8 September 2008

Tradertalk - everything is going down

Gary_Fullett joined.
Gary_Fullett Good evening
Gary_Fullett i beat amos im surprised
Derek joined.
Amos joined.
Amos Hi
Gary_Fullett good morning amos..
Trevor hi amos
oly hello
rich joined.
Peter good morning Amos, good evening everyone else
Amos GE. Not every night I have to compete with a Sarah. she will win
Gary_Fullett but you are cuter
Amos tonight is not an easy one. Some things have been etched in the sand and otoh , from a trading point of view- they are harder. So I will present both sides-- and you decide
Amos The first chart is the dollar.
Art we don't care if your pregnant
Amos I hope she nocks them up
Art lol
Amos One of the most important aspects of technical analysis is the comparison of things--phases, volume, ranges, strangth and weakness, duration... you name it.
Amos So the dollar took out the last high before the low, made higher semi, penetrated the momtnly 21 ma and MOST importantly-- closed the previous monthly bar-- of August AT THE HIGH --thus making it almost
Amos certain that we will make a higher high in Sept. We did. Now what?
Amos We can say rather safely that it is NOT A BEAR and more-- so it can be a range or a bull.
Amos If we look at the previous rally during 2005-- it took about 11 months. Note that that rally took 11 months just to penetrate the previous high and here we did it in 6 months-- so a little stronger here.
Amos But we are coming from much lower levels-- so a rally here , in terms of percents-- is smaller. All we know is that the market had a strong month, validated it with higher high-- which means that at the moment DEMAND is strong enough to continue the rally.
Amos How far?
Amos well this is where it is harder-- because we do not know at what time frame the CM is looking right now. We can only guess. So first I defined two extreme phases: the last one from 92 to 70 -last 2-1/2 years and the 50% of that is 8160
Amos and the large one from 120 to 70 which I do not show.. I thought I did...ooops, I did it in the Dow Transport. Forget it-- I do not know where that 50% goes-- so I retract. The next resistance is the 55 ma
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Amos which is around the 8300 depending WHEN we get there.
Amos We also have the ICE of the previous low at 80--which is definitely an important land mark since it was the low of 1995-- and is a very large benchmark for world finance.
Amos The question is how long we are going to stay in this rally-- --if the last one took 11 months-- then we have a small measuring stick-- if this is really an IMPORTANT BOTTOM in the dollar-- then the next rally will be
Amos longer than 112 months. If not-- then I do not know. I also do not know the shape of that rally-- we started with 4 months small "stopping range" and broke out of it-- and once the first phase will be over-- we will start a reaction
Amos of that large rally which can go back to the 75 area or who knows.
Amos This is going to be tough. and anyone who tells you they know-- is hot telling truth. The likelihood that spetember will be as big as august-- is slim-- rarely does a market start a move with two very large bars
Amos it is likely to be a narrower range. so I would say that the 80 should be the first resistance.
mr_steve_Atlanta_GA What graph are we watching?
Amos what will it do then? have no idea
Gary_Fullett the charts were posted on the site steve
mr_steve_Atlanta_GA I have them, what one are we talking about?
Amos For that perhaps it is worthwhile to look at the BP and the euro and maybe we will get a clearer picture
Amos The next chart- is the quarterly bp
Amos This one is rather unique. The last time we had such a strong move was when Soros made his famous billion dollars-- in 1992 and it is almost out of the chart-- in 2 quarters most of the trading world
Amos which does NOT have more than 15 years back data-- will NOT remember, or know what transpired then-- at any rate-- this is a HUGE quarter. this is NOT done by speclators. This is done by forces that KNOW!
Amos The chance that this decline is going to stop abruptly and reverse to the upside-- is VERY SLIM> Something is indeed very wrong weth the queen and the market is DISCOUNTING this.
mr_steve_Atlanta_GA My first time visiting, could you please give me a symbol of the chart we are looking at so I could fallow along with the class?
