Steady As She Goes
In the past few weeks we have been keeping it simple/stupid by following the trend and as usual, ignoring the news. Which served us despite the fact that many technical indicators were suggesting heavily overbought conditions (a five year low in volatility only being one of them). As the old saying goes: The market can stay irrational a lot longer than you can remain solvent. A lesson I learned (the hard way) many years ago.
At this point there’s really not much to do but to let things play out. Make no mistake – it’s not the tape that ruins most traders. It’s our egos that usually do us in. As we as human beings we seem to have a unique ability to ignore the blatantly obvious. The need to constantly question and to evaluate every single (and improbable) possibility would rank in close second place. It’s amazing how clear things often turn out to be in hindsight. But fledgling traders often have a tendency to ‘over optimize’ (a term I borrowed from hacking software) and project their own theories on reality. In many cases to their own financial demise unfortunately.
None of us is immune. I’ve been there – you have been there. If you have been trading more than a year or two and survived then you may just have what it takes to join the small percentage of people who can make a living as a trader. It’s a pretty exclusive club, mind you, no matter what anyone tells you. Most people wash out. Sometimes due to ignorance but a lot more often due to laziness and impatience. The market is a cruel mistress and you have to work hard to master her whims.
Now let’s drop the philosophy lecture and look at some charts! The spoos – not much to say right now (per the above). She’s pushing higher and I think the best policy right now is to follow the ST panel upwards. There is no other context of importance right now but price. By the way – if she decides to drop through the 25-hour SMA then look at the lower 25-hour BB for possible support. That’s been holding up earlier this week and it’s where I would expect ST buying interest to emerge if they decide to scare the children again.
Dollar – getting interesting here. I’m seeing a lot of ‘context’ if you will – see the right hand panel and I’m sure you get what I mean. All that is happening near the 100-day SMA and thus I think a big move is coming. Not sure which way but I wouldn’t rule out the upside just yet. Anyway, keep watching this one – could be good, especially if she starts a short squeeze.
Silver – another chart to keep an eye on right now. It’s heading into daily resistance (right panel) and I would look for a possible reversal near 33.
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This entry was posted on Wednesday, January 23rd, 2013 at 2:25 pm. Both comments and pings are currently closed.