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All equity markets, including Forex, runs in cycles.
When a new cycle begins, there's a shift between new and old participants in the market. It's a good time to review you strategy/system/method and be on the lookout of market behavior (this is the main reason why indicators are useless in my opinion) hope it makes sense.
It's good to play cycles but you better have the foot on the brake.
I can make this whole post about market cycle but let's get back the Dow
Traders/investors/ CNBC/ The Boy Scouts of America/The Undertakers Anonymous Society/Barney/Hilary Duff...everybody was waiting for the DOW to break the 12k range on Friday....yes this past Friday. Didn't happen...why??
Very simple ....Oil went up and retail went down...these two animals are putting a lotta weigth in the market recently
Keep an eye on them. |
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One of the things I am working on right now is to have a better understanding of money flow and sector strength analysis. Your comments are going to save me alot of money. Thank you Raul.
Ive been a big fan of John Murphy's work with intermarket anaylsis but always felt that past cycles are not repetitive. With new technology and the ever changing supply and demand of natural resources, I feel there is always some new sector that I need to be updated on. Still trying to understand this better.
Your comments on crude and the retail sector adding weight to the markets inspired me on a new breakout/breakout failure strategy. This information will add further confirmation on S&R/market profile strategies that I currently use.
I highly doubt the YM will ever become a "popular" contract. I dont think its necessary to apply too much weight on it either. The ES usually leads the YM.... and its rare to see the YM lead the ES.
I use a similar analysis method by watching my scanner. I have about 80+ sectors, futures, and stocks that I place on my scanner and anytime I see mixed signals of green and red, this is a warning sign. Hence, I try to apply a rangebound strategy and aim for singles and not homeruns. I also like to analyze overnight action as well as any pre-market volume on the SSF's. The opening play is probably my most profitable and favorite setup. The opening price can act as the dead low/high for the day and offers an excellent entry point.
And yes.. indicators are useless. Im always shocked to see new traders being in love with them and asking indicator questions. They are asking the wrong questions without even knowing it.
Regards,
James Lee