Taking It to the Bank 8/15/23

[DrStool]

  

2 hours ago, fxfox said:

Doc,

a question regarding the "Weekly Chart Picks":

Have you ever done an investigation about in which "environment" the hit-to-miss ratio is best? My guess would be that around earnings release the ratio is worse than in calmer periods. Since charts of individual stocks get "fucked up" by earnings release due to gaps (think about MA's in particular). Maybe results overall could be improved somewhat if periods of higher volatility (around earnings release date) could be filtered out? For example. If you get a buy signal, but earnings release date is in 2 days, you don't take the signal.

They work best at 6 month cycle turning points. In between, less so. This is the principle of synchronicity at work. 

As I've pointed out often, rangebound markets are meatgrinders. The system is designed to find swings, not trade range edges. I try to avoid making commitments when the trend is flat. But sometimes you just don't know. The market is constantly changing. There's a lot of randomness that you just have to accept and pull the plug when the trade goes bad. Perhaps more importantly, we must be active in taking advantage of when there are breakouts from the range. 

Earnings have no impact in cyclical analysis. If there's a buy signal after a strong earnings report and the chart is coming out of a good base, I feel comfortable putting it on the list. Doesn't work so well on the sell side in a bull market.  

Positive earnings surprises in the direction of the trade more than compensate for the ones that go wrong if the loss is managed properly. For example, I recently had a buy on Airbnb and the next day it had a vicious selloff on earnings, dropping about 10%. In the next update, I set a stop just below key support. At that point everyone hated it but the longer term chart structure looked good. It made a double bottom while I waited, but then it took off and became one of the best performers this year.

When it began to show signs of being maxed out, and the holding period was approaching 13 weeks, I added a tight trailing stop which closed out the trade shortly after with a 19% gain. 

If you spend time trying to guess what earnings will be and what impact they will have, you will never take risk and never trade. I'll leave the fundamentals to investors, and stick to technical trading with the certain knowledge that that will provide enough of an edge for the method that I use to be modestly profitable over the long haul. 

There are no perfect trades.  Just some are more lucky than others. And some less so. So I'm not seeking perfection in running this list. I'm just trying to tilt the odds so that I have more good luck than bad. When I have bad luck, the object is to keep going because of the knowledge that the odds are that you'll have good luck on the next one. If you're 2-1 lucky to unlucky, and you manage the unlucky ones intelligently, you can take it to the bank. I Liked the Buys Better Than the Sells

Meanwhile, the pattern we are in right now looks like one of those that's not conducive to successful swing trading. We could be getting into one of those meat grinder periods. The last 9 days have looked like Galloping Gertie. Although I'm not sure it will lead to collapse. 

Look at this amazing hourly chart of the ES 24 hour S&P futures. The rally off the low 2 days ago stopped overnight exactly at the 2 week downtrend line. Now the little uptrend channel off the low is broken. 

The problem for day trading here is the dominant period isn't clear because of the decrease in duration and increase in amplitude. We'll just have to see whether spport levels hold as this drop proceeds. The key levels to watch are 4448 and 4442. An upturn above either of those could lead to an upside breakout through the 4500 area. If they break 4442, I would get too excited because there are multiple spport lines converging around 4429 that should generate another bounce. 

In short, today seems like a good time for doing nothing. The Calm Before the Storm

And now, for your listening and dining pleasure, and just for the fun of it, I present to you 3 charts. The hourly, daily, and weekly charts of the 10 year yield. Draw your own contusions. Meanwhile, Let the Scary Pictures On Primary Dealer Financing Do the Talking.

For moron the markets, see:

• I Liked the Buys Better Than the Sells August 14, 2023
• The Calm Before the Storm August 14, 2023
• Gold Sets Up August 8, 2023
• All We Need is a Few Good Shorts August 7, 2023
• Under the Big Top August 7, 2023
• More Supply is Just a Lie But Withholding Weakens August 4, 2023
• Let the Scary Pictures On Primary Dealer Financing Do the Talking July 31, 2023
• Correlations Don’t Matter Until They Do, Like Now July 23, 2023

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[SiP]

ugly close

[DrStool]

I have decided that Antwerp is the most interesting and European of big European cities that most Americans have never heard of. I love this place!

Fantastic. 

 

 

[DrStool]

9 hours ago, DrStool said:

If they break 4442, I would get too excited because there are multiple spport lines converging around 4429 that should generate another bounce. 

5 day cycle projection at the close 4411.