Sunday, March 3, 2013

Issue 089 - How Weee'd A Chart - Part 5

Yeah it's been a while since I've written something or even write about my angst about some maroon.  What should I write about anyways when everything about chart reading has been said.  But I should state the more obvious and less trivial and most logical of all.  Enter big angst.

Lower Time Frame Follows The Trend Of Higher Time Frame!

It's completely technical.  It's completely logical.  But why do people think that the lower time frame can do the unthinkable is beyond my comprehension.  Perhaps all the pre-conditioning of hearing about false pops and drops but people who read this blog still do the same thing.  The problem when I listen intently to what the issue is, is they completely lack the understanding of the basic concepts of what technical trading is.  Seems pretty harsh but that is what it boils down to.

Sure they have bits and pieces.  Sure they can identify what certain things are.  But when you press them to explain it from one time frame to another...the simplicity that they know.  The simplicity that allows them to do what they already can turns into mental diarrhea.  It becomes completely obvious that the thinking employed to read the chart is really gimmick based not by clear concise thought.  If your thinking is not in the infantile gimmick phase, you would be able to see the momentum, see where you are in the price action phase as momentum shifts and know based on the leg where you are and how is progression building up or down momentum.  Sure they can regurgitate the content from blog to help them along but the full meaning fails to register when they go from one time frame to another.  The thinking process goes from simple to insane complexity in 3 seconds.

Momentum, Price Action And The Leg ... And Brain Damage

Where they fail is at points of consolidation.  Ironically these are the points where accumulation and distribution occurs.  The place where a leg start is.  The place where they know momentum shifts as liquidity changes the price action from moving singularly in one direction up or down to sideways.  So you ask them, here is the leg start in the 15 min chart, what should price do when we reach this previous area of support or resistance?   Should it bounce back or run through on the first attempt?  They will answer correctly that the price should repel.  Then you ask them, where should you see this change in momentum happen?  They will then correctly say in the lower time frame.  Ask them why. They will say .. Change happens first in the lower time frame.  So they go to the lower time frame and that is where the "brain damage" (say it the Bill Cosby way) occurs.

It's been accumulating but the price continues to go lower.  Did it reach the leg start yet you ask them.  No answer.  Then they say well its been sideways and been choppy.  It just keeps going up and down.  I think it will go lower.  Then the price pops up and kills them.

It's been distributing forever but the price keeps going up?  Did it reach the leg start yet?  I just told you its been distributing but the price keeps going up.  It isn't doing what it should to go to the leg start.  So they go long and the price drops and kills them.

Then they say...
How the hell did it just pop or drop that hard when all it was doing were these little pops and drops?

Major Freaking Brain Damage!

What is going on?  Why so brain damaged?  It really is quite an annoying problem.  From my perspective, the lesson has been taught in many ways.  Biggest clue is how a 2bar reversal can look like a head and shoulders in a lower time frame.   It was a huge paradigm shift for me when i realize the significance of that notion.  This is a huge hang up if you really don't put two and two together.  While price action is producing this huge distribution or accumulation pattern as the price action goes sideways in the lower time frame,  and probably 1or 2 candles in the higher time frame,
3 things happen:
  1. They forget the higher time frame 1st touch
  2. And in forgetting, they think the move will bust through that higher time frame level.
  3. This happens because they forgot that they are moving sideways from the original leg.
The brain damage goes on further.

They ignore the decline in the momo.  They have no clue that the sideways movement with the decline in momo were breaking down levels of support or resistance for the first touch --- ergo even fail to recognize the progression.  They fail to see, to recognize basic chart patterns and how they work.  That as you progress further to the left...you break down the momo of the bigger leg where the sideways action started from.   What does that mean?  

