Technical Analysis - Silver 10/31/11

What do you think about silver right now?  Do you think the silver market cares what you think?  It doesn't.  

One of my best trades this year was to get out of the silver market before it broke down.  My expectation after silver stabilized off its lows was for a little more intermediate term resolution to the downside.  The silver market does not care about my expectations.  So far I have been wrong about this idea of intermediate term downside action. 

I have not given up on the idea.  It just has not happened yet.  It may not happen.  I don't really care.  A good trader needs to learn not to care about being right.  Trust me on this.  I used to care.  A lot!  I don't care anymore.  I am now trading to make money.  I used to trade to be right.  I made money when I cared, but I probably also lost more than I would if I had not cared about being right.  The only thing I care about in trading now is exponential returns and linear losses.  I care about killing losses off and managing risk.  That's all.    

Nothing has really happened in the silver market to make me want to go long silver again.  One of my new automated systems is now long silver.  That system is still in the development process.  I am ignoring the system for now.  Perhaps I won't ignore it after development is complete.  Anyone who knows systems knows they are typically not very accurate and rely more on risk management tactics.  

The charts I have been posting here are loosely related to entry and exit signals of trend following systems, but also employ a lot of discretion.  Let's see what they say about silver this week.

The weekly chart still has a downtrend present.  It is being tested right now, but it is still technically a downtrend by these measures.  

When I first started looking into markets, someone said "A kid with a ruler can outperform most money managers".  I believed that statement.  I still believe that statement.  I might be a little nuts though.   It's a crazy world.  Sometimes crazy ideas work out really well.  Sometimes they don't.   

Silver's daily bar chart shows that an intermediate term uptrend has emerged.  Will it persist?  I don't know and I don't care.  Do I see a great trade set up right here?  Not really.  I would not want to be long if 29.927 was taken out to the downside though. 

Weekly chart shows a downtrend.  Daily chart shows an uptrend.  We usually trade in the direction of the next larger trend.  

Our moving average envelopes tell the same basic story.  Weekly downtrend.  Daily uptrend.  Limbo.  

RSI is in downtrend range on both charts.  That's something to think about.  Does it tell us the future?  No.  No one knows the future. 

Same mixed picture with Silver's Dynamic Trailing Stop.  Weekly chart is in downtrend mode.  Daily chart is in uptrend mode.  

ADX shows non-trending behavior on both charts.  

No changes to my current Elliott Wave interpretation of silver.  Changes here typically come when interpretations are negated.

Current Stance

Long Term: Flat trading positions

Intermediate Term: Flat

Definitions: 
Flat = no position / not long or short the market. 
Sell Short = positioned to attempt to make money on price declines
Buy / Long = positioned to make money on price advances
Hold = hold a long position
Hold Short = Hold a short position

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Best Trading Advice

My long time friend has the best trading advice.  My trading has seriously improved a lot after having a few chats with him recently.  His advice is pretty unconventional and can be summed up as 'Don't take any B.S. from the market!'.  

I took it to mean I should kill losses off more quickly and get out of trends as soon as they start to breakdown.  I call it the Lintzner no B.S. system.  Some of you now know who the advice comes from.  

Technical Analysis - S&P 500 10/28/11

I'm actually writing this on Saturday the 29th.  10/28 was a market day, so it probably makes more sense in the title. I had other things to do after the market closed on Friday.  

What an exiting week in the S&P 500!  Thursday was really exciting.  Some of you might have caught my post on 10/26 about how things felt like they were heating up.  Sometimes you can just feel the tension rising.  Sometimes tension rises when you least expect it.  Remind me to write about my single largest (proportional to capital) losing day some time. 

Tension in the S&P has not stopped rising.  No one is wrong yet.  Everyone is claiming they are right.  None of them know if they are right yet.  They my believe what they say, but they don't know.  The bulls are still at risk.  The bears have not yet been defeated.  Sure, they are licking wounds, but their case has not been destroyed.  I might be a little biased.  There is a special place in my heart for the bears and downtrends in general.  Does that make me a bad person?  I hope not. 

Usually downtrends are really great for making money.  Downtrends also set up buying opportunities.  They tend to move faster than uptrends.  The recent uptrend looks a lot like a downtrend in that respect.  Some say that bear markets have the best rallies.  Is this a bear market rally?  I don't know.  I am a mercenary trader.  