Amos How far can we go? the obvious chart point of 170 is clear to all technicians
Amos Steve of Atlan ta-- We are at the second chart of today's letter-- the British Pound, quarterly
Art British pound Steve
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Amos But the strong declint from 200 to 176-- is one of those times that you must admit that technical analysis-- is NOT the modus operendi-- . Such a strong decline is something that is engineered
Amos by forces that could not careless about technical analysys-- by the same token that during the Soros decline-- anyone who tried to stand in front of that avalanche-- died
Amos The only way to cope with this-- if you want to guess a counter move-- is TO WAIT until the storm is over-- look to the left and see that after the bp reached the b ottom at 140-- it stayed 8 years in a range besween 140 and 170 and came back to SPRING that area 10 years later
Amos before it started the big move from 140 to 200-- this is a very "organizeds" trip. I do not know how to trade the bp-- unless you are scalping it for very small moves- that can be "read" on the chart
Amos but the important point is to realize that the way this quartely looks, unless something phenomenal happens between now and end of September-- then something is very rotten in England.
Amos So this part of the dollar index- is weak
Amos I did not mention this- but since we are in september-- we have first the FRIDAY expiration of the currency options-- 9/5 and then we have the contract expiration around the 15 of the month and we have the
Amos quartely chart painting and we have the tripple expiration of the indexes-- so a large part of september will be options and expiration games.
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tradinginhandles ge
Amos The only sure thing you can say about the bp is this: THERE IS NOT ONE LONG WITH PROFIT here-- so if they want to squeeze the longs towards expiration of the Sept contract-- THEY CAN DO IT WITH EASE!
Amos The next chart is the euro which is basicall the mirror of the dollar. while the dollar PENETRATED the Semi chart-- the euro is still holding. The crucial point if the 14355 or in the forex side which is generally more accuarte-- but since we are close
Amos to expiration-- then the difference between cash and futures is very small-- the points are 14365 and 14309 which is the last low before the high- on the monthly chart- and was made during dec 2007.
Amos However----unless we get a very strong rally in the very near future-- the chart is not strong. Again in the euro too- there is hardly any long with profits- so the Sept expiration may be a squeeze. It is important
Amos to understand that in the larger scheme of things-- cme volume is a small fraction of the FOREX volume-- so squeezing perhaps 300 million out of 2 trillion may not be so important-- once in a while-- they do abide
Amos the poor futures sister and let them have their squeeze victory. Add to this that we actually finished 13 semi annual bars-- then we are entitled to more than one bar correction-. The euro chart
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Amos presents a small problem in that we do not have a reversal-- and there is still a chance that because we closed the previous semi at the high-- this one will require further testing-- that meanst that it is probable that during 2009 we will come
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Amos back one more time to test the 160-- I have no way to tell if that will happen-- but it is plausible. In that case we are into 1-2 years of RANGE. same as we spent at the bottom in 2000-2002. why not?
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Amos The fact that the euro is holding that elusice 14355--may be a secret signal they are sending each other-- that perhaps after the expiration game is over-- we WILL start an important rally- is a diestinct possibility
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Amos our role as traders is to GLEAN ALL THAT INFORMATION and ge AWARE OF IT-- then we can better judge the next move.
Amos By the same token that the dollar gave some skewness signlas a month ago-- it may be giving such signal during september, mainly becuase it is such an important month-- from the mechanics of
Amos trading point of view.
Amos What to do between now and expiration? I have no advice except-- trying to identify small time frames suopport and resistance but by NO MEANS trying to be brave and stay too long on any side-- we have done most
Amos of the move and we , most likely , be biding for time!
Amos What i mean by that is trying to look for small models that have higher probabilitiy of working- like KR on the 60 minutes etc.
Amos Again, I recommend to go WITH the thrust (15 min at least) than trying to GUESS points of support and resistance-- because when the market is in the business of PUNISHING the wrongs-- which in this case
Amos are the longs-- --those obvious points of support and resistance-- can be laughed at.
Amos To sum up the currencies-- the likelihood that the dollar has bottomed for at least antoher 6 months (to equate with the last rally of 11 months) is high. How we shall form this
Amos rally-- I have no idea
Amos The next chart is the dow transport. THe qurterly.