When price moves sideways...what was it doing before it went sideways?  Since I really do have to spell it out.  If you look a little further left...you should see a big leg up/down.  You would think that if you see a first touch coming from the higher time frame, that people who claim to read this blog would come to the clear and logical conclusion that the lower time frame would start to dist or accu by losing momo as the pa moves left, as the pa gets new lows or new high on lower macd, as the pa goes toward that higher time frame level of support or resistance.  Why?  Is it not by definition that accu happens after a move down and dist after a move up?  To prepare for the expected response for the 1st test of that higher time frame level of s/r.  And while all this stuff is happening...why do people still ask where will it go even if they recognize the set up?  Do they not understand the progression and legs?  Obviously your target should be the leg start that hasn't been tested.   But it is the obvious they want to disbelieve.  It becomes so obvious that people are oblivious that even the basic chart patterns, definitions and constant repetitive way that price and momo moves or behaves is not readily available to them.  They only know the setup they like to play but even in full detail.  Oh hey this is a double top this will move all the way down to the leg start..and then pops hard at the leg start of the first valley.

Goes back to level of understanding.  What they don't get, they make up.  Sometimes the rational provided is incredible.  Almost like listening to the news.  The effort to understand is limited to the gimmick trade setup that becomes their favorite arsenal to trade.  It works till it don't.   There is no real understanding even if they get it right.  They couldn't describe it to specific details and conditions.  And so if they are not savvy enough, they play those gimmick moves they adopted in the wrong situation.  They go long to the moon when they should have shorted or short to china when they should have gone long.

Don't be brain damaged.  Learn to put it all together!








Tuesday, March 6, 2012

Issue 088 - How To Weeee'd A Chart - Part 4

Happy New Year!!  Alright, the last few issues, we saw how momentum works through its 2 engines - Accumulation and Distribution.  We also saw how the price action looks during these times when momentum is shifted from selling to buying and vice versa.  We touched on a little bit on how legs help you determine how levels are gained and or lost.  This last bit of info that you need to start understanding what you are reading is one of the most significant things you must learn to spot significant levels.  The only way to spot them is by reading and understanding the price action.  These things are called "levels", "support", "resistance".  Some other people call them "poc" and all its variations (vpoc, mr. spoc).  People don't get these levels and they don't really understand why the market did what it did because they don't know that the price will always target the previous support it lost that eventually allowed the price to cascade down to where the price found support to start the rally or move up.  People come up with stupid calls like "false pops" and "false drops".  Logically they can't say it was false because it happened.  But if these were logical folks to begin with, they would understand that the market consistently move in the same manner over and over again and there is no such thing as false pops and drops.  Its just idiocy to think that way.  It also gives them an escape should they fail to read the move correctly.  "Oh yeah, it did this false pop/drop just to shake me out of my stop and you know those big guys are taking my money." 

The progression is clear.  What are false pops and false drops?  If you read a little bit about legs, you would understand that those "false" whatever always seem to hit, the leg start.  Through that simple mechanics, it is far from false, but a constant function.  And we know that the momentum is setup through progression to support the resulting move after the "false" move occurs.  False whatever will always happen near a leg start.

What is a leg start?  Leg starts are significant levels of support or resistance.  It is generally near the tops or bottoms of a move up or down.  They are the level where you will find your consolidations forming their base whether it be a peak or valley.  It is the initial level of support and always the last level of support to be tested on the leg.  Understanding how to identify levels of support/resistance and differentiating them as leg starts and understanding why they are key levels is a skill that a trader has to gain.

I wont go over the entire blog entry on peaks and valleys, but what is key is what the key level of supports are from those peaks and valleys.  Peaks and valleys are the start of legs.  Their tips are the result of testing of previous support or current support.  And they are key in the progression of accumulation and distribution  as a collection they are the top part of head and shoulders and double top or their inverse chart pattern counterparts for accumulation patterns.  And they are also produced as juts up/down on any move up or down which are more prevalent in lower time frames.  So far, all I've told you is obvious stuff.

So lets talk about something not as obvious.

When retracing back up/down a leg, one way to find a key level at the peaks or valleys is to find the candle that closed above(for the move up) or below(for the move down) the key level of support.  In order to do this, for the retrace up the leg down, you must understand the move up from the leg before your move down.  Generally both these levels for the move up or down is the same level.


Off this weekly chart, in order to understand why this level here is significant, you can first get your first clue from the immediate leg to the left.  From here, you are interested in the 12/20 candle.  This candle closed above a significant level of resistance in order to gain a level of support.  And the 12/13 candle demarcates the level of interest as the level that it could not close above of, by wicking there.

