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Sunday, March 11, 2012

GOING FORWARD




I am debating exactly how to go forward with the blog. I have a few ideas of changes I am contemplating making. Please make comments about what you like and do not like about what I do here, but keep them professional. If you are a homer for something and I have posted things in the opposite direction, I don't want comments about that. I trade in two directions, so at times I will be bullish or bearish in individual markets. Please do not comment on why I am bearish on something at one point in time if you are just always bullish that market no matter what happens. What I am looking for is in general what is liked and disliked.

The above chart show something that has just come up regarding the COT data. I have learned to read this data from the two best analysts of it that exist, Larry Williams and Steve Briese. My analysis will not always be correct at times the markets move contrary to the way I analyze these reports. That is life folks, I know nothing in trading that is 100% and if I did you can damn well be sure it will never be mentioned here :).

As it is with anything else you need to look at this report objectively, what is it saying? Is it saying anything? It is typical that it does not give direction. If you look at every report with an agenda, it is worthless. If you are a perpetual bull like reader Robert, you ignore all the bearish setups and find any little wiggle to support a bullish stance. If you are a perpetual bear like others, you ignore all the bullish setups and just find one weak when sellers out numbered buyers, and proclaim it is a big sell signal. I prefer to let the report tell me what the players are doing instead of funneling them into my own view. Last week is a perfect example of this in the metals. You had some buying by the commercials in Gold, but not anywhere near enough to generate a buy signal. The buying in Silver was so small it barley moved my line yet some people proclaimed it was a huge bullish signal.

If we look at the overall trend in the above chart what do you see? What I see is the commercials generally selling and the small specs and large traders buying. I also see Open Interest rising steadily. This is a bearish setup. Yes it is true the positions of these folks did go back in the other direction this last week. If you are bullish you would say hey look at that huge buying... Please!!!!! Look at what the overall trend is and don't be a pinhead. What we want to see is significant trends in the activity of the players, not one week action. Robert who like so many drank the cool aid that millions have drank, and no matter what any report says, is bullish on Gold and thinks it will rise the next 20 years. These folks cite the recent amount of commercial buying which is not even half of the selling that has taken place. If you were watching a sporting event and one team had a 30 point lead and the other team narrowed the spread to 17, would you be convinced the team trailing was going to win? I wouldn't. 

My dad is a good person to pick on to make this point. I was talking to him the other day and he was down that Michigan had lost the first round game in the Big Ten basketball tourney. I had read the paper and saw that they won that game, so I asked him what he was talking about? Of course they were trailing apparently with 3 minutes to go so he turned off the game and missed the comeback win. He was in a negative way just looking for signs that they would lose and ignored everything else. This type of bias can really rob you of many of life's great experiences. Look at things for what they are, do not assume something is going to happen. It may happen like you think most of the time, but there are going to be times when it does not. Just because you are convinced Gold will always rise no matter what happens in life, have a plan just in the 1 in a million chance that you are wrong. I can assure you from personal experience, that I am never sure what will happen, and neither should you be.

If you are T Boone Pickens, I am sure you are so bullish on Oil now that the COT report showing there could be some trouble with that position means nothing. I my humble world I prefer to not have agendas and to lean where the data leads me. Even though I am very bearish on Gold in general for the reasons I have stated over and over in here, if we get COT data where the commercials turn into strong buyers on the next dip, I will be bullish. That will be where the data takes me. For now it takes me to the short side of Crude and Gold.

If you are a long term trader or investor, you should not be reading this blog. I am a short term trader and I play both sides of the market. There is no point at all if you are locked into one side in anything to be reading here, this is just a bunch of noise.

Good Trading



13 comments:

HT said...

CJ - i think you have a great blog. i look to your blog as a mentor for LW trading techniques, buy/sell signals, when you enter/exit trades, profit/loss, your logic for analyzing trades, charts, data etc.

i'm not a bull nor bear and agree with your neutral bias. i am in the markets to make money on both sides.

thank you for sharing your work with us!