Amos I see an OKR followed by a thrust. If this model is correct-- then we are in front of multi year decline in this index. we also have the double top at 500 which can project to 2500
Amos if this happens-- that will be a real contraction in world economics. I have no idea if it will happen or not but going back to 2004 levels should NOT be out of the question.
Amos So many things are happening in the world-- I have no idea which will be the leading factor. Is it the political uncertainy in russia?
Amos will it be the slow down after the olympics?
Amos will it be the cost of fuel and people travelling less?
Amos will it be a cascading rolling stones of one thing leading to another-- starting with the real estate squeeze?
Amos I stink when it comes to interpreation of world events and their economic impact--but one thing is obvious-- we had quite a bubble in THIRD WORLD MARKETS-- the biggest in their history where
Amos marketst such as sapin, peru, mexico, portugal... you name it- exploded. Usually after such a bubble it takes a few years of PUNCTURING. so--if the dow transport is telling a TRUE story- then we arenow in year 2 of a big top and the closse of september will have an important
Amos story-- because if this quarter will closes near the low-- it is highly likely that the thrust after OKR model will kick in in force and we shall start a serious decline. If it closes near the middle or higher in the next 3 weeks-- that will ber another pircuture-- and the market
Amos may want to wait another quarter-- perhapse to see who wins between biden and Sarah.
Amos Again, sorry for being so vague-- but when you have a clear model-- it is SILLY to try to force you view upon it-- it is MUCH BETTER to let it RESOLVE ITSELF because the KNOWLEDGE embedded in the model is
Amos so DEEP and has a meaning for much longer period into the future- that it is , again, silly to try to even anticipate-- but rather-- let it unfold and then FOLLOW!!!
Amos The next one is the russel-- since we are following it recently- the NR-7 on the monthly chart is done. We are not in NR-8 . last month closed in the middle-- and september opened with a rather unique action--GAP OPEN that reversed itself immeidately.
Amos This brings into focus another important model that may be acting right now-- that is the OPENING RANGE- the Steinghardt model-- looking at the FIRST DAY OF THE MONTH-- as a trading range and going
Amos with the break out.
Amos We traded lower today than the first day of the month. On its surface it is a sell signal.
Amos However if you look at the last 2 months action- of the s and p or the nasdaq-- it is HARD to tell that one side is the obvious loser-- so from a poinot of view of tripple expiration-- i cannot tell which way market
Amos has to go. Perhpas this time-- the options sellers are the big winner s and the market should expire with the 1275 or so strike price being squeezed to zero-- because that is the biggest open interest of puts and calls
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Amos I do not know. From the monthly chart point of view of the russel-- we are at the higher part of the range that is still confined withing that huge JANUARY range-- and we are much closer to its END than to its beginning
Amos I can promise you that we are in front of a rather large directional move- and I am betting on the down side because of the larger time frame picture-- but we may have to wait until that infamous tripple witching expiration
Amos The next chart is one we never spoke about-- but it is interesting
Amos Gary keeps asking me about the bonds ever so often-- and I keep responding that I cannot read the bonds chart. the Utilities , quite regularly are positively correlated with the bonds--- this time the chart looks different
Amos I hope I am not seeing ghosts-- but it seems that the monthly chart is forming a nice head and shoulders. we also have a large kr followed by a thrust. we also have first penetration of 5 ma over the 21 ma (which is normally only FIRST WARNING --not REAL START OF MOVE)
Amos but the picture of the head and shoulders is rather tempting
Amos the fact that we made a lower low of that big range during August- is important-- I am sure that once we take out the lows of august-- there will be big sell off.
Amos It is trut that we are still above the highs of 1999 and 2005-- and this whole "head and shoulders" is nothing but a range and tripple back to the ice---but considering the thrust of the semi in the DOW, the double top in the s and p
Amos and the weakness of the SXC= the options index-- the chance that this is only a continuation pattern is slim.
Amos What will happen if the Utilities break?
