No Bull - No Bear - No Bias (TM)

Elliott Wave tutorial - link to free tutorial with examples and simplified explanations

2009-09-01T09:23:00.002-04:00

There's a good, free Elliott Wave tutorial at http://www.elliottwave.com/tutorial/Default.aspx - you just set up a free membership login (and ignore their subscription sales pitches unless you've got the dough to throw and the willpower to avoid relying on their EW counts when they're wrong - which is the whole point of educating yourself so you aren't at the mercy of relying on misguided or biased counts).

You can even just bookmark and reserve it for reading up on certain topics as they piqué your curiosity.

Tony's Objective Elliott Wave counts differently so be careful to avoid mixing or confusing them. But for free general background info, this is a nice resource.

It's somewhat simplified, but that's what you want for a tutorial. And there's enough information that you can get a good understanding about Elliott Wave theory and how it works.

Using Fibonacci and other price-pattern numbers for different trading timeframes and styles

2009-07-21T17:10:00.005-04:00

Here are some comments to help readers, especially newer readers, better understand how we use Fibonacci and other number levels for trading purposes. Using my VIX level of 24.78 as the example for today, we know that the VIX already touched it in late June and rebounded higher. But - there are times when price continues back to test a Fibonacci level again; this may happen when another price pattern is at work, or a longer-term trend is still at work. I've seen some situations where price will barely touch the Fibonacci number and be done with it, going into a trend reversal. I've seen others where price actually overshoots the Fibonacci level by a little or even a fair amount. One example happened in March, when the Dow Transports overshot my Fibonacci target quite a bit, before finally giving a trigger day and going into a reversal back upward again. (You can find those posts using the "Transports" label at my main UnbiasedTrading blogspot, see links at right.) Another example happened more recently, as I was posting frequently with US Treasury bonds and notes, giving the symmetry target and tracking as they sank into that target. In that case, it didn't take as long for Treasury notes and bonds to give a trigger day up and then have a very healthy rally.

So I go ahead and make a lot of "noise" about the numbers I see as the bigger picture important levels, to help people get ready and watch for potential reversals around those numbers. Normally, if price chooses to overshoot one of these numbers and spend at least one entire day beyond the level, and then have a trigger day* and reverse back across the line, that really is it. Once there's been an overshoot like that, then I typically see more resonating around the number as a clue that it's not going to reverse. Yet again - if you go back and look at my posts about the Yen, it certainly took a while there, but probably because that 111.49 pivot level is an extremely long-term, big picture number on the yearly charts! My 24.78 number for the VIX is on the monthly charts, not as long term.

*What's a trigger bar? It can only occur after price has moved to or if necessary beyond the target price level. Then, the next bar - whether on hourly charts, or daily bar charts - must be watched to see whether or not it closes above the high (or low, as the case may be) of the prior day. You can have better confidence that it's a trigger bar if you see good volumes accompanying that trigger bar day.

A trigger bar is never a complete reversal pattern, it's only the first thing to look for. It depends on your trading time frame and style whether you operate with a trigger bar, or wait for a complete reversal pattern to set up. For example, with UNG, we recently had looked for the target level of $12.00, and we got it. The next day, price moved above. It was a trigger bar but only for aggressive traders. On the hourly bars, price ended up returning to and closing at $12.20, thereby shaking the faith of those who were buying at $12.00. The following day it rebounded again. If you are a swing trader, then it is also perfectly valid to say that UNG still has not yet completed a full reversal pattern. You can be waiting for price to push yet higher - $14, anyone? - then do a pullback, and only then look for another trigger bar day up to buy with more confidence that the downtrend may really have reversed and start turning UNG into an uptrending ETF. (This has a lot to do with why I keep repeating that UNG must remain above $12.20, and certainly above $12.00. And why I've remarked that I want to see better buying volumes.)

People trading cash accounts - what I might refer to as the "KI$$" accounts I started discussing over the weekend - know that it can kill your trading account to try going into a position too soon, only to find it isn't valid, or is just premature. Example being today - if you already agreed with me that 24.78 being tested again today could turn both VXX upward and the equities indices downward (along with $COMPQ having got to my $1912 Fibonacci level), then you may have been trading it. And if you are a daytrader then you could have done so profitably, if you then TMAR'd (Take Money and Run) after two intraday legs down. But if a cash account (KI$$ account) trader, then you must stick with classic swing trade rules, including to look for a trigger bar.

Look at the VXX chart, upper right. You will see that tomorrow could possibly become a trigger bar if VXX does not make a new low, and if it closes above today's high. Or, if VXX digs a bit lower tomorrow - and believe me, it is possible for VIX and VXX to spend the entire day under the level that is equivalent to 24.78 VIX - then the earliest day that might become a trigger bar, would be Thursday.

Using the classic indicators on that VXX chart, you see that StochRSI is "oversold" but as long as it's down, it's down. MACD has turned down again, but over a period of a few weeks is showing positive divergence - not a guarantee but suggestive. And, Slow Stochastics looks ready to curl back up again but hasn't yet. A bit lower would actually touch a possible trendline. The pace of decline has slowed as shown by the smaller intraday range of the price bars in recent days. Also significant, volumes have been increasing. At this point it only suggests possible capitulation. Obviously, swing traders will want to see increased volumes on UP days, showing increased buying that's coincident with a trigger buy day, and good volumes later on follow-through upward days.

This is why people often talk about needing to see follow-through. It really is important.

So, those who are daytraders or nimble traders with margin accounts have the kind of flexibility to test numbers and levels, which obviously is a speculative game. For solid trading, investment positions, and swing trading with "normal" cash accounts, you need to know and use solid trading techniques like these, when you are evaluating the types of Fibonacci numbers and other price levels that I point out here.

Typically we have a pretty good track record, such as the examples I gave above. Then, there is the VIX level of 33.81, which I was sure would be significant. Turns out it was not, althoughit afforded good daytrading opportunities for nimble players. The VIX price resonated around it too long, showing that it wasn't going to provide support for a reversal. That's why we were clued in that under 33.81, the VIX was probably going to test 24.78. Which finally it did, and here we are again.

So - just wanted to provide these comments, especially for newer readers who may not already grasp how to work with these numbers I've been talking about today and recently. Do I still believe that VIX 24.78 and $COMPQ 1912 are important? Absolutely, just as I still believe SPX 961 is important. Just because VIX weakened and equities strengthened this afternoon, doesn't mean that we won't see a reversal play out from these numbers. It just means that we need to let these markets take another day or two to show us whether we get more than the little intraday setback we've seen, from these levels.

Normally, I cannot write separate comments for people with cash accounts vs. those who are daytrading or margin trading. So know your limitations, your time parameters, and your style ... and filter my comments accordingly for what works for you. When you see me make a remark such as, "depending on your time frame and style," you'll have to realize and remember - I'm referring to the points I've made above. Make peace with your trading time frame and style. If you are a KI$$ / cash account or slow-moving swing trader (people who dabble during the lunch hour at their day jobs - you've gotta know who you are), then you must keep it slow, and wait for the trigger days, the indicator-confirming days, the volume-confirming days.

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If you want to see how the above examples all actually played out with postings and how we tracked those items, you can go to my main UnbiasedTrading blogspot and my UBTNB3 blogspot (use links at right) and click on the labels associated with them. For example, for UNG, click the "Natural Gas" label, because UNG is an exchange-traded fund (ETF) that tracks the natural gas price.

"KI$$" is an idea I posted about last weekend at my main UnbiasedTrading blogspot. It's for:
Keeping
It
Simple for
Swing, Slow and caSh accounts

so the abbreviation would be "KISS" except that I like calling it "KI$$"! I don't know if I will be able logistically to track a separate KI$$ portfolio,but as I post about sectors and ETFs, etc., I will be making a greater effort to point out when something might be approached a specific way for those with "KI$$ accounts".

How to use the ChartsEdge daily and weekly forecasts - additional information from ChartsEdge

2009-07-06T17:23:00.002-04:00

Mike Korell at ChartsEdge has issued another discussion about how to use the ChartsEdge forecasts. I've provided in previous posts here the information on the daily and weekly cycles forecasts (you can find them using the "Chartsedge charts" label in the labels list). This time, he talks about how he ties it all together - the ChartsEdge daily maps, the weekly forecasts, and the swing trade focus. You can see that discussion posted today at Chartsedge Daily Market Maps; and, it's quoted in below:

A comment from today’s discussion
Posted: July 6th, 2009
Author: Mike Korell
Filed under: One-Day Market Map Comments to ChartsEdge »

How does it all tie together?
I use a combination of techniques in the material. Here’s the list:

The weekly chart - This chart is strictly mathematical. It uses recurring patterns identified in market prices over time.

The daily chart - This chart is created using a radio-frequency receiver tuned to the frequency of our planet’s heartbeat… the Schumann Resonance.

The Swing Indicator - This is the most difficult to explain. The concepts I have learned in creating the daily charts offered clues to the fact that the Schumann Resonance is heavily affected by the solar wind. This stream of particles is ‘directed’ in part by the position of the Earth in relation to the other planetary bodies in our celestial neighborhood. When these align in certain ways, the RF level is changed. The best way to locate these relationships is to pull out the old Zodiac and Ephemeris. I get to put on my wizard hat and use science nearly as old as recorded history.