Now sometimes the candles are not so straight forward.  That is why I suggest that you look to the leg to the left of the current leg.


When you zoom out, you get a better sense of how important a level is.  The logic of understanding the mechanics is simply:  what is the level that a candle such as the 12/20 candle had to close above in order to gain a level of support.  The qualification is gained by looking at the price action where the level acted as resistance:  first by wicking there as resistance or support and second by doji's.  How do you localize these areas?  Look for peaks and valleys.  Look at the level where they congest.  Look at the base of their congestion.  And then look for the relationship as described above.

As you can see from this example, the support found in 3/14/11, was a support they tried to hold from 7-9/08 and 5-7/06, was a level of resistance in 7-9/05, support in 5/01, 10/99 and then finally the level of support gained in 12/28/98 that was the level of resistance in 12/21/98.


So how does it look in a daily perspective or a lower time frame?  Much like the weekly as you can see the expected relationship or mechanics is observed.  An area of consolidation before the move up is also, a leg start.  It is all just rocket science.


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How To Weee'd A Chart  --  Part 4 by kewltech is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.
Based on a work at kewltech.blogspot.com

Thursday, December 1, 2011

Issue 087 - How To Weeee'd A Chart - Part 3

Okay, so we sorted out what momentum is and how it is generated.  Those are part of the basics of momentum. And the key thing about volume is the type of volume coming in.  And then, how it will change the outlook overtime as it progresses.  Again, what we are going over are basic tenets that you should understand when looking at a chart.  So far what we have covered is a lot of rocket science.  Mind blowing stuff.

The next thing to understand is the price action.  And how you can relate what is going on in the momentum, to the price action.  Again, the point here is that if the market will pop or drop, in whatever time frame, it will setup a change in momentum to facilitate that move.  Change will always start in the shorter time frame first.

When it comes to price action, you can gain a lot of insight on how the price and momentum has moved and should move.  You can also discern the process of accumulation and distribution.  These are generally manifested in those many chart patterns.  It is well worth your time to become familiar with chart patterns as they can give you some confirmation of what you are seeing.  And it is also well worth your time to understand how momentum looks like when such patterns work and fail.  Since the market does the same thing over and over, you should find commonalities in the momentum with the price action.  A type of finger print if you will.



Now, remember this chart?  I purposely removed the price and the time frame because people make quick judgement about what they are seeing.  This is the weekly chart of the ES, and the peak that we see here, with the big candles and such, many would say that there is no way to understand how to play that.  The candles of 10/24 - 11/14.  To tell you the truth that is how I thought before.  Now as I've said, that change happens in the lower time frame first.


When did the distribution start for this same chart but this time in the 4hr time frame?  It started at about 10/11.  That is how the lower time frames can show you how change is happening.  How the weekly candles from 10/24 - 11/14 was produced.  People have to learn how to use their charts and time frames to their advantage.

Now why did this structure in the 4hr seems so huge comparatively to the weekly?  Could it be that it is because the weekly is a huge time frame?  Of course!  You also have to get the proper timing of setups and must understand that the higher the time frame the more significant the setup is on the lower time frames.  Quick question.  If you are looking at a huge time frame like the weekly, does it represent more volume per candle and therefore more volume over time done that of a 4hr chart?  If you can answer that, then maybe it will make sense, as to why it took so long.


Here is our leg down from 7/4.  When we popped up to where you see #4.  That is the fist test of that previous support that we lost the week of 8/1.  And the rule is.  First test you will fail.  So what did the 4hr tell you?  That since 10/11, it was already distributing to prepare for the move down.  Was it the news?   Do you need a phD to understand this simple concept?  But then you will say.  "Dood.  This is on a weekly and 4hr basis."  And I will respond back with.  "Dood!  I'm not gonna hold your hand.  Do your own research in the lower time frames and see if it does it too!"  If you do find that it does, there you can probably say, there is consistency in the technicals.  And you will then scoff at the person who said.  "T/A doesn't work because the fundamentals are too volatile."

Well that is  first thing you should understand about price action.


