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Wednesday, May 30, 2012

WHERE DO WE GO FROM HERE?




Yesterday big up, today big down, and more explanations for both than I know what to do with. My favorite is that we went down based on concerns about Europe..... Poppycock! Why do uninformed people always feel they need to tell the rest of us idiots why something happened, when they have absolutely not a clue in the world? Where is the credit that is due the evil speculators that drove oil prices up now that they are tanking? If they drove them up they certainly must have driven them down too didn't they? Oh wait it was some politicians policy that saved us all from $200 Oil. I think the savior was T Boone going public as being bullish again. He must short the max position when he makes these remarks, otherwise he would be broke. He has to be the worst prognosticator of price in the history of man walking upright, yet he is incredibly wealthy.

The trend has switched to down where I indicated on the chart above, so ideally we would get a rally all the way up to the top band for sells. I doubt we will get that, but there is always hope of the perfect trade setup. I am not going to chase this right at this juncture, so if we just roll over from here I will miss it. Many of my short term tools are transitioning into marginally bullish positions. If you look at the top chart, the one thing that bothers me a great deal is the huge buying by the small specs, at a time when the trend has changed on a weekly basis. I will admit I am very skeptical of COT tools in the stock indexes because of all the manipulation that is going on. I don't think the government is giving us the real data in this sector. I can't imagine why?.......... ( Tongue in Cheek, eyes rolling ). The COT data stopped being effective in stock indexes a few years ago, seem like a coincidence?

In any event in the idiots school of trading, I just follow the lines. They tell me we broke the uptrend and now are in a down trend. As a result I want to sell bounces. I never did find a  5 year old so I am guessing as to his interpretation of what I would have shown him. We certainly did see an across the board meltdown again today, so as Coleman would say, short sales for everyone! I noticed some of the grain markets showed some relative strength today, so they might be in store for some up movement here. I was looking at shorting the bean complex until I found a big divergence in soybeans that told me not to short. We will see if that was a good decision or not. I think it was regardless of the outcome. About 80% of the similar patterns I found in Beans to today's featured the price not falling over the next couple of weeks, even though a few did. I play the odds even if I miss a few.

Gold and Silver also had nice reversals today, but are really stuck in sideways trading ranges in down trends. I am not too excited about buying in that type of situation. Many ETF's are in the buy zones on the weekly charts, so that has to be my first look in them at the moment. If we bounce then I will be looking for sells in them. There does appear to be some big player buying in them during this dip.

I will like to short Nat Gas on a bounce, just to name one specific trade I am waiting for. I don't see much else for tomorrow. I am also tempted to start looking at the short side of Bonds now.

Good Trading




3 comments:

Michael Tredr said...

that had to have taken the winds out of everyone's sails when the market went up that one day and got its face kicked in the next session.

Anonymous said...

Nice analysis! So the SP500 trend is down. You seem to have strong capability Chris.

I just wonder why don't you go and work for some big banks, institutions,... Isn't it a chance to strike it big and earning like few millions per year without the risking losing own money? You already have a name for yourself after all.

TraderJ.

Chris Johnston said...

Not sure I want some paper champion looking over my shoulder telling me what I should be doing. If someone offered me something where I could work from home but for them and do teleconferences, maybe I would consider that, otherwise no interest