How can RF cause me to want to buy or sell a stock. It may be in my genes… here’s a few paragraphs that may offer some insight. http://www.dnafrequencies.com/about.shtml

Using stop loss orders

2009-06-06T21:34:00.004-04:00

Stop loss orders can make all the difference for avoiding losses, and for locking in profits. One of the trickiest aspects is where to place the stop. There are some good ideas about that in this article, Two Points Relevant to Trade Execution by Brett Steenbarger at his TraderFeed blogspot.

Normally you place a stop loss order on a position you've entered into. Early in the trade, you use it to automatically stop out to prevent a big loss. (It is FINE to accept a small loss - the point is not to allow it to turn into a BIG loss. Remember, it's much worse to accept a BIG LOSS, than to admit you were wrong. It's okay to be wrong! All traders are wrong some of the time. What separates winners from losers, is that winners are willing to stop out and take a loss before it becomes an anchor and a bigger loss.)

Later, when a trade starts to prove that it is "working," i.e., the position is going as you hoped, the question becomes when to take profits? That's one of the points that Brett talks about in the article cited above. It's a very good idea to know ahead of time, what is your target? Then take at least partial profits when price gets to that point. DON'T get greedy at that point and decide to hope for more - you can easily lose it all! So, at least take partial profits. If you keep part of your position, move your stop at least to the breakeven point, so you won't lose money if price goes back to where you entered.

My late trading mentor had a little acronym: TMAR! It means, Take the Money And Run!

It's great advice!

Personal note about Friday 5/8

2009-05-07T16:03:00.004-04:00

I'll be out at a golf event all day tomorrow - will not be posting.

Here's wishing you a great day tomorrow, no matter where you will be or what you'll be doing!

Reversal patterns - patterns, triggers, and relationship with Fibonacci and other techniques

2009-05-07T12:30:00.005-04:00

Reversal patterns are chart patterns that signal a turn, or reversal, in trend. They can display on a short-term basis such as intraday, on a longer swing basis such as on the hourly bar and/or daily bar charts, and even on big-picture charts for the long term such as weekly and/or monthly bar charts.

Reversal patterns are more likely to be strong or robust when coupled with other indicators, such as a Fibonacci level or a trendline test. Such asa the 33.81 level in VIX I've been discussing recently.

This post will describe a few different types of reversal patterns. One is based on Elliott Wave, with the idea that trend movements express as 5-wave counts and counter-trends as 3-wave counts. Therefore, if we see a movement in one direction that expressed in 5 waves, we think it is most likely in the direction of the trend. So if we think the trend is reversing, we'd be looking for a 5-wave movement in the reverse direction. To confirm a trend reversal, we'd look for a 3-wave movement pullback (i.e., coming back against what we think is the new trend direction). And then, we'd look for a movement to initiate once again in the new direction. That would be considered a trigger, and we'd place a stop-loss protection at the top (or bottom, as the case may be) of the pullback.

Another is called a trap door. Here's an example in the VIX chart (below). I marked in red the line that VIX must remain above for the signal to remain valid. In blue (middle line) is the trigger line. The top, green line that I added is where momentum should pick up, because that will make the higher high that other traders will use as an entry signal or confirmation, either to enter the trade or to add more if they already came in on the blue line.

Another is called a 1-2-3 trend reversal. -- place holder, will add more on this at a later time.

Another is called a triangle trap. -- place holder, will add more on this at a later time.

Using sentiment indicators: volatility index signals

2009-05-04T11:25:00.003-04:00

Here's a post I put onto my main UBT site today. Since it contains some discussion about how to interpret signals from a volatility index chart, I'm also re-posting it here:
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VXN is the volatility index associated with the Nasdaq. As mentioned here in recent days, it landed on the midline of its bigger-picture Bollinger Band on Friday (a few cents under its prior low of April 17). Both lows poked its lower Bollinger Band on the daily chart, and you can see that its current value is actually positive compared with Friday's close. Are there other signals on this chart that give advance notice of the VXN moving up (which may be a bearish signal for the Nasdaq, at least in the short-term if perhaps not longer)? One, look at the moving averages - they splayed out in a "bow tie" from early March and have been extending downward. So, they might be getting ready to revert upward. The faster-moving StochRSI (upper indicator) is showing positive divergence, but the slower indicators (at bottom) aren't responding yet. Also, if you drew a trendline connecting the recent swing lows, it would indicate the VXN may be at or near the bottom of that downward-channel line. (If it did poke a bit lower, it would definitely touch that again, but I don't know that it "has to" do that.) You could also draw a trendline connecting the recent swing highs of the move down. The VXN might want to touch back up to that trendline, or if it moved above that, it might pick up a bit of speed.

I didn't actually draw those trendlines onto this chart, but if you are tracking charts and doing your own chart work, it's something you should already be doing. I look at moving averages and Bollinger Bands on my VIX and VXO charts, but I rely even more on the trendlines I draw onto those charts.

If the VXN moves above and especially if it closes above the high of Friday's candle, then it can be a trigger signal. How strong it would be, and how long it would last, would also depend on the other factors such as have been discussed on the bigger picture charts this weekend. (Including the ChartsEdge weekly forecast for NDX, among other things. Not saying that forecast is set in stone, but it is one of the guideposts we have to work with.)

Again, this isn't to add or take away from any of the discussions about Nasdaq and equities from this weekend. Just a set of comments on how to consider signals coming out of a volatility index like the VXN.

Information on how to use the TRIN indicator

2009-04-28T14:11:00.003-04:00

Here's some information about using the TRIN indicator. I posted this along with the intraday chart a bit earlier today at the main site, and will keep that intact since it may be more useful to see at least one practical example in action. I'll use bold to highlight the information quoted below from the Chart School at Stockcharts.com:

While the TRIN itself is flickering between positive and negative for the day (approximately 1.6 or a bit above), the moving average levels of the TRIN need to be considered. This is especially true for position investors and swing traders. Here's what Stockcharts.com says about TRIN interpretation according to the founder of this indicator, Richard Arms:

Richard Arms developed the TRIN, or Arms index, as a contrarian indicator to detect overbought and oversold levels in the market. Because of its calculation method, the TRIN has an inverse relationship with the market. Generally, a rising TRIN is bearish and a falling TRIN is bullish. Sometimes you will see the scale of the TRIN inverted to reflect this inverse relationship.
.....
A number of TRIN interpretations have evolved over the years. Richard Arms, the originator, uses the TRIN to detect extreme conditions in the market. He considers the market to be overbought when the 10-day moving average of the TRIN declines below .8 and oversold when it moves above 1.2. Other interpretations seek to use the direction and absolute level of the TRIN to determine bullish and bearish scenarios. In the momentum driven markets, the TRIN can remain oversold or overbought for extended periods of time.
http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:trin

The TRIN isn't the only indicator to use, but the way it's looking with the moving average seems to warrant consideration. Right now it's been continuing to rise, but all my moving averages on my TRIN chart from Stockcharts.com - the 3-day MA, 10-day MA, 13 DMA, and 20 DMA are above 1.2. The only exception being the 50 DMA but that's to be expected. So when I'm sizing up this market and looking for weakness, I would prefer to see TRIN moving average levels that are lower (or, that are lower and just beginning to turn up).

Again, just one indicator, but should be kept in mind.

Using the TRIN

2009-03-12T11:35:00.002-04:00

Some traders make good use of TRIN and I won't claim to be a real expert in it. Certainly you can study up on it at the StockCharts.com site in their glossary and chart school articles. It's a way of measuring advancing versus declining volumes. I also was tipped off by Kosta to a description by Matt Trivisonno on how he uses a 3-day moving average for it. Basically, in a bear market such as we currently have, looking at when the 3 DMA is quite low and then turns, for a sell signal. Presumably in a bull market it would be the opposite - a buy signal when it is quite high and then turns.

I'm beginning to think there can be nuances in that, such as when it makes a higher low and then turns can also be a nice sell signal in this bear market. Not 100% certain yet on that particular point, though.

Here's a post I made January 26 at my UBTNB3 site:

Thanks to Kosta for all the data, charts and links you provided this weekend! One of them prompted me to make adjustments in the indicators I use with the TRIN chart. You cited Matt Trivisonno's work which I looked at, and his comments about the 3-day moving average being a reliable indicator in this bear market. I'll need to get a bit more familiar with it, especially to see how it works for either a serious rally in a bear market or in a bull market (guessing it would be inverted) ... for now, I've made a couple of adjustments as follows.

First, I adjusted the MACD settings in the top indicator, so that may help show when the 3-day moving average is at the relatively extreme level that Matt charts as indicating an overbought market getting ready to move down. (I remember he commented that in the past, what happened was the market still moved up for a day or two, and then down.)

Second, I adjustment the moving averages that are overlays on the main body of the chart, by making the red MA line a 3-day moving average. I know it's more difficult to see, you have to look at the chart closely, but it's there. (Hmm, what I should do is make another adjustment so the "down" candles aren't red, that way the red 3 dma line will "pop" better.)

