[DbPhoenix]

Originally Posted by Gringo »

RIMM from previous posts has crossed above 80 and negates the earlier short. It is a nice example of the futility of shorting a stock from the strongest group.

For future reference, when a hinge forms at the very top of a rise (see my last chart), it will most likely lead to a continuation. And you always have the option of bracketing the trade.

[Gringo]

Hi,
Q's have been going up for over 6 months now! I have posted normal/standard support/resistance boxes (value areas) but have also tried to measure strength in upthrusts.

Please note the % change in upthrusts. I haven just chosen the closest whole numbers to keep calculations simpler.

Note: It may look like Elliott Wave to some but keep in mind I haven't really read much about Elliott Analysis and similarities are coincidental. From what little I recall Elliott proposed last upmove to be greatest in magnitude (frenzy)? I am uncertain about it so forgive my misunderstanding.

DbPheonix: In case this doesn't qualify as Wyckoff analysis then move it to perhaps Chat Junkies.

[DbPhoenix]

Originally Posted by Gringo »

DbPhoenix: In case this doesn't qualify as Wyckoff analysis then move it to perhaps Chat Junkies.

On the contrary, it's very relevant: "By studying the relationships between these upward and downward waves, their duration, speed and extent, and comparing them with each other, we are able to judge the relative strength of the bulls and the bears as the price movement progresses." Thank you for bringing this to everyone's attention.

As for Elliott, his view on waves was somewhat different, but the "waves" are all formed as the result of traders' psychological impulses, and if one gets all mechanical about it, he may miss what the waves are trying to tell him. I wrote the following awhile back with regard to Elliott:

Put simply and in the context of investor psychology, there are "waves" of buying and selling that are governed largely by fear and greed (outside those that are the result of manipulation). In an uptrend, the greed is stronger than the fear, which is why these waves look the way they do, ie, "two steps forward and one step back".

It is only reasonable that the first wave of buying be tentative. After all, these people are still grappling with the fear. And when the reaction to this first wave winds up being relatively trivial, it is only reasonable to expect that buyers will be a bit (or considerably) bolder in the next wave. The inevitable reaction to that will stem partly from prudence, partly from remembrance of past mistakes, partly from fear. But, again, it's understandable.

The next wave, if there is one, can be aborted for various reasons, or it can result in a genuine panic to buy that sends it into the stratosphere, and this is one to be very careful of.

Waves on the corrective side are dominated by fear, and the first reaction gives those who were unable or unwilling to exit at the break to do so at the earliest possible opportunity, and this feeds the next wave down (along with those who thought it was only a dip and are trapped by the turn). If the selling pressure is over, that's where it stops, one of the characteristics which separates a correction from something worse (remember in The Abyss where the rig is dragged toward the edge by its own crane?). If something worse is in the cards, the ensuing "rally" will become yet another wave down.

Therefore, counting and measuring isn't so important as understanding what's in people's heads and empathizing with their fear and greed, unless one believes that his entry and price targets should be determined by these counts and measurements. It is essentially this dynamic which creates H&S patterns, Ws, Ms, triple tops and bottoms, etc.

[Gringo]

I have been hearing of quite a bit of skepticism about this market's upmove. Some expect the end of be near and others are claiming lack of fundamentals for this drive.

Below is chart of QQQ with some notes. The main point I am making is that unless the uptrend defined by the trend line is broken decisively we remain in an uptrend. Worrying too much about future and past simply confuses the mind. It's the present that concerns us and it is in the present we make our profits and losses.

Ah, fill the Cup! What boots it to repeat
How time is slipping underneath our Feet.
Unborn To-morrow, and dead yesterday
Why fret about them if today be sweet?

---Khayyam

Too much anticipation not only emotionally hurts us, but also makes it difficult to feel the waves by unnecessarily anchoring us down.

S/R is 42.6 and 41.6 (green box at top).
This s/r is equivalent to 1730 and 1690 on NQ.