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How To Weee'd A Chart  --  Part 3 by kewltech is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.
Based on a work at kewltech.blogspot.com

Wednesday, November 30, 2011

Issue 086 - How To Weeee'd A Chart - Part 2

Well, someone just forced my hand.  Someone from Grapevine, Texas.  We will talk about Volume next.  
I think you have missed the difference between accumulation and distribution based on volume. The lack of volume from the dates posted above does not denote distribution or accumulation. The area of the chart that is missing is 7/25 to 8/8 is a good example of distribution. From 9/12 to 10/15 is accumulation. Any certified T/A person would easily see this in the volume you are discussing and would consider this a mild pull back before a continuation. Mild pull backs are healthy but not an indication of direction until accumulation or distribution comes in to start the next move or leg.
Anonymous
Grapevine Texas
 

To answer the comment.  I believe I know what accumulation is and clearly what distribution is.  However, since the anonymous person eludes that they are a certified T/A person.  "Any certified T/A person would easily ". 

Volume
Everyday people note what the volume that traded in the market is or was.  Volume is basically all the trades for the day.  It can be further subdivided to 2 components.  Advancers vs Decliners.  Buyers vs Sellers.  When you talk about advancer's, these are buy orders.  When you talk about decliner's, these are generally sell orders.  Lets keep it that simple.  I think many people can go on about it with tons or rhetoric.  In simple terms, overall volume consist of buy and sell.

Volume when it comes to momentum, is about the cumulative effect of the buying and selling that goes on in the market.  Cumulative means that all the buying that occurred will contribute to the out look of what is already in the history of the stock or market as well as all the selling.  If for instance, the stock has experienced primarily mainly buying in its history, then the overall volume of the said stock consist primarily buy volume.

Why is volume so interesting?  Why do we even talk about it?  Because it is what makes up the overall momentum.  It also helps define the trend.  It is what is being offset to produce periods of accumulation or distribution.  How so?

If the stock or market experiences primarily, buying, it doesn't really mean that there were no selling.  It just means that the overall volume were buy orders.  And of course you will have sell orders.  Why?  Because there will be people who will sell to take profits.  Some people are also trying to short it.  Over time, if the amount of buying tapers off, the cumulative volume that already has taken place in the stock/market that happens to be selling, will offset the cumulative buying volume to make the stock go down.  It is a mathematical process.

So let us talk about this Accumulation and Distribution.  

The act of buying more shares of a security without causing the price to increase significantly. After a decline, a stock may start to base and trade sideways for an extended period. While this base builds, well-informed traders and investors may seek to establish or increase existing long positions. In that case, the stock is said to have come under accumulation.
Ah, this is one of the first blog entries I wrote.   And so our reader said thus:  "From 9/12 to 10/15 is accumulation."

Well let us see the chart for what our reader was referring to.



The first chart is the weekly.  And the 2nd chart is the 4hr.
First lets look at his weekly.  The leg going down at 9/12 to the pop is his (just to help me out, i'm gonna give our person a male gender, I'm sorry if you are actually female, no offence.) accumulation.  Does it fit the definition?  

"The act of buying more shares of a security without causing the price to increase significantly. After a decline..."

Nope.  Because it went down first then popped.  The price did change significantly from the said period.  There is accumulation that occurred there at the 10/3 area, but the strength to push the price up all the way to 10/24 high actually the result of the accumulation from the tail end of week 8/1 to about 10/10.


Is this not what accumulation should look like based on the definition above?  So what you have from 8/1 to 10/10 is the sideways movement that is by definition of what accumulation is.  And then the resulting pop.  Now this pop in the weekly is not a strong bullish accumulation.  This is where some people will say there is a "hidden" divergence.  Go read my blog entry for that.   I'm not going over that again.

Now let us discuss what happened in 10/3 for the pop.  As I've said, the pop that perhaps our reader suggested, is not the pop responsible for the larger move that occurred overall.  The momentum is the product of the accumulation as discussed above.  What is responsible then 10/3 pop?

Well there are 2 factors here.  2 time frames.

  1. The weekly trend built up by the accumulation we noted above wanted to pop this up.
  2. The shorter time frame (which we will see next) shows you the pop that occurred on 10/3.  Is also in response to the larger time frame trend.  Higher the time frame the bigger the move.  8/10-10/10 is the wide base, that my chart expert teacher, Asbucky, taught me, will be followed by wide space.  The big pop up the the start of the leg down of the previous high at 7/4.  1st test pop, ergo, we pull back.