**Update 8:20 am - okay, I've made color adjustments, let's try this way for a while. The 3-day MA is in white, standing out well against the black background.Below are the new color schemes for the TRIN (the daily chart is followed by an hourly chart)(in the hourly chart, the 3-period MA is for the 3-hour MA of course - may be useful for daytrading):

K39 Stochastic Technique - for catching and riding trends

2009-03-02T22:31:00.005-05:00

The K39 Stochastic Technique is one I learned from reading up at Stockcharts.com. By the way, you can learn probably more than you really need to know, just by looking at all the free information at Stockcharts.com, including their ChartSchool, information on indicators, glossaries, etc. So when you've got free time, it's definitely worth browsing around. This method I find relatively easy to apply, and it's a very useful adjunct to methods like Elliott Wave as it helps clue you in to whether or not there's a trend you can catch and ride.

Here's the link to the Stockcharts.com webpage that has the full article on this: http://stockcharts.com/school/doku.php?id=chart_school:trading_strategies:the_last_stochastic_. The first technique on the page, certainly you can try if you like it. Scroll down a bit, though, and you'll see the explanation of this K39 Stochastic Technique. Once you read this, you'll understand why I use this indicator set on a lot of my charts (and you'll be able to "read" what it's saying on the charts I post, even when I don't specifically refer to it in my posted comments). I try to track and comment on this indicator set, but cannot always squeeze that into each commentary I post with my charts. One example is, take a look at my weekly and monthly charts of the SPX. This indicator set on those charts is one of the reasons why I've been able to "see" that the lows into the current time frame are not looking like the way they looked back in the 2002/2003 time frame (i.e., downtrending rather than supporting trend reversal currently).

Here's a quote of the central explanation of the K39 Stochastic Technique, along with a few of their charts illustrating how this works. Please be sure to read the full article at Stockcharts - it's isn't really much longer than the quote below, but you'll want to get all the detail if you really start applying this in your trading. (Besides, you'll enjoy browsing Stockcharts anyway, if you don't already!) Here's the quote ... I've added emphasis in bold for certain points:

A study published in "The Encyclopedia of Technical Market Indicators" found that some very good signals were given by an un-smoothed 39 period stochastic oscillator (K = 39, no signal line). A buy signal is generated when K crosses above 50% and the closing price is above the previous week's high close. Sell and/or sell short signals are created when the K line crosses below 50% and the closing price is below the previous week's low close. Taking a longer period, and not smoothing the data over a 3-period moving average allows the analyst to view Lane's Stochastic.

Note: You can add the Last Stochastic to our SharpChart charting tool by adding a "Slow Stochastics" indicator with parameters of 39 and 1.

Here is an example [the example lets you see how to select the settings in the "settings" area underneath the chart display]. Alternately, you can choose "Chip's Mutual Funds" from the "ChartStyles" dropdown.

In the chart below for MSFT, we see that the 39 period K crossed above 50% on June 14, at around $36.00.

Weekly, Daily and Hourly through Minute data can all be used effectively for the 39 period stochastic. Using weekly data for three years, we see that the 39-Week Stochastic for MSFT didn't cross below 50% until late February, 2000.

The whipsaw that occurred for MSFT the following month shows the need for signal confirmation. If we look at CSCO for the last year on daily data, we see that by the 39 day stochastic, it was a hold from November 1999 at $17 through early April 2000 at $32 a share. Here again, we see a false rally at the end of April. What can be used for confirmation?
Since the Stochastic is a price momentum indicator, one should pair it with a volume assessment for trade confirmation. In the chart below, the On Balance Volume (OBV) indicator has been added along with a 30 day MA as a signal line.

Notice that there was a bullish OBV crossover in early November 1999 and again in early June 2000 soon after the K line moved back above 50%. Although the Last Stochastic reversed in April, the OBV crossover did not occur. When the K line moved above 50% again in early June, confirmation soon followed.

One last point to remember is that all stocks are unique, and while the 39 period Stochastic is a useful technical indicator, one should always map the performance against your specific stock. [Some] stocks have evidenced a tendency to signal entry at a K crossover above 40% and a sell with K crossing below 60%. However, in volatile equities a second price or sentiment indicator along with a volume indicator provides the best confirmation.

I'm confident you will agree, this is a very nice indicator set when you combine the SloStoch at 39,1 and OBV 30 MA (OBV with "30" entered into the box). It won't give you the kind of turn indicator you get with a standard stochastics setting or with StochRSI, but it's a great technique for spotting when a trend is starting and is in progress.

More info on using the ChartsEdge daily maps

2009-02-21T08:42:00.002-05:00

Mike at ChartsEdge made some more changes to the daily map forecast algorithms. It looks like we should definitely not expect them to depict overall trend each day, but rather continue to look to them for intraday cycle timing. Please scroll down, or use the Chartsedge label, to refer to the prior posts here about ChartsEdge and how to use the daily maps. For daytrading, you'll want to look at these for the timing of intraday cycle movements up and down - the map will not necessarily tell you whether an intraday high or low will be relatively higher or lower than the other intraday highs and lows.

Here's the post from ChartsEdge yesterday with their note about the changes to the algorithms:

Market Map for Feb20

Posted: February 20th, 2009
Author: Mike Korell Filed under: One-Day Market Map »

This chart represents some major changes in the algorithms. Problems associated to inversion, morning/afternoon accuracy variations, and timezone compensation have been addressed.

One thing to note is that the chart has been detrended. It reflects short-term moves, but not generally the overall direction of the day. I may change that in the future.

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Cycle charting and how to understand the ChartsEdge weekly and longer-term forecasts

2009-02-16T00:39:00.015-05:00

Market cycles are charted by a number of analysts, mostly using a variety of methods. On the UnbiasedTrading and No Bull - No Bear - No Bias blogsites, we tend to favor two sources of cycles analysis. One is Tim Wood's Cycles News & Views; another is ChartsEdge which provides daily, weekly and longer-term forecasts displayed as charts of what's expected (in both time and price); and another is Terry Laundry with his T Theory. T Theory is not quite the same as most cycles, but it is based on looking at time factored with price, and is premised upon the idea of accumulation and distribution cycles that show up in his work with predictions about where the S&P 500 market is likely to go next. You can find all three of these located in the list of "other sites of interest" at the right side of each page.

Tim Wood doesn't make his information available on a free sample basis, so we cannot provide his charts or commentaries in freely posted discussions here. Tim in his Cycles News & Views addresses not only equities but also bonds, gold, the dollar, and oil. He presents current charts with oscillators and his proprietary Cycle Turn Indicator, with detailed commentary that includes at what specific price levels a trend continuation or trend reversal would be confirmed in each these markets. (You can find Tim posting general-interest articles periodically at FinancialSenseOnline, but if you're at all interested in his work, I recommend you do as I did and get a subscription, then enjoy a deep dive into the analysis he provides.)

We certainly also favor Mike Korell's work at ChartsEdge, also included in the "sites of interest" at the right side of the page. ChartsEdge provides both weekly and longer-term cycles forecasts of the S&P 500, Nasdaq, and gold; as well as a newer but incredibly canny daily forecast. Unlike Tim Woods' approach which opens the door to the specific cycles timing, oscillators, etc. and is more manually analyzed, ChartsEdge crunches the analytics and spins out cycles charts that are relatively simply to see and use. So you don't "see" the cycles behind the screen, as it were, but just the results as described below. I've found that using the ChartsEdge forecasts is rather similar to weather forecasts - there can be something that's showing up in the longer term charts (available via subscription only), but the actual timing of when it shows up and the magnitude of the moves tends to firm up and become more clearly predictive in the shorter-term charts (their free week-ahead charts are what we post here, along with their daily forecasts). Naturally it's harder to react if you only see the day-ahead and week-ahead, unless you're purely daytrading - and even then, I greatly recommend a subscription anyway just to help size up the general market trends.

I've already posted their discussion of how to use the ChartsEdge daily Market Maps that we post (used to be called BP charts when developed in the fall of 2008). So below, here, I'll post the ChartsEdge discussion and example charts (please note, this material below is all copyright ChartsEdge) of their longer-term cycle forecast charts, of which we post just the week-ahead versions for equities and gold:

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CHARTSEDGE
The stock market forecasts are based on cycle data which has been analyzed by a Neural Network. This use of artificial intelligence reduces the effect of personal bias and allows the simultaneous cycle analysis of many input variables. Easy to read and easy to understand. Whether you are a seasoned investor looking for the additional edge provided by cycle analysis or a beginner, these charts require no prior technical skills to take full advantage of their projected targets and turn dates.

"CYCLE"
An interval of time during which a characteristic, often regularly repeated event or sequence of events occurs.
The American Heritage® Stedman's Medical Dictionary. Houghton Mifflin Company. 28 May. 2007.
Stock market forecasting can be achieved in a variety of ways, some successful and others not so successful. This is a brief description of the basic ideas used to create the Chartsedge forecasts. The "Cycle Forecast Charts".

Here is an example of a cycle. During the time shown, the cycle repeated twice.

This all looks nice and neat and seemingly has nothing to do with the real world of markets and trading.

The truth is that traders are affected by many such cycles in many time frames. Whether a trader is looking at a buy/hold decision spanning decades or a two minute futures transaction, the cycles are similar in appearance but differ only in the length of the intervals of time mentioned in the definition above.

Now let's complicate things a little bit.

Here is the same cycle as above with two more cycles added to the picture.

In the real world, there are hundreds of cycles which affect our markets.