Amos I do not know--I do not know what it means from an economic point of view-- that people will use less electricity? I have no idea-- but if the "SOLID" utilities will join a break-- that can only amplify a decline in other sectors
Amos The next chart is the quartely DJU
Amos I tried to see what kind of correction we can get
Amos so I drew fibo retracment from the 2002 lows to all time high and 50% gives about 3550
Amos and I took the projection of the potentil "head and shoulders" the distance from the head to the shoulder and multiplied it-- in case this works- and I got 3600 or so-- so there are two potential targets which seem to converge
Amos many times when you get similar targets from different views of the chart and from different time frames-- you get some kind of synnergy which lends a little more confidence to your assumptions.
Amos they are still ASS-umptions.
Amos but the qurterly chart is showing someting else which is interesting
Amos the CLOSE
Amos since 2006 every quarterly bar-- closed at the high/ the first time we had a weaker close-- we got the first thrust during the thris quarter of 2007. followed by a rally which closed above the middle
Amos then we have a reversal which close AT THE LOW- and that was IMPORTANT SIGNAL the next rally was INSIDE BAR and now we alreayd made a lower low!. If we close this qurter near the low-- the chance for a much weaker next quarter
Amos will be large-- because we had TWO QUARTES in the last year that CLOSED AT THE LOW--That is IMPORTANT!!!!! it is an internal signal of the CM!
Amos I cannot prove it to you-- but I see it more and more
Amos Next chart is the crb quartely
Amos Like the euro it has a large OKR on the quarterly-- but the semi is still showing higher low.
Amos This is the largest bar in human history-- the fact that we are witnessing a MEGA YEAR stopping action is WITHOUT QUESTION!
Amos how long it will take-- is one big question.
Amos At any rate-- anyone who is dreaming in the next few years of higher commodities prices than we saw last 6 months-- is just dreaming.
Amos Such huge bar is mor often than not-- a WATER MARK of Gustav proportions.
Amos If we take out the semi annual low too between now and december-- that will also creat a reversal on the yearly chart-- which, of course, is a MEGA SIGN!
Amos I do not know how to use this information in the individual commodities-- pork bellies had recently 40 cents move up and down in a few days. have no idea why. perhaps it is so thin ( I heard 300 cointracts per day) that it means nothing--
Amos lumber may rally. Cocoa-- who knows. WHeat is slowly coming back to earth.
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Amos remember a while ago I was discussing the simple fact that nothing can sell at 3 times cost of production for too long. Not crude, not corn, not beans not silver not nothing.
Amos We have been in a huge bubble- and at such times-- rationla thinking-- is out the door-- but we are slowly coming back to more normal behavior.
Amos From a trading point of view it simply means that the big FREND FUNDS are going to give back some of their huge profits-- and that poople who came to the business in the last 3 years-- are going to be grinded to pulp-- becausse they will continue to dream
Amos of the previous move and only buy and hold-- the next few years belong to traders and, of course,. to premium sellers.
Amos Premium selling in the next few years-- will be important--that is why watching options prices will be important too. This is my view. i have been saying this for a long time-- and it is ever so slowly materializing.
Amos the last chart is the Eurodollar
Amos I have mentioned it a few months ago and I said- we have come to a SCREECHING HALT and it is important to watch it
Amos you can see that we indded stopped moving.
Amos Since this is the MAJOR HEDGING TOOL of most large bannks-- this is important.
Amos In the last few years-- many pundits were shouting that instead of the FED leading the markets-- the market is leading or guiding the FED.
Amos Most of the breakoutf of the ED occured MONTHS before the FED started acting-- these guys KNEW!
Amos Now these guys are Sitting on their hands and NOT VOTING.
Amos Again, if there is any one amongst you, folks, who understands the fundamental meaning of this-- please ENLIGHTEN US-- I have NO IDEA what it means-- I only know that when we break out of thise range-- there weill be , again a strong move of 1-3 percentage poiunts in the prime
Amos and this will have some meaning to, at least stock market trading
Amos notice that once the ED stopped moving-- the s and p and the nasdaq also CONVERGED into a tighter trading range-- still giving nice scalping
Amos possibilities-- but NOT large moves.
