Wednesday, March 07, 2012


Depending on what your trading techniques are you may at times have potential buy and sell signals at basically the same time. From a COT analysis perspective, this will never be the case, but at times I trade daily trades that go completely against the COT setups. COT setups are bigger picture fundamental situations that often take time to develop into shorter term trading opportunities. In the case of the above chart, we can see that based on COT analysis, this is a pretty darn good sell setup. This does not mean that I won't take buy signals, if my short term tools which have nothing to do with the COT data setup nicely for a buy.

One of the techniques that Larry Williams taught at a seminar a couple of years ago presented the possibility of buy one day sell the next then buy the next after that. Rarely would it ever happen but the way the technique worked it was certainly possible this type of action could follow. When asked how to determine whether to buy or sell he simply said you listen to the first messenger that comes into the room. In other words, let's not choose sides, just play the signals as they come along without prejudice. In actual practice, this is easier said than done, and I am guilty of not being able to consistently do that. At times I am glad I am this way and at other times I wish I could just relax and do that.

I do know that for the most part when I inject arbitrary opinions on things into trade biases I trade worse than when I don't do it. Here is an example. Many years ago I was sold on the merits of reversal bars, so I really sought them out when entering trades without doing as much research on my own as I should have on how effective they actually are. I had a very bad experience with this type of trading. I did not lose much money, but it was just awfully inconsistent. I would make good money then constantly give it back. I developed an absolute hatred for reversal bars from that. To this day I still find myself hesitant at times to take trades on days following reversal bars. I have emotional baggage there. In reality, I don't think the type of bar means much at all. I have studied entering above and below outside bars, inside bars, reversal bars, doji bars, you name it. I have not found any of them to really have an advantage over the others. There are some intricacies that I have found, but I am going to keep those to myself.

If you find yourself having an aversion to doing something, research it to see if in fact that aversion is based on facts or is just some phobia or misnomer. You may find it is justified and you may not. Act accordingly depending on what you find. As this discussion pertains to the above situation, I am looking for sell signals next. They have not yet setup correctly. If in the process of that setup we rally if significantly, I might well find the next messenger in the room is a buy signal. If that happens, that is how I will play it, I will take the buys.

In spite of the COT sell setup here, I know I have to keep in mind that in strong trends we often get COT setups against the direction of the trend like this that are invalid. This is why I require shorter term patterns to pull me into the trades. There are several sell setups including Gold, Energy, and stock indexes here. I think Sugar might even be working into a selling situation but it is too soon to tell there. I also think the currencies are sells, so basically bounces across the board are potentially working into sell signals for me. Most of these are also supported by COT setups on the weekly charts which is always a nice bonus.

Here is a market I am just unsure about, the 10 Year Notes.

Overall the trend is still up but this market has just been a chop fest for several months in a row now. The 30 Year looks much worse. I don't like the divergence in POIV here in terms of potential longs, that is a pretty significant negative divergence. At the same time, I see nothing at all in the COT data that waters my lawn, so I am just not sure which way to play this, so I won't play it at all.

Net net looking for mostly sells and laying in wait for them. I want to "let the game come to me." I hate that phrase but just wanted to coin it once in public to mock those who use it constantly. What exactly are you supposed to do, stand outside the 3 point line and wait for the ball to roll right to you so you can chuck one up?

On a more somber note, I just found out recently that another one of my wonderful Saint Bernard's has a terminal disease. Any good karma that any readers can send upward would be appreciated. This poor guy has been through so much, just got into good health with our help, then he receives this terrible blow. He is not even 4 years old and this has just been devastating to me. I deserve to go before he does, he is the sweetest dog of all the ones that we have ever rescued, and deserves a longer life than what he is going to have. I will make sure to give him all the love I have to give for as long as he hangs in there, and I would ask that all of you try and do the same to someone who matters to you. I have decided that I am going to write a book about our experiences rescuing animals. I know the moment I heard the news I had never felt worse, and I know others have moments in their lives like that. I am hoping that writing about it will help others realize they are not alone in their darkest moments.

Sorry to bring the mood down, but I inject a part of me into doing this every day and this is very much a part of who I am.


Shaun said...

Chris sorry to hear about your Saint Bernard. We rescued a Boerboel cross many years ago and he turned out to be the best dog we have ever had.Reading your post it really hits home how I miss the guy. Rescue's have tremendous loyalty towards their owners and when they pass or when we get bad news about them we are reminded how amazing these dogs are. You have time to spend with him so make the most of it so that one day you can look back and have no regrets.

John M said...

Very sorry to hear about your St. Bernard, Chris. Sounds like a wonderful dog, I'll do my best in terms of karma.

My girlfriend and I love animals, it's sad to hear what your guy is going through. Hope for the best.

Anonymous said...

Thanks for fighting the good fight Chris!!

Anonymous said...

Sorry to learn of yet another animal rescue problem for you. Is this the one that sleeps in your bed - a recent aquisition?
When I first joined this blog you turned me on to a rescue site -
http://www.theanimalrescuesite.com/clickToGive/home.faces?siteId=3 -
for which I am greatful. It is a feel good moment for me every day. For readers not familiar with it, give it a try. There is a "Cute Dispute" video challenge and a very short "rescue" story every day
and the bonus is you get to click a link that provides free food to rescue shelters. A "real feel" good moment - every day.
Don in Virginia

Anonymous said...

Our four legged family members, they are much more than pets. My deepest sympathies. -Mark

Charles Hugh Smith said...

I appreciate that you share your real life with us and not just trading knowledge. Most of know the sadness and pain of having to nurse a treasured pet through the final stage of life.

Chris Johnston said...

Don we have had Zeus about 2 years, we got him along with a female from a breeder who had lost his home and had to place his dogs. The female was his main bitch he used for breeding, and Zeus was a dog he had bred that came back to him. Both were in poor condition, she can barely hear due to ear infections that were never treated. She is otherwise a sweetheart. Zeus has so much extra skin his face as almost like a Sharpei, we had two surgeries done where they cut out skin, and now he looks completely normal. You would never known he did not start off this way. He couldn't really see, and now his vision is great. He also had some elbow problems and almost died from one due to a severe infection. They removed a chip from one of his elbows that was so big it was incredible that he could ever walk with it, yet he did. After battling through all of those things, he was finally in the clear and just doing great until one day he started limping and they found bone cancer in that leg. I am giving him some of my nutritional products that we had such great success with the last time one of our dogs had this same problem, and he seems to be improving. There has never been a case where this has been cured unfortunately. He is such a wonderful dog, and we have never had a dog that is more happy to see us when we come home than he is. He is painfully shy with outsiders, which just makes me realize how much he loves us and I can say the feeling is mutual. He is going to be my toughest loss to handle due to all he has been through and the way we have helped him come out of his shell to trust us. He had to have been severely abused to have this demeanor I think.

Chris Johnston said...

sorry for the typos in the last comment blogger got weird and would not let me correct them

HT said...

Sending tons of good karma your way.

Do Central Banks fall into the commercials category?

PD Quig said...

Like some wise person said, "I'm trying to be the person my dog thinks I am." They are the essence of family. Pure love and no attitude. Really sorry to hear about your guy. My heart goes out to you both.

Chris Johnston said...

no HT they are not

Thanks for all the nice comments about by boy