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 January
29, 2006 Commentary (weekend edition)-
I may just
keep the same commentary in here every week and simply change the charts. I say
just about the same thing every time, it seems: the market is just fantastic
for trading, in my opinion. It's been fantastic, it's staying fantastic, and
about the only thing I see changing is it seems to be getting more and more
fantastic as the days go by. Basically, I judge fantastic by two main
characteristics, and they are movement, and that movement being off my
areas.
In this regard things are about as good as I could ever hope for.
Any of the members to my now ending service, or any full set
buyer who has been in there on a trial or been into the archives can attest to
just how much I am finding in this market. And, as I say over and over, I'm not
saying this to brag at all, or anything like that, I am saying that if you
aren't finding more than enough to work with, it isn't the market, it's your
'Trading Plan'.
Today I will do a basic run through three key indices, starting
with last week's Jim's Chart of the Week. The markets set up a slew of ABCD
patterns, and they all began to 'play out' this week, right off key lines. This
upcoming week will be interesting, to see if these are bounces or the starts of
some much larger moves. Keep in mind, many things, one being the Russell Index
we will look at shortly, are blasting off to new all-time highs almost daily. I
like to choose the stronger issues when I am on the long side in a trade, and
the weaker issues when I am on the short side. Given the action lately I am
mostly working the long side, with my short side activity confined to select
very short-term intraday plays under very specific conditions.
I'll start
with last week's Jim's Chart of the Week, showing the S&P.
Here's the S&P, showing the ABCD
correction right down to the median line lower parallel. Notice how well this
set has been 'seen' by the S&P. I had a lot of confidence in the set by
this time. I just showed the framework here, but of course I had a full
Fibonacci workup for this area.
Let's see what happened.
The S&P had trouble getting moving off
the area, but it finally did. This is not uncommon, and why I wait for entry
triggers, and why I use technically placed stops. The S&P made it to the
upper parallel, right at the C point of the pattern and a .786 retracement off
the top. This is a key spot for me to watch for clues. Many indices, sectors,
and individual issues are in a similar position.
Let's look at the NDX.
Here's where the NDX was last weekend. I put
a key retracement line on there, without a label, since it isn't one of my
'public' numbers (it's introduced in Kane Trading on: A Totally New 5-Point
Pattern). As with the S&P, I had a full workup and grouping here,
but the framework will get you started so you can go back and do your own work.
I discussed this one, as I did the S&P, in advance in the members' section
last weekend. We had been working on these all week as things unfolded.
Let's see
what the NDX did from here.
The NDX also took its time moving off the
area, but finally it did. It is definitely weak looking compared to many other
indices and sectors, especially given how the SOX is just exploding. Notice the
NDX is still far shy of the median line. If 'short time' comes, this will be an
area I will be looking at. Do a little research on option expensing and tech
companies if you want a real shocker. Maybe they will ignore this like they
seem to ignore everything else when they want to ramp things, but I can't
imagine this not coming home to roost, big-time, at some point.
Let's look at
the complete other side of the coin, the all-powerful Russell Index.
Notice how the Russell went up to a new
all-time high as the S&P and NDX, among others, went down for another leg
to form their ABCD's. The bounce off the .300 retracement area clued me to some
serious strength in this one. The Russell actually formed a pattern of mine in
here, right back at that median line. If you have the new books you know exactly what I
mean, and the members see me showing this type of thing frequently.
Let's see what the Russell did from
here.
The Russell came right off the area and that
started a multi-day ramp on to new all-time highs once again. There was a tiny
reaction at that upper parallel before the Russell exploded over the area. I
was using this layout to guide my intraday mini plays, as well as for more
'swing' type trades on the 15-minute and 60-minute timeframes, for example. The
Russell is just the greatest trading index I have ever seen. With the minis and
ETF's, as well as some other ways to work this, it is the greatest thing for me
since sliced bread.
I am going to miss doing the members' commentary, which
will wind down to a close at the month's end on Tuesday. It gave me a chance to
discuss my market ideas and show things like we just saw, in advance, on a
daily basis. The flip side of that coin is that I will free up an immense
amount of time to allow me to get more focused on my own trading, to recoup my
energy after the market closes in preparation for the next day, and above all,
to spend more time with my family. It will be a little odd to see all these
incredible setups, have all these ideas about what I think is about to unfold,
and have no one to show them to anymore. In the long run, though, I think the
trade-off is worth it to get back to a more balanced life, and to focus more on
the newly-revised mentorship
program.
I have so much to say about this current market I could write more
than I already have today and barely scratch the surface, but I just did that
in the members' section. Maybe once that service is fully finished and I have a
little time to recuperate I will be able to do a little more in here in that
regard. We'll see. We all have to keep in mind my purpose for doing the free
commentary, and that is not to do full market coverage and explain my entire
methodology, but to introduce everyone to some of the concepts, to see if my
work may be for you. In that regard I will surely be providing enough content
for that purpose, as I have been all along, so stay tuned.
The next
commentary will be next weekend's edition, posted by Sunday evening, February
5, 2006.
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