Well, I’m going to have to find some sort of macro nonsense to fade just so PA can stop talking to himself over here. I’ll take a look this weekend. Besides, I’m interested in applying the TA skill set I have been developing with the intra day trading to longer term swing trades.
Tell us what you come up with…I might be backing down on “fading nonsense”. 
Need to take a step back and see what new nonsense develops. A new presidency means new stupidity. But we can’t know what stupidity, and I don’t want to be on the wrong side of the nonsense!!
Still doing the sideways strategy for now, shorted ES at 2150 this week, and sold puts at same strike that expired today, then sold new ones expiring next Friday. Collect payments as markets hover, waiting for him to figure out his plan. But definitely not going net short, more market neutral…my “spider sense” says sh!t could get crazy if Drumpf launches the biggest most irresponsible fiscal stimulus ever.
Fixed income…are these guys f@#%d? Is this finally the end of low rates? Maybe there is some strategy here, I dunno.
Good call PA. There is no edge in trying to understand the repercussions of the current variables. Too many lose cannons and responses to said cannons have been unpredictable. Whatever it is I do find will be 90% technically derived and poised to follow through on a timescale of a few weeks or even days. This copper situation may be an interesting place to start. I may also look at rate hike sensitive assets and look for areas of high probability counter trade (to upside or downside) post December decision. They would be pullback trades in a more dominant trend. Anyway, will post anything I find and why.
I didn’t have a whole lot of time to search around for stuff, but I did notice gold is looking interesting. Here is a daily chart of GC with some notes
The volume profile on the right side is of trade volume from the December-January bottom to current time. What I gather from this analysis is that gold may be on a path to rejoin the area of the bottom volume node, however, I think it will pull back into the meat of this dominant volume node before it does so
I would be interested in a long at around 1210, a stop just under that “critical point” at 1190, and a profit target of about 1270. That risk 20 pts to make 60 so I like that risk to reward.
The reasoning behind this is based on how I have been tackling my intraday trading experiment. The market it an auction trying to find the fair price of assets. The fact that so much volume accumulates in certain zones is that these are regions where price is considered the most fair. In addition, if there has been a lot of activity in a price region in the past, chances are that region (if revisited) will be active once again as those who originally opened positions will seek to manage them. Anyway, the current region in gold is a very dominant one and I deem it unlikely that price is able to just wiz right though the lower portion with out a re-auctioning occurring before moving lower. That gap zone is significant and to make the leap will probably take a significant change in the fundamentals. However, the fact that 1218 has been tested three times now make this level “heavy”. If we get a pullback this time, the next touchdown could be the one that spills.
All this being said, I am freshly applying analysis that I usually use on an intraday timeframe. Curious to see how it plays out on a larger time frame. Another point, even on an intraday time frame I am wrong about some part of the trade greater than 50% of the time. My positive expectancy and consistent profitability is more a factor of my favorable risk/ reward. My analysis is more about finding logical set ups which reflect that and less about being right all the time.
Also, this set up has options strategies written all over it. I’m simply out of time at this point.
Update : Novemeber 15. Given I entered the trade around 1212 (of which there has been a couple opportunities), _ I would now move my stop up to break even. _ I am not seeing enough buying enthusiasm to support my pullback theory at the time. However, I would also like to give it a chance to fully play out as perhaps we will get a grind up like in the last pullback.
you missed the head and shoulder breakout oy vey
I know Igor is just being stupid as usual, but it inspires a question I have. Why are traditional money managers/ finance professionals so threatened by TA and active trading approaches (especially day trading)? It is not just on here. When I have face to face conversations and I bring up what I have been doing with trading I see them get almost physically uncomfortable with the prospect of actually discussing it seriously. They are very quick to either villanize it as self centered gamblers irresponsibly wrecking havoc on the market or idiot suckered feeding the brokerage firms until eventually blowing their entire account. In other words, they degrade it to a joke. Frustrating. I should probably give up trying to be an ambassador.
You think active managers are threatened by TA and active trading approaches?
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you prob shouldn’t bring it up in a dark lit corner of a club when the guy is a sloppy mess after 3 bud lights…i dont think they are there to listen to your monologue on TA
Part of the challenge is that it is difficult to separate what aspects of technical analysis are truly scientific and plausible vs what is a bunch of jargony mumbo-jumbo.
I do think that trading systems can be profitable. And I believe that chart patterns can be explained at least in part by behavioral dynamics. They certainly seem to be useful in characterizing them. But part of the challenge is how an outside observer can tell whether a cup-and-handle formation says anything that can be acted upon consistently, or even if a cup-and-handle formation can even be defined in an unambiguous way before-the-fact.
I do think that trend channels make some sense. I think that oscillators can tell you about how the price range compares to recent price ranges and that some combination of these can tell you if people are in more of a risk-on or risk-off mode.
I’m not sure if that matters too much to a long-term investor, who probably shouldn’t be too concerned with day to day fluctuations to execute a fundamental investment thesis. I’m also not sure how many of the things we can learn from technical analysis have good risk-reward ratios once stops and transactions costs are in there. I do think that watching position size is pretty important for traders.
