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 November
7, 2004 Commentary (weekend edition)-
Today I'm
going to cover a few business items real quick, and then we'll get to some
charts. First off, I want to thank everyone who has 'pre-ordered' Trade Management. I have to admit
so far the response has been very impressive. I know everyone has been waiting
around a long time for this release, but still, the enthusiasm really makes me
feel good about all the work I have done.
I also want to point out that if
you are a previous full book set buyer and you haven't ordered Kane Trading on: A Totally New 5-Point
Pattern, the special upgrade price (plus the free shipping), which is
substantially less than the regular price, expires at the end of this month. If
you want to take advantage of that, please e-mail me for the link, as I am not
going to post that link on the site.
Something else has come up that I didn't
think to mention in the last What's New update, related in a
way to the last item. If you are a full book set buyer and want to take
advantage of the new phone
support offering that is part of two of the new packages, I was told several
times that there is no way to do that. This is similar to the book situation
with Kane Trading on: A Totally New
5-Point Pattern. I kind of missed that one here.
Once I was
contacted by some of the people who had purchased full sets and wanted to take
advantage of this offering, I set up a page, just like with TNFP, to do
that. You don't have to be a 'brand new' full set buyer to partake in this,
just a full set buyer. (The reasons for this are obvious. The point of the
support is to discuss the methodology. If you don't have all the books, and
hence the background, I can't very well discuss it with you.)
If you are
interested in this offering but didn't know what to do, again, please e-mail me for the link. I do it this
way because I know that no matter how clearly I spell it out on the various
pages, some people that aren't eligible will still buy on those pages
regardless. I give the links out to those that request them to avoid the
unpleasantness of these types of illegitimate orders.
As my last
order of business, I am frequently asked what chat room I refer to in this
commentary. To avoid making everyone who doesn't know the answer to that
question search the archives, I will mention it once again. Scott Carney over
at Harmonic Trader runs a
real time chat room that everyone can participate in. I assist in there as much
as I can. It is purely educational, and no recommendations are made, but
real-time trades that either of us may actually take are posted. All issues are
covered from stocks to futures to FOREX, in many timeframes.
Questions and
participation is allowed. I mention it in here all the time not to attempt to
promote it, but to point out to readers that many of the things I discuss in
this commentary are not done 'after the fact', they are done as they unfold. If
the reader would like to see that happen in as close to 'real-time' as it is
possible to do, I suggest they check out the chat room. That way they could see
how I identify some of these potential opportunities as they come
together.
I get nothing from Scott as far as remuneration for sending people
over to check out the chat room, or for assisting in there. He usually runs a
limited duration free trial, but you'd have to check his website out and see
what he is doing. I am in no way involved with that at all. If you like the
service, which is only offered, I believe, as part of his entire monthly
subscription package (or with certain other purchases I think), you can
subscribe.
That's between you and Scott, and, again, I get no
remuneration if you do. I think he has a great package at a great price (and
some insane software), but I am not trying to push that. I want it to be clear
that I am mentioning it in here from time to time so that readers will know
that a venue exists if they want to observe some of these setups discussed not
only in this commentary, but also as they unfold. Enough said on that.
Let's look at
some charts. I'm going to show something I saw in the e-mini Russell on Friday
afternoon. I'll start with a look on a 13-minute chart.
The Russell was forming a really nice looking
ABCD pattern, set up to continue the uptrend. The first step for me would be to
set up the numbers from the pattern itself. Let me add those to the chart, and
I'll zoom in a bit.
A nice, tight grouping formed. So, is that
it? Am I ready to trade? No, not even close. I want to see if this area is
demonstrating a large amount of 'harmonicity'. In fact, how did I decide
which alternate ABCD to set my grouping up around? You see that's part
of what is unique to my methodology, and what I explain in detail in the
books.
In my actual work setting up my charts I have multiple ABCD
groupings on the chart. I then look to see which (if any) are demonstrating a
high degree of 'harmonicity'. You are seeing more the 'end result' here, since
I already know which one I want to focus on.
This is not because I know how the
example works out, but because I looked for the 'harmonicity', as I discussed
in Kane Trading on: Advanced
Fibonacci Trading Concepts, and further clarified in Kane Trading on: A Totally New 5-Point
Pattern. Let's do that here, as long as you keep in mind that I can
only touch on what I am fully doing in this process. I can't explain it all in
this column, even if I wanted to.
Let's look at a 60-minute chart.
I keyed off of three swing-lows and added
three retracements onto the chart. They all grouped together within about a
half of a point. For a 60-minute chart that is remarkably tight. Let me add
those onto the 13-minute chart where the ABCD pattern and grouping are already
highlighted.
They fell right in the same area as the
pattern grouping. This is what I am looking for. Although the grouping may seem
a little spread out, it's only because this is a fairly close up view of the
area. The entire grouping is under three-quarters of a point wide, on a
13-minute chart. If one felt that lower retracement was an 'outlier' it could
be deleted off. If so, the grouping is only about a half of a point
wide.
Let's see how this reacted to the area. I'll drop down to a
1-minute chart, just to show the minute detail.
The two horizontal lines are the approximate
bounds of the grouping, ignoring the one lower 'outlying' retracement. The
grouping has clearly been penetrated, so it is immaterial if that retracement
was ignored, or not. The Russell reacted strongly to the area, and gave plenty
of movement for a potential trade for me.
This is a case where the setup was
from a higher timeframe, but with the week coming to an end, I was forced to
play on a lower timeframe for a smaller move. I still based the trade on the
larger setup and 'context', but just went to a 3-minute as the traded timeframe
instead of the 13-minute. This is a lot like what I do when I trade a tick
chart but base it on setups from the 3-minute and/or the 1-minute charts. I
adapt to the situation at hand.
Let's finish with a look at the QLGC play.
This one is still progressing quite well.
QLGC is still going up, and is in management
mode. What I am doing right now is fully laid out in Trade Management. I am still
working most of this play with my trailing stops and scaled exits in place. I
just let the plan unfold now.
Gold is very interesting, but there's just
too much to it to cover at this point. In brief I started to scale out of that
as it came back down, and it was a net small (small to medium) winner, with
every scale out above cost. I just didn't want to take that much heat. It then
rolled back up to new highs. This area is obviously of key significance. I made
two plays, and both were very favorable, but neither was a 'runner'. That's
fine, since I am more than happy with singles and doubles, and the occasional
big run.
The next commentary will be the mid-week edition, posted by
Wednesday evening.
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