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 October
9, 2005 Commentary (weekend edition)-
Today I'll
discuss a few orders of business, and then we'll get to some charts. I just
realized that with my never-ending list of chores to do to keep up with this
project I didn't post a chart last week for Jim's Chart of the Week. I will
make sure I get one posted this weekend. As you all know, I just have too much
to do for being just one person.
Next, as I suspected, I never did
get a single e-mail regarding the commentary from two weeks ago. Not a single
link was sent to me. I'm not gloating here, I just knew that I wouldn't. I've
searched as long and hard as I could in my own quest, and was unable to find
anything. I used to say early on that my goal with the books was to provide
what I was looking for, but couldn't find, when I first started out. I'm
feeling pretty good about how I've done in that regard.
Finally, I am
still struggling with the dilemma of what to put in this free commentary. When
I first started this website, some one hundred and seventy eight commentaries
ago, it was easy. I had some novel new ideas to show, and a few things that I
didn't want to show directly, but the importance was in the overall details of
the methodology, as it all fit together, and that was laid out in the books. I
could find examples, show the pattern and grouping, and have my charts and
commentary.
Now, fast forward to today. Not only has the methodology evolved
quite a bit, what I have been willing to reveal in the books has increased
greatly. I have created an entire course, if you will, in the books. For the
most part I detail my 'Trading Plan' from top to bottom, from start to finish,
and discuss my most advanced (and formerly proprietary) techniques. I am just
not willing to show all this material in a free format. As it is I am really
struggling with the idea that I should have been offering all this only as a
program, one-on-one, with a non-disclosure agreement, as many others
do.
I
won't go on and on here, but the problem is I just can't show a great majority
of the details of the work in here, and if I cut most of that out and show what
I can, what is left? If the purpose of this commentary is to give people a
chance to see my work and make a decision if it may be able to help them in the
development of their own 'Trading Plan', am I able to accomplish that with a
greatly 'censored' version? The answer is that I'm not. You can get an idea of
some of the things that I do, but it's just not that detailed, in terms of the
entire scope of the methodology.
Now, what's the point of this?
Honestly, I'm not sure. When I ask for feedback I usually get plenty that says
I should keep doing the commentaries. That makes sense, since the people who
send the feedback have not bought any of the books. They want me to keep doing
it, so they can see what else I may reveal for free. I don't blame them. But is
that what I am doing this for? I don't recall ever getting feedback from
someone who went on to buy any books 'down the line'.
I don't want
to sound singly 'commercial' here. My point is, if the purpose is to
help people see if my work may help them, at some point they would make that
decision, and then get the books and go from there. If it isn't accomplishing
that, I need to know what it is accomplishing. My time is always in
short supply, and it is very precious to me (and my family). What I have put
together and offer in the books, for what is a very nominal amount of money (in
my opinion) considering how much it covers, is my contribution. I feel it is a
big contribution.
I simply would not have put in three years writing all
that up if I were going to give it all away free. I would have just kept doing
what I was doing, and spent the time with my family. This is one odd 'business'
where many people think you should work for long hours, giving away hard-earned
secrets, and do it all for free. When I ask my doctor, mechanic, carpenter,
plumber, and electrician if they will do the same, they look at me like I'm
totally insane, and then they usually smile, begin to laugh, and say something
like 'Funny, for a minute you had me going there…' Yet in this 'business'
many expect just that.
All this is working us towards what I hope is a better
understanding of the dilemma I face. I don't even feel I can ask anymore 'So,
you tell me, what do you want me to do in this commentary?' That will only
provoke more responses saying 'just keep doing it', from people who likely will
never move on to actually study the methodology in detail. I discuss all this
because lately, in some ways, I dread the weekends and the thought of trying to
come up with something that is solid, well 'censored', still shows my work, but
yet does it with most of my tools cut out, essentially with 'my hands tied
behind my back'.
