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 April
24, 2005 Commentary (weekend edition)-
I am posting
the weekend commentary early, as I hoped I might, because I will be completely
absorbed this weekend working with a student. I will show some of the things I
showed this week in the members' section. Keep in
mind that I am showing just about everything in there, as far as setups, in
advance, and not after the fact.
I discuss my thoughts and setups,
and then do some follow up so that what I presented can be followed as it
unfolds. I have found this has the greatest educational value for those that
are really studying my methodology and trying to learn the intricacies and
nuances of what I do.
Let's follow up on the SPY setup that I have
been discussing. The SPY sold off hard off my previous setup, and while
everyone seemed to be covering his or her shorts I felt a 'wave 4 bounce' setup
was coming. Although I understood that this might not produce a lot more
downside on the next thrust, I thought it may also break down and I wanted to
see how this would play out. I put two key numbers on the chart (of course I
had full groupings on my working chart), and noted the possible test from below
for the ML lower //. Let's look at that.
The SPY was rising right up to the area, and
then I saw it all come together on the lower timeframes. I'll show this in the
ES, as that is where I would be playing the intraday aspect of the layout. As
far as the SPY went, my play was still in riding what I was holding off the
original large ABCD setup.
The ES formed a nice looking ABCD pattern
right at the 1.128 external retracement stop run shakeout point. It then
dropped like a rock, not giving me a single exit trigger on this timeframe for
the rest of the day. I had an idea where I thought this move might go to, and
that was the 1.272 external retracement area for this 'wave 4'. I had that on
my charts. Let's see where that fell on this SPY, and what happened
there.
The SPY went to just about exactly the 1.272.
The ES turned one hundredths of a point below the 1.272. It then rocketed
straight up, as I expected. The really crazy part is where it went to, and what
it did from there. I highly suggest that you put a ML set on the 13-minute ES
chart and see what you can discover.
I did this in the members' section, but I
can't do it all here. I will say that in combination with my Fib techniques it
pinpointed the rollover point and the end of the sell off point today, where
they came in, with what I think is startling accuracy.
Let's take a
quick look at something else I posted.
I spotted a great setup forming in JPM. JPM
went right up to the lower area, rolled over very smoothly, and dropped like a
rock. But that's not the amazing part. Seeing it unfold, and showing this as it
happened, was quite interesting, to put it mildly. I'll go to the 15-minute
timeframe.
After the steep sell off JPM comes right down
to the intersection of the ML lower // and the .786 retracement. I had this set
on my charts well before JPM even hit the PTA and reversed. Once it headed down
I put the retracement on the chart that hit the lower // where the price looked
to be headed. JPM came right off that area strongly. I made my management
adjustments when I saw the reaction, which was to scale out of some, and move
the stop down.
I then watched, and as JPM rolled back down on Friday afternoon, I
saw something else come together.
I can't show the specific retracement here,
since it is the one I discovered and laid out in Kane Trading on: A Totally New 5-Point
Pattern, and that number is not 'public' at this point. If you have the
book, put the retracement on and take a look at that. Now, that's something. I
had that number on the chart as soon as JPM rolled over, and it went right to
the spot where it hit the lower //. This is just amazing stuff. I find that
number works exceptionally well for me in finding ML // synergies.
The next
commentary will be next weekend's edition, posted by Sunday evening, May 1,
2005.
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