Tuesday, 27 August 2013
Sunday, 25 August 2013
Welcome back... (Continued..) Are you ready for it ? Whatever "it" will be!
For many years the end of Summer and onset of Autumn has often proved to be a significant turning point in major financial markets but due to a number of both macro and technical reasons I have never quite anticipated and looked forward to a September as I have this year in 2013. There is a tangible atmosphere hanging over the markets as to where we go from here and not just concerning the big QE threatened easing question of which we all wait with baited breath to hear of from the Fed in September. From talking with colleagues we are all conscious and mostly in agreement that this year seems unusually tense and nervous. One thing I can be 100% sure of is that we cannot tell what direction markets will take next month and onwards towards the end of the year, however we can make valid and coherent assumptions and plan for one of two outcomes- either upward or downward movement. It seems most unlikely that the third option ( that i just failed to list as an option !) of consolidation and sideways movement will be all that Autumn 2013 delivers but one cannot be 100% sure, but it remains unlikely.
Whatever new trend awaits we also know it will be irrational (to some degree) until the financial community and press work hard to come up with a story to clothe it in that makes financial sense.It's the old analogy of painting the bulls eye round the already shot arrow on the barn door thus giving yourself a bulls eye shot/score to show your friends and family. I do not really care to think, let alone list how many variables that could effect the market. That's even before we start pulling our hair out just thinking how many potential International News stories over conflicts, distasters etc. Then we have the current underpinning fundamentals of fair to middling recent US and EU/world financial economic data, Rising US (&UK) home prices, record low rates that have political will behind them to remain low (a worry in itself) plus the monetary policy at the heart of all this and the resulting fall out from this such as asset inflation. Are we going to buy the "Green Shoots of recovery" argument?
What will give me the leading edge is price itself. This may sound glib but what i mean is that I cannot recount how many times I have sat in front of the screen watching price sidling along sideways within PitchFork and usually at a critical level ( either a upper or lower Median line parallel or reaction line in a big fat time frame) and then watched as the stimulus for a break up or down comes as from economic data releases or similar news. With hindsight it then all makes sense and we all nod our heads in agreement pat each other on the proverbial shoulder and tell each other how clever and correct we are. The point is we do not need to expose ourselves to needless risk. All we need to do is identify a new trend and once it's off and running and hop on board as per the trend of earlier this year such as USDJPY and Emini S & P. But this year I can smell and feel a certain amount of fear. With US and many equity markets not far off thier all time highs from this summer the prospect of further unlimited upside potential simply feels less probable and thus existing profits and all those big fat basis point gained are threatened. Greed is of course what these markets are about and I often look back a few months later at my own greed (such as my Long ES on the 28th May this year when I was convinced we would sail on up through 1700 and was already thinking of the profits and forthcoming brokers cheque/wire transfer i would soon be receiving! I was fortunately stopped out but it was my pride rather than my account balance that took a hit plus that dangerous feeling that I actually know where price is going ) and am amazed at my expectations. Yet here we are nearly exactly 3 months later and I am still trading the ES from the long side and even while writing this cautionary tale and looking at the ES chart in just about every way it can be viewed still remain of the view that we have the potential for more upside and 1745 to 1750 being an important pitchfork objective.
The point is that although there is cause to be concerned on many levels I never forget that important money managers who shape trends and the supply/demand for stock will always look favourably upon any economic situation that is mediocre and their interpretation is always optimistic. Even with the winding down of QE and recent statements from the Fed it seems that the market has overcome it's initial fears and now we are back to "business as usual". I have written before about the long mentality of Wall St and indeed the whole securities industry and the long mindset and how this is at odds with my professional background in other US futures markets during the 80's and 90's and the older and (hopefully) wiser i get the more apparent it is. This fact having been said and me stating that nothing currently changes my opinion about trading the ES from the longside is exactly why i am nervous this September 2013 with obvious assets such as equities so over inflated.
