Dave...Excellent question, that is really noteworthy the 625 and 725 band, how did I get it? Look at the following chart a 5 days chart of DOT, we have this great move to 725 a pull back and a test of to be exact 626.4, where I thought it should been 625
quote.yahoo.com^DOT&d=5d
If you look back at my previous posts you will find that on my way down I had identified these points as points where I saw some support. On break of these very points I was selling calls on DOT to protect partially my seriously eroding long calls on individual stocks where I had gone long.
725 and 650 and 625 originates from that steep fall from 820 to 540 area. The points where we have support usually become a point of resistance on the way up, that is very simple and that is how most of the experts play the market in the pits, they heavily rely on previous movements. They are also into trend lines.
Now look at this chart,
fast.quote.com Bars&bars=100&newstype=480%20x%20360%20GIF&chart_type=Close%20only&colors=fq3d&vol=&study=Exponential%20moving%20average&ma_period=50
On the way up that is from move of 550 to 820 if I consider inter-day moves you will find that 550 was an important resistance. Like wise 450 was also a great support, for me 550 was the ultimate reversal based on signal emanating from co-relating NDX 1965 and 1292 on my SPM. Now I knew that if a reversal has to come this is my day, now all these levels have been highlighted by me much earlier now, when they are hit either I have to put the money where my mouth is or shy away I don't, I get into it. These very points are the points where I want to go out naked on street like Archmides and cry 'buy buy'.
I also check the validity of the gurus at these points, none with exception of names I keep highlighting were positive at that juncture, others at 550 had no idea. They had total disregard of that support 1292 on SPM a traditional long support that took a lot of doing anyone with even slightest of TA info would not short at a support like 1292. You don't short a market making new highs and you don't short at supports. You do it on break of supports or you go long on break of resistance. Now going back to PHLX dot chart look at these points 725, on the way up and down, look at 650 a resistance on the way up a support on the way down. 625 a valid resistance on the way and a valid support on this second move up to 725 area.
Now, when I see that complicated system currently utilized will take people into a territory absolutely unknown. I see most of these systems like 'Pied Piper' leading the investors into sea, I write and let every one know 'beware of these systems' these do not work. I develop that disdain for the complicated systems, when it is written all over in front of you on simple charts why get too complicated? This is my question the waves do not exist and these stories about timing of the market just are pure fabrication of mind, no one can do that. The result is that these complicated systems lead to tragedies of missed opportunities.
I will tell you that I have with the exception of people who have seats in the exchange and the locals rarely found a person who have traded 'Futures' for 10 years and have made money. Like 'bakkara' one would make money in the beginning, but as you know well time to leave is equally important. The one's who leave the table make it, once who are caught in the web of greed loose it all.
but at the end the markets take it back from you, the futures market is most difficult, it cannot be charted the greed and fear is impossible to chart. Many of my friends have burnt their fingers in futures market, the trade against the pit is sure trade to loose. They will take you through wild swings, in case of futures you are unable to sustain that kind of movement in options you have much more room. Although people are put off due to spread but atleast a long option will not stop you out, you don't get a margin call. It is for this reason you that see your levels even if you have timed it wrong. The market trending upward comes back to you. It is only at major supports like 1292 break that a view has to change as from there one can chart the step back to 1130. Also at one other point view has to change is 'fundamental change' like inflationary pressures building up, or ground war in Serbia or Oil rising above 22$.
So what do you do, you see all these points like 1355 1342 1328 1318 1302 1292 and work around them, you keep a watch on indexes like SOX BKX RUT OSX DOT NDX COMP and keep rotating these indexes which are having maximum impact on the move. I call these days as six figure days when we catch a big move up, as I think that a keen investor can determine a big move by this simple analysis. I don't know how else to address the markets. I know that it looks that 'I never loose' the point is that when I am little early I will hedge my move. I will than add at lows and big supports, the premium seriously eroded comes back to you. I don't get out of market being 'whipsawed' that what I have learnt in 22 years of market, just take care of the 'timing and liquidity', give yourself some room to play. Market is about room, million $ response is you will see your levels, give yourself some room to play. It is cramping of movement that destroys an investor, once one get too pumped up it is the fall. The reason that many a 'heroes' fall is that they trusted their models too much, they believe in mass hysteria, market moves opposite to perpetual short posters on SI, just do opposite to what they are writing, you will make money. Mass skepticism is the time of getting in, when these skeptics go long please get out of the market.
· It is timing which is the key here, in Futures you just don't have time, the tick moves against you. The losses mount and you just cut at the worst possible time. Like they have taken the futures to my outside support of 1342, many a stops were hit below 1355 but they made sure that people go short probably they will take it above 1355 today. We may have seen this 1355 as a false break, even a big number on economy will not be a big threat to market, initially yes but overall the move will be up.
Last night to close SPM around 1348, is a classic pre number trap, on one day break are we short no I did not do it, for simple reason the momentum was just not there, in momentum based markets I also got out at DOT 715 as momentum was drying, momentum based stocks need momentum to thrive.. It is combination of million thoughts of 'if and when analysis'.
I do get my numbers right and it is always very simple nothing complicated rather putting pieces together. Although it is fun but I show extreme humility towards market, I am a 'small speck' in relation to the market as such I know my limitations. I know my size, even when I am 150% sure I will not invest in stock more than 5% of my net worth. I just don't get carried away, rather when it is too good I keep asking this question, where I am wrong, something that is not right, the quest has gone for last two years and I have come to conclusion that mine is a trading based unemotional approach., I change my strategy from long to short, short to long purely as market demands the day I have loose this ability, the day my ego comes into play the market is going to raze me to ground, many a Ike's have been humbled by this force wild. Respect it and don't be judgmental about it, Accompora's and Kurlack's were humbled by this very same market, like Barton Bigg's and others in ASEA. So at the end of the day every day it is another day. Just go back and have deep look and remember KISS, and keep visiting me here, you will find the blend of expertise and banality with added flavor of market directional moves that is something we do with our hearts in it, I try for magic I get it ..ggg
Dave.. I remembered just now about that request you made, I will send you a PM now... Sorry for overlooking for quite sometime.. |