Sometimes I have to spend hours, literally, just to come up with
something that I feel is barely acceptable, and that's just to find it,
not even put it all together. What once was fun is now a chore that I don't
enjoy. On the other hand I love doing the members' commentary, where I
can work unrestrained, and the mentoring, where I get these reactions of
amazement, usually one after the other, from the students. That's where the
personal reward is for me. But, if I no longer do this free commentary, will
the archive be enough for people to make their decisions? Does it have to be
current commentary to decide if the material may be useful for someone?
What you have
just been reading is yet one more way I am different than 'the rest' of what is
out there. I discuss where I'm coming from in here. I don't maintain a
'professional' approach, like everyone else, just talking exclusively market.
I'm just a regular person, a regular trader, trying to share what I've
discovered. I'm not trying to maintain some kind of 'image' that will increase
sales. I explain what I think, and ask for feedback. I try to keep the readers
informed about the possible directions I may take this ongoing project. This is
just one more look at that process.
Right now I have no good ideas about how to
resolve this dilemma. I just know that if I am working for free, I at least
want to be enjoying it when I do it. That means I have to solve this. If you
have any feedback you'd like to send me, except 'I think you should just keep
doing it', I'd be happy to receive it. I don't want to move to my likely future
model of just full book sets and mentorships (or full book sets with
mentorships) without any transition, or without any feedback.
Well, as
usual, that turned out to be longer than I thought it would be when I started.
Let's get to some charts. This week, Monday through Thursday, was perhaps the
best trading I have ever seen. If it wasn't the best, it was the best I can
recall. The Russell mini was just beyond belief for me, as were most of the
things that I follow, from stocks, sectors, and indices, to treasuries, gold,
currencies, and energy, just everything. I have never seen so many of my
patterns come together and produce reactions. It was just an amazing week in
the markets.
As most of you know, especially my long-term readers, I focus on
ABCD patterns. All 5-point patterns are based around ABCD's, and hence my focus
is on the ABCD's. The latest books show the 'new' ABCD variations I have come
up with, and they have come to be a significant part of the ABCD's I am using
now. I am not sure even roughly what percentage of my total ABCD's traded are
the new ones, but likely it is over 50%. Given that I work a lot with alternate
ABCD's, as outlined in Kane Trading
on: Trading ABCD Patterns, it may be that only 10%-20% of my setups
involve 'standard', run of the mill 1.000 ABCD patterns.
That is part
of the dilemma, again. I have a slew, and I mean a slew, of just incredible
setups from this week I wanted to show in here. All got 'censored' out because
they were either 'new' ABCD patterns, or they used numbers I don't show in
here, or they had ML techniques that are from the new book. Scratch this one,
scratch that one. I also have a slew of setups just completing right now that
are 'before the fact', and all had to be scratched for the same reasons. The
frustration is immense. This is my best material, the core of what I do now,
and I have to show you the 'regular' stuff.
Let's look at
a median line framework I have been showing in the members' section as it
unfolded, on the 60-minute ES chart. This has been a guide for me for a long,
long time.
I had this set, with warning lines, on my
chart way back as soon as that swing-high on the top left hand side of the
chart was formed. It was 'tested' very promptly, and I had the confidence to
start using it to guide my pattern and Fibonacci setups. Notice the fantastic
ABCD pattern (with an ABCD in the BC leg) that set up this whole run down,
right off the median line upper parallel offset line. Each step of this
progression was a setup unto itself.
Don't get the idea I'm doing less pattern and
Fibonacci work now that I show so much median line work. I use the median line
sets to guide my decisions using the same setups that I have always used, with
the exception of the inclusion of the 'new' ABCD patterns. I just can't show it
all on one chart, or it would be too cluttered to comprehend. The interesting
thing about this 60-minute layout is that there was a lot going on, on the
daily chart, and there were overlaps and areas that were all coming together at
points from many different sets and patterns. It was truly remarkable. Of
course I discussed a lot of this in advance in the members' area.
Let's look at
just a few of the setups I saw in the MR. This is just a very small selection,
and it is not particularly 'well-chosen' for this week.
