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October 10, 2014

Major Technical Damage

Wednesday near the close of the U.S. session I really thought the ole’ Yeller had us all by the balls. If there has ever been an opportunity to squeeze the bears into oblivion then this had to be it. In yesterday’s musings Scott confirmed my notion that the series of lower lows and lower highs was still intact (barely) and that the bearish case was on the edge of extinction but still had a small chance of resuming. The odds were pretty minuscule IMO and early yesterday I kept checking the tape waiting for the invariable second shoe to drop.

But then suddenly something very curious happened:

In the last 20 minutes, someone has placed/canceled a 666 contract [...]

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June 23, 2014

Volatility Cycles

Some of you eager beavers have to start wrapping your mind around the concept of markets moving in volatility cycles. Just like it is a common observation in natural systems (i.e. water, sound, electromagnetic) imagine a sinusoid wave that oscillates in repeating cycles. A few days ago I wrote an indicator that visualizes the idea very nicely – I call it ATRIP as it’s a hacked version of average true range:

What is important to understand is that these cycles are a natural aspect of all basic market types – bull, bear, and even sideways. In sideways markets they allow us to scalp or swing trade – an apt definition of the activity obviously. In [...]

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May 3, 2013

Good And Bad News For The Bears

Unless you trade out of a cave then you already know that the S&P’s 1600 ceiling was effectively smashed today. It’s doing the gap & camp near 1611 right now but the day ain’t over yet. Now if want to spend a lot of time regurgitating what already happened then I suggest you go look elsewhere. We stainless steel rats for one prefer to look forward as that’s where our edge is. So in that spirit let’s zoom out a little and take stock as to where we are:

Looking at our monthly panel what sticks out is that we may be in the process of painting a seventh month higher. Obviously May is still young but what we do know is that six [...]

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December 9, 2012

Figure Pointing

The dreaded honeypot period continues and the bewildering gyrations of the past few weeks have not offered market participants any further hints as to where things may be heading next. That of course is the sole purpose of a honeypot formation, so let’s take a peek under the market’s hood and lay out some crucial inflection points.

Since early November the S&P 500 has been running nowhere fast. If you take away all the daily noise (something P&F charts happen to be very good at) then you see it priced near where it started out six weeks ago. In case you are not familiar with P&F notation – the little B on the chart stands for November and [...]

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Cognitive Bias Carousel
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    The tendency to treat money that has already been committed or spent as more valuable than money that may be spent or acquired. Imagine two … more
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