Long-term cycles such as the sunspot cycle or the US Presidential election cycle are combined with shorter-term cycles such as the lunar cycle, the daily cycle, or even things as short as the 140 millisecond Schumann resonance cycle.

How is it possible to make sense of these lines?

Our bodies and our minds take care of the problem by averaging all the information and weighting the data according to our own experience and preferences.

Let's look at the result.
When the three cycles shown above are averaged, the result is a much simpler thing to view and understand, but much more difficult to anticipate. That is to say, how do you know what is coming next?

One solution is accumulate all the cycles which you think may be relevant to a market, weight them mathematically, and create an average.

A nearly impossible task.

So, how is it possible to anticipate such a complex waveform as the stock market? The answer is in individual cycles.

Let's take the averaged chart and add to it one of its component cycles.

If you examine the two circled areas, you will see that a single cycle approximates the average cycle during brief time periods.

All that is required to anticipate the averaged chart is to find the single cycles which are currently closely following the averaged one.

A simple and effective solution to the complex nature of cycle analysis.

Disclaimer: These charts are prepared without regard to the particular circumstances or needs of any specific person who may read it. The sector trading and swing trading information contained herein is believed to be reliable, but its completeness and accuracy is not guaranteed. Opinions expressed may change without notice. No part of this report is to be construed as a solicitation to buy or sell any investment. We do not accept any liability, whether direct or indirect arising from the use of information contained in this report.

Examples of common Fibonacci pattern setups

2009-02-14T13:29:00.003-05:00

There are a number of well-known (and other not-so well-known) chart pattern setups that incorporate Fibonacci levels. Many of these have names, such "butterfly", and typically work in either direction. So you can see a bullish butterly, and then another time, a bearish butterfly. My personal favorite book summarizing great Fibonacci-based chart pattern setups is one by Hobbs, called "Fibonacci for the Active Traders." I do recommend buying the book! Actually, when you search around for the book, you'll find both the inexpensive small book (approximately $45) which I have.... and another that costs about 10 times as much. I don't know that you need the much-more expensive version, that goes along with a full trading course on the topic, but who knows. If you have enough coin to drop down for that and really want an intensive, give it a try.

I know there are also other books on the same or similar Fibonacci chart pattern setups, and if you search the internet you might also find websites about it.

Perhaps from time to time I might be able to describe some of the chart pattern setups here, as part of trading education for this site. In the meantime, here is an image that is a sort of "summary" depiction of many of the more common of these patterns. Each one is great, because it not only defines a pattern setup, but then if the pattern doesn't do what's "expected," you'll know very quickly and can (and should!) exit the trade so you can cut losses and re-evaluate. If the pattern DOES do what's expected, you normally have a Fibonacci-based target level that you look for price to get to, so you can confidently TMAR (take money and run = pocket your profits) at the right price.

In these charts, note that the letter markings (such as A,B,C) are NOT Elliott Wave count markings. Elliot Wave is different, although all of these Fibonacci-based chart pattern setups will express within the context of Elliott Waves. One of advantage of knowing these is that they can often "clue you in" to what the Elliott Count probably is ... and, they can help you if you don't know much Elliott Wave.

Definitely buy the book though, because the ~$45 version is terrific, contains all the information you really need to master many of these. Then use standard money management and trade management ... don't overtrade, but wait for patterns like this to show up. So when they do, you'll have trading capital at hand, you can deploy it, and quickly know whether or not to stay in the trade. If the trade works, then you wait for your price and TMAR and say thanks! And take a break, enjoy, and then go back to looking for the next one.

Elliott Wave for beginners - impulses and contracting triangles

2009-02-03T00:21:00.003-05:00

Look, it isn't realistic that I can teach Elliott Wave through a series of posts here - but I WILL set out some basics so that the curious can follow along, and students of Elliott Wave can have some refresher lessons from time to time.

First, one of the most basic concepts: the impulse wave. It is the wave that goes along with any trending market. It is called a 5-wave movement because it expresses as five waves, in which the fifth wave completes at "the top." Waves 1, 3 and 5 always move in the direction of the trend. Waves 2 and 4 are counter-trend movements. Sometimes these counter-trend movements are sharp pullbacks, and at other times they can be more like sideways consolidations. (And sometimes the counter-trend movements are more complex, with some elements of sideways consolidations and other elements that are sharp movements. You can look at a chart of gold during 2008 for an example of a complex correction (which may not even be over yet!).

So, here is a depiction of the Elliott Wave impulse wave. Some basic things to know about it:
* Wave 3 is never the shortest wave. Doesn't have to be the longest, but it just cannot be the shortest.
* Wave 4 never overlaps into the territory of wave 1. If you think you see that happen, then the count is wrong. Then either the impulse didn't actually complete, or it's a different type of wave and not a trending impulse wave.
* Each wave of the complete impulse has subwaves that are deemed "fractals," meaning that the first wave has its own little 12345 movement. (You can count these down to the 5-minute chart, but don't bother trying to count in smaller time frames than that - won't help you as a trader, and just wears out your eyes.) (There is also a saying that if you cannot "see" an Elliott Wave count on a 15-minute chart, then it probably doesn't exist.)
* After "the top" when the impulse wave completes its wave 5 (including all of the fractal fifth waves within that larger wave 5), then look out! It's time for the correction!

Below is a depiction of the Elliott Wave impulse wave:

By the way - yes, impulse waves CAN and do express downward in bear markets. Although there is debate whether they are true impulse waves, or just parts of a corrective wave like a zigzag. I won't go into that in detail now ... suffice it to say, a zigzag counts out as a 5-3-5 movement - five waves down, a three-wave pullback up, and five waves down again. So it is possible for each of the five-wave movements of the zigzag, to look like a 5-wave impulse.

What about triangles, you hear about them so much! Well, an Elliott Wave contracting triangle is relatively common. The trick can be that they can appear as part of a larger pattern. Well ... more on that, another day. For now, two basic points about triangles are:
* A contracting triangle is the classic type, but there are other types. The depiction below is of the contracting type. (Will address other types in future.)
* A contracting triangle can be the entire 4th wave of an impulse. Although, a 4th wave can also be more complex, in which case you would not expect to see a triangle untile the final component of the complex correction.
* A contracting triangle canNOT be an entire 2nd wave. But, it is possible to have a contracting triangle as one component of a second wave.

Below is a depiction of the classic Elliott Wave contracting triangle. By "classic," I mean that in the uptrending market, you see that the price comes from below and temporarily "tops out", then there's a pullback that's called the A-wave. From there, the series goes into the B-wave up, C-wave down, D-wave up, and E-wave down. Then price rebounds again and there's a sharp thrust out of the triangle as price resumes its uptrend.

The rules are the same, inverted, for a triangle in a downtrending bear market. So the depiction below shows two contracting triangles - the one on the left is in an uptrending bull market, and the one on the right is in a downtrending bear market:

The classic text to learn Elliott Wave is the book, Elliott Wave Principle by Frost & Prechter. I think you do have to go to Prechter's Elliott Wave International (EWI) organization to buy it (and I think they give it away free if you sign up for a subscription with them), but I'm not 100% sure of that, maybe it's available via Amazon or somewhere else on the web (eBay??). Honestly, I do not recommend the actual EWI organization - sorry! Maybe others like it or can benefit from it ... and I've got to agree, Robert Prechter DOES have a great writing style and nice explanations of the Elliott Wave theory and how it all works. And if you decide to subscribe to them for a while, hey, whatever floats your boat. Just don't "buy into" their investment recommendations hook, line and sinker, if you know what I mean. If I thought their service helped a person get the job done with investing and trading, well, I'd never have gotten to the point of having my own blogspot arrangement! I just mean that for actually applying Elliott Wave to your investment and trading decisions, you're probably better off elsewhere. I say that based on my personal experience, of course.

So why do I use Elliott Wave then? I find it to be an excellent set of constructs for assessing, measuring and predicting market movements. Except that it's very ambiguous in real-time, because at any given moment, it's possible to "see" several EW alternative counts, and some can give you a bullish idea but others will give you a bearish idea. So I find that I get much better results when I factor in what other methods are saying - cycles, trend analysis, technical indicators, sentiment, Fibonacci numbers. These other methods give me a sense of direction and even timing, and then that helps me draw conclusions for the most likely way for a market to express with the Elliott Waves.

So if you have any interest at all, do study up on Elliott Wave. It's very interesting in and of itself, and it can make you a better trader - so long as you retain your objectivity, and you "listen" to what other methods are suggesting too.

As always - be careful out there, and happy trading!

My comments on using ChartsEdge's Market Maps and Cycle Charts

2009-02-02T23:17:00.000-05:00

Just some personal comments I'd like to offer on using the ChartsEdge Market Maps to guide a trader's outlook for the intraday action.

First, I like to look generally for the morning trend, which was indicated to be down this morning and that did happen.

Next, I look for whether that trend is indicated to continue all day, or have some contrary movements and if so, approximately what time(s) during the day. Sometimes the trend changes intraday occur "spot on" to the indicated times, other days the timing is a bit different. Sometimes those differences also work into the intraday "highs" and "lows" becoming relatively higher - or lower - than the Market Map indicates. When that happens, it usually indicates an underlying current of more optimistic or pessimistic bias that also informs how the action will go during the afternoon. (Almost as if Salvador Dali got hold of the Market Map and flexed it and then "draped" it to be skewed relatively higher or lower for the afternoon!)

