Thursday, May 27, 2010

I have written here for some time due to being extremely busy, the markets have been choppy with no confirmed bias. Heres a paragraph from the book Practical Speculation by Victor Niederhoffer, an ex-trader for the QUANTUM fund owned by George Soros:

''Life, like the markets,offers the greatest rewards to those willing
to assume risk.Assuming risk brings uncertainty,anxiety,and occasional
loss,but it also brings out the best in us.In becoming a speculator in life,
each person embarks on a heroic quest,becoming more than he or she already
is.Heroism is a potent antidote to the cynicism and alienation so
many of us accept.''

Wednesday, May 19, 2010

Good Support/Resistance chart (FOREX)



Heres an AUDJPY daily chart where price has held at 76.00 support many times, now as a rule that I follow, the more price touches and bounces off of a support or resistance level the weaker that level gets. Others think of it differently, they look at it from a different perspective they say that the more prices hold at support or resistance the more obvious that the major players are interested at buying the stock at that level. The way I look at it is different, Every time prices hits a support or resistance level and bounces, participants absorb supply at support and absorb the buying or demand at resistance and the more times it bounces the less likely that demand at support or supply at resistance will be available thus the market will fail to reverse and a breakout will occur.

The AUDJPY is the perfect example to this if it breaks, buyers wont be able to keep on buying at 76.00 and prices will break through and once they break through all those buyers will look to get rid of their holdings thus adding fuel to the fire. This pair could turn around and head for resistance again, anything can happen but the probabilities are in favor of a breakout and especially after so many bounces.

Sunday, May 16, 2010

Observation (Silver ETF) - ( 20 year bond ETF)




Above are two chart of both the Silver and 20 year bond etf. Both of these instruments have been on the spotlight recently.

20 year bond ETF (TLT): This is an interesting instrument that is currently in hibernation mode and could easily go either way, price is in a typical sideways action as both buyers and sellers have balanced demand and supply. Recent volume though indicated differently, the spike in volume tells us to get prepared as this thing is close to its boiling point and could blow in either direction. Emotions have been soaring sky high recently, traders have been getting emotional and volatility usually provide signs to a reversal. I am looking at this box if price holds above then am bullish if holds below then am bearish, KISS (keep it simple stupid).

Silver: Silver has been in the spotlight recently and has been making headlines as a good investing opportunity instead of gold. Is it over or under hyped? The only indicator that could give us a clue is PRICE as explained on the chart. My analysis is never a prediction their just thoughts, I could be wrong and if I were to be wrong then I would trade the other side without hesitation. Always build scenarious and never develop and opinion as it leads to sloppy trading.

Friday, May 14, 2010

NASDAQ ETF (QQQQ) Observation


Heres a Q's chart, it is obvious that we had a no demand day followed by a down day, this isn't a very good sign as bears may be overcoming scared bulls and as a law in economics and business when supply overcomes demand prices decline. Moving averages have also started crossing over signaling indecision. All this after the EURO bailout isnt a good sign, things dont look too bright for the bulls for now.

The Law of Cause and Effect - (FOREX)



The Law of Cause and Effect works on everything including the markets, I use it in my analysis on a daily basis. A good example to this would be the recent EURO bailout. We all know that it was a bad idea, Jim Rogers said that the currency has nailed its coffin. I am not going to get into fundamentals, information on that can be found anywhere on the web, instead I am going to demonstrate through technical analysis what I mean by cause and effect on the EURO chart.

As demonstrated above, the heavy buying after the news ignited the bulls temporarily, and as market participants came to understand that their investments weren't sound and that the euro was getting into deeper trouble by implementing the bailout, market participants decided to exit the market and added Euro supply sending the EURO down. This can turn ugly if the EURO fails to hold support at the October 2008 low at 1.2330 which its approaching really fast. if IT does breach then 1.1700 is the next hurdle.

Wednesday, May 12, 2010

Typical Chop is what we got (FOREX) GBPUSD


A typical chop is what we got after those to opposite pinbars as evidenced by this 30min chart. Its time to proceed with caution, the market is pausing and aggression should be avoided.As we have yet to determine a confirmed bias on market direction.

Monday, May 10, 2010

Typical chop conditions to be expected in the GBPUSD (FOREX)


The GBPUSD could get choppy over the next couple of days after two pin bars in opposite directions formed on the daily. It shows indecision among market participants, at first buyers buys bought and absorbed the selling on Friday and then today the opposite happened Sellers took control of the excessive buying and pushed prices down. This would signify a range in my analysis. That range will be eliminated once the high or low is taken out and either the bulls or bears regain control.

USDJPY (FOREX)


Here is what I think of this pair, given that its extreme sensitivity to news. The Yen gains strength in times of risk aversion as its a safe haven currency. As shown from the chart above, the USDJPY is about to break its weakly resistance and turn bullish after long weeks for grinding down movement. If the trendline is taken out the yen goes higher then theres even more reason to remain bullish, but if it doesn't then thats not good news for the bulls as its a sign the bears are still in the game.

Sunday, May 9, 2010

Thoughts before the new week (QQQQ)


Before the market opens this week, I have to point out that last week was pretty incredible, I have to admit that at this point I have no idea where we are headed unless the range of this weeks bar is taken out in either direction. If the low is taken out then am bearish and if the hight is taken out then am bullish, but given the ammount of buying in that bar and strong close I am abit more bullish. I expect a chop week the low or the high might be tested and you never know with volatility rising we might test them both! I am in safe mode this week unless am convinced of a move in either. In terms of uncertainty, be patient and wait for confirmation and the market will show its hand.

Friday, May 7, 2010

Correction (SPY)


We got our correction on the SPY and on all markets, but what should be noticed is the hidden buying in the decline. Markets were in a free fall today just to bounce strongly off of the lows. It then shot up and caught all short sellers. This could be an exhaustion move to flush out all the sellers. OR . We can compare this last fall with a ball that falls from the sky, the first bounce is usually the most extreme (today) the second bounce is going to be less extreme (tomorrow) and the third even les...etc. Till price stablizes and moves higher again. It was definitly accumulation and if prices take out the low then this is not a correction, its a BEAR MARKET! as it will be a failed accumulation.

Tuesday, May 4, 2010

A picture says a thousand words


A picture says a thousand words, and thats exactly what this SPY chart is saying. It broke out of the box and it broke hard as expected. I am currently short term bearish after that box broke and ill remain short tern bearish till the longer term trend line is broken to the downside then ill wait and see what happens. The EURO zone has triggered this with spain being a factor. We are still in a bull market till proven otherwise.

Saturday, May 1, 2010

A box (spy)


Here a look at he S&P etf. It is obvious that we are currently in a box after a decent push up. As evidenced by the chart we are in a box on the daily timeframe and we have formed a head and shoulders pattern on the hourly. Even though I dont put much emphasis on that pattern it does exist.
We had a down day on above average volume after 2 up days on low demand as evidenced by the volume which was lower then the declining days. Look for the 118 level as its vital. If it breaks and holds then we are probably due for a correction. The negetivity regarding Goldman Sachs was enough to trigger this panic selling. Time will tell how this story goes. Looking at the big picture we are still in a bullmarket and this is nothing but a pullback or correction at best.