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Ill-LQD 2.0
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Ill-LQD 2.0

by The MoleOctober 2, 2009

3:00pm EDT: Apologies for my long absence but I had a half dozen issues to deal with this morning plus I had to attend two phone conferences. In the meantime I see that we’ve been treating water around VWAP since the open with a slight bias to the upside.

The one chart that however keeps fascinating me is LQD. To see a second consecutive down candle like of that magnitude is very significant and indicates that bond traders are rushing out of risky assets. The big question is whether or not this will continue to have an impact in equities – but let’s not forget that bond traders are (usually) a lot smarter than their equity trading cousins.

Thus far the lower channel border is holding. I’m not sure yet if we are sub-dividing into 2nd waves here or if something else (i.e. more worrisome to the bears) is going on. If we run up from here I would have to completely revise the wave count of the past two months as an a-b-c at this stage would violate the {i} wave of late August. We need of course be open to this – the labels we attach to waves in development are not chiseled in stone and it’s always good to not get locked into a mental framework. Unfortunately however we cannot second guess the process either – at this point nothing has happened that would violate our blue scenario. If we breach above 1069.62 then we know for sure – in the interim any rips continue to be short trading opportunities. I know that sucks as said move would suck the life out of any of our puts – but that’s life in the fast lane – if you try to get in early you will have to sweat through these limbo situations. And the bulls will do their very best to test our resolve – prepare head fakes. Not saying that it will happen but when you enter into a trade the word ‘hope’ should be erased from your vocabulary.

3:53pm EDT: VWAP breached on both ES and NQ – very very cool – let’s see how far this thing will go.

3:57pm EDT: The fight for battle bot supremacy has begun:


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • http://www.facebook.com/screasy v8muscle

    copied from last thread:

    Something to keep in mind… the 2 scenarios that I think are left on the table. I think the orange arrows on the chart are more likely to be honest.

    http://screencast.com/t/Ql9SF36RHn3n

    Transports also confirming this may be the bottom of the move down before we go up again. Long term trendline is intact:
    http://screencast.com/t/9xUwd2aLWIk

    tech showing the same: http://screencast.com/t/Tua3uMuuuS

    edit: a 3rd scenario is we retest the broken wedge, make a double top, and plunge into the abyss. That is probably my favorite scenario http://screencast.com/t/PzLasunF3uzf

  • gmak

    I would suggest that bond traders are moving out of all fixed income assets. Look at TNX. It is up now from a negative value (it reached almost 31.00 earlier today)

  • molecool

    Yupp – just don't know how I would count the white path yet – will simmer over that during the weekend.

  • http://www.evilspeculator.com/annamall annamall

    Any bounces I am adding to shorts :)

  • http://centrifugaldeforest.blogspot.com/ Centrifugal_Deforest

    LQD was scheduled to pay a dividend this week (5.6% annual yield).
    This may account for most of the drop, though I haven't looked into whether or not charts have already re-priced lower, the exact payout, etc.

    Anyway, might want to look into it if you are looking to leap.

  • Joe8888

    Hi all..

    a quick view of the daily SPX,,,,WE ARE at some support levels here,,,,do more work over the weekend..

  • Douala

    Mid McHugh report
    [sorry Bart he did do one after all]
    ~~~~~~~~~~~
    Stocks are flat Friday, as a back and forth small degree wave 4 completes. This is corrective, meaning a final small degree wave 5 down should follow either at the close Friday, or early next week. It looks to us that this five wave small degree decline is the completion of wave c-down and (D) down. The S&P 500's pattern has evolved from a Bearish Rising Wedge to a Bearish Broadening Top.

    SPX http ://www.screencast.com/t/XfEnbb6r8gz
    NDX http ://www.screencast.com/t/XfEnbb6r8gz

    [Note: I put a space after http]

  • LegendC

    Is the push here finally?

  • mrBozo

    Anybody else prevented from getting into IB?

    Shenanigans again

  • molecool

    After a seven months continuous melt up a drop like this due to dividends? I wish trading was that easy 😉

  • Douala

    Note: I reposted the McHugh report below. I forgot a few things. Sorry. Still suffering from Sugar overload here.

  • PRSGuitars

    Update for Carl re: 133.3%

    http://screencast.com/t/XKoRVJYug

    Agreeing with my previous thoughts that there will be some EOD fuckery, perhaps with downside as people refuse to go long into the weekend, but Steve (v8muscle) put it well that we're at an easy bounce spot looking for /es 1040 at least next week sometime.