Bulls and bears can both be shot.  I love animals, but you get the point.  The best thing to be in the market is a mercenary.  Or maybe its a ninja.  Someone help me think a of a better metaphor!  We want to catch the herding animals when they go to slaughter.  We want to wait to see which team is most likely to win.  We want to join that team. Life isn't always pretty.  This is just the truth.  Sometimes we get killed too.  That's why risk management is our number one goal. 

Let's get to the charts.

Weekly chart showing follow-through to the recent break out of the prior downtrend.   

I actually want to focus a little more on the daily chart this week.   The blue and red lines are the current battle lines.  At least the ones I will pick my team from.  It pays to be a fair-weather fan in the market (why do so many people watch football as if the outcome of a game is going to change their life?).

The most recent downtrend was broken.  Follow-through has happened.  Are we now in an uptrend.  Sure!  A tactical trader could be legitimately long here and have a stop at the red line or above.  I went long this week in my short-term system and even in some discretionary trading.  But just doing something because I did it is a path to failure.  Traders need to think for themselves.  Being something other than tactical in your trading is also a losing path.  The market is your boss.  You are not the market's boss. 

Back to the battle lines.  A break above the blue line destroys the current bearish case.  There will be no more downtrend if the blue line is broken.  It is really that simple.  Can a new downtrend emerge right after the current one is taken out?  Sure!  The market can do whatever it wants.  It is a tricky beast.  

A break of the red line would currently leave what Elliotticians call a three-wave sharp in place.  That would be bearish.  The downtrend would likely reemerge.  It is really that simple here too. 

There are reasons even bears would expect the potential of a couple of more short term subdivisions higher from here.  Your main battle lines are the blue and red lines.  Almost anything between those lines can happen right now.  If you were to sell short here and put a stop at the high from Thursday, you would probably fail.  Such behavior would not be tactical.  It would be stupid.  If you were to go long here and not close the position if prices moved back down below the red line, then that would also be stupid.  

Two main steps: 1)See which team is winning.  2) Join that team.   Just ask Ed. 

The weekly moving average envelope is now in neutral territory.  Daily MA envelope in uptrend mode.  It's a mixed picture.  It could definitely be the birth of a new uptrend, but its also usually a good idea to trade in the direction of the next larger trend.   


RSI is still in downtrend territory on the weekly.  Most people only use RSI as an overbought / oversold and divergence indicator.  Connie Brown shows how it can be used as trend indicator.  Daily RSI is in uptrend mode.  

It's a mixed bag right now.  Good thing you have battle lines drawn.  The bad thing is that you should not be letting me draw them for you.  We should all be more interested in how others think about things than we are in the conclusions themselves.  

Weekly Dynamic Trailing Stop has moved into uptrend mode.  Daily DTS is in uptrend mode.  The daily DTS level should probably be considered by anyone holding long positions right here.  It's tighter than the battle lines we drew earlier.  DTS does not have the same analytical meaning as the battle lines either.  It's just a tactical way to lock in profits and cut losses.  We use this as an exit indicator -cut losses short / let profits run type of thing.

ADX (yellow line below prices) measures trending behavior.  Weekly ADX shows non-trending behavior right now.  Daily ADX registers new trending behavior.  Which one is correct?  Both.  Which one will win in terms of next significant trend?  I don't really know right now.  That's why we drew battle lines based on price. 

Our current top Elliott Wave count (we have alternates) tells us that this scenario is negated if prices move above the highs from May (the blue battle line).  Do I care if this scenario is negated?  No.  Should you care?  Are you in the market to make money or to forecast and occasionally have the joy of being right?  You decide.  The market will give you what you want.  It will also find your biggest and most unknown weaknesses.  

 
The VIX has become more complacent in recent weeks.  Something to think about.     

It seems like the Put/Call would still be a bit lower if there were immediate probability of the current rally being completed.  There will probably be a week's time in between this and the next full S&P post.  A lot could happen in either direction during that week.  It's a good thing we have battle lines drawn. 

