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 May 28,
2006 Commentary (weekend edition)-
Wow, what a
week. More action than I could even begin to imagine. I know things are really
awesome when I see a setup come together, it plays out, and then shortly after
I start getting e-mails with charts from my various students, and they are all
of the same setup. Now, for me, that's 'as good as it gets'. The really great
thing is the diversity of areas where the market is trading so well. I am
seeing great action in just about every last commodity, as well as my minis,
the stock market, and the currencies. I just couldn't ask for more. We had
another two mini Russell days that I would call 'epic', and the other days were
way better than 'average' I just can't stop gushing, the market is just
fantastic. I feel like this is what I've waited my whole life for.
There is so much to cover I just
couldn't even approach getting through a small fraction of it. I know, my goal
here is to show one concept or idea, and be happy with that, not to do a full
market review. Still, I do tend to try to cover a lot, and when very
interesting things happen with all of them, I'd love to detail it all. But,
alas, it's just not possible. I'll try to cover as much as I reasonably can,
but it will only be a small fraction of a few aspects. Still, it should be some
good stuff.
I will get to last week's Jim's Chart of the Week after this next
chart, which all fits into the same theme. I'll start with copper.
I switched to candles to show this a bit
better. Copper literally plunged at the area in the 'pre-market' hours. Keep in
mind, as I always say, this is my framework, not my entire working area. Do a
sliding parallel, for example, and see what that tells you. Do the alternate
ABCD groupings. In other words, do all the work.
Copper hit the area and went up
like a rocket. It went right to the median line and rolled down, almost to the
lower parallel, where they came right back in. Those that have Kane Trading on: Trade Management
know exactly how I am looking at all this. Even if this is it, and it goes up
no further, I still say, so much for the crash. It 'crashed' right to my area
and reversed hard. There was way more than enough here to get some serious work
done.
Let's look at gold, which was last week's chart of the
week.
I skipped showing last week's chart because I
needed the space for the extra work I want to show on this one. As you recall,
it was similar to the copper setup, the ABCD at the lower parallel there. Gold
jumped right off the area, but then came right back down to it. This is
particularly nice for our work in here, because of how it did
this.
Let's do a little price action study here, on the 60-minute
all-sessions chart.
I didn't like how gold moved up, forming an
ABCD that completed right at a major grouping at a key line (the other line is
just the upper parallel from a modified Schiff median line set). Do the work
here, this is a serious area. The numbers are key ones, and the line is also
key. What do I mean 'key'?
Some numbers, in certain 'context', have more significance
to me than others, as do some lines. What those lines are comparing is
significant, because what they compare to will have varying
significance. This was chock full of key factors here. This is exactly
what I don't want to see when I'm bullish, and is why I read price action so
much. There are a lot of clues that simply don't exist (yet) when the area is
hit. I definitely take this into account when I 'work' my active management plan on a trade. I
pointed this out in advance to one of my students who trades gold.
Let's see
what happened from here.
Gold rolled off the area, came back and did a
'test' of that upper parallel, and then dropped like a rock. Notice where it
started to bounce? This was a nice move up, and it was loaded with clues. There
were a lot of clues in the behavior as it started to roll there, too. I can't
show it now, but do some work and you should see how it acted in the areas I
watch. It tipped its hand quite clearly, in my opinion. It did exactly what I
expected it to do, based on the price action. That's all I can ask for. Enough
to get some work done, and clues that it's changing character at a key
area.
Let's take a quick follow up look at cotton.
Recall where we left off last week at that
last arrow. Hmmm, cotton seems to have seen that line of mine. Do the rest of
the work and it should make sense. Funny how many things I point out in advance
and the price action responds right off the area. Where am I watching next?
What is the 'context'? What premise(s) might I be forming here?
Let's wrap up
with one I call 'Did he suspect it was going to bounce there?'
I had to scrunch up a lot of data to get on
what I wanted to show here. I didn't move to a weekly because I wanted the
daily bounce to be clear. The S&P hit right at a very key line I had, right
at a .300 retracement off a major low (go back and recreate what I did here to
see it). There was also a horizontal line that hit two very obvious swing
points right in there. This is, of course, just a framework.
The S&P
bounced dead off the area, with vigor. Not only that, go to the DOW, the NDX,
the COMP, the Russell, the SOX, and anything else you want, and you will see
the same thing, as far as layouts. I had a similar setup across the board in
everything. Do you think that had me ready? How obvious is this, if I am using
my methodology? It never ceases to amaze me how often I find the areas I can
work with. Where am I watching next? Take a look at this week's chart of the
week, which, although very oversimplified, shows 'the obvious'.
As I close,
let me mention that a setup is playing out now in the Canadian dollar, and that
is worth looking at, to see if it is clear to you, and to practice some
management techniques. Also, something very interesting is unfolding in the
Aussie dollar right now. Look at the 60-minute and daily charts there. This is
is 'complex', in that multiple things are going on, and the full magnitude of
my techniques are needed. Still, if you are one of my more advanced readers you
definitely will want to study this one.
The next commentary will be next weekend's
edition, posted by Sunday evening, June 4, 2006.
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