Stock-Market-Observations

MY CHARTS

CHART NOTATION

I received an email today and I thought it deserved passing along.  It regards a mistake I made in my chart notations.  There’s an even bigger mistake I’ll confess to later in this blog.  The following are excerpts from the emails regarding chart notation.

“My question is about chart 10.6.  It seems on that chart there is a conflict.  And, I just want to know which is correct:

A)  The text on left side states Step #3 is Up Since 04/10/12.
B)  The Blue Wave Count on the right side indicates IN 2 with text that states “a correction with substantially lower lows would indicate that blue 2 is over.”.

My question is for the Intermediate Term are we in Step #2 or Step #3?”

05-07-12 SPX 60 MINUTE BARS

My response:

“Thanks for catching that problem.

I concentrate on writing labels on my charts and forget that I have written a synopsis on some of the charts.  That would continue to be a problem and to avoid a repeat, I’ve disposed of the synopsis.  Instead, I will rely on successively longer term chart labels to explain the wave count.  It’s easier, simpler and less likely for me to screw up.  I have kept the long term synopsis (10.8 and 10.9) because that seldom changes and hopefully won’t become a problem.

From chart 10.6, “My question is for the Intermediate Term are we in Step #2 or Step #3?”

Looking at the charts with a different perspective (yours), I see that I haven’t made myself clear.  I have added the intermediate term wave count to chart #10.8.  Hopefully this will clear up the longer term picture for you and others. The answer to your question is that we are likely in intermediate step #2 (blue 2).

Only in a best case scenario is black 3 still in progress since 4/10/12.  That count is possible and it’s also possible that black 3 never began.  At this point it’s a subjective call.  Black 3 is a sub-division of blue 2 and therefore black 3 depends on the existence of blue 2.  If blue 2 is dead, naturally black 3 is dead.  Blue 2 is still alive.

From chart 10.6, “a correction with substantially lower lows would indicate that blue 2 is over”.

This means SUBSTANTIALLY lower lows and to date we are not in the substantial decline classification.

Larger wave blue 2 is still in progress since late November.  One has to be always alert to the “possibilities” that a wave count has changed and that’s why I mentioned the “possibility” that blue 2 could be ending in chart #10.6.  Blue 2 is threatened, but step 2 declines (black 2 in this case) are normally longer and deeper than step 1 and this one appears to be part of the norm.  You never know the result until we get a breakout, up or down.

The market is presently absorbing the news (EU problems, USA elections, US economy, etc) and trying to factor all of that into its long term perspective.  These situations can be nebulous as they take place but very clear in hindsight.  The breakout clarifies the situation but the wave count gives you the perspective to understand where you are in the longer term scheme.”

FORGOTTEN BUY SIGNAL

I realized a couple of hours ago that I still had a buy signal in effect.  That a pretty nasty mistake.

Not wanting to compound the error further, I’m not going to issue a sell signal at this time because there is the “possibility” that the signal would be on, or near the bottom.  At this time, things are working as stated in Sunday’s update.  The rally has taken place and one more thrust down could take place.  The decline following the rally looked as if it was taking place at the close today but the futures have not confirmed.  Again, the futures are probably waiting to take their cue from the opening later tonight in Europe (DAX, FTSE and CAC 40).  Asia is flat this evening.

I’m unsure how I would have changed the buy signal if I hadn’t forgotten about it.  It certainly would have been changed to at least a don’t buy signal, which is in effect presently.

SIGNAL CONFUSION

Because of the realization that I had a sell signal still in effect, I had to review the process.  It’s convoluted but this is how it happened.

On April 26th I posted the following:

“I have been asked about posting my trades on the blog and I think that could be confusing because I make multiple trades using Walter Bressert’s “Money Management” system of trading (see Money Management in the GLOSSARY).  In the Bressert method, there are 4 trades involved in one transaction, one initial opening trade and 3 closing trades.  Because of the multiple trades it would be confusing to list all that I do.

I am a firm believer in the quip, “THERE ARE RICH TRADERS AND OLD TRADERS, BUT THERE ARE NO RICH, OLD TRADERS.”.  I have a lifetime of trading and I know that this quote is true.  If followed faithfully, Walter Bressert’s money management has the methodology to force one to trade long term and that’s a good feature.”

Because I don’t want to transmit the wrong attitude towards trading (because everyone can’t do it right), I’ve resisted revealing all my trading activity.  And that’s precisely how I’ve got myself into this mess of the forgotten buy signal.

The truth is that I do trade frequently.  In addition to my trading I hold a long term position per the Bressert method.  I also spend a lot of my trading time, sitting on the sidelines.  I prefer to do nothing rather than something wrong.

And now for the ugly truth.  Because I felt the primary trend was up, I didn’t reveal the fact that after writing the Sunday update “04/29/12 – Bob’s ADX Sunday Update“, I was convinced that I should sell the trading portion of my position.  Sometime after 3 AM EDT Monday, I sold my trading longs and went short.  The trade lasted only a few hours and I was out shortly after the open.  Since that time I have not had a trading position because I didn’t see the right opportunity to re-establish my long position.  Inadvertently, this was the correct action to take but I didn’t tell anyone what I had done.  BECAUSE I didn’t have a long position, I forgot that I had an existing buy signal in my blog.

So how do I avoid a repeat of this mess?  I guess I have to tell all in the future.  If readers get the wrong idea about trading even though I am frequently on my pulpit sermonizing against the evils of trading, that’s going to be their mistake and not mine.

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This entry was posted on May 7, 2012 at 8:40 PM and is filed under SELL - BUY, UPDATE. You can subscribe via RSS 2.0 feed to this post's comments. You can comment below, or link to this permanent URL from your own site.