Xiang said...

hi

i am quite new here, been following your blog for the last 6 mths. Generally, i really like the discussion in this blog mainly on seasonal pattern, COT, mkt directions,some entry technique, etc.

Unlike others, there are explanations, discussion on many things, not just trade calls without any reasoning. I have learn alot from your blog. Thank you.

Cheers

Xiang said...

Hi

I am quite new here. I have been following you blog for about 6 mths.I think this is an awesome blog. I really like the discussion and explanation on many things like the COT,Seasonal pattern, the mindset when trading, the direction of the market,etc etc.

Learn alot of things from here and i will sure recommend people to read this. Unlike others where there are only trade calls, your blog have reasoning behind every conclusion.

Definitely can feel that you love what you do. Cheers

Anonymous said...

I like your blog. I like the way you talk about what you think, rather than blab about BS, like most journalists or bloggers.

When you asked for comments, the first thing that came to mind is "why don't you expand your blog into a full website". But then I thought, well he's always saying that he doesn't want to tell all his knowledge for free...

Then I figured, well... I guess if you focus on just one thing (like daily blogging), then you get better more focused results than trying to cover a wider spectrum.

Cheers,

John M said...

I like everything about this blog. Maybe you could use the word 'pinhead' more often. Always makes me crack up. Other than that...

Anonymous said...

CJ
I like it the way it is for reasons already given. Perhaps one addition - an explanation of why you executed a trade when you do. You give the info on the setups but rarely on any execution. We all realize you have indicators that you will not reveal and that is OK, but anything else that would explain why you entered a trade might help us all.
Regarding market biases, I agree; in my 68 years on the planet the one thing I have absolutely learned is that expectations are the biggest source of disappointment in all matter of life - investing, trading, relocating, business and especially relationships. The best answer is to be in the moment, in the here and now as they say.
Keep up the good work.
Don in Virginia

Squire said...

Reading your blog brings me back to reality. There is so much BS coming from the internet and broadcast meadia.

Trading is the hardest thing I have ever done, contrary to a recent radio advertisemet that said "just buy my program and you will be on your way to easy street". (Not an exact quote).

Charles Hugh Smith said...

Chris, you are one of the most honest, most clear-sighted analysts to share his work on the web. If you feel the need to charge for your work here, it is perfectly understandable, after all, look at the value of what you're sharing. My only request is that if you go behind a paywall that you make it very easy to subscribe and access your posts. Whatever you decide to do, I hope you will keep posting and sharing your hard-won wisdom on trading.

Chris Johnston said...

Thanks for the comments maybe I don't need to change much, I just felt it might be getting boring.

Would love to use Pinhead more often but unfortunately after last week I would be calling myself names! I would have been the pinhead last week

John M said...

I just got back from Europe...sorry to hear about your dog, Chris, I had missed a lot of the comments when over there. That's tough, you have our complete sympathy.

Mingoman said...

Love this blog! The funny thing is that I am not a futures trader but mostly trade options.

Thanks again for all your hard work.

Anonymous said...

I like reading your blog. I am not sure of your motivation for doing it, but in spirit of being honest about trading include some of the actual results like % winners vs loosers, 12month trailing return, etc, it will illustrate the realities of trading & importance of staying the course. Based on your writings of last 3-4 months it looks like you having a pretty dry period - which is BIG part of this businees. Also discussion about approach to setting protective & trailing stops would be quire helpful. Thank you

Chris Johnston said...

Actually over the last 3 to 4 months I have had one losing month and 3 winning months, so although subpar on some level, not terrible. I have mostly just changed posting as many trades live as I used to. I have gotten concerned about people blaming me for losses based on a few emails I have gotten. Since this is a non revenue producing blog, I don't want to get into some crazy lawsuit from someone saying I told them to do blah blah blah etc.. It is unfortunate the a few can ruin things for so many.

I will admit that I have not traded as often as I normally do due to how vertical the stock market has been and how it has effected so many other markets. I just have not had as many setups as I normally do.

I guess overall that is a pretty good observation by you.