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Market Mood
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Created: by worldwary Attachments:11

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Market Mood

  #41 (permalink)
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worldwary View Post
Thanks. This seems to give a pretty similar signal to the 12EMA but tends to follow price more closely. Do you tend to trade more from the daily chart or weekly chart using this method?

I noticed a few potential "whipsaw" situations where the daily closed below the line while the weekly was still above, for instance in Sept. and Oct. 2010. Would you exit a long based on the daily chart or wait for confirmation on the weekly?

Buying and selling whenever price crosses the moving average will definitely give a lot of whipsaws. The SMA(3,-3) should not be used on its own.

I would buy pullbacks after the a new uptrend has been established on the daily chart especially if the reversal on the daily chart is at a Fibonacci support zone. I do not enter trades at the Fib zones as it would be like catching a falling knife. I use SMA(3,-3) and MACD on the daily chart for confirmation of trend.

Entry is based on 60 min chart. Before pulling the trigger I would check that the uptrend on the daily/weekly chart is still in place. I do not use the SMA(3,-3) as a trailing stop.

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  #42 (permalink)
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Market mood does not have to matter, depending on your trading method. Here's Thursday's session for the GLD on an 8 range chart. Most traders would call this a range bound, congested, day etc. The total range for the entire day was $0.70, yet look at how many winning trades there were depending on your trading method. The triangles are auto-generated by my indicator, but the arrows are the precise entries. I trade this method everyday, risking 1 bar to make 3, stop 1 tick behind the entry bar. On that day, I actually traded the CL with the same method. The less movement you require from the market to reach your targets, the less relevant market mood becomes.

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  #43 (permalink)
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monpere View Post
Market mood does not have to matter, depending on your trading method. Here's Thursday's session for the GLD on an 8 range chart. Most traders would call this a range bound, congested, day etc. The total range for the entire day was $0.70, yet look at how many winning trades there were depending on your trading method.

I agree wholeheartedly. If you have an appropriate method in place for what the market is offering on a given day, you can make money in any kind of market. The trick is making sure you're using the right method at the right times.


monpere View Post
The triangles are auto-generated by my indicator, but the arrows are the precise entries. I trade this method everyday, risking 1 bar to make 3, stop 1 tick behind the entry bar. On that day, I actually traded the CL with the same method. The less movement you require from the market to reach your targets, the less relevant market mood becomes.

Do you always take entries like those pictured here? I can't tell a lot of details from the pic but these entries look like some form of a reversion-to-mean or "fade the extremes" method, as it appears that you're betting on short-term reversals that will keep range narrow rather than expanding outward. That kind of method would be expected to perform well on a narrow range day like the one pictured but in a strongly trending market I might expect entries in the opposite direction to perform better. I have virtually no experience with GC so I'm sure I'm talking out of left field here.

Do you sometimes take trades in the opposite direction of those shown here -- i.e., going long rather than short when price is starting to push upward? If so, how do you determine when to trade which direction?

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  #44 (permalink)
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worldwary View Post
I agree wholeheartedly. If you have an appropriate method in place for what the market is offering on a given day, you can make money in any kind of market. The trick is making sure you're using the right method at the right times.



Do you always take entries like those pictured here? I can't tell a lot of details from the pic but these entries look like some form of a reversion-to-mean or "fade the extremes" method, as it appears that you're betting on short-term reversals that will keep range narrow rather than expanding outward. That kind of method would be expected to perform well on a narrow range day like the one pictured but in a strongly trending market I might expect entries in the opposite direction to perform better. I have virtually no experience with GC so I'm sure I'm talking out of left field here.

Do you sometimes take trades in the opposite direction of those shown here -- i.e., going long rather than short when price is starting to push upward? If so, how do you determine when to trade which direction?

I guess this is a mean reversion method. I trade both direction in any market, whether ranging or trending. I never take entries in the direction of a move after price has pushed multiple bars in the direction of that move. In a trending market it's basically trading pullbacks in the direction of the trend, and divergences against the trend.