Now this is a 2 stage accumulation with a new low produced.  The accumulation was built up by the buying that occurred from 9/22 to 10/4, produced a positive divergence in the macd.  Boom!

Honestly, I don't recall saying lack of volume.  But I do recall saying lack of buying.  Does that not seem more accurate?  If you were to draw a wedge, to that said spot where we sold, isn't that the proverbial bear wedge?  That as you go up the wedge, you will increase in sellers and decrease in buyers?  How do we see the said distribution?


Interestingly, I made this chart a few weeks ago to show that volume dropping to one of my buddies, who is trying to learn to see how, instead of volume charts, I use the macd.  And you can see the weakness here already.  So lets look at the reader's point about distribution.

"The area of the chart that is missing is 7/25 to 8/8 is a good example of distribution."


Now, according to this chart, he is actually saying that the move down is distribution.  Hey, this person is potentially a certified T/A.  I can't argue but to use the facts as defined by other experts hired by StockCharts.
Distribution StockCharts.com Definition
The systematic selling of a security without significantly affecting the price. After an advance, a stock may start forming a top and trade sideways for an extended period. While this top forms, a security's shares may experience distribution as well-informed traders or investors seek to unload positions. A quiet distribution period is usually subtle and not enough to put downward pressure on the price. More aggressive distribution will likely put downward pressure on prices.
Do you see the similarities in the definition of Distribution and Accumulation.  It isn't the resulting pop that is accumulation.  And neither is the resulting drop that is distribution.  It is the sideways movement of price and offsetting of bullish/bearish volumes to bearish/bullish volume respectively.  So our reader is against the definition provided.  How well is the definition given?


A picture is worth a 1000 words.

So what was I referring to in the previous blog entry?


Is it not the same?

Now, a little more about volume and dropping of volume.  Volume can drop and it does so regularly during the day.  If you believe that there is such a thing as trend, you will also understand that when volume drops, the trickling in will always follow the greater time frame trend.

As you can see in the charts, when it comes to the divergences, the process of accumulation and distribution takes time to take affect.  Dropping of volume does not necessarily mean that you can expect an immediate turn around in the price action.  That depends also on the time frame.  But if it does drop, the greater trend will be followed.  That is just what you should expect because it is the trend.

Thank you for a very excellent blog comment.


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How To Weee'd A Chart  --  Part 2 by kewltech is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.
Based on a work at kewltech.blogspot.com

Tuesday, November 29, 2011

Issue 085 - How To Weee'd A Chart -- Part 1

If you're wondering what the hell "Weeee'd" is, its a play with words.  I really meant read.  Even in our little group, the skill of reading the chart properly is lacking.  It is a confounding issue.  What is actually happening is that people don't incorporate a lot of what they learn to the basics.  It just seems people would progress faster if they actually understood the basics.  But what are these basics?

Basics include the vocabulary.  Not just being able to talk the talk.  You can go into any chat room and you will find people who can talk a good talk.  But if you ask them to explain the exact detail, over 90% will fail.  Where they will defer to is to talk about the news, politics and whatever else that is not in the chart.  I know people who still don't know how to identify support and resistance.  Some don't even know the significance of congestion.  People still think that congestion is where the "market" is deciding where to go.

There are really 3 things that make a chart useful.  Price action is what people note.  They form patterns and the price moves up and down as candles form.  The second thing that people should notice that these things appear on your chart over time.  See, this is an important point.  As candles propagate the chart, time elapses.  Price movements show how momentum changes over time.  And on that note, what is momentum?  People identify chart patterns as momentum changers.  They talk about wedges, and how at the top or bottom of a wedge, there are more sellers or buyers and so price drops or pops.  What is it exactly?  To be really accurate, it is volume.  Did you really think it was actually buyers and sellers sitting on some line?  No!  The description is figurative.  Do you know how many people couldn't really explain what that means?

