|
|
| |
|
 April
16, 2006 Commentary (weekend edition)-
As I've
mentioned before, I am out of creative ways to start my commentary. So, I'll
just do the broken record again and say "Another great trading week goes into
the books". It's simply my opinion, but I just couldn't ask for more for
the market, as far as tradeability. And by the market I mean not just stocks,
but minis, commodities and FX, too, and perhaps especially the latter
issues. As I have said in the past, my reason for constantly mentioning this is
that, I feel, if you are having trouble finding setups and getting reasonable
moves off those setups you should be looking at your entire, comprehensive
'Trading Plan', and not blaming the market. The market is awesome, in my
opinion.
Before I begin I just want to mention one thing. Book sales have
been 'brisk' lately, and the positive comments I get back are just way beyond
flattering. I plan to add some of these to the testimonials page as soon as I
can find the time. I recall back when I first started this website there were a
lot of people wondering what I had put together that was unique, and how I
could 'prove' to them before they bought that I wasn't just another one of the
several zillion 'charlatans' who pump out junk trying to make a fast buck. As
all this unfolded over time I struggled with the process of moving from unknown
to well-known and 'trusted'.
It is starting to become clear now that I have reached
the point where I no longer get inquiries asking what I do that is different
and unique, or arguing that I don't have much that is different. My name is
well-known, and there are a lot of people posting positive things about my work
just about everywhere out there. Now almost all I get is extremely flattering
feedback about how much my work has helped the them. Here's the interesting
thing, though, and it was my intention from the start to do this. I am getting
a lot of feedback on my overall, step-by-step holistic approach, not just on
how useful my potential trade areas (PTA's) are.
As I have said many times, my PTA
is only about 10%-20% of my overall 'Trading Plan'. I am not trying to get an
unrealistic edge in just one area, I am trying to collect a group of small,
realistic edges across the entire 'Trading Plan'. This process, of forming an
entire, comprehensive 'Trading Plan', is the theme of my book set, and I am
getting a lot of feedback with regard to that. I am getting a lot of comments
about how this or that person has now finally developed a plan, and he or she
has an idea of what to do from start to finish now, for the first time in his
or her trading career.
That was what I was trying to offer all along, and that
is information I felt might help traders develop their own plan from start to
finish. Now that people have stopped focusing 100% on the PTA, the depth of my
work across the board is starting to be much better appreciated, as far as I
can see. I can't tell you how good that makes me feel. While almost everyone
out there is talking about how their PTA concepts are far superior to what
anyone else does, I am focusing on the other 90% of my 'Trading Plan', and
explaining how I do all that.
It has taken quite awhile, almost three
years, but my name, reputation, and work have finally reached the point where
what I am trying to do, and trying to offer to traders, is becoming 'common
knowledge' out there. That's makes it a lot easier for me to use my time in an
efficient manner doing what I've wanted to do all along, and that is provide
the fully comprehensive information that I couldn't find when I started out,
for those that are really serious about trying to make trading a business for
them. Now, on that very happy note, let's get to work.
I am going to
follow up on the 10-year, and then we'll use the rest of our time on last
week's Jim's Chart of the Week.
Everything I am going to look at this week is
very subtle, and really is something better suited for one-on-one in a
mentorship. Nonetheless, there are some concepts I wanted to show, and I'll try
not to go overboard and take half the day trying to do this. Unfortunately,
that will mean it will be a somewhat simplified and limited version of the
entirety of what I am looking at. We can just look at a few of the
aspects.
Here's where we left off with the 10-year. From last week, I said:
"You can do a curious thing and clone this set and move it, and you will see
the move down here from that last small swing-high was just about the exact
width from the median line to a parallel. Very curious. I can also discover
that with offset lines." I hope you did this, as there was something very
specific I was watching for based on that, and the 10-year did it
exactly.
Let's follow up and see what has happened since the last
chart.
The lower left arrow shows where we left off.
If you 'shift' the set (not shown), you will see that if the median line was at
the rollover point before the arrow, the spot of the arrow would be just about
dead on the lower parallel. As I said, this could be done with offsets. Now,
based on this and some other factors, I felt an equal bounce up, right back to
that sliding parallel area (at the upper arrow) might be about to unfold. This
would also set up a pattern if it did that.
The 10-year
did exactly as I suspected it might, and rolled down hard right off the spot. I
hope the clues I provided were enough to get you to do the necessary work to
understand what I was getting at. If not, keep working on it. I am not going to
just tell everyone my entire thoughts every time. If I do that I don't feel
there will be sufficient motivation to 'do the work' and learn, and I don't
want anyone to ever misconstrue anything I point out as a 'recommendation'. My
sole purpose here is educational, and my approach is what they used to call
when I was a teacher (in a long ago life, far, far away) 'guided
discovery'.