[Gringo]

Below is chart of AAPL. Notice how it's close to reaching it's higest point ever. 190 and 200 are last hurdles. Is there going to be breather atleast at these levels where those who held through all the turmoil of past year are itching to break even? Anything is possible but 200 is a psychological round number as well which could prove tough.

I recall Jesse Livermore wrote in Reminiscences of a Stock Operator the importance of these round numbers like 100, 200 etc. In case price doesn't blast through them or goes only a few points ahead and starts reversing, generally, he considered getting cautious especially if market had had a bull run.

Interesting Note: Run in Apr 07 - Oct 07 is almost like the run Mar 09 - Sep 09. Both % wise and time wise.

No guarantees here but something to keep in mind. AAPL has been a tech leader in this up run and weakness in it may give some clues about health of the market.

[Gringo]

Q's are at trend line. If you notice the last two days have seen increased trading intensity as evidenced by higher volume. It appears supply did show up this time when price tried to climb up and pushed it down. Now this has happened in the past that after a day or two of sharp price declines further move downward halted and price shot up as soon as demand absorbed all this supply. Lets see what happens tomorrow.

Some believe that TL offers support and resistance. DbPhoenix declares it's not the case. I am still confused whether TL or MA for that matter offer support and resistance or just happen to coincide with real s/r and give the appearance of a significant area.

Daily chart of QQQ shows price stopping at TL. We did break below the green value area (rectangle) and are in no man's land on dailies.

To see closely what lies within this no man's land I zoomed in. The 60 min chart shows that we are right under s/r. Here My s/r could be somewhat off as well but I used what appeared more significant to me. These lines were drawn some time back to give me a better perspective for shorter term trading.

We don't know which way price will go. We only know here s/r are to buy or sell.

I have begun to find daily or end of day trading to be quite cumbersome and slow on my psyche. Perhaps because I watch price in 1min or shorter interval every day and can see so many things happening within minutes and hours, while EOD takes eons to reach significant levels.

Self discovery is one of the side effects of learning how to trade or perhaps it is the driving engine for success.

Sun Tzu claimed we need to know ourselves and the enemy (read market) to have success. Knowing only one of the two halves the chances of success.

[Gringo]

XLF has quite an erratic price movement which obscures the s/r. Looking at daily in conjuction with Vol by Price gives a clearer pricture of where bulk of trading tooK place and as a result which s/r are likely to be more significant.

30min chart is there to show the movements when we zoom in. There are smaller s/r as well for intra-day traders but not labled here.

[Gringo]

There is Weekly and daily analysis of GLD. I have bothered to include UUP because there seems to those who believe GLD and US Dollar are inversely correlated. This may be the case, however, I believe it's better to trade what you see than what may or may not be correlated. Even if gold and USD are correlated in some way there isn't a guarantee they have a cause and effect relationship.

Gold Weekly:


Gold Daily


USD Weekly


In any case, what USD is showing is that it's between a box and has had quite a down trend. Once it breaks above TL then we'll think about upside move. For now we we focus on the s/r in front of us. GLD is in NH ground. It has no prior resitance above and has grater potential to run, but no guarantees it will run.

Some will argue how can USD go up and gold go up as well when they are inversely correlated? It's possible if inflation is faster than the rise in US interest rates to curb that very inflation. Rates increases in other countries lag US rate increases causing USD to go up. But wait! Inflation is faster still, hence, investment money runs to the inflation hedge i.e., gold. Now gold's priced in USD hence causing people to buy USD to eventually buy gold leading to USD and gold prices to become positively correlated!

Oh, and I haven't even talked about the news that OPEC + Russia, China etc, are in secret meetings to trade oil in their local curriencies instead of dollar and middle east working on creating a unified currency. What will this do to USD, to the economy, to inflation, to political instability, to alliances? What will that do to inflation and USD? What about healthcare? Will that affect defecits and USD?

There are so many possibilities and each has merit in someone's eyes. I simply prefer others to lose sleep over what might occur while I use support and resistance to make my trading decisions.