You see, only volume can really be the underlying thing that makes momentum make sense.  With that as the underlying thing, it explains what is being distributed in distribution patterns.  What is being accumulated in accumulation patterns.  If you have to ask what those patterns are...it just shows you how much you know.  But what is it that make up the volume?  Buy and Sell.  Those are the only inputs to the market.  You buy to go long and you buy to get out of your short.  You sell to go short and you sell to get out of your long.  No!! Its the news!!  If you believe me so far about volume, then it isn't very far from logic to conclude that in order to make the price go up or down, momentum must be set up to do so.  It wont be difficult to conclude also that if you could note what is going on, you can possibly follow trend.

There I said it, trend.  Trend is the result of the offsetting of these volumes.  Trend is the product of accumulation or distribution.  Trend can be short or long.  Trend is stronger the higher the time frame.  Take a look at your weekly trend.  Based on the weekly trend, how long has the momentum been bearish?  If you conclude that the currently trend is due to the global economic issues on the news today?  You are dead wrong.  Fundamentally, the economic issues have been building up for years and decades.  Technically, if you can read the momentum, it has been that as well.  When has the momentum been weak?  Since before 1999.

But why did we pop up so high?  Because the monthly outlook of the market was bullish.  And the progression of the weekly must occur first before it can affect the monthly.  What does that mean?  Change happens in the short time frame first.  Buckets of volume over time.  The larger the time frame, the larger the volume it represents.  For example:  133tick vs 1600tk   Some may argue that tick charts does not represent volume.  But they do.  Its just a different unit of volume.  While you can have carr based volume charts, tick charts is just like saying dozen or packs of something as oppose to the actual unit.


The difficulty with some people is to understand that in situations like the one above is actually playable.  The problem is, they live in a world of impossibility.  I could tell you that this is an hourly.  I could tell you that this is a 5min chart...but regardless of what it is, the shorter time frame will show you how this becomes a playable chart.  O this happens too fast!  Some may complain.  Again, depending on your perspective.


Now when you look at it this way, how playable is that weekly chart?  This also illustrates why things don't just happen.  They must be setup to do so.

Some people don't get where this distribution came from.  They just don't understand that the work of volume offsetting that has been occurring since 10/10 in this 4hr chart at 1180 to the 1180 on 11/18, that there is a giant negative divergence.  There are clearly less buying happening and more selling since 10/10.

I've peppered this blog with definitions and illustration of those definitions and examples of whatever it is.  It is just to help build a common dialogue and also build what is necessary for you to gain basic knowledge.  What is distribution?  How does it look like?  What do the price action do?  Some people even refuse to learn how to spot certain chart patterns.  Those patterns are commonly discussed because the market does the same thing over and over again.  You would think a basic chart pattern is something you would want to learn if it occurs over and over again so you can capitalize on it.  You would think that you would study how it developed over time and try to recognize the momentum as it formed.  And how would it look like in a low time frame.  And what does it look like in a higher time frame.  Where did it occur with respect to the leg?  Easy questions but takes work.

That is it for lesson 1.  There is a plethora of information that you must digest off of this one issue.  The problem is some will try, and some wont.  Some will brush it off as common knowledge, because they already truly know.  Some will brush it off because they think they know but when it is time to recognize it, they fail miserably.  Well good luck!


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How To Weee'd A Chart  --  Part 1 by kewltech is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.
Based on a work at kewltech.blogspot.com

Sunday, November 6, 2011

Issue 084 - Indicator Trader

There are only 2 indicator, lower study indicators, that I use.  And those of you that know me, know exactly what they are.  Obviously, you can see my charts and you will notice what they are.  The thing that I would like to emphasize is that these indicators are volume sensitive.  And reactions to volume can be gauged through comparative analysis.  In my geek speak, you will compare to adjacent time frames to see the effects of a lower time frame progression.  The higher time frame, is the trend.  I'm not going to go over the whole concept, you can read about them in earlier issues.  Indicator based trading is really fun when volatility is high.  Indicator based trading is really effective when you can gauge the flow of volume properly.

Volume Flow Is NOT Consistent!!

When people read the indicators, they think the thing that is moving it, is in constant and equal flow.  That is far from the truth.  This is why I tell you to understand comparative analysis.  I learned about volume flow at the time that the market was very volatile.  Do you recall the wild fun swings of the crash from 2007-2008?  Those were the fun days.  It was a great time to learn about how the indicator moves.  If you were really paying attention, you could see exactly how volume drops and pops correlated with price action.   You would also realize how price action could follow your channels and price action patterns.