Once the big pattern in the Russell started
to play out that triggered me to do two things. One was make my decisions on
longer-term plays, and the other was to lean, heavily, on the short side in the
minis. The MR was just so accommodating it was unreal.
Once the
trend started it formed an ABCD, which triggered nicely and followed through.
It then formed another one, which also triggered nicely and followed through,
big time. This was then followed by yet another ABCD, with an ABCD in the BC
leg. This could be thought of as an abcde correction, but I looked at it
as an ABCD. Even if triggered on the second swing-high there my stop would have
been higher than it went on the third thrust up, so it wouldn't have mattered
what interpretation I had on that last pattern. The MR can just be fantastic
when it starts moving. How nice is the action on this chart? The higher
timeframe setup was the driver, and that made all the difference.
These were
just three of many ABCD setups that I found in the MR this week. I had to hand
select out just 'standard' ones to show here. There were a lot of my 'new'
ones, and I particularly like those in the Russell. There were also some 4-Point Continuation Patterns,
one of which was particularly nice. Once I have the 'context' laid out, it's just a
matter of waiting for the setups, and there are lots of them.
Let's look at
another one.
The MR forms this nice ABCD pattern, right in
the area of a very noticeable 3-minute trendline. I also put a sliding // on
there from the fourth 'test' of the line. I put the 1.618 external
retracement of the BC leg on there. You can build your own area for this if you
want, but you can clearly see what the setup was here. After this run the MR
formed several more patterns, and then continued its run down. It then gave a
crystal clear signal and trigger to play the covering ramp.
Let's look at
something simple I showed, in advance, in the members' section, in the
XAU.
I had been watching this line for some time.
It was 'tested' right at a .382 retracement. Sure, I had other things coming
together there, but this is something I was very aware of. The XAU has reacted
six points off that spot so far. Even if it is done right here, this is more
than enough of a reaction for me to 'do what I need to do'.
Let's finish
with a more detailed chart on the NASDAQ Composite Index.
I had to delete off some retracements here,
as they are numbers that I can't post in this free section, but you can get the
idea. The arrows were areas I was watching, and a lot of this was discussed in
advance in the members' area. (I'm sorry I keep saying that, but if I don't
mention that I discussed this in advance some will say 'Nice after the fact
chart, Jim', and if I don't say in the members' section I'll get e-mails asking
where I discussed it in advance, because they missed it.)
The area of
the first arrow hit dead on a key number, and how and why I watch this spot is
explained in detail in Kane Trading
on: Median Line and Fibonacci Synergy. The second arrow shows an
alternate ABCD with a very tight grouping of key numbers (some had to be
deleted off for this version), right at a sliding parallel. The reaction went
right to the upper parallel, and rolled right at the .786 retracement there.
This created a time factor that is also explained in MLFS.
It went right
to that division line area and started to bounce. It now sits right under that
grouping. This is a key area for me to watch to learn about the intention of
this index. I'm not going to discuss this much more to be fair to the members,
but suffice it to say that this is an area that will tell me something, either
way. If you look at the other major indices and sectors, using my methodology,
you will see many of them are set up with similar critical 'testing'
areas.
This chart is just amazing to me, and has been a guide for setup
after setup for me. The curious thing is that what you are seeing here is only
a small percentage of what I see here. I could talk for hours about everything
else that this layout has. Look at the area of the median line and the points
two and three anchor line. What's there? If you had Kane Trading on: Four 'New' ABCD Pattern
Variations, that would make a lot more sense to you, in several ways.
There are things right on the charts that we don't see, until we learn ways to
interpret them that we feel helps our trading. This last chart is full of
things like that for me.
I don't know if I've accomplished anything today with
this commentary. I didn't do this to 'vent'. I did it to keep my loyal readers
informed of what I go through to bring to you the work that I do, and to see if
anyone has any suggestions. This is an evolving project, without a clear plan
right now as to exactly what I want to do with it. I like to allow the readers
to participate, to some extent, in the shaping of the future direction.
The next
commentary will be next weekend's edition, posted by Sunday evening, October
16, 2005.
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