We are working at a fairly high level for a 'free' commentary, and
I am trying to keep it worthwhile and worth telling others about. So far, I'm
feeling pretty good about how I am doing with that goal. Finally, go to this
week's chart of the week to see what I am watching now. Understand, that chart
is showing several lines I am watching (and one I didn't show that you should
do), but that's all. You must do the rest of the work and draw your own
conclusions why I am watching there, and what that will tell me.
Let's do some
work on that Euro, from last week's Jim's Chart of the Week.
Here's last week's chart. I pointed out a
tight convergence area right at a lower parallel. Okay, that's great, but
what's the significance? Drop back in timeframe and look the layout over. The
move down off the upper parallel was the completion point of one of my
patterns, set up for a strong downside continuation. Anyone who knows my work
will understand exactly what I mean here. To get to that upper parallel the
Euro did either an ABCD, or an Elliot abcde correction, depending on how
you want to assess this one. This lower parallel, to me, is a key 'test' point
for this larger pattern premise.
The value for me is not only in
managing a short off that recent high, but also in assessing the overall
premise, which is based on a huge pattern on the higher timeframe. I have
reasons to suspect the pattern may not hold, and it will instead potentially go
into an ABCD. I am watching very closely for clues on this. So, what looks like
a potential long trade area actually has a lot of significance for me in
reading the price action as far as my various premises. I'm like a detective,
and there are clues all over the place that most simply walk right
past.
Let's see what the Euro did, down on the 30-minute chart, with all
sessions data.
The Euro came right off that upper parallel,
hung around the median line area, then reached the lower parallel, by the
arrow. That's what I showed on the daily chart. I put the obvious .382 off the
high on there as this started up. Now it's all about the structure of the price
action on the way up, and how it acts as it hits key areas.
Let's move
ahead a bit and see what is happening.
The Euro moves up in a clear ABCD pattern,
with the 1.000 ABCD hitting right at the division line area, just below that
key .382. Keep in mind this is a framework, and not a full workup. The Euro
starts to roll of this key area, and so far the price action looks totally
corrective, and I suspect the line area by the arrow is not going to produce a
significant reaction, say back up to the upper parallel again. There is a lot
more going on here I am assessing, but this gives you the gist of what I am
seeing here. So far, this is shaping up to be a great 'fade' trade for that
lower parallel being significant for the long side.
Let's see
what happened.
The Euro kept rolling, and then what's his
name from the ECB started yapping (Oh, you thought Greenie was the only one to
yap the market up or down?), and they dropped it like a hot potato. Notice that
the movement went right with the flow of the price action at the time. I see
this very frequently. Also notice how the price has since oscillated around
that lower parallel. Do you think I find that informative? There are clues all
over the place. And now another pattern is shaping up, and I am watching
that.
There are patterns and lines all over the place in the Euro, on
various different timeframes. Many times I see an issue bounce from pattern and
setup to pattern and setup, and as this happens on the various timeframes it
'boxes itself into a corner' in the sense that it must now break out on some
timeframe, as it can't make any move without breaking a premise on some
timeframe. I call this 'wedging itself in', not to be confused in any way with
a typical technical analysis 'wedge' pattern.
I can see this happening, and I
feel I can frequently figure out almost the exact spot where this comes
together, and then with clues I can seek my edge in positioning myself as it
makes what is sometimes an explosive move from the apex area of the 'wedge'.
This is a very advanced concept I am working on, and I have only hinted at it
in a few mentorships, and released no details on it at all. Maybe
someday.
As I close, keep a close eye on energy, as I suspect we may be
seeing some real moves in gasoline soon, as well as the other issues. The
metals are still 'in play', and I don't even need to tell anyone the treasuries
and currencies are 'hot' right now. The stock market action did get exciting,
right out of the ES area I pointed out, and I think we may get some nice
movement before the summer sets in. I suspect this may not be a 'slow' summer
from a trading standpoint. Get ready for some things to happen in here, as I
have that feeling...
The next commentary will be next weekend's edition,
posted by Sunday evening, April 23, 2006.
|
|
|
| |
|
|
 NOTE: Reading this page or
any page on the Kane Trading website, or utilizing this website and any
material
contained herein in any way, shall constitute an
acknowledgment that you have read, understood and agreed
to all
the disclaimers,
terms & conditions, and
policies of this site.
|
|
|
This
website is best viewed with MSIE 6.0, text size set to medium, and screen
resolution set to 1024 by 768.
Copyright
© 2006 Kane Trading. All rights reserved.
|
|