Current Stance:

Long Term: Hold Short (if NOT currently short, stay flat for now, but prepare to possibly sell short -see battle lines mentioned earlier in the post)

Intermediate term: Flat (preparing to possibly sell short again -see battle lines mentioned earlier in the post)

Short term: 
My propriety short term system is currently allowing trades on the long side at the moment.  Changes in directional orientation as well as entries and exits in this system occur more frequently than posts to this blog.

Definitions: 
Flat = no position / not long or short the market. 
Sell / Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position     

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Robert Prechter Explains The Fed, Part III

The world's foremost Elliott wave expert goes "behind the scenes" on the Federal Reserve
By Elliott Wave International 

This is Part III, the final part of Elliott Wave International's series "Robert Prechter Explains The Fed: The world's foremost Elliott wave expert goes 'behind the scenes' on the Federal Reserve." Read More.

Peter Schiff to Occupy Wall Street - "I am the 1%, let's talk"

Peter Schiff opens dialog with the Occupy Wall Street crowd.  Nice work! Education is important and this is one way it can happen.  I have to admit that I have not thought outreach to OWS would be fruitful.  Schiff may be proving me wrong.  I'm glad he got video of all of this. 


 

Technical Analysis -EURO 10/27/11

European leaders reached an agreement "to expand a rescue fund for indebted nations and reached an accord with lenders on writedowns for Greek debt" today.  I don't really trade off of news, but we could consider some of today's action as possibly a knee jerk type reaction to that news.  In actuality, today's action was just follow through in patterns already established.  None of the macro markets we cover here turned in a new direction.  They just accelerated in their current direction.  People find it hard to believe, but markets are usually ahead of the news. 

Although we currently have a long-term bearish view of the EURO, our intermediate term stance has be neutral.  Let's see if there is anything in the charts to cause us to change that stance this week.

The long-term price pattern in the EURO still looks like a large distribution pattern to me.  

The EURO's intermediate term downtrend is officially broken for now.  Glad we were out of the market for this.

Weekly moving average envelope for remains in downtrend mode, while the daily is solidly in uptrend mode.  A mixed signal in the EURO. 

Weekly RSI is still in what can be considered downtrend range.  The daily RSI is moving into uptrend range.  More mixed signals. 

At this point, the EURO's Dynamic Trailing Stop (something we often use for an exit signal) is in uptrend mode on both time frames.  

Weekly ADX (yellow line below chart) is not currently registering trending behavior.  The daily ADX on the other hand has started turning up a bit in response to this sustained rally.  

My overall Elliott Wave interpretation has not changed.  If prices break to new highs above wave (2), then it will have to be discarded or modified.  If, on the contrary, prices start breaking down soon, and break below recent lows, the look out. 

In fact, a break below 1.3645 would probably have me thinking about taking a swing at short selling opportunities in this market. 

Current Stance

Long Term: Hold Short (or hold USD)

Intermediate Term: Flat (planning to sell short if trend breaks back down).

Definitions: 
Flat = no position / not long or short the market. 
Sell / Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position 



You will probably find the following read interesting: 

Robert Prechter Explains The Fed, Part III
The world's foremost Elliott wave expert goes "behind the scenes" on the Federal Reserve
Elliott Wave International

Defender of Free-Markets

Rarely defending free-market principles, politicians are useless most of the time.  Both Republicans and Democrats typically advocate some type of command and control economy over freedom.  Ron Paul is an exception.  He does an excellent job in this interview. 



Krauthammer, through the questions he asks, outs himself as basic authoritarian.  I've never understood why people who claim to favor small government and free-markets like Krauthammer, but I run into them sometimes.  

Also notice how Ron Paul quickly responds that he would appoint Jim Grant as Fed Chair (as he works to phase out the Fed).  Grant is brilliant, and Paul is brilliant to recognize that. 

"I only have one subject I am interested in.  That is the subject of liberty" -Ron Paul, defender of free-markets.  

Fun Times at the S&P

The S&P 500 futures market has been pretty fun the past few sessions.  Usually pretty systematic and directional, I broke character at did several short-term discretionary trades in both directions -long and short this week.  In talking with one of my trading buddies afterwards, it seems he was seeing the same stuff.  That feeling of being in harmony with market behavior is really enjoyable and almost athletic feeling (don't worry, I get plenty of real exercise). 