The chart in the image is the GLD etf, but Gold futures equivalent GC is actually my favorite instrument. If you like the CL but find it too wild, you would like the GC. I compare the CL to riding a rodeo bull, and the GC to riding a rodeo horse, the GC might buck you off, but it won't try to gore you in the process like the CL will

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  #45 (permalink)
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This is a market that just doesn't want to go down at the moment. It's been a great period for directional trades the past few days. Directional bias is great when you get it right, miserable when you get it wrong.

I view tomorrow as a real wildcard however and am unsure what to expect. One wrong word from Bernanke in the press conference (the wrong body posture even) could spark a selloff or a rally.

I sized down this afternoon but continue to maintain a long directional bias until proven otherwise. As far as intraday trades are concerned, it's been a matter of buying on the few dips that present themselves, then watching the paint dry for a few hours and holding as long as my patience can hold out. The pace of trade, especially in the uplegs, is incredibly slow. We're kind of in "no man's land" right now as far as profit targets are concerned.

Good luck to all and it will be interesting to see how tomorrow plays out.

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  #46 (permalink)
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There comes a point when a rally like the one we've been experiencing starts to seem overdone. I've been watching for more concrete signs that the mood might be shifting and hadn't seen anything until just a few minutes ago. Looks like the "rally into the close" pattern we've seen the past few days was attempted and rejected; also looks like the long-term uptrend line was just broken to the downside, so may be time to take a breather from the long positions and reassess next week. A great little run the past few days though.

I spent some time watching the precious metals and placing some silver trades this week and that's an entirely different world from the equities. Pretty crazy the kind of volatility they're experiencing now.

Silver in particular looks like it's approaching a blow-off top; reminds me a lot of oil back in the last month or two of the 2008 rally. If this is indeed the case then some explosive moves might be expected in both directions as the situation plays itself out. One goal for the weekend is to do some homework and develop a silver trading plan.

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  #47 (permalink)
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I spent some time this weekend researching prior blow-off tops to try to develop a trading plan for silver. I thought there might be a good short opportunity on a break below the $45 area.

Needless to say, I didn't expect that break to occur in the first 15 minutes of trading on Sunday night. That caught me completely off guard. Just goes to show that all the preparation in the world won't do you much good if you can't execute.

I may start another thread to discuss blow-off tops in general as my research was eye-opening.

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  #48 (permalink)
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worldwary View Post
There comes a point when a rally like the one we've been experiencing starts to seem overdone. I've been watching for more concrete signs that the mood might be shifting and hadn't seen anything until just a few minutes ago. Looks like the "rally into the close" pattern we've seen the past few days was attempted and rejected; also looks like the long-term uptrend line was just broken to the downside, so may be time to take a breather from the long positions and reassess next week. A great little run the past few days though.

Still haven't seen anything remotely bullish this week.

At times like this the main question I try to answer from a "market mood" perspective is whether this is just a pause in a dominant uptrend or the beginning of a larger correction. Right now there are still clear signs that "correction mode" is in play. Intraday price action is very jagged, like a serrated knife, with abrupt reversals and quick moves in both directions. This is consistent with high volatility and while it doesn't necessarily mean that the market will continue to drop in the coming days, it's not consistent with a market that wants to move higher either. So my short-term directional bias is neutral-to-bearish.

There's an interesting inverse parallel between this week (so far) and the week starting April 18. Monday the 18th started with news that initially looked very bearish (S&P sovereign debt outlook downgrade) and the markets gapped lower but then staged a big turnaround to open higher. The rest of the week continued the uptrend, with heavy buying occurring on Wed. and Thurs.

This week started with news that initially looked very bullish (Bin Laden death) and the markets gapped higher but then staged a big turnaround to close lower. Every day has continued down since then, with heavy selling on Wed. and now Thurs.

Not sure what this means exactly but it's interesting to see two such opposite weeks occur in quick succession. Maybe means a rangebound, indecisive market for the time being. There may not be a clear directional clue until a breakout either above Monday's highs or below Apr. 18th lows.

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