  • PRSGuitars

    Looking like holding between 20 and 50 sma on 5min, and the vwap.

    Thus, 1023 or 1020 /es — somewhere in between there.

    Have one /es long now but will try to steal another one on Sunday to ride up toward 1040 by tuesday-ish. Gotta see more charts but fairly short still, so need to hedge that to reload heavy short 1040-1060 or so (add to shorts, that is).

  • scrillagorilla

    The problem with your thesis on LQD is that LQD is generally NOT considered a risky asset. It is all IG bonds. Take a look at JNK, containing much riskier HY bonds. JNK is actually outperforming LQD today, which signals increased risk-appetite.

    Divergences between the bond market and the SPX are quite accurate in predicting the folowing day's action. When JNK outperforms LQD but the S&P goes down, the S&P usually goes up on the following day.

    That said, JNK got absolutely hammered yesterday, so perhaps its relative outperformance today is simply a correction from extreme underperformance yesterday.

  • PRSGuitars

    133.3% Channel Extension — Transports Version!

    http://screencast.com/t/vU2RUSQ0uLSp

  • Carl V

    Hey mrBozo: the same for me; I was wondering if ti was my computer or connection so you kind of relieved me, but this is a shame of course!!

  • z12run

    It pays a monthly dividend, so I wouldn't think that would be the reason (why didn't it happen the previous 7 months?).

  • mattco

    Had major issues here in NYC. My Bloomberg terminal was fine but could not get onto the internet for 20 min. Weird!

  • molecool

    Appreciate the input – I'm the first one to admit that I'm not a bond trader. BTW, is this the first time you post here?

  • BigHouse(Aka Mr Vix)

    Here is that end of the day sell off weeeeeeee

  • Carl V

    Thanks PRSGuitars – appreciate you care of me 😉 Will certainly quietly look at your technique this weekend –

  • narianu1

    Check out my live trading videos at:

    http://tenbaggerchallenge.blogspot.com

    I'll post new one's every day, so follow the blog and you'll be automatically notified when I post each new video.

  • crush1618

    Did NDX just print (iii) of [i] right now?

  • molecool

    My point exactly. In any case – I don't trade fundamentally and this is border line. The chart shows a trendline breach with a follow up and that's what I go by.

  • dollar

    3:54 PM So much for that brief fling with savings: The latest BEA release shows that the U.S. personal savings rate fell to 3% in August.

  • molecool

    There are plenty of support levels – if you look at my charts. At some point the bears will have to start breaching them otherwise P3 will never happen.

  • PRSGuitars

    posted above, just making sure you catch it here as well… worked for /es, SPY, SPX etc + EUR/USD as far as I can tell, now we can add the $DJT —

    http://screencast.com/t/vU2RUSQ0uLSp

  • Holl

    Great week mole!

  • gsavli

    weeee indeed. this is not to go short over weekend imho. lame bear action towards the end, i'm disappointed.

  • centerline

    Trouble over here as well with TD and a host of other systems for awhile there. Gets the paranoid part of me going pretty good.

  • DeBauche

    What is the current status of S&P 500 650 March Puts? I have not seen any recent comments.

  • dollar

    It was too good of a week. I sold half my inverse ETF's at the close, but held on to my UUP

  • mattco

    It is funny how it came back on at 3:50EST. Pretty good way of keeping the market from selling off. Fuck the short ban from last year…Kill the bear by squeezes and then cutting off trading at the perfect time. Would have to put my foil hat on if my connection came up at 4:01EST. For now I will chalk it up to a “random” occurrence, similar to the “connectivity issues” at the NYSE a few months ago. lol

  • http://centrifugaldeforest.blogspot.com/ Centrifugal_Deforest

    Trading's not easy?
    …no wonder my jaw's in a perma-clench

  • http://oahutrading.blogspot.com/ steveo77

    Hey, this is just a channel poppin' market and you found the key….keep posting (in real time though…..)

  • http://oahutrading.blogspot.com/ steveo77

    I follow JNK daily since I have been short for about a month (ouch)….
    I would agree that the realtive outperformance today was just a relief rally from recent pounding.

  • http://oahutrading.blogspot.com/ steveo77

    When I saw your posting, I took some QQQQ puts, and sold them near EOD for a nice profit, thanks for the hat tip.