It could get interesting over the next few sessions.  A break below 1216.50 on the December e-mini would possibly be fairly significant on the intermediate term.  That's around 1221 on the cash market.  Conversely, a break above 1252.50 on the mini / 1256.55 on the cash might be somewhat significant in the other direction.  

That puts the market between two key battle lines following a recent rally.  Of course the market can do whatever it wants.  It could just turn into one big choppy and sideways mess here if it wants, but I have to admit that I am chomping at the bit a little after the past few days.  

With the S&P worked into this corner, there are so many ways to set up trades up or follow which ever way it breaks out.  It's got to come out at some point.  When it does, it is likely to be a good trade for whoever is on the right side.   

This is not my usual weekly S&P post.  That will come sometime this weekend.  Here is last week's.  I just wanted to share a little of the excitement.  Kind of feels like a storm is expected to bring big powder days (if you snow ski, you get it) dead ahead.  

Technical Analysis - Gold 10/26/11

It's Wednesday.  That means it's time to post gold charts. 

One of my better trades of the year was a non-trade.  It was a decision to move to the sidelines in the gold and silver markets before those markets really took a dive.  This does not relate to core physical holdings.  I'm talking about speculative futures trading.  You can see the dealer we like to use for domestic physical holdings via links down on the right hand side of this page. 

Gold has recently consolidated and is moving up a little at the moment.  I never reentered because I have been expecting resolution to the downside on the intermediate term.  Although not confident enough in this expectation to sell it short, I still have not reentered long.   The market may or may not be in the process of proving me wrong (not a big deal to a trader, really).  Limbo is actually where we are at right now.  I don't see solid indication either way at the moment.  Sometimes, you just have to wait things out a bit.   Let's see what the charts look like.  

The weekly chart's uptrend has actually held up pretty decently.  Prices initially broke through, only to then move back up and run right along the line.  If they break again, we will probably get that downside resolution.  If not, then we should be on the way to new highs. 

Gold's daily bar chart clearly shows that prices are trending up on the intermediate term right now.  That was decided with yesterday's break above the 1698 level. 

The solid white lines are parallel lines drawn first across the lows and then placed at the first high of the the consolidation.  If prices are unable to break above and move out of this parallel, then the chances of this being only an upward correction are still relevant.  

The dotted lines are parallel lines drawn from the pattern low (most recent lines) to the current pattern high.  Then a parallel is placed at the most recent pattern low (in an uptrend).  A break of these dotted lines to the downside would be indication of downside pressure.  Unlike the solid white lines, if prices keep moving higher, the dotted lines will keep being redrawn until finally violated.  

A solid red line has been placed above prices at an area of prior consolidating action.  This represents possible resistance.  

Both the weekly and daily moving average envelopes are actually still neutral.  The daily lines have all turned up, but the signal line has still not broken out.  Trend following indicators lag, but they help us ride waves.  

RSI could be considered to be in uptrend to neutral range on the weekly chart, and looks like it definitely found some support.  RSI on the daily chart is in downtrend range and might be approaching resistance.  Its a battle.  Let's see who wins before we pick sides.  

Gold's weekly Dynamic Trailing Stop is still in downtrend mode, but the daily DTS is now in uptrend mode.  Remember, this is a tool we use for exits, not entry.  


ADX continues to register non-trending behavior on both time frames.  

Let's watch and see what happens by this time next week. 


Current Stance

Long Term: Flat

Intermediate Term: Flat

Definitions: 
Flat = no position / not long or short the market. 
Sell Short = positioned to attempt to make money on price declines
Buy / Long = positioned to make money on price advances
Hold = hold a long position
Hold Short = Hold a short position

Evaporation of Wealth on a Vast Scale
How $1-million can disappear
By Elliott Wave International

Bursting of the "debt bubble": It's the financial story of our age and it's happening before our eyes. The full scope is hard to keep up with because it's unfolding at various levels, such as... Read more.

Does Stimulus Spending Work?

Technical Analysis - Swiss Franc 10/25/11

Although the Swiss Franc is still not very interesting to me at the moment, there are some things happening that we should keep our eye on.  A possible short-term / intermediate-term bearish set up is forming, and it could lead to even bigger opportunities in the months to come.  

