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 January
8, 2006 Commentary (weekend edition)-
Wow, was that
a week, or what? I could talk endlessly on my views on all this, but I already
have in the members' area. I'm quite exhausted from doing a mentorship this
weekend, but I still wanted to get a commentary out to everyone. I am on track
to 'launch' the updated mentorship page next weekend, and explain the changes
I'll be making, assuming nothing goes wrong between now and then.
Today I am
going to show three things that I covered, in advance, in the members' area,
and I posted some of this to two forums, also in advance. I will also follow up
on one thing we have looked at in here recently. I'll start out with the NASDAQ
100 Index.
Here's a key area I was watching on the NDX.X. The arrows show how
well this set was used. Understand, this set was on my chart at the first arrow
there at the upper left. This formed an abcde correction here where the
trendline came in. This is just a framework, and of course I had my Fibs and
such on here. I was so excited about this I posted it to two forums.
Let's see
what we already know happened.
The NDX.X just rolled down to the area, gave
a slew of great entry triggers, and has literally exploded. This is a great
example of why I don't use 'profit targets', but instead use various trailing
stops. I haven't even gotten a hint of a trigger for an exit yet. I am
especially alert to the 1.272 external retracement (not shown) just
above.
Let's see what the INDU set up.
The INDU completed an ABCD pattern, right at
the lower parallel of a modified Schiff ML set (it may not look like a modified
Schiff set because I create it by hand, but it is). This set up as the NDX.X
set up what we just looked at.
Let's see what the INDU did with that
area.
You knew that was the outcome, but it sure
was exciting to watch as it unfolded, with this work on my chart in advance.
Notice the position now with respect to that median line.
Let's look at
the S&P.
This one has a lot more lines. There is a
median line from this large 'adjusted' set, a warning line from a modified
Schiff set, and another warning line from another set that I deleted off for
clarity. These three lines hit at the same spot. This is also a pattern area,
and I had my Fibs there, too. I just showed the framework for clarity. This, as
not only the NDX.X and INDU came together, but just about every last thing I
watch. The IIX.X hit a spot dead on and launched that huge ramp. This may have
been the largest convergence of beautiful setups I have ever seen at the same
time.
Let's finish with a follow up on that XLE setup we looked at
before.
XLE is still moving off that pattern and
setup. I cleaned the chart up a bit and left just the two key lines that hit
into the potential trade area, for clarity. Drop down to a lower timeframe and
study how you might be managing this one. What would be your trade premise?
Your management plan? I know what mine is. I can say this is one strange 'bull'
market, with gold and energy leading. Speaking of gold, it has ramped back up
that entire $50 decline it 'gave back', and did it dead off an area I posted in
advance in the members' area. They kept saying gold is dead, and I kept saying
'watch this area'.
As close, let me quote a big chunk of my write-up from
the members' area:
"Wow, this is some incredible action. No doubt I picked
the areas dead on, and no doubt there hasn't been a hint of a signal yet to
even think about the short side, no less actually trade there. On the
other hand I am still comfortable with my decision not to do much positioning
from a portfolio standpoint in here. What I mean is that I am not committing
new money, so to speak, to longer-term plays, even though those were very clear
ABCD and abcde setups on the daily charts. I am using those for 60 and
15-minute timeframe plays, based on the bigger pattern and setups. Essentially,
'swing trades'. I've discussed this many times, and I'll follow up just a
little more.
The bullishness is like nothing I have ever seen. Not only is
everyone on one side of the boat, they have 100' gangplanks extended out to the
side and they are out on the very ends. Let's see, IBM announces the end of
their pension plan, and although this may save them some money right now, this
is essentially a big pay cut. This is not good for the economy in my opinion.
The jobs report was terrible. Remember, it takes something like 250,000 per
month added to keep even with population growth and such. This is something
they stopped discussing awhile back. Anything under that is essentially
contraction. But, they spin it positive because the Fed will now slow way down,
or stop.
Yet the fed fund futures priced in more hikes on the news.
And that mouthpiece who I won't mention by name, he's the most vomit inducing
idiot I have ever seen. He is completely irresponsible in how he talks
everything up. It's borderline criminal in my opinion. All you had to do was
watch television Friday and you know who I mean... So, the market keeps going
straight up.
Hey, I'm not complaining at all. I know what side I'm on, and you
know what I used to get me there. I'm just complaining on behalf of 'the little
guy' who believes all this, the ones who got slaughtered in 2000 in their
retirement portfolios and had to go back to work. The talk about the January
barometer was rampant. I guess it's off to the races, and that 30% S&P
target I heard about yesterday is a given. Except two things.
The
commercials added more to their shorts, and are now short over 78,000 contracts
net, a position approaching March 2000. Why are they losing more and more money
as this goes up, instead of making money, as they have in all the other 'bull'
markets? Then came the final nail in the coffin. This 'analyst' got on the
idiot box and put a target for GOOG of $2000. Yes, you read that right, $2000.
Not only that, he said he arrived at that with overly conservative measures...
Just something to think about. This makes tulips seem cheap to me..."
The next
commentary will be next weekend's edition, posted by Sunday evening, January
15, 2006.
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