Today, NASDAQ made a new higher high of ~1980, only 15 points away from my predicted NASDAQ target ! The target is calculated, very roughly, based on an island reversal breakout pattern, as presented before.
Generally speaking, I defined the price movement pattern/trend as three kinds: trend up channel, trend down channel, and no-trend zone; See the previous post regarding these here.
So far, since March, the chart has formed 2 no-trend zones during the UP trend ! These no-trend zones are very helpful for future market development, that's why I mark them here in the chart today. The importance of these no-trend zones has been previously described in a short post.
One conclusion I can throw out here is: Unless the no-trend zone is successfully broken down, being a bear is very very dangerous ! This is the big picture so far ! Namely, wait until the broken down of the no-trend zone to act as a bear in the market is much safer and smarter !
The end of this UP wave will create a new DOWN wave based on the symmetry pattern, as explained before. The fate of this expected coming DOWN wave is listed as following:
- Break down the no-trend zone, and destroy completely BULL's hope !
- Form a new no-trend zone, and destroy completely Bear's hope !
So how the expected coming DOWN wave performs will determine both bear and bull's fate again ! As usual, the market will dynamically evolve, so do our analysis ! Our analysis and predictions have to be dynamic in order to follow the trend ! That's the only way to make money from the market, just follow it !
Livermore once said: "Men who can both be right and sit tight are uncommon!" I totally agree with him! During this UP wave, I have bought in BAC around $3, but I sold them all with pretty nice profits. This is not good, in my opinion, even with profits. Because the whole UP trend of BAC is not clearly done yet, to date. I should keep some free shares until the complete of the BIG trend. Learn how to let the profit run through the whole wave cycle is very very important ! One way I am thinking is the 80-20 and 50-50 rules. Always keep some free positions if you think the big cycle wave is not done yet ! Another thing to do is to keep some distance from the market !
Hi, Tiger, I am truely amazed with your calls in this rally. Your calls are not just predictions but backed up with your TA analysis. I have seen you posting in HuTong. As you know, there are a lot of TA experts there. A lot of them have drawn bearish conclusions from the TA. What puzzles me is, for the same chart, how come you can draw such big differences?
ReplyDeleteDo they just don't know TA or you have some secret weapon? Obviously, this is not the case.
So, what makes you so right this round comparing to them? Just TA or something else? Thanks a lot!
Hi, bokchoy,
ReplyDeleteThat's a great question! I have not been HuTong for some time because I am very busy for trading and thinking. It's glad to know you are one of my old friends.
It's very true that different conclusions can be drawn from the same chart. That's the beauty and charm of chart reading ! Think this way, if only one conclusion can be drawn from a chart, then what will happen to the market ? The answer is the market will go to one direction for ever, which is impossible ! That's why different conclusions will, and have to be drawn from a simple chart !
The above fact tells us:
1. Chart reading seems simple, but actually very very very complex and hard.
2. Draw conclusions purely based on the chart could be very very dangerous because of the point 1.
Of course, I didn't draw my conclusions purely based on the chart ! In the side bar, you notice I have the world market indexes, gold price, Euro and US dollars, Oil, and Treasure bonds market. These markets are not isolated, they are correlated ! So when you draw some conclusions you need to consider them as well ! The more information you considered, the more reliable your predictions will be. However, no body can gather all the related informations. As a result, if one important information is missed, the conclusion then may not be correct.
Some other important things regarding the chart reading:
1. Try to find out the Bull's force and Bear's force, and when they are balanced and imbalanced
2. Try to understand how the balanced force between bulls and bears becomes imbalanced, and how the imbalanced force between bulls and bears becomes balanced.
3. Try to understand how both bear and bull's force grow and shrink.
Randomly, I will post some of my thinking on chart reading in the "Technical Analysis Tips" column, which is in the side bar.
Finally, sometime, gut feeling are needed for this market's players.
Hope all of the above are helpful !
Tiger
Powerful algorithms — “algos,” in industry parlance — execute millions of orders a second and scan dozens of public and private marketplaces simultaneously. They can spot trends before other investors can blink, changing orders and strategies within milliseconds.
ReplyDeleteHigh-frequency traders often confound other investors by issuing and then canceling orders almost simultaneously. Loopholes in market rules give high-speed investors an early glance at how others are trading. And their computers can essentially bully slower investors into giving up profits — and then disappear before anyone even knows they were there.
This is very wonderful post. Be honestly, i lost money in total in this big wave started march. So I'm keeping looking for the answer, here it is. I realized i didn't really understand what the following trend means. Acctually, i just follow my opinions and catch up the small wave since i ignore the whole picture. Although i read many books...
ReplyDeleteAnyway, thank!
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Tiger, appreciate for the great reply. One experience I had was: you can indeed make $ by watching CNBC but depends on how you digest info.
ReplyDeleteFor example, recently we had Whitney pumping GS on CNBC, my instinct tells me, she is a player not like Dr. Doom, an economist. She might miss the boat or at least she wants to make $ on GS, while GS was around 135. Even I have already concluded the head and shoulder pattern was a fake but my bear bias stopped to paticapte in this rally.
As always, please keep up the good work.