This did again happen today, as the countertrend action started kicking in relatively early and the mid-day action was relatively higher than indicated. This set up the afternoon low to be higher than the "lowest low of day" indicated in the Map, and the late afternoon rally to be to higher levels.

So if you were daytrading, and you got that nice drop early but got caught off-guard by the upward movement happening quicker and more strongly than expected, it also clued you in for the rest of the day, including the ability to ride a nice rally in the afternoon.

Finally, I like to look for how the Market Map seems to "fit" into the weekly cycle chart. Now, I'll grant that sometimes it looks like the weekly has to adjust to the daily, and vice versa. So far for this week, however, one thing is evident - that the weekly cycle chart is consistent with strength showing up today and Tuesday, with things changing into Wednesday. (Not only for equities, but also for gold (basically inversely, at least this week).)

ChartsEdge has occasionally provided explanation and information on their cycle charts and how to use them. I believe that my comments here are consistent with those; and, this helps also explain why I continue to find them amazingly reliable tools informing investment and trading decisions.

Explanations about the approach we use at Unbiased Trading

2009-01-31T08:28:00.003-05:00

Something I posted Thursday evening and probably makes a good explanation for those relatively new to technical-analysis based trading:
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Why do we focus so much on technical analysis here? Well, there are two answers to that. Here's part one of the answer: Because I got tired of losing money "investing" with fundamentals and looked for something better!! You know what I mean, right? All those times that analysts recommend stocks, especially when the consensus is that some stock will do well ... then maybe it does, maybe it doesn't ... and even if it does well, they never tell you when to sell to lock in profits, and not see them waste away!

Here's part two of the answer, why technical analysis: Because it works. Because the price of any asset is set by supply and demand (something that economists and fundamental analysts are amazingly reluctant to admit when it comes to most tradable securities), and it turns out that technical analysis gives you a way to see where supply and demand are going and therefore where price is heading. When price is trending up, or down, or consolidating, or ripe for a nice trend reversal. Discussions about fundamentals don't make money. Being able to "have tomorrow's newspaper today" through the clues of technical analysis does make money ... so that's what Unbiased Trading is about.

Trading is not really different from investing, either. Show me someone who wants to invest and doesn't care about making money, and I'll show you the tooth fairy. There's no point in putting money into anything without some protection against losing it, and without some game plan for making, taking and keeping the profits. (This is why I crack up when I hear "investment advisors" talk about assessing a client's goals - what can the goals possibly be, other than to make money?!?)

Stock prices are set by the next bargains between buyers and sellers, not "set" by analysts who calculate discounted cash flows, expected future growth, the company's balance sheet, and all that. It's certainly valid and valuable for people to know and review all that information, and it certainly helps many with their motives for buying and selling. Then again, there are also other motives for buying or selling any asset, which may have little or nothing to do with the economic fundamentals. If you enjoy discussing why transports should be going up because the price of oil is way down, or why transports should be going down because business travel is down and commodity shipments have slowed - that's all fine, well and good.

But if you want to make money (or avoid losing it!) based on where the transports are headed next, then don't buy (or sell) based on some economic ideas and a bit of hope (or fear). Use any techniques you find reliable to clue you in. That's why I use a number of techniques, usually one or a few will give some insight when others are less scrutable. The other thing is keeping an open, objective mind. It is critical - the ability to acknowledge what charts are saying, without preconception or bias. Along with the ability to check one's ego and acknowledge what's working or what isn't.

The core of most technical indicators is price + volume, with many giving ways to "see" into whether it's the buying or selling that's taking the upper hand. That's why I like to use them with Elliott Wave. Elliott Wave offers a number of alternative counts at any given point in time, so picking the "right count" is greatly helped by the indicators. For examples of ways to blend Elliott Wave counts with indicators, here are some of my thoughts marked on the S&P500 charts (below). Now, do I look at other information on the markets? Sure! Much of that gets folded in here from time to time, such as the sentiment indicators, cycles and so on. I do also factor in fundamentals, although I don't often bring that discussion here. There are plenty of other great sources for fundamental analysis (including Minyanville, Seeking Alpha, and many others.) These charts (below) use many of the indicators I like, but as you know if you've been reading here, there's also great information we factor in here such as sentiment indicators.

First, a quick look at the transports. The potential Elliott Wave count with a triangle jumps off the page of this chart, although I haven't spent as much time looking at its big picture (as with the DJIA and S&P500) so right now it's a bit more hypothetical. What does make it look fitting, though, is the way the drop from what I marked as the "e" wave has been a nice smooth trend, just the type of quick thrust move out of a triangle that's textbook Elliott Wave. The standard triangle target would be ~2600 on the transport chart.

That bearish view of the transports tends to bolster the thoughts I've been working with on the broad equities indices. I posted some days ago my thoughts on the possibilities that the financials completed their low and may pull back while the broader markets push lower - and as the financials did pull back today, am keeping an eye on that of course (will continue posting on that as we move forward).

Here are the hourly and daily bars charts of the S&P500, with plenty of my technical analysis thoughts marked on them for all interested.

As you can see (and know if you've been reading here a while), I've been tilting for days and actually a few weeks to the idea that we'd see a drop down from early January. With a pullback rally up, to be followed by another, deeper move down testing the November 2008 lows. We're finally at a point where we may be starting that next move down.

And as part of my classic Elliott Wave training, I'll note that this construct will be wrong - and discarded - tentatively if price moves above Wednesday's high, and definitely if price moves above the January 6 high. It isn't that I lack confidence in what I see in the charts; it's just that I don't believe in trying to make market guarantees, and it's part of remaining unbiased. So as always, be careful out there, good luck and happy trading!

=============
Note: Yesterday, when I looked back at the triangle in the Dow Transports and reflected on the pattern in the SPX, I realized that the triangle may be a viable Elliott Wave count for the SPX as well. Previously I had rejected the idea as not "looking right" - it's shallower, and I hadn't given recognition to the triangle before the 943 high as being a possible "D" wave within the larger triangle (this can happen, to have a tsmaller triangle substitute as one of the zigzag legs of the larger triangle). I posted the SPX triangle count at my main UnbiasedTrading blogspot yesterday, with comments indicating that it isn't my primary count for that index but can be possible. And either way, not really mattering since the outcome is the same, a significant move down over the coming days and perhaps few weeks.

Using indicators to confirm likely Elliott Wave counts

2009-01-28T11:44:00.002-05:00

Here is an example from what I actually posted today at my UBTNB3 site for traders in the SPX. It draws on the idea of the A, triangle B, and C-wave up that I reviewed in my prior example of trading triangles (from this past weekend). The StochRSI indicator I am referring to is in the lower part of the chart. When it is above the .80 line (with color) it does not necessarily mean "overbought", it means the trend is in place and still "working." When it drops under .80 then you know the trend, on THAT time frame, has weakened out.

You can and should compare how it looks on different time frames. One example I know some use, is to see if the StochRSI on the 5-minute chart "agrees" with how it looks on the 15-minute chart. If so, then you know the trend is good for the immediate time frame. It's especially a nice tool to confirm your trade, whether or not you have a clear understanding of an Elliott Wave or Fibonacci setup.

Some like to set StochRSI on "21" rather than the default "14" that Stockcharts.com uses. That's fine, it depends on how many "signals" you want to get from it. The 14 setting will be quicker, and the 21 setting will be slower. Adjust it to see what works for you. For most short-term trades, either the 14 or the 21 setting should be okay if you are using the 5-min and 15-min charts method (and may depend on what you are trading so you can experiment a bit).
=============

SPX can already be an a C=A level, and the hourly is testing up to the 200-hour MA (and if you are counting the move down as an impulse it could be in the 4th wave area but I'm not seeing that quite as clearly). Traders keep an eye on your indicators - prime example, check the StochRSI on the 5-minute, 15-minute and hourly bars charts. When the shorter-term charts have this indicator falling under the .08 line it's slowing down, and if it pulls it down on the larger time frames then you know the slowdown is more significant. Either gets you on the sidelines with TMAR on the big move, or gets you watching just in case it wants a trend reversal.

My thesis is that once a C-wave is done then we may see much lower levels, that's what I'm on guard for. Never any guarantee but it's my primary Elliott Wave hypothesis. So if and when either C=A, or there's another level that completes a C wave, my hypothesis is that it finishes a larger (B) wave and next move down. Here below is my weekly chart with my thoughts on this as my primary hypothesis:

Trading triangles examples

2009-01-24T15:40:00.002-05:00

Here are two examples of how to view the triangle that seems to be manifesting in equities over the past week. There are other things to consider, by the way. For example, I've marked it as a running triangle with the 80.06 low in SPY as part of the triangle. If you believe that the triangle begins to manifest after the low, then the triangle can extend longer (meaning that the "d" and "e" legs would take another day or so).

Also, even if price breaks to the upside as in the second example below, there remain bigger picture questions about what that would mean. There's an Elliott Wave count for the bigger picture in which it would be a high that wouldn't exceed the January 6 highs, and then the markets would roll over and test the November 2008 lows (either very close to that, or under that level). There are also Elliott Wave counts in which the January 6 highs would be exceeded. Which is why I continue to keep an eye on and post the bigger-picture charts in addition to the shorter-term charts like these.