Amos the ED is a "LEADING INDICATOR" as they come (there is NO such thing as LEI-it is a joke, of course)
Amos I do suggest-- we do not veer our eyes off this indicator-- it may give us a small edge
Amos Beyond this-- I am open to questions and comments--
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Peter good timing, Sarah's about to start :)
Amos LOL
mr_steve_Atlanta_GA My first visit, nice job Amos
bradc lol
Amos Thank you steve
Gary_Fullett i thought steve from Georgia
Amos Ok folks lets go watch a real hockey mom. Hope she emasulates some of the lefti machos
Gary_Fullett russia attacke dgeorgia
Gary_Fullett georgia
Amos Again- September is not going to be easy-- but it should be a trading affair at least uintil th 16th
Peter thank you Amos, more food for thought. One comment, the 7880 area in the dollar is a key Monthly pivot on my chart
Amos Sarah was a mother. she gave birth at 90
Gary_Fullett isnt sept and oct weakness for stocks?
Gary_Fullett and abraham at 99
bradc seasonally weakness in grains
Amos Yes peter-- the whole 80 area is huge ice
Gary_Fullett because of harvest brad?
bradc y
Amos Yes gary- that is the convention
Amos ok folks have a good evening see you next time
Peter yes definitly, and broken ice usually gets a reaction the first time retested
Peter Amos, have a great trading week
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Gary_Fullett okay great lecture amos
Gary_Fullett heck its like 4 30 am there
Gary_Fullett so as amos metnioned we are some critcal junctures
Gary_Fullett the end of sept is the end of the 3rd quarter
ScottB kind of kills Zack's strategy
Gary_Fullett he isnt here its okay lol
ScottB i.e., buy and hold metals
bradc well, him and amos have different thoughts on the direction of price it looks like
Peter the only buy and hold that seems to work in Amos's set of models is the US dollar
bradc just for the record, corn is not at 3x the cost of production
ScottB yep
Gary_Fullett where is it brad ?
bradc 1.5-1.7
bradc 1.5 prolly close
bradc does amos mess w/commods much?
bradc assuming avg yields
Gary_Fullett yes he looks at them
Gary_Fullett doesnt trade em as much as the finacials as well as other markets
ScottB I just read that it cost $10K in sulfuric acid to make $20K worth of Ni - than there is a bunch of other costs like energy, labor, etc.
ScottB at present price Ni produces are losing money
bradc Ni?
bradc nitrogen?
ScottB N = nitrogen.....Ni = nickel
Peter Northern Island or Nickle :)
bradc ok
ScottB actually "nude island"
mr_steve_Atlanta_GA left.
bradc that's what i thought but i was talking farm so wasn't sure
tom left.
Gary_Fullett tommorow for those that are new here will have a topic
Gary_Fullett and then we will discuss stocks
bradc time to put hoss to bed - have a great evening everyone
Gary_Fullett night brad ty
Peter good night Brad,
bradc left.
Gary_Fullett so any questions or comments?
Gary_Fullett too late to have a topic for tongith
ScottB cubs lost
Gary_Fullett and I am sure many of u wnat to see palin speak it is a 40 m in speach
Gary_Fullett 4-0
ScottB Amos makes it sound like there is nothing to buy....short everything
Gary_Fullett well after the recent breask
Gary_Fullett eh feels a turn occurred
Gary_Fullett to his models
Peter Thank you Gary; dinner time, then Palin DVR & chart time, good night every one
ScottB he is starting to make sense....handwriting is in the prices
Gary_Fullett well price and volume
ScottB night,,,,,Gary --- I should have bought a kumquat farm
Gary_Fullett okay I am goijg to start charts early
Gary_Fullett i will see u all tommorw night
Gary_Fullett or tommorw during to the day
Gary_Fullett night all ty
ScottB left.
Gary_Fullett steve will pribably be here tommorw
Gary_Fullett for stock talk
Gary_Fullett nibghtb all
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