|
|
| |
|
 June 11,
2006 Commentary (weekend edition)-
Now, keeping
in mind that I am just funning here, and, of course, making no claims of any
kind whatsoever, last week's chart of the week was as close to 'free money' as
I've ever seen in trading. We'll get to that shortly. This week I want to
really hit the 'educational theme' concept of this website with a look at
rates. This is particularly timely, and that's why I chose it, because we are
hitting into critical areas in here, and this will, in my opinion, literally
have worldwide ramifications. After all, rates are everything. It's all about
rates, and how much money they are flooding the system with at any given time.
The world is based on 'competitive devaluation' between the countries, and
rates are a big part of the game.
I want to focus, as always, on trying to
teach various aspects of my methodology, and not give any 'picks' (you all know
I don't do 'picks'), or just show you all the aspects of something. I recall
that old saying: give a person a fish and they eat for a day, teach them to
fish and they eat for a lifetime. I show the chart of the week to give the
reader something to do some work on, to get some practice. I don't always
particularly choose examples I think have the highest probability of 'working',
I choose ones that I feel have a good educational value. It doesn't hurt that
many of these show my methodology playing out spectacularly, after being posted
in advance, but that is a secondary benefit, albeit a nice one. I'm trying to
teach as much as I can in such a limited venue as this commentary. Try to look
at the charts in that light.
I will start with last week's Jim's Chart of the
Week.
Here's where we left off last week. The move
down in the S&P was very impulsive looking, and the move up very
corrective. An ABCD had come together at a very key median line, from a well
tested set that I had been following for a long time. I showed two basic
sub-groupings that I was watching. This is, of course, just my framework, and I
suggested, as I always do, that everyone do a full workup, to see all the
various aspects of this layout. I kick myself because I had planned to post
this to a forum I participate in occasionally, and I was so busy I didn't get
to it.
Let's fast forward to today, and see what happened.
The S&P dropped right off the area, just
about dead off the lower sub-grouping. At that point it wasn't about which
exact sub-grouping or line it rolled off of, but how the price action behaved,
and what triggers were
initiated. I suggest the reader study the lower timeframe(s) very carefully, as
this one not only triggered beautifully, it gave a very spectacular price
action clue that the upmove was about to 'fail'. See if you can spot
it.
The S&P dropped over 55 points off this area before it began to
bounce at an alternate ABCD. Do the work and see why this area for the bounce
was a high probability area for a bounce. Note, too, how the rest of the
indices, and many sectors, had similar setups. This is as good as it gets. Even
if you broke the down move into two sections and did two trades, both were
superb.
I know those days are over, and no one says anything along these
lines anymore, but imagine thinking that this was just random? Maybe once in
awhile someone might make a lucky guess, but how many times have I shown things
like this? I'm not making any claims about how much money you, personally,
could have made from this, I'm just saying, no way, no how, could I ever accept
what we saw here was 'random'. But, I'm preaching to the choir here with that
one...
Let's move on to rates. I'll use the 10-year treasury index for
this.
My focus in this series is not going to be to
tell you what I think is going to happen (I have no idea what will happen). I'm
going to show some areas, but mostly, I'm going to show various scenarios, with
the goal being to get you to think about how and why I am looking at this the
way I am. To see me do some 'context' assessment. I can only get into this very
briefly in this venue because of limited time and space, and because of how
long it takes to do these charts, but it will be a good start for you.
Here's a set
based on a previous move. This move, as we will soon see, is very significant
to me, because I had another set that pinpointed the starting point for me
essentially dead on. That raises the significance, for me, of using this move
for a future set, such as we have here. An ABCD is forming here, and an
alternate is hitting right at the median line. Note, too, the nice .300 and
.447 overlap area near the lower parallel. I have some things to work with
here.
Let's go back in time, and look at the significance of that last
bigger correction.
I initially had this set at the first arrow,
but 're-anchored' it a bit at the second arrow, as shown here. This work, the
how and why of creating a set like this, is right out of Kane Trading on: Median Line and
Fibonacci Synergy. This set gave me the area of the third arrow as a
possible area for a long.
Let's move forward to today, and see the perspective
with this set.
The lower arrow is that third arrow, where
the long opportunity came together. Notice how significant that area was. Rates
came right off that spot and just went crazy. They exceeded the upper parallel,
and almost hit the first outer division line. Now look at a more fully extended
ABCD, which could come together right at that median line. That gives me
something to consider. There are a few more sets that I feel are critical here,
and they give me some additional guidance. I will leave that as an exercise for
the reader, to look for those and see what they say. Remember, I said I'm not
going to say what I think is the most probably scenario, I'm going to give you
food for thought, so you can do some work.
Now, what am I missing? What makes
all this useless if it is absent? 'Context'. Without 'context', you
have nothing. Let's go to a monthly chart and get some perspective from
that.
Wow, is that interesting, or what? There
seems to be a large ABCD forming at a key line, with some time symmetry. One
potential spot is at the .564 and sliding parallel area, and another is just
above at the upper parallel and .618 area. Notice the ABCD in the BC leg,
oscillating around that median line. Notice the previous, major oscillation
around that median line.
Now, where are the ABCD numbers and lines? Could this
smaller ABCD run this up to the upper parallel? Is a long trade fighting this
area? Is there room for a reasonable move? What timeframe would be an entry
timeframe for this pattern? If this pattern and line doesn't hold, what would
the 'wave 3' that that would seem to imply here mean for rates? What does the
intermarket analysis say?
I told you I'd give you some things to work on. Is this
just incredible stuff, or what? I don't mean my methodology per se (although I
do think it's pretty good), but just what is unfolding, and how it can be
assessed and evaluated. These are incredible trading times we are living in. I
hope everyone enjoyed this work, and that it really gave you some ideas to run
with. How I do this, in more detail, is in the books, and to an even greater extent,
the members'
archive.
As I close, let me mention one thing. Keep an eye on the pound, as
it is forming an ABCD at a key line area. I wanted to do that one as the chart
of the week, but without continuous data (which I can't get using the interface
I have right now for the charts for in here), I couldn't get the lines on
there. This one will give me some important clues to the overall picture. Also,
watch that Aussie, as it is right at a big setup area. I was going to use that
as the chart of the week, but there are two areas I am watching, and it is
simply too complex for a chart of the week with no explanation. I instead chose
the unfolding setup in the Canadian, which came off a line and pattern like a
rocket, and now sits at it's first critical 'test' area. Watch the price action
right here for clues.
The next commentary will be next weekend's
edition, posted by Sunday evening, June 18, 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.
|
|