To be totally honest the charts and simple Andrews PF analysis are still indicating higher prices. Let me show you these simple PF studies again especially in the light of last weeks bounce of the green ML seen below. The upsloping green fork is anchored off the June 2012 low which cannot be seen in the daily chart below. This fork has already proved itself as we bounced off its LMLP back in late Dec 2012 as part of the QE3 impetus on price.
Remember the blue pitchfork expresses the relationship between three exceptionally important pivots that encompass the entire recent late 2012 to current 2013 leg up and we must remember price never touched its centre line and rallied upto the UMLP. A CL non touch is one good indicator of future market direction and this was no exception.. (A similar pitchfork can also be drawn off 27/March 2012, 4th June 2012 and the recent high on 22 May this year to give you the resisting line that fits like a glove - this fork is not shown here). Here below also we can see in more detail last weeks bounce off the green LMLP and of course price may loose some of it's energy and top out and return to this same line. I am also aware we may see a series of sideways small waves along this line with higher lows.More probable is a continuation of this trend upto the black pitchforks upper median line parallel in the high 1670's and then a series of bars bringing us back down for a retouch (possibly more than once as per the diagram below)
Whatever new trend awaits we also know it will be irrational (to some degree) until the financial community and press work hard to come up with a story to clothe it in that makes financial sense.It's the old analogy of painting the bulls eye round the already shot arrow on the barn door thus giving yourself a bulls eye shot/score to show your friends and family. I do not really care to think, let alone list how many variables that could effect the market. That's even before we start pulling our hair out just thinking how many potential International News stories over conflicts, distasters etc. Then we have the current underpinning fundamentals of fair to middling recent US and EU/world financial economic data, Rising US (&UK) home prices, record low rates that have political will behind them to remain low (a worry in itself) plus the monetary policy at the heart of all this and the resulting fall out from this such as asset inflation. Are we going to buy the "Green Shoots of recovery" argument?
What will give me the leading edge is price itself. This may sound glib but what i mean is that I cannot recount how many times I have sat in front of the screen watching price sidling along sideways within PitchFork and usually at a critical level ( either a upper or lower Median line parallel or reaction line in a big fat time frame) and then watched as the stimulus for a break up or down comes as from economic data releases or similar news. With hindsight it then all makes sense and we all nod our heads in agreement pat each other on the proverbial shoulder and tell each other how clever and correct we are. The point is we do not need to expose ourselves to needless risk. All we need to do is identify a new trend and once it's off and running and hop on board as per the trend of earlier this year such as USDJPY and Emini S & P. But this year I can smell and feel a certain amount of fear. With US and many equity markets not far off thier all time highs from this summer the prospect of further unlimited upside potential simply feels less probable and thus existing profits and all those big fat basis point gained are threatened. Greed is of course what these markets are about and I often look back a few months later at my own greed (such as my Long ES on the 28th May this year when I was convinced we would sail on up through 1700 and was already thinking of the profits and forthcoming brokers cheque/wire transfer i would soon be receiving! I was fortunately stopped out but it was my pride rather than my account balance that took a hit plus that dangerous feeling that I actually know where price is going ) and am amazed at my expectations. Yet here we are nearly exactly 3 months later and I am still trading the ES from the long side and even while writing this cautionary tale and looking at the ES chart in just about every way it can be viewed still remain of the view that we have the potential for more upside and 1745 to 1750 being an important pitchfork objective.
The point is that although there is cause to be concerned on many levels I never forget that important money managers who shape trends and the supply/demand for stock will always look favourably upon any economic situation that is mediocre and their interpretation is always optimistic. Even with the winding down of QE and recent statements from the Fed it seems that the market has overcome it's initial fears and now we are back to "business as usual". I have written before about the long mentality of Wall St and indeed the whole securities industry and the long mindset and how this is at odds with my professional background in other US futures markets during the 80's and 90's and the older and (hopefully) wiser i get the more apparent it is. This fact having been said and me stating that nothing currently changes my opinion about trading the ES from the longside is exactly why i am nervous this September 2013 with obvious assets such as equities so over inflated.
