The setup for the big trade

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Sun, Nov 1, 2015 - 1:31pm
Pete
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Dec gold 10.30

The upward movement has all the earmarks of completion. It lasted 12 weeks, similar to the other rallies over the last few years. This was one of the weakest counter-trends, with weak daily momentum compared to the others. 

The labeled pivots are the weekly min-0 pivots. You can't draw a Babson 0-4 center line here because the pivot structure doesn't qualify for that approach, but the 2p line drawn here could become a valid center line if gold pivots on it, giving us a 3p line. (Part of the interest in this comes from the nearly parallel 1-5 tops line; the correction is a weekly "bear flag".) So if the "0-4" 2p line becomes multipivot, we might get strong support at the line marked rl? on the chart. The weekly chart interpretation posted earlier is also valid. Meanwhile, the new ml is nearby the old 3P/0-4 center line and price may well bounce off these several times in a resumption of the downtrend over the coming months.

Mon, Nov 2, 2015 - 12:51pm
fslade
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Yes we're all just doing the

Yes we're all just doing the best we can - and if you're telling me I should examine my emotions/reasons for posting, and be aware of and receive the message it contains, then I'm way ahead of you. But the best I can do now (for my own selfish reasons) is point out that, in the 25 posts before my post, 3 were by you AM, 6 were by others, and 16 were posts from Pete regarding forks and Babson lines. I personally don't come here for this kind of run of the mill technical analysis, as there are about 6 million other forum threads I can get that (and at least some of them are actually trading what they write). And can't help but think that kind of volume of posts on something unrelated to the core of this thread dilutes the good stuff and diverts everyone's attention from the kind of posts we used to get.

Mon, Nov 2, 2015 - 2:27pm
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Hi FsladeThere are a couple

Hi Fslade

There are a couple of different angles interwoven here that I'd like to explain to yourself since you spotted it and also all to readers ...

Pete is posting here because I personally asked him to do so a little while back. His work with Andrews Pitchforks is very good in my opinion, and I saw that and asked him to post here and he has done since then. His TA is good TA, though I admit it's less proprietary compared to what I bring. I appreciate he came in to add more filling to our pie.

I made the request because he knows how to use them, and also because they work. That's a lot more than can be said for technical patterns and much of TA in today's markets, but Babson & Andrews do work. I think that I posted a comment about Andrews a long time ago ,but if I didn't here it is: If you can figure out why pitchforks work you have gained something important.

Actually Pete has done more medium term, and short term stuff, whereas I tend to look at long term and medium term myself. So he puts up some 60 minute charts. You rarely see me use them in this thread, and I tend to stop at 4 hour here by way of a habit. So he's looking at stuff that I pass by.

The low number of posts recently (by myself) are as a result of personal circumstances. A member of my family has been very ill for the last 6 months or so, and she passed away a few days ago. So I have had a lot of extra things to do for quite a while, outside Setup, and that's been reflected in the amount of material I have had opportunity to put up here for readers. Frequency of my AM posts should drift back to normal as we go forwards, and I hope to add the odd AM blog post and open access RNP video into the mix occasionally. The problem is I'm limited in how I can show prop stuff's conclusions by using conventional charting tools. Text is a bit sparse on detail.

I guess when I get back to normal and if Pete concentrated more on daily to weekly we would be both singing more of the same tune. But does the hourly charts not add something extra? Or does it confuse by having too much "time frame clash" in the opinions expressed?

Suggestions are welcome.

argentus maximus Rhythm and Price https://www.greenhobbymodel.com/rhythmnprice.html This analysis - global markets
Mon, Nov 2, 2015 - 9:47pm (Reply to #8373)
flyinkel
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fslade

Turd gave us a great "ignore" button, and you can easily put Pete on "ignore" and have the same readability you desire with the folks you desire. What I don't understand is your desire to have Pete curtail his posts when others find them useful; why deny others the right to see Pete's posts? AM is LT. Pete is ST. I appreciate the offerings of both. I am not a trader, but can spend hours on charts, make a conclusion, and it is refreshing to then find Pete posting similar conclusions, put some clinks in the coin bucket, and walk away with a couple happy ST trades. The LT trades have not been making $$$ yet, the ST have and provide more $$$ to use towards the LT. The more $$$ you have to apply to "The Big Trade", the more $$$ you have. We can have our cake and eat it too in this case, it's just pushing a button to ignore those you don't want to follow, and keeping those we do.

flyinkel
Mon, Nov 2, 2015 - 10:09pm
SamSchlepps
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Eliades Line and SPX

If you have some time - are we bumping into the Eliades line from the underside? And in RNP 227? you talked about a history of 3 tries at the line and then a rejection/pass? Does it look like that's in play here? - sorry says guy without all the right tools.

Mon, Nov 2, 2015 - 11:07pm
boomer sooner
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Thank you AM and Pete

I am enjoying the more "hands on" charts by Pete. My learning style is by grabbing hold and getting bit, Pete fills that with the forks. I am amazed how the forks work and how he can see where the market is trying to move.

Tue, Nov 3, 2015 - 12:46am
SilveryBlue
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AM perhaps some coms in advance?