I'm currently planning to sit this short-term pattern out because much of my current focus is on a systems programing project right now (really want to get this stuff worked out -lots of work!!!).  But we will be tracking this due to the larger implications that may be unfolding.   

We can see that the franc is in an upward retracement at the moment.  This may lead to an important long-term Elliott Wave pattern.  We'll get to that in a minute.  

Most importantly on this chart is the thick red line.  That's a key support area.  Why?  It's pretty simple.  Prior consolidation resistance becomes support after it is broken.  Notice how the uptrend we were happy to ride found support in this area after finally breaking through.  We will be watching that level for clues if this little upwards retracement (spell check hates that word, but it is a common term in Technical Analysis) turns back down.

Any of you (sometimes I wonder if I'm talking to myself) who are familiar with Elliott Wave, are probably noticing that the chart above could easily turn into a five down impulsive pattern.  If you wanted a short or intermediate-term opportunity, you could probably look for a place to short during this rally with at stop at the wave-one termination point (there are no certainties in this game; use stops!!!).   

I'm probably on the sidelines for this one, but this pattern is starting to get interesting.  It may be setting up to provide several opportunities over several months.  If we get some good Elliott Wave patterns in this market, I will start labeling them the way we've been doing with the S&P 500 and Silver.  

The Swiss Franc's weekly moving average envelope is still in downtrend mode, while the daily MA envelope is in uptrend mode.  I know; rocket science, right!  Keep It Simple Stupid. 


RSI can be considered to be in downtrend range on both charts.  If the daily RSI moves up to touch it's upper resistance line than then turns back down to break the lower support, it would be indication of that possible fifth wave down mentioned earlier.  

The Dynamic Trailing Stop is now in uptrend mode on both the weekly and the daily time frames.  We use the DTS as an exit mechanism, so this is not really important while we are on the sidelines. 

ADX displays non-trending behavior on both time frames. 

At the time of this post, 1 USD = 0.87784 CHF.

Current Stance 

Long Term: Flat

Intermediate Term: Flat

Definitions: 
Flat = no position / not long or short the market. 
Sell Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position   

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CFTC Issues New Dodd-Frank Compliance Rules

You can read about it at WSJ. 

The bottom line from what I can see is that this will not affect most futures traders.  Mostly, this is about the OTC or Swap market.  

Maybe this will affect the very largest of players out there, but this will not change operations for little guys like me or even most managed futures / trend following funds.  Any trader who is going to be able to stick around already limits his/her position size for reason of risk management.  If you are running enough money to where this affects you, call me - we'll create an LLC and I'll trade some of your money for you.  Just kidding!  I don't take clients (yet?), that is unless you want to persuade me.  

 The CFTC explains the new rules in a FAQ pdf available here. 

Of course, it's important to notice what Dodd-Frank is really about.  It's about people and politicians wanting to blame someone else for losses.  It's about striking out to hurt someone when you feel hurt yourself.  But it's still good to know what and when new rules of the game will require changes on our end.  I am happy to say that this does not seem to be one of those times for us.

Some really smart friends have asked me about this a number of times over the past several months.  My speculation was that this would not change what we do, and I am happy to say that is now my current understanding of the new rules.  

Technical Anlaysis - Silver 10/24/11

Silver is in limbo land right now.   I'm still looking for a new short to intermediate term leg down, but I've been wrong before (many many times!).  I really don't care if it comes to fruition or not.  Part of trading is knowing that most trades do not work out.  The important thing in trading is how you have determined to react when a trend / outlook is validated or negated.   We are still on the sidelines in metals as far as our active trading is concerned.   


The silver chart set is usually posted once a week and usually on Monday.  Consistently  tracking our markets helps us stay in tune and be ready to pull the trigger when called for.

A downtrend is still present on the weekly bar chart.  

The daily chart of silver above is really what I meant by limbo.  You can see that the intermediate term end of the downtrend was violated to the upside, but prices have not really followed through further to the upside.  Since that time, a simple trendline was broken to the downside, but prices are still kind of hovering around.  For anyone who is long or short here, there are clear short term levels to place stops.  

Silver's weekly moving average envelope still in downtrend mode.  The daily MA envelope is still neutral. 

RSI is in downtrend range on both charts.  

 
Silver's Dynamic Trailing Stop is in downtrend mode for both time frames.  