To be totally honest the charts and simple Andrews PF analysis are still indicating higher prices. Let me show you these simple PF studies again especially in the light of last weeks bounce of the green ML seen below. The upsloping green fork is anchored off the June 2012 low which cannot be seen in the daily chart below. This fork has already proved itself as we bounced off its LMLP back in late Dec 2012 as part of the QE3 impetus on price.
Remember the blue pitchfork expresses the relationship between three exceptionally important pivots that encompass the entire recent late 2012 to current 2013 leg up and we must remember price never touched its centre line and rallied upto the UMLP. A CL non touch is one good indicator of future market direction and this was no exception.. (A similar pitchfork can also be drawn off 27/March 2012, 4th June 2012 and the recent high on 22 May this year to give you the resisting line that fits like a glove - this fork is not shown here). Here below also we can see in more detail last weeks bounce off the green LMLP and of course price may loose some of it's energy and top out and return to this same line. I am also aware we may see a series of sideways small waves along this line with higher lows.More probable is a continuation of this trend upto the black pitchforks upper median line parallel in the high 1670's and then a series of bars bringing us back down for a retouch (possibly more than once as per the diagram below)
Here is one possible scenario in the 240 min chart although as we are approaching autumn one can suggest a more direct and violent move. The black downsloping fork cannot be ignored and thus the recent low at just above 1630 will be critical in the coming weeks. Again remember a non touch of the black forks centre line would be very bullish and horny for price.The angle of this fork and last weeks higher low on the green LMLP now makes the possibility of price touching this centre line less plausible but not impossible as this objective now lies much lower at 1530 as opposed to 1580 ( viz a viz trajectory of time and price).
Now lets look at a slightly more complicated study. Bit messy in the daily but
Here in the 240 min its nice and clear
and another template
and the detail
Finally look at the long and short stochs in the B line window and the 2 x window...very bullish as is the daily view of these indicators
Conclusion: This market gives no hint of turning down yet and while this threat grows the long side looks wide open for at least another 80 big points. All eyes on the restest of either the black donsloping UMLP ( top charts) at 1675-ish or a restest on the green uplsoping ML at 1640-ish
Thursday, 22 August 2013
E mini S & P + USDX US Dollar Index has made a new pivot
The emini S & P has a bit of a jump in it's step. I identified two mini pitchforks where it shows a positive intention to not touch its centre line so watch out for a push upwards
This is my reaction line chart from PF's drawn only in the the weekly/monthly time frame. Its picked more winners than Simon Cowell...and it hasn't been adjusted/tweaked since last year and is a chart study that keeps on giving. All the reaction lines are drawn by hand the hard way but are accurate to a extremely high degree. However the reaction lines do not appear when you drop down to a low time frame below( as in the 30 min chart above) . This is the same for all charting platforms (my experience is MT4, MT5, Esignal, Ensign Windows, DTN ProphetX/,NinjaTrader and perhaps a few others i tried years ago for less than 2 weeks which i can't remember but remember i specifically use line tools such as the Andrews PF and also need to get a custom idicator written for the reaction lines ( if poss) so other trading platforms without these basic tools are not in my sphere of interest even though as a pure trading platform they maybe infinetly superior such as Tradestation, CQG etc) as the pivots do not exist but you can insert them manually buy drawing over the line in the daily or 240 min TF.
.Here's a link
Here is the USDX with yesterdays Fed minutes factored into recent price action.
.Here's a link
Wednesday, 21 August 2013
Welcome back! E mini S &P, US$, Grains, precious metals etc... Are you ready for the next trend?