    I want to review block trades near end of day, could be enlightening.

  • gpanek

    Looks like LQD still has to get thru the 50 dema plus support at 104 and then linear regression curves to cross. It could be a sweet indicator of major trend change. see chart here http://www.puresync.com/images/lqd.jpg

  • Joe8888

    100% agree with you,,,when i was a boy, my Dad took me to a Bull fight,it wasn't a fare fight, they drug the bull first, then once the Bull is drugged -out,,, the Hero, comes out,,,El Matador…and Kills the Bull,,,

    my point is, even with all the Drugs, they injected in him first,,,, it was hard to Kill THIS Bull,,,,

    So i know, This Bull Market.will not! just roll over,,,we are putting inn the drugs in her,,here,,,,and soon, Our Matador, will come ,for the Final Blow….

    Stock indices are poised for a sharp correction into the first half of November…Then maybe
    another rally,,,,putting inn a lower high,,and then it's all over…..

  • lilme

    AGNC – high dividend stock 4% quarterly – the day of the ex-dividend 10/30/09 the stock tanked by more than 4%. First time I tried this, but Berk played an option move on AGNC. I am not suggesting this is 'predictable' but people searching for yield are gaming these dividend dates. LQD pays on the first of each month – morningstar.com lists the dividends and the dates.

  • http://oahutrading.blogspot.com/ steveo77

    Per your top chart, from a wedgie point of view these things usually bounce off a total of 5 times, and then rocket the other direction. So your white pill would be just the picket for bearish eupohoria.

  • http://trading-to-win.com/ DavidDT

    expect strong bounce on Moday…really strong…very strong…

    …may be…may be not… how the hell do I know…just passing by

    http://screencast.com/t/Zzb8ACaKXxQ
    http://screencast.com/t/iDLhvzyCd

    sleep well

  • PRSGuitars

    Will do — been in chicago with just my laptop all day. Was buying /es from my girlfriend's bed on my iphone after the jobs report, not really my regular setup… haha.

    I think the next time anyone posts a channel, i'm going to slap that extension on and just wait for it to get there. The 133.3% extension works too often in circumstances like today — gap to or near the target and reverse back towards the channel it just broke.

  • LegendC

    OptionsHouse had an outage yesterday and today, although both in the mornings.

  • LegendC

    A young bull says to his father, “see that heard of heffers down there? lets run down and fuck one. No says his father, lets walk down and fuck em all” 😉

  • Scrillhog

    I bet you're basing this off the full moon this weekend, yes? =)

    Small long position myself. 10% position.

  • http://trading-to-win.com/ DavidDT

    nuh..
    just had nottin to say and had to say somettin

  • TheMacroEconomist

    Hey Joe did you see my avatar for today…the Bull in a hospital bed on an IV dispensing drugs called a Stimulus Package…(got this from the MarketWatch feed last night). :)

  • TheCrowe

    Looking for the gap on the SPX at 1016ish to fill first. Interesting that the SPY gap is closed from 9/4 but the SPX gap is not. Thanks for the charts, as always! Best, Richard

  • Joe8888

    that's great,,,,,u gotta keep that one .for a while…

  • Joe8888

    lmao

  • http://oahutrading.blogspot.com/ steveo77

    Exactly let the market come to you…lets say your bounce point is 122, coming down from 125, set an alarm at 123, and a buy long order at 122.2, stop at 121.7 (or as tight as you wish).

    That's my theory.

    I feel crippled without my (4) 24″ monitors….so I feel your pain.

  • http://trading-to-win.com/ DavidDT

    daily QQQQ, SPY, IYR + hourly IYR posted

  • PRSGuitars

    please let me know if you find anyhting — been trying to do the same thing for sometime (im on TOS, no IB for me though…)

    thanks man, have a good weekend!

  • molecool

    They're humming.

  • molecool

    Good to see that the comment count is lower now and everyone appears to be focused again.

    Have a great weekend, rats! :-)

  • Stainless_Steel_Hamster

    try this

    the climb to august 13 was 1, 2, 3

    Afterwards … we should be at iv of 5 in the context of the first image

    http://www.fxtrek.com/glossary/content.asp?item…)

    Afterwards I believe we'll be doing a good drop to the 800's as and E in the context of the second image.

    Just my opinion

  • TheMacroEconomist

    Hey Mole! That LQD chart is something all right. I'm wondering if it's showing risk aversion – or, if it's part of the yield curve flattening thing seen in Treasuries starting in the second half of September.