Perfectly understand that real life takes precedence & I hope you & the family are getting through tough times.

I don't trade, as you know, but there is always the possibility that someone can grab the thread & make it their own just to disrupt things, so maybe consider a bit of coms if someone has to fill in?

Geez - listen to me. I sound as if I am paying for this. ROFL.

AM - Love your work & many thanks to Pete for taking point (not that I understand pitchforks as anything other than farm tools)

Tue, Nov 3, 2015 - 3:44am
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Breadth in Stocks Shrinking

@SamSchlepps: Breadth in Stocks is Shrinking, therefore the higher stocks go the weaker they can be considered to be, but the Christmas bullish effect must be allowed for.

Video unavailable

Low Quality Rally - Otterwood Capital

So yes, it's a rally back to former support which is now overhead resistance and has become an area containing sellers of stocks. But it's still a rally. I'll update that research and chart in an RNP today, it's unlikely we will rise high enough to make the crashline above the one you mentioned. But you know ... Central Banks ..... ! I'll also look at the RNP of several months ago (at the stocks top) with a view to making it or a part of freely accessible to Setup readers.

It's really a case of pulling up my personal sell level under the stock price as price rises. I've been fully hedged from mid year through into early October, but I'm an exposed stocks long at the moment and looking at them carefully.

argentus maximus Rhythm and Price https://www.greenhobbymodel.com/rhythmnprice.html This analysis - global markets
Tue, Nov 3, 2015 - 9:27am
SamSchlepps
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In support of Otterwood - J Hussman

https://hussmanfunds.com/wmc/wmc151102.htm

"... I’ve often emphasized that market peaks are not an event, but a process. One of the elements of that process, as I observed approaching the 2000 and 2007 peaks, and again during the extended range-bound period of recent quarters, is that deterioration in broad market internals — particularly following an extended period of overvalued, overbought, overbullish conditions — is a sign of increasing risk-aversion that typically precedes more extensive losses in the capitalization-weighted averages...."

Tue, Nov 3, 2015 - 10:56am
Pete
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gold am

gold has reached into the target area suggested on recent posts. We could get an hourly reversal bar in a few minutes, which is a good trade trigger. This is tradeable, given the extreme rsi(15). But, the latest m3 60m ml is sloping down. It is often wiser to wait for an upside zoom of this new ml, and then trade for 69m pivot 2 on a key line, which is often the new mlh of the daily swing. Can't yet see what this might be, but there would be many hours yet to discover it (time needed to swing up and down).

Wed, Nov 4, 2015 - 1:08pm
Solsson
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Yes Pete, the wheels is

Yes Pete, the wheels is coming off HUI now and we have a breakout in the dollar. I am waiting for the jobs report on Friday before I make a move. It was good for gold last time ...

Wed, Nov 4, 2015 - 2:03pm
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Some short-term keeps the forum lively, IMO

To me, having some short-term commentary to compliment the wide-angle, longer term stalking of the big trade is quite valuable. When things take months, or even years, to develop and/or prove out, keeping an eye on the daily moves seems to be a good way to keep one's head in the game. I have greatly appreciated Pete's posts and charts, and hope he keeps them up!

Wed, Nov 4, 2015 - 3:01pm
Pete
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gold mini-tutorial on trading the p2 at the LH

Gold did the classic zoom of the latest min-3 60m ml followed by a decline to a possible p2 at the new MLH (drawn using the daily chart pivots). Some buying support came in, giving gold a higher 60m close on the MLH (not under). This prompts further buying and a rally. Of course, this happens all under much larger weekly trendlines, so it's a buy signal in a much larger very bearish environment. It turns out it mainly just relieved the very oversold condition on the 60m chart; the "pause that refreshes."

Had you taken this buy and followed the principle of taking partial profits, or protecting profits by raising stops to break even, for example, this could have been a neutral or even profitable trade.

I like this method of trading a p2 very much, because the RISK can be strictly controlled and made small. Even here the right-minded taking of a profit and/or raising of stops would have kept you from loss while entertaining the possibility of a w.3 rally of a larger amount. Remember, 80% of the time the zoom value will be made on the upside. That's a lot of potential for a little risk. You have a lot of time to see and take the setup.

Let's say you see this higher hourly close on the MLH but realize the odds are not very good for this trade, given the bearish larger context. But, you never know for sure. 80% is 80%. You are disciplined. If the bearish larger environment is part of your system, you ignore this "setup"; or if it's worth say a dollar per ounce to see if this might go somewhere (that type of risk is part of your system), you put in a limit buy order a little above the swing low at 1114.7. You must add on something for slippage, too. So you figure 1114.6 sell stop plus 1.00 minus .30 (slippage) => limit buy of 1115.30. You would have been filled and taken a ride up. Exiting 1/2 or 1/3 of your position at or above the prior hourly high at 1119.2 or so (part of your system; it went to 1120.8) would give you about a $4 profit per ounce on the 1/2 or 1/3, and a no-loss position if you wanted to keep holding to await developments.