Welcome back! It's been a shocking summer for trading especially the eminis and speaking personally have really been keeping my powder dry for the coming months. The good and the great all return to their desks over the next few weeks and in the US it's Labor day that marks the exodus back to the office where great flows of capital and cash restart and interpretation of current fundamentals will emerge as coherent strategies and new trends. If you want the macro economic picture and fundamentals then this is not the site for you but if you want some interesting technical linear studies then look below:
The E mini S & P: Here are two simple charts with three visible pitchforks without their reaction lines from high time frames. There is no doubt the black down sloping PF's upper median line parallel has resisted price and we have since fallen away from those late July/early August highs with the big QE debate and indifferent US data being blamed for the recent uncertainty. Of course we are supposed to be heading for the black centre line which is approx at 1575 but there is no guarantee we will make it. Look at the blue PF and remember that we never touched the CL at 1550 and promptly rallied upwards ( as per Andrews theory) towards and just above 1700. There is also the green PF whose lower MLP has already supported price once and may do so again but as with all lines the angle is important and the probability of a new pivot being formed is directly proportionate to how close to a horizontal attitude any line posesses. This neatly bring me to a monthly TF PF of which you can see just one horizontal dark grey median line bang on the 1600 area which has already proved itself a winner with multiple examples of great price distribution around it. These are just a few of the lines that will make up the organic support and resistance that price will be moving through in the coming weeks and months. As for the finer detail of the matrix through which price will be moving you need more detailed and dedicated studies which are availble on my website www.commodity-analysis.co.uk and when you have those... well, you need to know how to use them.
What will be revealed in the coming weeks i have no idea. Perhaps a false break out upwards then a savage sell off? Perhaps the market will not wait until September but will kick off before?
Here's the current emini Dow ( Sep13) 4 hr with reaction lines ( all drawn using the free MT4 custom PF tool) and one in particular shows tremendous correlation with recent price action.
The E mini S & P: Here are two simple charts with three visible pitchforks without their reaction lines from high time frames. There is no doubt the black down sloping PF's upper median line parallel has resisted price and we have since fallen away from those late July/early August highs with the big QE debate and indifferent US data being blamed for the recent uncertainty. Of course we are supposed to be heading for the black centre line which is approx at 1575 but there is no guarantee we will make it. Look at the blue PF and remember that we never touched the CL at 1550 and promptly rallied upwards ( as per Andrews theory) towards and just above 1700. There is also the green PF whose lower MLP has already supported price once and may do so again but as with all lines the angle is important and the probability of a new pivot being formed is directly proportionate to how close to a horizontal attitude any line posesses. This neatly bring me to a monthly TF PF of which you can see just one horizontal dark grey median line bang on the 1600 area which has already proved itself a winner with multiple examples of great price distribution around it. These are just a few of the lines that will make up the organic support and resistance that price will be moving through in the coming weeks and months. As for the finer detail of the matrix through which price will be moving you need more detailed and dedicated studies which are availble on my website www.commodity-analysis.co.uk and when you have those... well, you need to know how to use them.
Here's the current emini Dow ( Sep13) 4 hr with reaction lines ( all drawn using the free MT4 custom PF tool) and one in particular shows tremendous correlation with recent price action.
Tuesday, 13 August 2013
Normal service will be resumed.......
Just a quick note to inform all that I am In London on business and have been unable to post but am back in the office this week on 15th Aug and am looking forward to the beginning of the usual late August early September market turmoil and potential new trend.It's often a critically important time.
Thursday, 1 August 2013
Emini S &P + USDX Dollar Index tests support plus my Soybean chart
Two classic Andrews type Pitchforks I have been tracking ES centre line progress on. Ii the chart above we have not pipped the centre line yet although it appears to have touched but the fall away from 1700 shows you that its a tempory fail.
Here is the second fork of interest....an even bigger PF showing the above fork inserted as a tiny up sloping black PF. Does anyone agree with me that this market is looking ripe for a retracement of decent proportions? As we come to the end of summer i always wait to see the signs of new trends developing. After Labor day we have the emptying of Long Island and the Hamptons and other similar such places where the rich and influencial money managers pass these summer months. Back on their desks at the begining of September they start to work again and huge capital flows move again as they appraise the markets.Can it be that we are simply going to keep going higher on the ES? Will QE never end? Of course not and when it does and the coded statements of the FED are fully realised then the S%$T will hit the fan back to 1500
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