    My knee-jerk reaction is that it is indeed risk aversion, just as you say. But I will put this on my research list for the weekend, throw together a chart or two over the weekend. Either way I think it's significant.

  • BigHouse(Aka Mr Vix)

    Lets talk when they get to $5 :)

  • jaxon

    Mole-a couple of quick questions-in our Bible the question of whether or not to use arithmetic or semi log scale is left up in the air. when i use arithmetic the only index to breach it's trendline, other than utilities, is Naz and it is very minor. i have been using semi log but the good book says to use both. what say you?

    also, i'm not convinced that this correction isn't an ABC with and ending diagonal. also, does that look like an expanding triangle from Aug.19 low? i think i've become a bit skeptical. i guess we will find out next week.

    thanks for all your hard work and insight.

    jaxon

    http://www.screencast.com/t/OoAQgsMOdIs

  • centerline

    “Bond quality ratio (LQD/TLT) broke down below a 6-month uptrend line and also broke down below 11-week lows on 10/1/09, thereby signaling a decline of intermediate-term proportions and a move away from risk and toward safety.”

    quote from another trading site. I will look for more on LQD this weekend and what it might mean.

  • centerline

    … that is, something more useful that potential money flow from corporate (even IG) to government bonds. I do think that JNK is useful to watch next week though…

    Also, In my feeble opinion, the grading of securities really needs to be considered suspect as well. Recalling our recent past on this one. AND, in a complete meltdown scenerio, nothing “corporate” is really “safe”. Money will run like hell to other safe havens. Like I said earlier, just thoughts. Maybe complete off my rocker.

  • http://trading-to-win.com/ DavidDT

    I'll take 10,000% return any time :)

  • http://trading-to-win.com/ DavidDT

    if you'd like – I'll teach you to make money on 15.4inch 5 years old laptop
    only today for only 2 gazillion dollaaas

  • notapermabear

    The LQD sell off might be money coming off corp bonds to buy the equities. So I am suggesting the cause effect is reversed here. Equities were brought down due to usual end of month and pre earnings takedown. Then LQD holders seeing not much prospect for further gains moved their money into equities as equities have yet to catch up to bonds. Or maybe just a lot of people playing the arbitrage (short bonds, long equities). Is there a way to confirm this ?

  • http://www.chartsandcoffee.com chartsandcoffee

    2 things. I typically have not seen eye to eye with Mole but yesterday he mentioned that trend trading and EW are mutually exclusive. I thought that was an interesting thought. Second, we both been tracking LQD. I've been watching this sucker for months.

    Here are my thoughts on the market including LQD. Yesterday was a huge day. Today not so much. Still waiting for EURUSD to break.

    http://chartsandcoffee.blogspot.com/2009/10/inf

  • Apple Al

    Just an idea to worry all us bears:

    http://screencast.com/t/uoAzZ3OD

  • scrillagorilla

    Not sure if first time posting or not.
    I'm not much of a bond trader either, but IMO at least following the bond market is critical if you're trying to predict the stock market, because Mr. Bond is rarely wrong. One simple metric is to watch the relative performance of IG vs. HY, and the easiest proxy is LQD vs. JNK. I use this indicator in my algorithmic trading, and it's one of the most accurate. When bonds and equities diverge (i.e. LQD up against JNK and S&P up, or LQD down against JNK and S&P down), then the next day equities will “follow” bonds about 70% of the time.

    You can also see that 30yr treasuries, which had been trapped in a tightening range for many months, broke out strong to the upside about a week ago. This is Mr. Bond saying, “Inflation is a mirage, DEFLATION is the real problem,” which of course is bad bad bad for equities.

    It's also interesting to note that the yield spreads on corporate bonds have been pricing in much less economic growth than stocks over the past few months. If you listen to Mr. Bond, he's saying the S&P should be about 850, so I'm using that as my target over the next 6 months or so.

  • grednfer

    I think your NDX chart and your SPX are the same….its a test, right?
    I agree with your truncated wave 5 theory, but the reversal was weak today so I don't know what the criteria is to needed satisfy a wave 5. How do we know it hasn't already happened?

    For a brief moment yesterday the DOW and the SPX failed a backtest of the 20DMA…….never quite made it to the 50 today though. I would like to see a solid run and firmer failure of the 20….and maybe we'll get that next week. Many leading stocks reversed and closed up today….GS, APPL.