I've labeled this as Elliott Wave, and my default label here refers to that along with Tony Caldaro's Objective Elliott Wave, but these are my points and I don't have any idea whether Tony uses these methods as part of his OEW. I can tell you that in Elliott Wave analysis, each legal of a triangle marks out as an "abc" (three-wave) zigzag. And the legs of this one look like zigzags to me, so I've marked them accordingly on the first of these two charts.

When price comes out of a triangle, the movement is generally sharp. In Elliott Wave terms, if the triangle is in a 4th wave position, the final 5th wave is usually a sharp thrust that then makes way for a strong trend reversal (both the thrust and the trend reversal being very tradable). If the triangle is in a "B" wave position, then a trader will at least want to be trading in the direction of the following "C" wave ... although what happens after that can be a little more challenging, in corrective patterns as we seem to be dealing with currently.

The technical indicators such as RSI, MACD, stochastics, and OBV volume measures, can be helpful in giving an early read on whether price is likely to break out of a triangle to the upside or the downside. Normally you will see the indicators making basically sideways, range-bound fluctuations up and down while the triangle is in progress (documenting the indecision of investors and traders that causes triangles to occur in the first place). As price gets ready to break out, the indicators should give clues about the relative strength either strengthening (for an upside breakout) or weakening (for a downside breakout).

If you find yourself on the "wrong side of the trade" when price breaks out of a triangle, I really cannot recommend trying to ride it out! First of all, you never want to be on the wrong side of a trade. You have no guarantees that price will return to your break-even point at any time in the near or far future, so it's best to exit even with a loss. Then switch to the correct side of the trade (or sideline if you prefer) - the indicators should be confirming the correct trading direction so you'd want to be going with them anyway. Second, as I mentioned, price usually moves strongly out of a triangle - because the sideways indecision is typically replaced with traders having more certainty on the direction to go. So you don't want to swim against the tide.

In all events, especially for traders nimble enough to trade intraday or very quick swing trades when the triangle appears in the hourly-bar charts like this, these ways to view a triangle - and be ready to trade out of it - can really make a difference:

More info on trading with ChartsEdge's maps

2009-01-22T08:24:00.000-05:00

Market Map for Jan22
Posted: January 22nd, 2009
Author: Mike Korell Filed under: One-Day Market Map »

Trending Days
Posted: January 22nd, 2009
Author: Mike Korell Filed under: One-Day Market Map »
This technique is still quite new and the introduction of the latest sensor design has opened up many new avenues of investigation. One of these is to understand the mechanism behind trending days. These days are the ones which offer a trader such as myself the best chance for big profits.

Since it would be difficult for the data from the sensor to create a chart which moved in a single direction for a whole trading day, it occurs to me that days such as we have seen like yesterday and the day before are the result of very choppy ‘multiple V pattern’ charts such as the most recent examples. Psychologically, I would think the effect would be of uncertainty or fear. It is this fear which drives moves.

The reversion of the signal on Thursday would have the same impact.

Fear = Profits

Elliott Wave ending diagonals

2009-01-20T23:24:00.003-05:00

In Elliott Wave analysis, movements in the direction of a trend count out as five-wave movements, with waves 1, 3, and 5 moving in the direction of the trend. Normally this are impulse waves, meaning that wave 4 never pulls back to the point where it overlaps into the area traced out by wave 1. The exception is the "diagonal triangle," a very interesting structure.

A diagonal triangle also has five movements, but its wave 4 will overlap wave two. Also, its internal "legs" are three-wave zigzag movements (each zigzag counting out as ABC). And importantly, a diagonal triangle occurs only at the completion of a larger pattern, therefore being either a fifth wave or a wave C.

A diagonal indicates that the trend is weakening trend, and price is unable to trace out a conventional impulsive five-wave move. That's why the diagonal is the only wave in the direction of the trend, in which wave 4 can cross into the area of wave 1. (Actually that overlap is required in order to qualify as a diagonal triangle.) Once an ending diagonal is complete, you should know, because the price usually goes back relatively quickly to where the diagonal began. That's a lot of movement! A good guideline is that the diagonal will be retraced in 1/3 to 1/2 of the time it took for the diagonal to play out.

That's one reason why Elliott Wave traders find this structure so interesting - the resulting move out of an ending diagonal, after it completes, is a "WOW"!

The diagonal triangle should be counted out as 1,2,3,4,5 (although some use letters, ABCDE - but it's better to use 1,2,3,4,5 because the diagonal does move in the direction of the trend, and all trend movements are supposed to count out numerically). The diagonal's “boundary lines” are drawn across waves 1 and 3 and across waves 2 and 4.

A common frustration is that, after the diagonal triangle patterns seems to be completed, often there's one final additional "leg" poking one last time in the direction of the trend that's being completed. So it's definitely something to be aware of. Is there an early sign whether or not the diagonal is really "done"? Yes!

Since “convergence” is a requirement for the ending diagonal pattern, it's useful to draw a trendline across the ends of what you think are waves 1 and 3 and then run a parallel line off of the end-point of what you think is wave 2. Once that second, parallel line is violated, that will eliminate the possibility of convergence at the wave 4 point .... and so, you can rule out the potential of a larger diagonal.

Also, it's very common to see a Fibonacci ratio relationship between waves 1, 3, and 5 of a diagonal triangle. For example, the length of wave 3 is usually equal to .786 (the square root of .618) of the length of wave 1; and, wave 5 is usually equal to either .786 or .618 of wave 3, or sometimes equal to .618 of the net price traveled by the first through third waves.

ISEE values and MA chart, values table and data resource

2009-01-18T02:06:00.003-05:00

The ISEE values are recorded and published by the International Securities Exchange, LLC and is a widely-used resource to gauge investor sentiment. They track and report (at 20-minute intervals during each trading day) sentiment on equities only; all securities; and indices + ETFs.

Many traders have the idea that when investor sentiment reaches an extreme - for example, a relatively high level of optimism - then it's time to be contrarian and "fade the crowd" by taking a bearish (pessimistic) position. Now, there certainly are times when sentiment as measured by ISEE (or other methods) seems to be neutral or not at an extreme, and then you might either try to determine whether it's in a trending mode with the market (thus not a "signal" to "fade the crowd") or you might simply choose to set it aside and ignore it until an extreme is reached.

Here's what their site explains about it:
"The ISE Sentiment Index is a unique put/call value that only uses opening long customer transactions to calculate bullish/bearish market direction. Opening long transactions are thought to best represent market sentiment because investors often buy call and put options to express their actual market view of a particular stock. Market maker and firm trades, which are excluded, are not considered representative of true market sentiment due to their specialized nature. As such, the ISEE calculation method allows for a more accurate measure of true investor sentiment than traditional put/call ratios.

"Because of this distinctive calculation methodology, ISEE has been referenced by The Wall Street Journal, Barron’s and other leading publications as a useful investment tool. Investors and investment professionals can use this unique put/call value to determine how other investors view stock prices, as well as to supplement and validate their own market views.

"ISEE is free. To receive the end-of-day email, sign up for the ISEE Alert email at their website." (The link to their site, including this info, chart (see below) and email signup form, has been added to the "other sites of interest" listed at the right side of this page.)

Below is a screen shot of what you can see for free at that website. For this view, I selected "All Equities Only" (to filter out bonds and other non-equity securities), and the date range from 10/1/2007 to the present (so I could see how it has been looking since the Oct. 2007 peak).

The value at end of day Friday, January 16 was 116, below the moving averages. Perhaps that signifies it's a bit oversold, although that doesn't mean it necessarily rises above them - it could just snap back and then drop more, if sentiment is trending or about to trend.

Anyway, I did want to point out too that the table below the interactive chart shows the values for the 3 categories - All Securities, All Equities Only, and All Indices & ETFs Only - updated every 20 minutes during the trading day. This can be a useful adjunct whatever trading time frame you're following (since you can set the time parameters much shorter - the default was perhaps a month, and the intraday fluctuations can even be another signal that intra-daytraders like to keep an eye on).

A nice feature of the interactive chart is that when you cursor over it (not the snapshot here, but the real thing at the ISE website), the cursor pop-up will display not only the ISEE value for the time period the cursor's on, but if you cursor over the moving average lines the cursor pop-up will display the MA value also.

I won't be able to post up the ISEE information regularly, so if you want to keep an eye on it intraday, daily, or from time to time, just bookmark their site (from the link shown at right side of page) (or use their email service if that works for you).

Summaries of Elliott Wave rules

2009-01-18T01:33:00.002-05:00

Here's a "cheat sheet" summary of the Elliott Wave rules which implement R.N. Elliott's wave principle. I did receive it from a former co-member of a prior trading site (Brad or bloewen), not sure if he created it or what its source, but thanks to whomever (and I hope and trust it's okay to share).

This doesn't substitute for studying up and practical experience, but can be a very nice reference. It's convenient for when you're looking for a reminder or clarification.

Using the McClellan Oscillator and McClellan Summation Index

2009-01-17T20:04:00.001-05:00

Here's information that the Stockcharts chart school/instructional area includes on this oscillator:

"Developed by Sherman and Marian McClellan, the McClellan Oscillator is a breadth indicator derived from each day's net advances, the number of advancing issues less the number of declining issues. Subtracting the 39-day exponential moving average from the 19-day exponential moving average of net advances forms the oscillator.

