How To Slow Grind

Just yesterday I talked about what I consider two dirty words in my trading vocabulary – overbought and oversold. A few people chimed in; Scott was among them and he pointed out that both concepts can be useful in sideways markets. I thought about that and on the surface it makes sense – after all I have written about various market periods extensively in my time. Sideways market behave differently than trending periods. However in the end I must still respectfully disagree as we would be comparing apples with oranges.

Clearly once a sideways market has been recognized few are going to point at a touch of the upper channel and say ‘boy oh boy – this market is overbought’. You play the swings – sure – forces are in equilibrium within a contained range. BTW, even in those situations people get screwed because quite often they expect more of the same and suddenly find themselves in a first rip of a rocket. Ooops…

In any case – the terms ‘overbought’ and ‘oversold’ are used over and over without care and for some reason you encounter them most often during strongly trending tape (i.e. short and long squeezes). Like some cat who showed up yesterday with his fancy RSI/stochastic/MACD combo chart which he thought was handed to him by the good Lord himself. Problem is – all these momo indicators can wind up embedded all the time. And poor retail schmucks find themselves trapped after attempting to trade against a strongly trending market. Don’t be that guy!

And almost as to prove my point the tape continues its slow grind higher, marking new highs on the way almost each session now. It may embark on a correction tomorrow or by next March – who knows?? What I do know is that my long campaign has now produced a stunning 13R and I’m starting to move my stop a big closer. That NLSL at 2,020.5 ought to do fine. If I get taken out there I don’t think they’ll find me calling the Spanish suicide watch hotline.

Update on yesterday’s USD/JPY campaign – that’s a good start and as we’ve touched 1R we’re now moving our stop to the break/even point. Nothing else to do right now.

New setup on EUR/CAD – I think a long above today’s high is permissible if it closes as a second hammer in a row. I plan to put my stop below that NLSL at 1.4058.

A few more goodies below the fold – please meet me in the lair:

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And if you’re not trading right now (which is the majority apparently judging by the comment stream) then you may as well learn something useful:

Now personally I’m more of a merengue person (and you can’t beat practicing with a hot latina). In any case I hope your partner is a little less bossy than this gal – daaammnn!!

Cheers,