ADX registers non-trending behavior on both charts.  

No changes to my current Elliott Wave interpretation of silver's price action. 


Current Stance

Long Term: Flat trading positions

Intermediate Term: Flat

Definitions: 
Flat = no position / not long or short the market. 
Sell Short = positioned to attempt to make money on price declines
Buy / Long = positioned to make money on price advances
Hold = hold a long position
Hold Short = Hold a short position

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Peter Brandt is right

About the difference between a market opinion and trading. 

Technical Analysis - S&P 500 10/21/11

This week's action in the stock market is technically bullish in terms of basic price trend, but it also is right in line with what our Elliott Wave interpretation suggested.   Our Elliott Wave interpretation was only bullish on the intermediate term, while remaining bearish on the  long-term.  

Are we approaching a potentially significant turn back down in the market?  Of course no one knows that for sure, but I do suspect such an outcome has significant potential.  We have to always be careful in these situations -situations where one of our methods suggest a pending turn while others identify an existing trend.  The number one goal is to ride price trends with good risk management tactics in place, not to pick tops and bottoms.  So let's see what the price action in the S&P 500 index is telling us. 

Remember all of these charts can be expanded in most browsers. 

The weekly chart clearly shows us that the downtrend has been broken (temporarily?).  Of course, this is not news as the downtrend was being violated as of last week's post.

The S&P's intermediate-term trend is up.  Based on the Elliott Wave pattern, which we will get to further into the post, I will most likely be willing to enter short positions if prices break below the short-term consolidation area that occurred this week -below 1191 to 1197 that is.  

As was the case last week, the moving average envelopes give us a mixed picture.  While the weekly MA envelope is still in downtrend mode, the daily MA envelope is pushing ahead in uptrend mode.  We usually try to trade in the direction of the next larger trend.  


Speaking of mixed pictures, look at the RSI on both time frames.  The divergence that, in prior posts, warned of the pending rally has not yet produced enough action to push either of the RSI measures into uptrend territory.  Especially the weekly measure.  It's all still looking like an upwards correction in an emerging bear trend to me (but I've been wrong many many times, and expect to be wrong many many more -part of the game of managing probabilities).  

Weekly Dynamic Trailing Stop remains in downtrend mode.  Daily DTS remains in uptrend mode.  Looks like the daily DTS provides an exit level right around the area I previously stated would be the area that would entice me to get on the short side of this market.  Indicators are just more refined and automated ways to tell you what the basic price action already can communicate on its own. 


Recently turning down a bit on the weekly chart, ADX registers NON-trending behavior on both charts.  

If you follow these posts on a regular basis, you will remember that our idealized lines shown on the chart above were pointing up and then down.  You will notice the upwards pointing line is no longer present.  Minimum requirements for a countertrend rally have been accomplished.  I'm not saying the rally is over (how would I know until after it turns?), I am just saying that it could end at any time.  Likewise, it could decide to move on up towards 1275 or something if it wants.  

What we do know is that if the count shown above is valid, then prices cannot move above the highs registered in May of this year.  A rally above those highs would negate this Elliott Wave interpretation. 


If this interpretation ends up being validated by future market action, then it gives me no pleasure to say it but, the Occupy Wall Street happenings are probably just the start.  OWS is just another example of social mood turning negative.  If we go back into major bear phase (stock market is the best real-time register of social mood; but perhaps some metrics and data will come out of social network studies soon), then this type of thing will only get worse.  

From what I can tell, the OWS movement has no consistency on first principles or even what they want in terms of outcomes.  They are just angry.  Hey, I think they have plenty of legitimate things to be angry about,  but the fact is that many of these legitimate things were present when social mood was higher.  Where were the protests then?  

It seems that they are also angry about illegitimate things in many cases as well.  Some of them carry signs saying "Eat The Rich" and the like.  And, I have seen interviews where some of the individuals involved with the occupations basically say they just want things.  School paid for, homes paid for, guarantees of this or that positive benefit.  Presumably, they want a government empowered by them to take things from others and then provide those things back to individuals the OWS people (if they can find consensus) approve of.  Like I said earlier, there is no lack of anger, but very much a lack of consistency on first principles.  