"Similar to MACD, the McClellan Oscillator is a momentum indicator that is applied to the advance/decline statistics. When the 19-day EMA (shorter moving average) moves above the 39-day (longer moving average) EMA, it signals that advances are gaining the upper hand. Conversely, when the 19-day EMA declines below the 39-day EMA, it signals that declining issues are dominant. As a momentum indicator, the McClellan Oscillator attempts to anticipate positive and negative changes in the AD statistics for market timing.

"Buy and sell signals are generated as well as overbought and oversold readings. Usually, readings above +100 are considered overbought and below -100 oversold. Overbought and oversold readings may vary among indices and historical precedent. Buy signals are generated when the oscillator advances from oversold levels to positive territory. Sell signals are generated on declines from overbought to negative territory. Traders may also look for positive or negative divergences to time their trades. A series of rising troughs would denote strength, while a series of declining peaks weakness."

And, here's some of the information on the McClellan Summation Index:

"The McClellan Summation Index is a popular market breadth indicator that is ultimately derived from the number of advancing and declining stocks in a given market. It is derived from the McClellan Oscillator by tracking its daily accumulation or "summation". This provides a longer-term view of the McClellan concept. Many people regard it as an excellent indicator of the overall "health" of the market and the market's current trend. It was developed by Sherman and Marian McClellan and first presented in their book, Patterns for Profit (available from McClellan Financial Publications).

"The McClellan Summation index generally oscillates between 0 and 2000 although it can move outside of this range during extreme or unusual market conditions. Historically, major market bottoms occur after the index falls below -1000. Readings above +1600 often indicate a major top is near. Top and bottom signals carry more significance if the index is also diverging from the associated market average. According to the McClellans, the beginning of a new bull market is signaled if the NYSE-based Summation index first moves below the -1200 level and then quickly rises above +2500.

"The Summation Index is simply a longer range version of the McClellan Oscillator. Whereas the McClellan Oscillator is used for short to intermediate trading purposes, the Summation Index provides a longer range view of market breadth and is used to spot major market turning points.

"The ratio adjusted index is calculated differently and is used for easier comparisons over long periods of time. First, the basic input for the ratio-adjusted version is no longer the daily advances minus declines. Rather you (1) subtract declines from advances, (2) divide the result by the total of advances plus declines, and (3) multiply that result by 1000. (Multiplying by 1000 is simply cosmetic and lets us work with whole numbers instead of decimals.) The rest of the calculations for the Oscillator are the same. The second difference is that zero (0) is now considered neutral for the Summation Index, so you no longer begin with 1000 in your Summation Index calculation."

There's more information there on additional aspects of these McClellan indicators - this is just a reminder of the wealth of technical analysis information one can find at Stockcharts.com.

At that site, if you just want to quickly and directly pull up the information in chart form, you can use the followng symbols:
$NYMO - NYSE McClellan Oscillator
$NAMO - Nasdaq McClellan Oscillator
$NYSI - NYSE McClellan Summation Index
$NASI - Nasdaq McClellan Summation Index

Entering and exiting trades; stop loss orders

2009-01-13T15:19:00.005-05:00

Here's a post I made this afternoon about a potential buy entry in oil:

The USO exchange-traded fund that moves with the price of oil has moved above yesterday's high of day, on fairly good volume. This can be a buy trigger. Is it likely to provide a good swing long trade?

Let's take a look at the chart. The RSI and MACD, and other indicators, remain in a relatively weak position, but some including the slow stochastics have been moving into a position where they can turn positive. The OBV indicator isn't showing positive yet, though, and the special setting of slow stochastics at 39,1 is rather low although it did move above 20 and now testing it from above. (It's also possible oil is getting support from a long-term trendline I showed at my main site some days ago.)

One strategy would be to dip a toe in with a swing trade buy, but place a stop-loss order just underneath yesterday's low. This way, if the oil price moves against you, and negates the trade setup by going under yesterday's low, you'll exit the trade with a small loss. The potential is that if oil price does move up, it could pick up momentum if it manages to go above last week's high. And, IF it goes over last week's high, then the indicators by that time should be looking more bullish.

This possibility of oil going into rally mode, as many have been expecting for months now (obviously disappointing a great many), doesn't look greatly high-probability given the factors I discussed over the last few days. Namely, that it doesn't fit one classic trend-reversal setup. However, it can still be either a different trend-reversal setup, or at least a good setup for a bear-market rally movement to the upside. So it's worth taking a look at, IMO.
As always - just thoughts and information, not recommendations or advice - any trading decisions are your own responsibility (or consult your own broker).
=============

One of the most important things to learn and apply when investing or trading (and they are really the same thing, just different time frames) is the use of displine when entering and exiting a trade. You are much more successful if you "measure twice, cut once" meaning when you check out why you are entering a trade - is the setup one that you trust to give a good trigger for buying or selling? Do you know what the parameters are for the setup, particularly, how will you know if the setup fails and you should exit the trade?

Stop loss orders are used for different purposes. One of the most important is the way you use them when you first enter a trade. Think of it as an "exit strategy" if the trade goes bad. In the example I give here for oil, the idea is to set a stop loss at a level where the setup probably isn't good, and you need to avoid losing money of course. Now, I'll tell you, many traders would set the stop loss just below the previous lowest point on that chart I posted. The problem with that would be that you could lose more money. It's a personal choice. Given how much oil has declined, and how weak-looking those indicators still are (even though oil may be getting support from a long-term trendline that I posted at my main site some days ago), I personally think it's a prudent idea to set a stop loss just under yesterday's low. I just don't recommend the angst of wondering just how low oil can go!

If you don't know what a stop loss order is, check with your broker or their online information. It is sort of similar to a "limit order," but different ... in a limit order, you specify the price at which you want your buy or sell order to be filled when you enter the investment or trade. A stop loss order is an order you fill out AFTER you got into the investment/trade - once you're in, you fill out the stop loss order by specifying the price (or percent % change in price, or dollar/cents amount change in price) at which you want your broker's system to automatically sell your position (or buy-to-cover if the position is a short position). In order to stop the amount of loss you'll have.

Remember - it's entirely acceptable and common to allow some small losses with stop loss orders! you need to avoid allowing losses to accumulate by being in denial without using stop-loss orders, as a bad trade moves against you and gets worse!

ChartsEdge map for 1/13

2009-01-13T07:51:00.003-05:00

I've posted the ChartsEdge daily (intraday) Market Map for today, January 13, at both of my other two sites. I won't be needing to post them here also each day, since this site is now being focused to education about trading, technical analysis, and trading tools and resources.

You can reference the prior post I made, with ChartsEdge's explanation of how to use these maps, if you are comparing today's Market Map with how the equities market action unfolds during the day today.

EW prior wave 4 and "triangle trap" setups

2009-01-13T03:07:00.005-05:00

Here is a chart I posted earlier today, which contained two ideas that are helpful to know. One is the idea in Elliott Wave (EW) that after price has finished a 5th wave, that completes a larger wave. And the correction is often to the level of the smaller-level 4th wave within the 5th wave itself. (It's referred to as the internal 4th wave within the movement that formed the 5th wave.)

The point is that the 5th wave itself is a five-wave movement counting out as 1,2,3,4,5. The lettering convention will actually look like (1),(2),(3),(4),(5) = wave 5. So, the correction from the wave 5 will usually go to the wave (4) level. That's what happened in this chart of the TLT. (TLT is the exchange-traded fund ("ETF") that tracks the movement of the 20-year U.S. Treasury bonds.)

The other idea mentioned within this post involved a "triangle trap." I'll post more about triangles in subsequent posts. For now, the point is that after the waterfall drop to that prior wave (4), price started to move up and down in a way that started to look like a triangle converging to a point, after which the normal expected move is one more push in the direction price took coming into the triangle. You really cannot see this in the daily chart, in this case - it showed up in the hourly chart (which I posted at my main site as soon as I saw it happen (fortunately very soon after it broke toward the upside).

In this case, the expected move, since price dropped into the apparently forming triangle, would have been one more push down. However, we identified that the triangle was actually not a standard triangle since it started to "break" to the upside. We refer to this as a "triangle trap" - because most traders are caught off guard by it, and when they finally see what's happening it creates a nice continuation move in the direction of the break (in this case, upward).

No trading result is ever guaranteed, of course. But these patterns have a high degree of probability. So far the internal wave (4) worked as a support level for TLT. We'll see in the coming days whether the "triangle trap" will produce much upside for a continuation of the trend upward in bonds.

How to use ChartsEdge's daily (intraday) Market Maps

2009-01-13T01:14:00.003-05:00

To help kick off the educational focus of this site, let's review an important explanation from ChartsEdge on how to use their daily (intraday) Market Maps:
=============

How to read the ChartsEdge Market Maps

The Market Map charts represent a perfectly neutral view of the market. These charts assume that the number of buyers and sellers are always equal. This is, of course, seldom the case. One other thing to remember is that the markets are 24 hours, so buying and selling which occurs before the regular trading hours will many times cause a jump in prices at the open either higher or lower.

