Saturday, August 21, 2010

(From Leisa) Finding your Inner Blogger

In today's super-connected world, throw a virtual stone and you are likely to hit a blog somewhere. And there's no shortage of investing and trading blogs out there either. So, why do we blog?

Here's an excellent post from my well-read friend Leisa, snippets of which i copied here. Who knows, this may even get you started on your own blog!

"Most people think of blogging as very public affair. They would no more write a public blog than they would run naked through a crowded square. I'm writing today to encourage you to create a your own private blog. If you first shuddered upon reading that, I want you to re-read it. "Private" is the operative word. You can easily set up a blog on Blogger (and I presume other venues, but my experience is with Blogger) in such a way that it is private only to you. However, if you have Unibomber or Ted Bundy tendencies, then I would suggest to you that a private blog on the internet would not be a wise choice. Rather, I'm writing this post today for those of you who have slapped your head or kicked yourself in the tush because you had a market/trade idea that you let get away from you..."

"Is not writing the concretization of thought? If you find writing agonizing, it is with good reason. Writing is what ensnares your mind's flights of fancy and imposes order. Writing forces you to wrestle your ideas to the ground so that they become accessible, practicable and, most importantly, executable. Your writing is the score of your mind's symphony of ideas. When it written, it is memorialized and accessible to you for further tweaking. The process is not meant to be easy. The process is meant to be discomfiting enough because it forces you to make your thinking productive and actionable. No longer are your thoughts an ethereal agent... "

"I will concede that some of you are tapping your toe and saying "No way!". You are a minimalist! You care only about your charts! Like all over- zealous door-knockers, I have an answer to that objection. A blog will help you post your charts and document your thinking. You can use labels that will allow you to post just your trade journal. You can upload your annotated charts, state your trade criteria and---most importantly--detail your post mortem. Perhaps your trade is so splendiferous that you want to memorialize it in its own special category. Add a tag! By simply clicking on your labels you can easily find all of your splendiferous trades. For a trade that went woefully awry, memorialize that one too with its own tag... "

Click here for the full post.
Do check out her trading-related posts on the US markets too.

(EWI) Slicing the Neckline: A Classic Technical Pattern Agrees with the Elliott Wave Count

August 17, 2010 By Elliott Wave International

In the August issue of his Elliott Wave Theorist, market forecaster Robert Prechter alerted readers that the U.S. stock market was slicing the neckline of a classic head-and-shoulders pattern in technical analysis, and that this may send the market into critical condition. Prechter said that when the Elliott wave count and a head-and-shoulders pattern are saying the same thing about the stock market, it's best to pay attention.
Here's how the August issue of the Elliott Wave Financial Forecast, the sister publication to Prechter's Theorist, described the head and shoulders pattern unfolding in the stock market:

"The weekly Dow chart [below] shows the development of an intermediate-term, head-and-shoulders pattern from the January high at 10,729.90 to the present. The January high marks the left shoulder, the April 26 high at 11,258 is the head, and the right shoulder is now ending. The April [Theorist]discussed the pertinent characteristics that Edwards and Magee used to define this technical pattern ... all apply to the current formation. Observe how weekly stock trading volume has contracted during the development of the right shoulder, a necessary trait of this pattern. The downward-sloping neckline -- exactly as on the big ten year pattern -- displays market weakness, which is consistent with our interpretation of the wave structure."

This chart shows the head-and-shoulders pattern.
Total U.S. Stock Market Volume
Here's what Robert Prechter himself said in a recent Elliott Wave Theorist:
"Generally, when the neckline slopes downward, the right shoulder does not rise to the level of the left shoulder ..."
Please look at the chart again -- then re-read Prechter's quote.

Read some of the latest nuggets directly from Robert Prechter's desk -- FREE. Click here to download a free report packed with recent quotes from Prechter's Elliott Wave Theorist.
This article was syndicated by Elliott Wave International and was originally published under the headline Slicing the Neckline: When the Market May Go into "Critical Condition". EWI is the world's largest market forecasting firm. Its staff of full-time analysts lead by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Thursday, August 19, 2010

Shanghai Composite: Heck of a Ride!

Since my post on Jul-5, "Why I am BULLISH medium-term" calling for a rebound, it's been one heck of a ride. From a low around 2350 to the current 2680 - a sweet 330 points (14%) gain! Hope some of you cowboys took the ride like i did. In the past couple of sessions, price broke an important trendline too. Although due for a correction in the next week or so, i maintain that there is high probability of more upside into this year-end (based on the EW count). Here's the picture:

5 Waves
Price rebounded beautifully off the 61.8% fibo retrace, and the bottom channel line, as proposed in the earlier post. The move up seems to be completing 5 waves (if not completed already), implying more upside - in the process setting up an ugly sorta Inverted Head & Shoulders. We can bring it up for discussion if there is another decent correction to setup a proper right shoulder.

Stopped by the Blue - initially!
The beauty of trendlines! Case in point - the first time price hit the blue parallel channel line, it backed off violently in an a-b-c hop, sending nervous bulls scampering. But in the last few sessions, we broke above it nicely.

Sharply Rising Volume
The dipping volume on the move down was a constant topic of emphasis in my previous posts. And now, note the sharply rising volume - yet another confirmation!

The medium-term uptrend in the Shanghai Composite has probably begun, with a minimum target of 3470, before the long-term BEAR market sets in.
In the very short-term, upside towards 2750 is certainly possible before a correction, although i wouldn't bet on it. Supports are around 2590, followed by 2490. My strategy will be to position mostly on the long side, with a few profit taking trades in between. All the best, and remember - SSEC has mind of its own!

Sunday, August 15, 2010

S&P500 Very Short Term: Support at 1070

This move down since the trendline break, has all the looks of an impulsive decline, and may be the beginning of a wave C or 3 down. Meanwhile, Shanghai Composite seems to have put in a medium-term bottom last month. As proposed in a post earlier this year, Shanghai leads SPX by 3-4 months. This could mean a medium-term bottom in SPX may be due only around end-September or October. This is pure speculation of course, as correlations only last as long as they last!

Very short-term, support for a technical rebound may be found around 1070 on the SPX, based on the rising trendline(green) as shown on the chart

Upside limited by 1090-1105, but i wouldn't be making upside bets in this market. Further supports around 1060, 1040. A break below the latter might trigger the larger Head & Shoulders pattern.

Stay nimble, all the best!

The Most Terrifying Video You'll Ever See!

A superb video, very well thought out. I'll be posting weekend material(not necessarily trading related) when i can. If you like this video, please do pass it on!