    BIDU on the other hand, TODAY, had a classic test and failure of the 20, which is my favorite…up or down…….looking forward to BIDUs future.

  • http://rosabarba.livejournal.com Rosabarba

    If bond traders were really bailing on risk, you'd think HYG would have suffered even more today, and it rallied into the close on nice volume. You'd also expect treasuries to rally (though they've admittedly been on a tear of late), but they sold off. You could make a case, based on those ETFs, that bond investors were actually more favorably disposed to risk than not today.

    LQD has been on an amazing run and always bears watching. I'm not disputing the importance. But I think it's worthing considering that a falling dollar has to take some of the stuffing out fixed-income returns, and IG bonds might simply have a bit of deferred mean-reversion in them. This trend break might signify the start of something, but I think a reasonable case could be made that it is not necessarily a coal mine canary for the equity market in and of itself.

  • amokta

    tell me whats to separate a leveraged etf from a ponzi scheme or a fiat currency, if their shares are not directly redeembale from the 'trust' and its only (share) value is that at which someone else wishes to buy it, and not its true 'trust' value. I only ask if we had a huge crash, then a short etf would on paper increase in value, but what if there was no one willing to buy your shares – shares would be worthless ? on the subject of BYZ whens a good time to buy these, and can it be held for months in a downward but volatile market?

  • Stainless_Steel_Hamster

    maybe, maybe not

    but even a further top is only weeks away on your count (unless you want to consider that this triple is just A)

    and then….

  • springheel_jack

    In all honesty amokta, if no-one wants to buy your shares, they are worthless, but that applies to every share.

    The value of all shares and other securities is based on a willing buyer. That also applies to gold, other commodities and every other store of value, including currencies, that has ever existed or will exist in the future.

    There is a powerful philosophical argument that all economic activity is based on the illusion that value has meaning. We have to suspend that disbelief when we involve ourselves in economic activity.

    Barring a general rejection of that illusion though, leveraged ETFs are as likely to have a continuing market as anything else.

    I'm going to be posting on the subject of shorting with a leveraged ETFs this weekend if you're interested.

  • AntG624

    $NYMO below -80 also giving signal of short term bottom.

    I'd prefer to see a rally next week that fails around 1060 or possibly double top at 1080.

  • http://trading-to-win.com/ DavidDT

    that is exactly my expectations to complete wave structure
    any new higher close will extend this mirage of stock market prosperity

  • http://trading-to-win.com/ DavidDT

    “trend trading and EW are mutually exclusive”
    (I have to say – you probably have misinterpreted something Mole said – I'd highly doubt that he could have said ANYTHING like that)
    wow
    I might have done something wrong – D-wave (as derivative of EW) helps me to stay in trend, to know when wave will most likely extend and when and where to expect price to go.
    No other method I've ever used was capable of anything remotely close to the precision of “trend following AND turns identification” as my incorrect wave understanding – should be incorrect if “trend trading and EW are mutually exclusive”
    Time for me to re-read some books – I've been doing something wrong I guess…

  • Douala

    grednfer
    LOL… I am sorry for the mix up…. here you go

    http://www.screencast.com/t/hqJ6b60y

  • Douala
  • Scrillhog

    I thought you wanted lots of comments.

  • Scrillhog

    If TA is working on log, there's a good chance you should follow that and vice versa IMHO.

  • http://www.evilspeculator.com berkshire

    I don't know how to do all that funky stuff like the other's, but the is a new post or as we said in the old days,

    “Clean Cups!”

    Caution… horizontal charts (I know you love them Mole) 😛

    Skål!

  • http://www.evilspeculator.com berkshire

    Lots of comments is good so long as they are pertinent. We (all, I think) would like a nice balance between number and quality content.

    Skål!

  • Offtimer

    Why do so many people like this UUP. Is it a hedge?

  • http://www.evilspeculator.com berkshire

    It certainly isn't and ABC with an ending diagonal, as diagonals would take more time, and form in a series of 3 wave moves, not with a gigantic drop straight down in the middle. As far as log or arithmetic, use both if you have the time and patience, or just make sure that you are consistent. That is more important than the VERY minute details of difference that the two scales produce (at least as far as the indexes are concerned).

