which says rates won't stay here long. Really? Did he miss the Feds recent comments? He was saying that several years ago, several points higher! Alas another "expert" misleading us.

The constant stimulation by the Fed is keeping a floor under declines in many places, and will likely help contain whatever type of retracement takes place in stocks. I will be looking to get long on the next decline of any significance. It does bother me how bullish the sentiment indexes I watch are getting. If I had to pick just one tool to fade markets with, Sentiment would be it.

You can see the last time the Sentiment indicator reached the levels of last week we had a pretty nice decline around the corner. CNBC is talking about the Golden Cross from what I hear, the 50 day crossing the 200 day Moving Average. I have not studied that to see, but I have been told that has been a very bullish pattern over the years. You may want to study that on your own, I don't care. They have rallied this sucker back from the brink of a short term decline so many times in the last two weeks I can't count them all. I think one of these days it will give and we will finally get a much needed pullback to shake out the weak hands. That will be the buying spot.

The Hogs trade I was watching is now off the board at least for tomorrow. I am still looking at the energies on the short side, but the Crude Oil chart is just a mess now, RB is too strong. so I am left with Heating Oil.

It looks like another day tomorrow for the tick charts. I did catch the Crude decline today on a day trade which was nice. I got out a bit early, but still had a pretty nice win on the move. Hopefully after tomorrow I will have some other setups to discuss. I got a little sidetracked up above, I guess I am bored. I am approaching a milestone in blog traffic, which once hit will be cool. The 100,000 visitor mark is in the near future, and that will be fun when it gets hit. I know that is an hour for some places on the web, but I am just a small town trader with no advertising of any kind. Thanks for reading.

Good Trading


John M said...

I think trading is a lot like playing rock and roll. It actually helps to be, tops, of average intelligence. Overthinking is dangerous in both instances. Trying to get control of emotions is one thing, but if you're exceptionally smart in general, I also think you have to learn how to think in simpler terms or you'll destroy yourself.

Of course, there's a lot more involved in anything than raw intelligence. Critical thinking in general has been on a steady decline for decades, and that's a learned skill. I think a lot of political thought is either based on or very dismissive of history, and I don't mean the spin on history any side gives it, or the sometimes bizarre reinterpretation of history that's been in vogue for a long time now.

I have a sister, too, but we tend to agree more than not. It's helpful that she's a historian, a teacher of history and critical thinking, and has a high IQ to boot. When I hear some people spout flat-out but widely disseminated historical untruths (and all politicians are guilty, it just seems more egregious on the right the past 20-30 years), she's my go-to. One benefit is that she's done a lot of primary source research. In other words, she doesn't just blah blah whatever the respective echo chambers are promoting, she points to facts that are actually documented instead of opinions.

A lot of people can't handle that, nor can they identify fallacies in arguments or understand how much they are manipulated by present-day blowhards. Personally, I think that most Americans are stupid, undereducated, mentally lazy and clueless about a lot of things. so easily led astray.

Back to my initial paragraph, you'd think there would be more great traders out there...lol

Chris Johnston said...

high intelligence can lead one astray especially in trading because keeping things simple is generally the best approach. Those with really high IQ's have the ability to consider more at once than others and that can lead to problems making decisions