Anyway, Technical Analysis comprises a lot of different stuff, which can range from complicated algorithms to deciding that astrology is meaningful. It’s easy to group potentially useful stuff with the clearly wacky stuff and laugh at all of it.
In short, I do think that technical analysis can be useful, but my attempts to harness it haven’t been all that successful.
Savy.
I suppose technicians could sound less silly if, instead of saying “look at this head and shoulders formation”, they could say… “look how price has been making higher highs and higher lows indicating that buyers have continued to beat out sellers. Now look at how this last movement made a lower high and and a lower low. Sure looks like sellers are starting to become more dominat.” So, head and shoulders sounds stupid, but it beats have to re explain that common situation of participant sentiment every time it comes up.
If TA does not reflect some aspect of buyer vs. seller sentiment, then it is indeed nonsense.
The alternate view is that it is just people looking for patterns in noise and attributing meaning to it after the fact. It is a surprisingly difficult counter-explanation to eliminate.
It is looked down upon as it’s seen as an activity for Dumbs who trade on short term, noisy movements, and not an activity for Serious, Weighty Investors.
The high frequency people are not seen as dumbs. And I suspect if we were ever able to look at some of the stuff Rennaisance does, there will be a some parts that are basically tweaked versions of TA.
But it is true that there is a lot of shystery stuff targeted at home people “Pay $5000 to take my seminar to show you how to use moving average swapping system to make $50, $60, $120k a year from your home.”
Trading and investing are not the same thing, however both participants in the market are complimentary and even symbiotic. Perhaps the reason some finance professionals shut me down at the mention of TA/ trading is because they think I don’t see the difference. Maybe they don’t see the difference (between traders and investors). I’m not suggesting they use it. Investing is a game of “guess the true value”. Trading is a game of “guess sentiment of the market”. Two games, two totally different kinds of information. However, _ both kinds of information need to be processed to let the market work properly_. *sigh* Traders are so misunderstood.
They may be two games, but like Chad said there is a very big difference in the ability to measure and objectively determine what happened for what reason. Not saying valuation is perfect visibility, just more so than trading where you can’t even define what the pattern is. Also traders tend to be get rich quick types, which I think psychologically is very different from the way plenty of investors think. But trading has been around a lot longer
I know you mean no offense, but stab me thought the heart! I hate that stereotype. I now trade remotely with a group of day traders from around the world and I can say their temperaments are more akin to a scientist than a gambler. Unemotional, analytical, and totally centered on risk management. “Get rich types” never last in trading.
There is a different psychology to trading but it involves getting used to losing … often! Because there is a lot of interpretation involved in reading the market though TA (including patterns, orderflow, and price action), there is a lot of art mixed with the science. You have to have a process to guide you though and then accept that being wrong some of the time is an expectation. Traders actually have to be more emotionally detached than investors.
The history of technical analysis and charting is pretty interesting. And suddenly one understands why it’s called Technical Analysis, because - in the pre-computer age - it was indeed fairly technical work to track and chart prices.
Point-and-figure charts seem comically basic to us today, but when people couldn’t just pull up a price history on Yahoo, it was a genuinely disciplined approach that likely had value merely in the fact that only people who were putting in the substantial effort could act on the knowledge produced. That means that technical analysis may well have worked 50 or 100 years ago because any behavioral traits it uncovered were unlikely to be widespread enough to be arbitraged away quickly.
Since the 1980s, as computers and databases were applied much more broadly to these problems, it’s very likely that the most obvious TA strategies stopped working because they became to easy to play against. The original Turtle Trader methodology doesn’t seem to work that well these days, because now there are computer programs that trade against them the moment the setup is right.
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Another interesting thing about TA is how one might apply it across various time frames: intraday, swing trades (a few days to weeks), medium term trades that might start to interact with short-term fundamental trades. and then potentially very long term trend following which might be used as a support or timing tool for fundamental theses.
I think there is potentially useful stuff in the shorter time frames, since it’s clear that prices change but it’s hard to see (aside from occasional exogenous shocks) how fundamentals have changed in any observable way. So we are left with the idea that either price changes are random, or that there are some kinds of rules governing short term behavior. That would be the kind of things that tecnicians might have a grasp on. But then again, it might just be noise, and any tecnician that knows of a system that works has little incentive to disseminate what it is widely.
Ha well most of my posting is via phone. I probably would have preferred to say most of the people attracted to trading. I’m not sure if I agree with the statement of longer term traders.
I like to quantify stuff. I want to be able to isolate variables and determine where I’m wrong. Being as explicit as possible makes me (hopefully) able to learn the right lessons. Trading just seems way to noisy to do that. But I wish you good luck!
I used to think technical analysis was nonsense. But one of the chart guys on masters in business made it sound much less voodoo-ey. So now I’m not as judgmental, just don’t think there is an ability for me to separate noise and skill (for myself or for others i’m giving money). So I go back to my bank valuations lol