These requests for positive benefits (as opposed to negative rights -just being left alone) highlights another aspect of negative social mood.  Now people are becoming more and more polarized -moving to the fringes.  Unfortunately, many of these individuals seem to be moving towards the authoritarian fringe of forced collectivism as opposed to moving towards a fringe advocating more voluntaryism and application of the Non-Aggression-Principle.  That's not a good thing.   




Personally, I like the following sign the best: 

Not only is the sign funny (we should all laugh at life a lot more), it also sums up what I was saying before.  These groups of individuals have all decided to get angry now.  Some of them have no coherent or consistent reasons for now vs earlier than now, they just are angry now.  Obviously angry enough to make signs -even signs about signs! 


Something I wish these people would think about before asking for more initiation force by government is the fact that many of the things they are complaining about result from government.  It would be nice to see more people arguing for voluntary interactions and less initiation force.  Do they not see the irony in complaining about government favoritism to banks, while also asking for government favoritism for whatever positive benefit they want?  They should just be arguing for more voluntary interactions,  but it seems we are just seeing a lot of folks who want more force and more control over that force -probably not a pretty picture.

OK, OK, I got off on a tangent.  Sorry.  Elliott Wave is a measure of behavior and herding, so it tends to get you thinking about these things even if you are simply looking to trade a price trend. 


Usually I post a VIX chart and a Put/Call chart here, but the site I usually grab them from has not updated them for Friday (may come back and post them once updated).  On another site, I can see the Put/Call has moved down as we suggested, but I would not say it is giving a sell warning just yet. 


Current Stance:

Long Term: Hold Short (if not currently short, stay flat for now, but prepare to sell short)

Intermediate term: Flat (preparing to sell short again -one trigger level mentioned earlier in the post)

Short term: 
My propriety short term system is currently allowing trades on the long side at the moment.  Directional orientation as well as entries and exits in the system occur more frequently than posts to this blog.

Definitions: 
Flat = no position / not long or short the market. 
Sell / Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position  

The Simple Magic of Moving Averages
How Moving Averages Can Alert You to Future Price Expansions
Elliott Wave International

Keynesian Economics in under 1 minute

This is so funny, and so true!  Keynsians really do think like this. 

 

Technical Analysis - EURO 10/20/11

The Euro's long-term pattern continues to look one of distribution to me.  

Parallel lines drawn on the EURO's daily bar chart continue to hold recently upwards moving  prices at bay for now. 

The EURO's weekly moving average envelope remains in downtrend mode, while the daily holds it's recently attained uptrend mode. 

RSI seems to be the tie breaker here.  Both RSI measures could be considered to be in downtrend mode.  It's usually a good idea to trade in the direction of the next larger trend.  

The Dynamic Trailing Stop is in downtrend mode on the EURO's weekly chart, and in uptrend mode on the EURO's daily chart.  

ADX registers trending behavior on the weekly chart, and non trending behavior on the daily.  Because it is a lagging indicator, the trending behavior registered on the weekly chart is relative to the recently emerging potential longer term downtrend.  The non-trending behavior registered on the daily chart is related to the recent intermediate term uptrend. 

My overall Elliott Wave interpretation remains unchanged.  

Current Stance

Long Term: Hold Short (or hold USD)

Intermediate Term: Flat (planning to sell short if trend breaks back down).

Definitions: 
Flat = no position / not long or short the market. 
Sell / Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position 

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Technical Analysis - Gold 10/19/11

My expectation has been for the intermediate term action in gold to resolve to the downside.  The sidelines are my home until that expectation is resolved through validation or negation.  Let's see what the charts look like. 

Gold's weekly price bars are still holding along the long term parallel trend-line.  Will it continue to hold?  

Gold's daily chart is in a bit of a limbo-land situation right now.  If prices break down from here, then fine, but a price break back above 1698 would lead me to consider revision of my current intermediate term expectations. 

Neutral is the current position of gold's weekly and daily moving average envelope indicators. 

RSI could actually be considered bearish rather than neutral on the weekly chart.  The daily chart's RSI is definitely in downtrend mode - more reason to continue expecting resolution to the downside.  

 
Weekly and daily Dynamic Trailing Stop readings are in downtrend mode.  

ADX registers non-trending behavior on both charts. 

