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ES and the Great POMO Rally
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ES and the Great POMO Rally

  #391 (permalink)
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jonc View Post
PB, isn't a weak dollar a concern at all for the government? While I understand that a weak dollar will reduce the burden of the debt which US has but am I right to say they would also not want to see the destruction of the dollar?

Do you see the Fed would act to strengthen the dollar H2 of this year?

Yeah, I would think it would be a concern however, they are doing nothing to correct the situation. This is all a direct result of the Fed's QE and are trying to figure a way out of the corner they've painted themselves into. The drop in the USD has been occurring for quite some time now but is finally receiving more recognition now that we are taking out previous low's.

This is causing inflation in all things important and will undoubtedly have adverse effects on the economy (in fact, it already is). The term now often used by Bernanke is "Transitory". Well, we now have an equivalent to "Contained" which was his previous last buzz word. And we all know what happened there.

So, in order for the Fed to strengthen the dollar, they would have to end QE and decrease the money supply by selling U.S. Treasuries. Those are two things I don't see happening anytime soon. This would make interest rates go up and stop all the so called "growth" in it's tracks. Housing if not already toast would take another huge step down and stocks would correct big time.

Cheers,
PB

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  #392 (permalink)
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Two videos about that topic "growth".
Hope they are of interest to this interesting thread.

Chilean Economist Manfred Max-Neef interview on Democracy Now:

Chilean Economist Manfred Max-Neef: US Is Becoming an "Underdeveloping Nation"

Dr Albert .A. Bartlett:

YouTube - The Most IMPORTANT Video You'll Ever See (part 1 of 8)

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Every moment I wake up I realize I know nothing, and then I smile...
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  #393 (permalink)
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Do you guys see the time to take a short position is here?

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  #394 (permalink)
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I don't trade it but there are a few support levels it just bounced off of on a daily OHLC chart.
  • bottom trend line since mid-March
  • support from early March and April
  • bollinger band mid-line
MACD and Slow Stochastics are bearish.


Maybe I'd start trying to establish short positions at 132, lookout for resistance at 130, and tighten SL at 127.

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  #395 (permalink)
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jonc View Post
Do you guys see the time to take a short position is here?

I would agree with Whatnext on this. There appears to be a lot of support that would need to break down before I would look to start building a short position. Also, QE 2 is still running which as I've said before, is providing an endless bid. It'll be interesting to see if the massive selling taking place in other markets will bleed into equities. If it does, we could get some intense margin selling. We'll have to see though, I'm neutral right now and waiting to see what the Fed does. My intraday trading in CL has been consuming most of my time lately anyway so, I'm content with just waiting for equities to actually do something.

Cheers,
PB

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  #396 (permalink)
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Read rule #7 on this post, and you'll understand why i kept saying buy the pullbacks instead of shorting tops. Remember, this doesn't even take into consideration that you can trail when it keeps going higher after it breaks new highs.

https://futures.io/elite-group-trading-methods/10586-donchians-rules-trading-commodities.html#post118680

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  #397 (permalink)
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jonc View Post
Do you guys see the time to take a short position is here?

I agree with what the others have said. I've posted a chart that explains what i see.

One thing I have learned the hard way in this business is to never assume anything. Whether you feel the rally has gone on long enough or whether you feel the indexes should fall because other instruments have fallen has no meaning. The markets don't care how you feel or what you think.

You asked if it may be time to take a short position. The ES is in an uptrend. I've drawn two channels and neither has been violated yet. Its still making higher highs and higher lows. Until it changes that behavior then there is no reason to take a short, unless of course it is an intra-day trade.

I posted a possible inverted Head and shoulders chart in this thread not too far back. If the pattern plays out to its potential it targets the 1430 area. So far we are only testing the Neckline of the HnS as well as the uptrend line. I guess we will see what the outcome is in the days to come.

I didn't mean to sound like a smart ass. Sorry if I came across that way.

David

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  #398 (permalink)
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Great info - there's a lot to learn from you three.

I'm very interested as to your methodology of entering and then building on positions. Learning the signals that lead you to enter and what determines the size of contracts purchased would help me (and others) grow as a trader.

If you have said it all in other posts I'll search around if needs be - but it might take a long time.

I can detail what has worked well for me recently, its draw backs, the occasionally recurring emotional errors in judgement that have limited success and future plans on combining day trading with multi-day contracts - if anyone is interested. Haven't slept in way too long and probably should before doing so - and the markets aren't even open!

The link Michael.H gave to Anagami's thread on Donchian is well worth the DL and print out IMO. I have some questions about Michael's comment.

David R: I've only used long H&S patterns as verification of broader direction. It's hard for me to tell which way they will break and TL's make the picture clearer - maybe just because the don't often set up like that.

Night.

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  #399 (permalink)
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Michael.H View Post
Read rule #7 on this post, and you'll understand why i kept saying buy the pullbacks instead of shorting tops. Remember, this doesn't even take into consideration that you can trail when it keeps going higher after it breaks new highs.

https://futures.io/elite-group-trading-methods/10586-donchians-rules-trading-commodities.html#post118680

Key point of Rule 7: Shorting (non-leveraged) a decline from 50 to 25 will gain 50% - while going long (non-leveraged) from 25 to 50 will gain 100%.

Michael: Are you talking about a close trail where you would lose previous contracts in the correction and rebuy entirely again - or a loose trail at X% of loss or the last correction and breakout level?

If you are exiting all previous longs when the correction comes what would be the problem with trying to short it for a bit?

If holding on to past contracts (in a future with leverage and movement like the ES) what would be the problem with shorting the correction with the money you are going to use to add on to that position when it rebounds.

If someone could short 30% of the correction they would hedge against losses and against the % difference of rule 7 for the re-buy.

Didn't occur to me at first but when trading only stocks there were too many charts to focus on to do this - maybe that's the case for Michael.

Others input welcomed.

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Your talking about money/trade management. I was simply implying that its easier to ride the trend instead of picking tops. Thats it. Im not gonna get into trade details with you. Ill let private banker or anyone else that wants to help comment on that.

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