In today's market action, if you are trying to learn how all this works, it would be more difficult.  Volume has yet to compare to those good old days.  If you were to try to learn it today, you would really need to pay attention to progression to understand how momentum builds up or dries up.  Progression on one time frame may be bullish, but if it doesn't affect the adjacent time frame in the same manner, it may mean that the higher time frame next to your adjacent higher time frame is actually bearish and its trend will be followed.   Huh??   Again, practice, and observation.  That is how you learn to be a technical trader.

Trend is real.  People think everything moves at the whim of the news.  Like I was trying to say in the last post, you really have to be careful about listening to the news.  Case in point.  The market dropped due to concerns about Greece and European economies.  The next day, Intel had great news and wiped away the previous day's loss.  Where is the logic in that?  European economy could blow away American imports and exports.  American economy could be affected in so many levels and yet, lowly Intel, though international in nature can have an equal or greater effect to wipe away such global economic concerns?

In the technical perspective, each of the moves were technically supported by a distribution to sell to the leg start, then first touch pop with the momentum setting up the prior to reaching that leg start, an accumulation to help the pop.  Technical moves are easier to understand than to try to decipher all the news and fundamentals.  Why have a charting package if you don't get how to use them?

Price action always follows trend.  Volume  that comes in is also subject to trend.  The two are related.  So if you are indicator trading or reading them for momentum.  Study how its flow works before basing your trading strategy on generalizations.  Understand how progression of lower time frame, affects the higher and vice versa.  Don't go in blind.   Been there, done that.  The next thing you have to do after figuring out how those indicators work, see how they relate to price action and then levels.



Creative Commons License
Indicator Trader by kewltech is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.
Based on a work at kewltech.blogspot.com

Friday, October 14, 2011

Issue 083 - Market Down! Market Up!

When you listen to the "analysts" on the tele, you get a feeling that these people are as clueless as everyone else. You also get the feeling that when the mic gets in front of them, they start to speak their political mind.  The interesting point is to note the duplicity that these media people portray.  This duplicity is mirrored by traders.  Just sit in a chat room and you will see how traders all reflect the exact duplicity in their way of thinking.  What is this duplicity?  Ask them why the market went down.

Trend is an interesting phenomena that traders strive to be in right side of.  But yet, these traders, economist, floor traders cannot tell you that the market is down because of trend.  they will tell you that the market went down due to the uncertainty in Europe, and the US.  They will tell you how Pres. Obama failed to provide jobs and his socialist policies have hurt the economy.  Ask these same people how their profitable trade worked, they pull up a chart.

If you understand technicals, why rely on funnymentals?  People caught or surprised the market situation most assuredly cannot read charts.  If they claim to know how to read a chart how is it possible that they missed their  weekly charts?  How did they fail to understand the distribution that has  been in play.  Where are those people calling for the moon with market prices above 1400?  Is 1400 still at the top of the trend line?

This guy asked me the other day.  How do I know that the short time frame is not gonna break the higher time frame trend?  The answer is simple.  Trend.  There is no such thing as trend if the short time frame can break the long time trend.  The real question he was asking pertains to market manipulation.  The notion of market manipulation is for people who dont know how to read charts.  The reason for this is because anything that goes into the system cannot be hidden in the charts.   The other crutch that people use the news and events.  If you truly want to be a technical trader, turn off the tv and don't listen or read or entertain the news from chats.  You will feel liberated.  

What are people not getting about trend?  The short term trend follows the will of the long term trend.  What are the politicians missing?  The market has set this trend a long time ago.  In order for them to change it, they must offset the volume that was put in place since 1990s.  You've read me rant and rave about funnymentals.  Today, EU wants to limit high frequency traders.  Can you say idiot?  If there is anyone that should be restrained, arrested and put to jail, go to them bankers.  But I digress.

Well that is it for now.  I've been away for bit and it has been nice.  I have to warm up to blogging again.  Grats to BJ and a few others who have had marked improvements.


Creative Commons License
Market Down!  Market Up! by kewltech is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.
Based on a work at kewltech.blogspot.com