Current Stance

Long Term: Flat

Intermediate Term: Flat

Definitions: 
Flat = no position / not long or short the market. 
Sell Short = positioned to attempt to make money on price declines
Buy / Long = positioned to make money on price advances
Hold = hold a long position
Hold Short = Hold a short position

Evaporation of Wealth on a Vast Scale
How $1-million can disappear
By Elliott Wave International

Bursting of the "debt bubble": It's the financial story of our age and it's happening before our eyes. The full scope is hard to keep up with because it's unfolding at various levels, such as... Read more.

Time to think

We all need it.  Sometimes mine is in the gym or outdoors.  Sometimes, it is just sitting quietly and letting everything that has happened process peacefully.  

Over the past six days (yes, I did some work over the weekend), the programming skills have improved.  Fourty-two basic and working automated trading systems have been authored from scratch.  Before you think to much about that number, just realize these are pretty basic -part of a ground up effort.  But, it's still a big number for me (I'm still new at the whole code writing thing). 

During this time I realized a few things:  The first discovery (sometimes I forget) was that I am not a robot.  I am a human and need rest and relaxation.  Particularly the eyes and brain need a break from this type of work more than the body.  You just can't think or see as clearly when down time is not allowed for.  

My second discovery was that some really good ideas and increased understanding of the logic involved come from a schedule that includes sitting and working at it for a while and then taking a good long break.  Seriously, more ah-ha moments have happened the past seven days during down time than during work time.  Of course the work time is also a key component.  Work time and down time -a symbiotic relationship.   Down time is more fun when much has been accomplished.  Work time is more productive when we take care of ourselves with exercise and rest.

I was probably a little out of balance by being to heavy on the play vs work side when I used to live in Squaw Valley, CA (Tahoe).  So, this time in TN has possibly brought back in some proper balance that I can bring with me when (still a tentative expectation) I return to the slopes.

The third (re)discovery is that I really like music.  Its not like I ever really stopped liking it, but have had a tendency to listen to talk radio or lectures (threw the TV out six or so years ago) during the trading day.  I do really like thinking about the issues of the day, but what can I really do about them?  For any political question my answer is to apply the Non-Aggression-Principle, so I am very much in a minority anyway.  The best thing I can do is build another business.  So, I have been turning off the politics and economic lectures and turning on the music.  Music (all kinds of music, depending on the mood) helps me write code.  Shoot, it just helps me enjoy the day more.  Wow -the enjoyment meter has really gone up lately!    

OK, enough downtime.  Time to get back to programing.     

Robert Prechter Explains The Fed, Part II

The world's foremost Elliott wave expert goes "behind the scenes" on the Federal Reserve
By Elliott Wave International 

This is Part II of our three-part series "Robert Prechter Explains The Fed." "Let's attempt to define what gives the dollar objective value. As we will see in the next section, the dollar is 'backed' primarily by government bonds, which are promises to pay dollars. So today, the dollar is a promise backed by a promise..." Read more.

Technical Analysis - Swiss Franc 10/18/11

The Swiss Franc's downtrend has given in to a little pause recently, but I still don't see an interesting trade set up.  

As could be expected, a former consolidation area has provide a little buoyancy to the Swiss Franc right here.  Although the original downtrend line has been breached to the upside, this is not enough to get me interested again. 

Although the daily bar chart (right) has now come out of it's downtrend mode (momentarily?), the longer term weekly bar chart (left) is still in downtrend mode.  In general, it is best to trade in the direction of the larger trend. 

RSI on both charts is in downtrend range.  

The weekly bar chart's downtrend might be in jeopardy in terms of the Dynamic Trailing Stop.  Prices are testing it, and have broken the daily DTS into uptrend mode.  Since this is more of an exit tool than an entry, it does not mean much to me right now.  

ADX continues to register non-trending behavior on the weekly time frame, and has recently moved out of trending mode on the daily time frame as well. 

At the time of this post, 1 USD = 0.89929 CHF.

Current Stance 

Long Term: Flat

Intermediate Term: Flat

Definitions: 
Flat = no position / not long or short the market. 
Sell Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position   

Robert Prechter Explains The Fed, Part II
The world's foremost Elliott wave expert goes "behind the scenes" on the Federal Reserve
Elliott Wave International