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 January
15, 2006 Commentary (weekend edition)-
That was
another great week for trading, in my opinion. It's amazing how many things are
moving, and how big the moves are. Look at gold, which is still moving off my
area. It's now at new 25-year highs, above that last big high when they all
said on television gold is dead and I kept saying to the members 'watch this
area'. As you may recall, gold came dead off the area, and went crazy. Even if
some areas of the stock market have slowed a bit in this past week, there is
action all over the place. We will look at those treasuries this week, right
off the area I put in the chart for Jim's Chart of the Week, in advance. Before
we get started, let me quickly discuss some of the changes here at Kane
Trading, as I mentioned I was planning on doing today.
I did make
the decision to go ahead and end the members' service at the end
of this month. Being the overdo it type of guy I am the report just kept
getting longer and longer, with more and more charts, and the time was killing
me. As I said, I want to devote whatever time I am willing to give up outside
of my trading time to the mentorship program, and use the rest to get back to a
life with my family, something that has been sorely lacking since I started
this project. The members' archive, which will be a full year long with over
1,350 charts, each with individual explanations, in over 250 posts, will become
a very valuable resource incorporated now into the revised mentorship
program.
I redid the mentorship page with all the new details laid out, and
I added some different options and structure. I integrated the Kane Trading course back into the
mentorship program, as that was no longer needed with the new revisions to the
mentorship program. I want to invite everyone to look this over, especially if
the program interested you before but you felt a bit 'intimidated'. The details
with respect to all the changes I just mentioned are outlined on the respective
pages, so I won't go into them here. I updated the What's New page with this
information. I have also updated the testimonials page a few times
recently.
I mentioned on the What's New page that I will be continuing
the free commentary. Apparently a few people thought I was going to discontinue
that, but that's not the case. Keep following along, since this section is
still going to be active. I am trying to think about some ways to change the
format a bit to 'spruce it up', but so far I haven't come up with any ideas. I
was also toying around with the idea of a weekly subscription
report/newsletter, since that is a format that a lot of people seem to like.
Perhaps a focus on what I am watching for the upcoming week or something of
that sort.
Ending the members' service will free up a lot of time,
only a small part of which I will need to use for the mentor program. I don't
want to take on anything big, but this would be a small time commitment
compared to what I have been doing, so I was just tossing it around in my mind.
I always like to try new things and see how it goes. I may or may not do
anything with it. I do know that a lot of people like to see what I am
watching, and where I am watching it, and that's what got me to even think
about this. On the other hand, perhaps I don't want to reveal too much about
what I'm watching... Stay tuned for updates, and when I decide on things I'll
let everyone know.
Today I am going to follow up on those long-end
treasuries, starting with the 10-year from Jim's Chart of the Week. Let's see
what last week's chart looked like.
Here's the chart I posted last weekend. I
have been watching this as it got closer and closer to that ABCD area, with
those key lines right overhead. There was a small reaction off the first
alternate ABCD grouping there, which formed a small pattern from Kane Trading on: Four 'New' ABCD Pattern
Variations, and then did a final thrust to the 1.000 ABCD area. The ZN
reacted there, and that's where the chart left off. Keep in mind this has been
developing for several weeks, and I have been updating this same chart in Jim's
Chart of the Week over those several weeks as it has been approaching this
critical area. Also keep in mind the larger-scope
'context', which we will
discuss momentarily.
Let's see what happened.
The ZN rolled right off the area, as I
suspected it would. I have been following this for a long time and discussing
it in the members' area. But what is the 'context'? This is a smaller ABCD
starting up off a much bigger ABCD that completed at the low on this chart.
Recall that I showed that area in advance? And what does my intermarket
analysis tell me here about rates? I suspected something was going to happen in
here so I showed something in the members' area right here, in advance, of
course.
Let's see what I showed.
The ZN was coming into a prime area of
interest to me if I felt this ABCD was going to 'blow out', or even be
challenged or well tested. There are some techniques on this chart that I
haven't laid out or discussed in here because they are book and mentorship
material, but you can clearly see the area. I was also watching analogous areas
in the 30-year, the TLT, some bond funds, and some other things, as well as
some intermarket relationships, especially in the currencies. This layout was
jumping off the chart at me. I had a theme I was working on in the members'
area and I dropped it to switch to this, given the timeliness and importance I
saw here.
Let's see what the 10-year did with the area.
Now, there's a move for you. The ZN hit the
spot and took off like a rocket. The moves were 'across the board' in
everything I was watching, including the intermarket issues. A lot happened on
the lower timeframe that I used to read the price action, and I showed that to
the members as it unfolded, but there simply isn't time or space in here to
cover that. The interesting thing is how precise the 30-year setup was.
Let's look at
that ZB.
Here's what I posted for the members, right
as this chart was captured. In other words, I did this 'in advance'. I say this
'in advance' stuff over and over to silence the critics who love to make
comments about after the fact analysis. If you trust your instructor/mentor
then you generally stop requiring a lot of 'proof' they know what they are
doing, and after the fact analysis is acceptable. Imagine trying to teach
someone daily chart aspects, especially over a weekend get-together, but all
they will accept is 'real-time, before the fact' work. Not much could be
accomplished.
So, I make it clear I have posted endless setups in advance that
'work out', and if what I can do isn't obvious, well, you're reading the wrong
commentary. And as anyone who has been a member can tell you, no, I don't show
hundreds of setups and then pick one or two that 'work out' to show in here.
I'm not trying to be 'testy' here, or ram anything down anyone's throat, I just
want it to be as clear as the Arizona sky that, in my opinion, my examples are
anything but 'well-chosen'.
Let's see what that 30-year did from here.
Now that's precise. No, they don't all hit
that deadly accurate and move like that. I am looking at areas, not
exact spots. Once the area is reached I go into entry trigger mode. My
methodology wouldn't 'work' for me at all if I traded this like many 5-point
pattern traders and 'faded' in at the area. I need to read price action and see
if I get my entry trigger.
The issue has to show me it 'sees' the area, and that it is at least starting
to reverse off the area. That's just how the pieces fit together to make up
this methodology.
Now I watch at the area of the division line (not shown), the upper
parallel, and especially for a 'test' of the median line from above. Keep in
mind all I have shown here is the framework. Do a full workup and see what you
find. What happens from here will show me which ABCD is going to guide the
future action, and that will have a profound effect on the economy and the
stock market via rates. This is a very important thing for me to keep my eyes
glued on to.
The next commentary will be next weekend's edition, posted by
Sunday evening, January 22, 2006.
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