    There is a chance (although it is remote) that we could be putting in an expanding ending diagonal. As far as I know, there has only been 1 confirmed expanding diagonal (according to EWI) which make the likelihood for another occurring now fairly low. From an EW perspective, there are several better counts before we have to climb that far out on a limb. From a strict TA perspective, yes, the TLs are diverging, but the entire “wedge” at this point is pointing upwards, vs. a triangle that should really be pointing sideways.

    IMO.

    Skål!

  • Offtimer

    I think most people like what I have to say by the number of points i have received or they just do not read what i have to say. You have found something totally unique and deserve more than points. This chart seems to be screaming down definitely 50 points very soon. My interpretation puts it quite a bit lower, more than 100 points in the next 2 weeks, because of time compression and downward depth attraction or gravitational weight. (Note the last 5 weeks.) This is contrary to what most market participants are expecting Monday. Great find!

  • molecool

    David – I did say that. Berk and I used to trend trade a lot and trust me – trend traders do not attempt to pick tops or bottoms. As a matter of fact they buy long after a trend has already been established. Maybe I will be more explicit on the subject in future posts.

  • jaxon

    Let's cast away the ending diagonal and consider the ABC correction only.
    Is this not a distinct possibility based on TA only. We MAY have an
    unfolding 5 wave impulse down but not yet. IMVHO a case could be made that
    what we have is an ZZ with 5, 3, 5 structure.

    Revisiting the ending diagonal, if I squint real hard I can see 3s with a
    very impressive thrust with volume at it's climax. (-: As for duration, I
    thought the concept is fractal and therefore this is not necessarily a
    factor. Let's face it, diagonals are all over the place, at all degrees and
    I've been successfully trading off them for some time.

  • amokta

    thanks – look forward to your post on shorting with leveraged etfs !

  • Apple Al

    “(unless you want to consider that this triple is just A)”

    Perish the thought. The reasons I'm considering this count is that the run-up from mid-July doesn't look complete and the action this week doesn't seem strong enough for a 3rd wave in a major new downtrend. Berk's post today lays parameters out quite nicely, we'll know the answer relatively soon.

  • http://trading-to-win.com/ DavidDT

    Mole and Chartsandcoffee

    There is a fine line between
    “trend trading and EW are mutually exclusive”
    and
    “trend TRADERS and trend faders are different animals”
    phrases
    and I would never object to Mole's statement.

    In the strongly trending bull or bear market I, for one, employ IBD methods with base counting, breakouts play, pullback etc. Like few years ago my blog had Google spreadsheet with stocks lists along with “trigger prices” (breakout points) for entering confirmed trend and staying with it. (this is the very last “IBD style” spreadsheet which I never even published due to new bear market starting http://spreadsheets.google.com/ccc?key=0Aj_s4pN…)
    As I refer to myself “I am no bear I am no bull”, but there is indeed substantial difference in mentality of people who trade trends and those who fade it – that I agree with 100% (I just happen to trade trends AND fade when it is time….when it seems to be time shall I say)
    So, once again, I am with Mole's phrasing “trend traders do not attempt to pick tops or bottoms”, but in no way with statement of this nature “trend trading and EW are mutually exclusive”

  • Apple Al

    “(unless you want to consider that this triple is just A)”

    Perish the thought. The reasons I'm considering this count is that the run-up from mid-July doesn't look complete and the action this week doesn't seem strong enough for a 3rd wave in a major new downtrend. Berk's post today lays parameters out quite nicely, we'll know the answer relatively soon.

  • http://trading-to-win.blogspot.com/ DavidDT

    Mole and Chartsandcoffee

    There is a fine line between
    “trend trading and EW are mutually exclusive”
    and
    “trend TRADERS and trend faders are different animals”
    phrases
    and I would never object to Mole's statement.

    In the strongly trending bull or bear market I, for one, employ IBD methods with base counting, breakouts play, pullback etc. Like few years ago my blog had Google spreadsheet with stocks lists along with “trigger prices” (breakout points) for entering confirmed trend and staying with it. (this is the very last “IBD style” spreadsheet which I never even published due to new bear market starting http://spreadsheets.google.com/ccc?key=0Aj_s4pN…)
    As I refer to myself “I am no bear I am no bull”, but there is indeed substantial difference in mentality of people who trade trends and those who fade it – that I agree with 100% (I just happen to trade trends AND fade when it is time….when it seems to be time shall I say)
    So, once again, I am with Mole's phrasing “trend traders do not attempt to pick tops or bottoms”, but in no way with statement of this nature “trend trading and EW are mutually exclusive”