All this strategy is how I implement part of the trade management principles spelled out in Trading in the Zone by Mark Douglas. A must book for all traders. If you trade systematically with necessary patience, you can even make a profit when you are wrong about what might happen next (the 20% prevails). But you must be well capitalized and follow all the rules. It's not easy.

So gold didn't get anywhere near the prior zoom high. We have a zoom failure with implication for another three pivots down (usually 5 min-3 60m pivots down from the zoom high as 0, sometimes only 3 further with a higher 5th p).

Gold looks like it will go the far h of the 60m channel drawn (whose ml was zoomed to the upside) (~1103 next hour). The new ml from there (assuming a bottom) would be downsloping, so it's best to wait for another zoom up and similar setup to what we just had. You would redraw the MLH using the daily pivots that give you an upsloping mlh (there could be a few possibilities). P2 can and does happen on other lines, but the MLH is the most frequent. I'm not considering support or lack thereof on the daily and weekly, just peering at the 60m. Usually you find agreement with a daily/weekly chart line as support too, especially if a major low is to be made.

BTW, perhaps you notice that the zoomed ml crosses the MLH at the bar the low is made. This is not necessary, but it happens quite a bit, and enhances the reliability of a pivot right there.

Sometimes a low risk opportunity arises to reverse and go short on the sell stop, following the main trend to capitalize on the zoom failure. There were clues the market wasn't too interested in the long at a few dollars higher. Notice the large volume increase on the bullish 60m candle, yet its close was below the high of the prior bar. Disappointing, yet evidence that maybe you should take a profit (again). That would have been wise! The following hour confirmed rough sledding for the long side as the low close of that bar was below the MLH, and below the close at the pivot low! Now you could exit your other 1/2 at breakeven (barely) and wind up with $2 profit/oz. And even go short by the same logic. This is emotionally difficult to do if you had hope it would go up. It's really all just cold mathematics requiring discipline and detachment (calmness).

And it's programmable...

This was fun to write, and perhaps it will benefit you who aspire to be consistent traders.

Thu, Nov 5, 2015 - 11:14am
Pete
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stock market: p2 @ mlh

One of the 80% winners (the zoom rule). We may have seen the market top.

Fri, Nov 6, 2015 - 8:12am
Solsson
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Report from FED in

Report from FED in 20minutes:

  • No rate hike
  • Gold going north
  • yessmiley
  • Have a nice weekend
Fri, Nov 6, 2015 - 10:24am
Solsson
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Bummer it went south, no real

Bummer it went south, no real bargains in the market today, not in the miners I am interested in. Added a few Kaminakies ...

How about a gold rally for the rest of the month? I want to get out last week of Nov, first week of Dec, buy back late Feb, early March 2016. That's my game plan.

Fri, Nov 6, 2015 - 11:08am
Pete
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NQ (gold in the crapper)

ES and NQ are showing signs of weakness, but the NQ bulls are irrepressible. I don't think the Fed likes it.

Been researching for the first time deeper use of rsi, as in crossovers of rsi with its m.a. Seems to be great for catching the end of swift moves in day trading that are probable to reverse. Perhaps a very good way of taking the initial profit on a move that has gone far and fast that is probable to retrace a lot. Taking this partial profit is probably the key to success in a trading system. Puts the trade in profit and avoids any loss on remaining positions.

If this NQ low holds today, we will probably get a retest of the upper h. If the uh is broken, the warning lines will probably become important for resistance because the touch at the larger ml is so precise (perfect on the 5m chart).

Since this is all happening so early in the morning, there is plenty of time yet for a Major washout today, one that turns the stocks lower for months, and puts metals to new lows quickly. When I saw the rsi crossover buy signal in silver, I bought a big contract--but it hardly budged. I exited at breakeven minus the commission. Been looking at possible downside targets in gold, and conclude that Goldman may yet get their 1050 by year's end. frown

Have a good weekend.

Fri, Nov 6, 2015 - 11:51am
Solsson
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My predictions for November

My predictions for November is Gold up and Dollar down, there are 5 nice waves in the 5h Dollar chart now topping out at $100. Gold is extremely oversold, ready for a bounce imho:

if not, now that is a different situation, that would be bearish I guess, however the above is the more likely outcome, preferred scenario smiley

Fri, Nov 6, 2015 - 11:57am (Reply to #8389)
uki
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Solsson wrote:My predictions

Solsson wrote:

My predictions for November is Gold up and Dollar down, there are 5 nice waves in the 5h Dollar chart now topping out at $100. Gold is extremely oversold, ready for a bounce imho:

if not, now that is a different situation, that would be bearish I guess, however the above is the more likely outcome, preferred scenario smiley

One interesting observation to your charts: to have full symmetry we should have observed higher highs and higher lows on USD. What we got however is even more gold-negative: roughly horizontal USD trend since March and clearly down trend in gold. That is why I expect to go below the summer lows, before the leg up.

Fri, Nov 6, 2015 - 4:11pm
Solsson
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Hmm many bearish calls from

Hmm many bearish calls from the gurus, I took a closer look at the HUI chart and there is a similar breakdown pattern now as it was back then when I was fleeced and AM started up this thread:

If HUI breaks 104ish I am out !

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