Very Interesting chart ! Is your chart distinguishing between buying and selling activity or you presume that they are buying because the price goes up ( now it is clear but might be less evident in flat markets)...... I think the correction is healthy ! how many up days we had ! Greece bailout might not be as positive as everybody expects ..... which country will have to be saved next .....

CDS spreads on France and Germany increased by 15-20 % in one week ...

Risk is like chemistry ,"Nothing is lost, nothing is created, all is transformed" Antoine Laurent Lavoisier (1743 - 1794)

in contrast to the previous analysis, here is the COT report.

panel 2 is my proprietary COT stochastic

panel 3 is the raw data net shares (long - short)

no question about it, the commercial hedgers are going long. Very long. As the market is making all-time highs.

I don't know what to make of it. I'm completely stumped. not only do we have the dumbest money buying (amateurs in previous post) but we have the "smartest" money buying as well.

This is going to be interesting.

*Note: Many claim the COT is completely worthless now days. I haven't yet made up my mind..

I am sure the commercial hedgers are still trying to figure out how to deal with EURO news .... as the great Mohamed El-Erian said recently... nobody is used to deal with countries balance sheets......

gabga100 

Very Interesting chart ! Is your chart distinguishing between buying and selling activity or you presume that they are buying because the price goes up ( now it is clear but might be less evident in flat markets)...... I think the correction is healthy ! how many up days we had ! Greece bailout might not be as positive as everybody expects ..... which country will have to be saved next ..... CDS spreads on France and Germany increased by 15-20 % in one week ... Risk is like chemistry ,"Nothing is lost, nothing is created, all is transformed" Antoine Laurent Lavoisier (1743 - 1794)

Panel 2 is the turning point oscillator which is a work in progress. It is not direction, it just detects pro activity. I don't have much experience with it on the weekly chart. On the tick charts it's much more clear.

However Panel 3 is directional, meaning high values represent buying and low values represent selling. I should change the color scheme to avoid confusion because in panel 3 blue isn't pro and yellow isn't amateur. In panel 3 blue is buying and yellow is selling.

Panel 3 is based on options traders, so it's a totally independent data source and I give it a lot more weight, more than the COT and other data sources.

But that COT chart really has me scratching my head!!

gabga100 

I am sure the commercial hedgers are still trying to figure out how to deal with EURO news .... as the great Mohamed El-Erian said recently... nobody is used to deal with countries balance sheets......

In the past, when I found the COT more reliable, I would avoid trading against them. And with a major movement like that from net short to net long, I don't plan on trading the short side until I see them selling.

this is like a mini-commercial capitulation.

Just finished doing my weekend homework. Attached are the trend chart, the dotted lines are determined by ..... you guessed it, volume! and that shows trend is up.

Cycle charts - I still see strength. I think we're due for a pullback but the pros will probably buy it again and keep the rally going. Next target is 1240.

cunparis 

Interesting pattern on the weekly chart. Panel 2 is the professional activity. Panel 3 is amateur activity. Both are measured in two completely independent ways. Both are my own proprietary indicators. Notice how they're generally opposite. With pros buying the dips and amateurs buying the tops. Notice that the amateurs are currently buying and the pros are not. In fact the week before last week showed record amateur buying. According to this calculation, more amateurs were buying the week before last than at the Oct 12 2007 high!! That's a lot of amateur buying. And when they've all bought there will be no one left to buy. This leads me to believe that we'll have a correction "soon" (remember this is a weekly chart).

How do you distinguish buying from selling? I mean, the May 9th low had huge pro volume. You're proposing that pros were buying here, when it could be that they were selling, which caused so much downward movement into that low.

shodson 

How do you distinguish buying from selling? I mean, the May 9th low had huge pro volume. You're proposing that pros were buying here, when it could be that they were selling, which caused so much downward movement into that low.

This is the hardest part! I start by assuming that the pros are countertrend because they won't chase moves. This is actually not always true, if there is a big move it's because traders are chasing. But I'm looking for the smartest of the smartest and they usually don't chase moves. So volume countertrend that can turn price helps me to classify it. If they stop a down move then I call that "responsive buying".

This is easy to do with discretion but in a mechanical indicator it's a lot more difficult.

cunparis 

Just finished doing my weekend homework. Attached are the trend chart, the dotted lines are determined by ..... you guessed it, volume! and that shows trend is up. Cycle charts - I still see strength. I think we're due for a pullback but the pros will probably buy it again and keep the rally going. Next target is 1240.

Thanks for the updates CP. Can I call you that? On the weekly I'm also seeing possible targets around 1230 and 1260.

The quest for profitability.

Here's my current tradelog:



Things are starting to come together except for CL. Actually the $1000 losing day was when I was trying to follow an extreme scalping method in the l2st room. This isn't my normal method and I shouldn't include it here but I do just to remind me that it didn't work.

I've been making incremental changes over the past month, continuously refining my method. I think I'm making progress. Thursday I tried a scaling in approach and that worked but I saw that it wouldn't let me trade size which is the ultimate goal. So Friday I used tighter stops and that worked as well and I felt better about it.

I've got a new performance tracking measure that I'm using and it's to look at my performance over the past 5 days. That way it'll show my most recent performance. Here it is:



I circled the metrics I look at. The $ amount is slightly incorrect because Ninja uses a 1:1 exchange rate with the euro. But I do look at the profit factor, I want it > 2 and ideally > 3. The win rate is good to be above 50% just for the psychology (I don't like losing). So far everything is looking good.

The stats since Friday are looking even better. That's when I last modified my approach:



Only 1 loser. I think I've finally found something that works for me!

The next question is when will I be ready to go off the simulator and trade real money. I find it ironic that I've traded more on simulator in the past 5 months (since I went full time) than I have done in the previous 2 years. I guess that shows maturity & patience.

I'm feeling really good about ES. So if my stats continue to meet my requirements (PF > 2) then next Monday I'll go to real money for ES. For the other markets I need more time to build up more confidence. Today was the first time I traded FESX and I was 2 wins 0 losses so that was good to see my method can work on several markets.

Also one more thing.. today I traded DAX & FESX without the sine wave & better momentum. And I did just fine. In fact less information meant less thinking and more reacting. I liked it.