Let's take an example chart (this example calls it a "BP" chart, the old name for what's become the Market Map daily charts):

At the time that the market opened, futures were trading below fair value, so prices opened down. Lets take a look at the market moves in the chart below

As you can see, the market is lower at the open.

The Market Map chart shows that the bias of the market should be higher into 11:30-12:00. As a result, the market immediately reverses and trades higher into that time frame.

The fact that the lower high on the Market Map at 12:30 becomes a higher high in the market is an excellent indicator that there will be very bullish action in the afternoon. This is demonstrated by the weak pullback into 2:00 and strong rally into 3:45.

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Thanks to ChartsEdge for such a useful set of charts for intraday, in addition to those great cycle charts by the week! (Yes, longer-term cycle charts are available directly from Chartsedge by subscription.) The information at the ChartsEdge site on how the Market Maps are generated is certainly fascinating and worth reviewing.

You will also find that this explanation of how to use the daily Market Maps can be useful for interpreting the ChartsEdge weekly cycle charts. The weekly cycle charts, and the daily Market Maps, are posted at ChartsEdge and also at my main site, http://UnbiasedTrading.blogspot.com (and they have longer-term charts available by subscription).

ChartsEdge intraday map for 1/12

2009-01-12T07:33:00.001-05:00

Market Map for Jan12

Posted: January 12th, 2009 | Author: Mike Korell | Filed under: One-Day Market Map | »

ChartsEdge map for 1/09

2009-01-09T08:10:00.000-05:00

Market Map for Jan09

Posted: January 9th, 2009 |
Author: Mike Korell |
Filed under: One-Day Market Map | »

=============

Folks, did you check the ChartsEdge RSS feed at the right side of this page yesterday? If so, you would have noticed that during the day, Mike posted an update of yesterday's map with a shift that did a great job of pointing to the rally in the late afternoon. This is a great reminder to check that feed during the day for any updates - they may be rare, but they do occur. It's another feature that makes these maps a uniquely helpful tool for the intraday action.

ChartsEdge map for 1/08

2009-01-08T08:06:00.001-05:00

Market Map for Jan08

Posted: January 8th, 2009 |
Author: Mike Korell |
Filed under: One-Day Market Map | »

=============

Folks, I want to say again, I think the ChartsEdge intraday chart maps are doing a great job. Yesterday, price did start upward as the map yesterday indicated, but then market bias did overcome the action so the upward movement failed. So, once again, the early action tracked very well, and then you had to be alert for whether the intraday highs and lows were tracking as indicated or whether a strong market bias was taking over. Even when strong market bias takes over, the timing of subsequent turns tends to remain evident, it just plays out translated differently in actual price. That's been my observation, and is also based on Mike's comments at his ChartsEdge site on how to use these charts.

ChartsEdge map for 1/07

2009-01-07T07:42:00.001-05:00

Market Map for Jan 07

Posted: January 7th, 2009
Author: Mike Korell Filed under: One-Day Market Map »

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If you haven't already, check out the McClellan Oscillator charts I posted yesterday evening at my main site (you can find via http://www.ubtnb3.com/) - this is among the reasons why I think equities markets swing traders must be especially careful at this time.

ChartsEdge map for 1/06

2009-01-06T08:27:00.001-05:00

Market Map for Jan 06

Posted: January 6th, 2009
Author: Mike Korell
Filed under: One-Day Market Map »

ChartsEdge map for 1/05

2009-01-05T07:52:00.000-05:00

Market Map for Jan05

Posted: January 5th, 2009
Author: Mike Korell
Filed under: One-Day Market Map »

=============

Snaps to you if you're daytrading, you're well-positioned to take advantage of the ChartsEdge intraday "Market Maps". My personal observation is that they work very well, with the intraday cycle timing in particular. Sometimes the intraday bias is different, and that shows up normally by mid-morning or not much later, if you see an intraday cycle high or low that's relatively "higher" or "lower" than the map showed. In that case, you keep with the cycle timing, but you adjust for the day's stronger upward or downward bias.

I noticed that particularly happened on Fed day (what a surprise! LOL) and around the holidays, especially a couple of days last week. My personal expectation would be that the intraday bias tracking should become "truer" for a while - will see. Meantime - if you are fairly new to using them, then look at my main site (you can reach via http://www.ubtnb3.com/) and check my prior posts there with the "Equities Intraday" label (labels listed to the right) and you'll find the prior posts that discuss how to use these maps. And/or, just visit the Chartsedge Market Map site (listed in other "sites of interest" to the right) and browse what Mike has posted there about these intraday maps and how to use them.

Also, if you haven't already, check out my main site at that url, and review the chart analysis and commentary posted this weekend - lots of good information for any trader, and especially for any having a swing trade focus (and even day traders should keep an eye on the bigger picture).

Best to your trading day!

ChartsEdge map for 1/02; and 2009 thoughts

2009-01-02T08:15:00.000-05:00

Market Map for Jan 02, 2009
Posted: January 2nd, 2009 Author: Mike Korell Filed under: One-Day Market Map »

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Folks, we'll look forward this weekend to some real in-depth evaluation of the markets and thoughts on direction during 2009 (you'll find it at my main site, you can find via http://www.ubtnb3.com/). For now, I'll just note some comments by Terry Laundry based on his T Theory work (posted at his ttheory.com site) that also agrees with some other sources that I tend to think are worth paying attention to:

Dec. 8 - "a finally rally into year end. At that point in time the longer collapsed Ts with their twin Dec 29 and Jan 2 top projections will be completed, and the market will be free to fall to a new oversold condition next year."

Dec. 15 - "This T agrees with the longer A-D T discussed in last week's update and I expect the market will peak at year end then drop sharply into a mid January or later low.
The S&P should try to retest the November lows shown here by the green Support line [chart is linked to the Dec. 15 post at that site]. A successful retest would be bullish, a failure to hold would be bearish."

ChartsEdge map for 12/31

2008-12-31T08:07:00.000-05:00

Market Map for Dec31
Posted: December 31st, 2008 Author: Mike Korell Filed under: One-Day Market Map »

The Schumann resonance consists of multiple standing waves which circle the earth. Each of these waves is at a slightly different frequency. Up to now, I have selected the strongest wave to create these charts. The problem with that is that the chart may get the appropriate turn time and direction, but the overall market bias which is affected by all the other waves is ignored. That was the problem yesterday. The turns were correct, but the bullish bias was missed completely. Today’s chart is a first attempt at correcting this flaw. I have arbitrarily selected the 8 lowest frequency waves and weighted them by their strength to create the chart. This combination would have created a perfect chart yesterday.

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Folks, I shouldn't have stated at my main site (http://www.ubtnb3.com/) yesterday that the Chartsedge map for yesterday didn't "work" - because really, it was quite obvious that it predicted the turns very well. And Mike had previously provided a discussion, which I had posted in one of my posts about Chartsedge, about how to spot when there's a more bullish or more bearish bias than indicated by the map. This did happen yesterday, for those watching intraday - when you first saw a low that was higher than predicted, and a subsequent high that was a new high instead of a lower high, those were your early warning clues that the price action was skewed to the upside. You could have then used the intraday turns (cycle high and low turns correctly shown by the map) to time entries and exits to play it (for example, by switching daytrades from short to long, or scalping in a different direction).

If you are not sure what I'm stating about this - it's simple, just look at the price action of the SPX intraday yesterday, and compare directly against yesterday's map, and it will become clear to you. Meantime - thanks again to Mike/Chartsedge for a phenomenal market-mapping tool!

AND TO ALL -

HERE'S WISHING YOU AND YOURS

A VERY HAPPY NEW YEAR!!!

ChartsEdge map for 12/30

2008-12-30T08:17:00.000-05:00

Market Map for Dec30

Posted: December 30th, 2008 Author: Mike Korell Filed under: One-Day Market Map »

Chartsedge for 12/29 - and New Hardware

2008-12-29T08:20:00.001-05:00

Market Map for Dec29
Posted: December 29th, 2008 Author: Mike Korell Filed under: One-Day Market Map »

I have been waiting for this event to happen. The Power Spectral Density at 39Hz is almost double that at the normal 14.1Hz signal. This chart is based on data from the higher frequency . Luckily, the times for the turns remained pretty close, but the 39Hz signal is much closer in appearance to the cycle charts in the forecasts section of ChartsEdge.com.

New Hardware
Posted: December 29th, 2008 Author: Mike Korell Filed under: One-Day Market Map »

I completed the construction of a new sensor module. I am testing the unit now but need to create shielding and setup the datalogger and power backup system. New charts should be online by the first of the year.

The initial results are just short of amazing. I have suspected that there was an AM signal riding on the wave and that was what actually caused the sensation of fear. My theory being that this ability of humans to sense this was part of a survival mechanism which caused us to hide during times of high radiation caused by the solar wind and periods of unusual geological activity. This ability to sense an impending earthquake has been recorded in various animal species. Both of these events cause alterations in the Schumann resonance. Up until I powered up this sensor, I could not see the mechanism, but it all becomes clear with the 1 part in a million resolution of this new device. The unit which I am presently using has one-tenth the resolution and is sampling once a minute. I am sampling the new unit once per second. Since the data riding on the wave is around .3Hz, it was impossible to see anything but noise with a slow sampling rate.

I am looking forward to these new charts,
Mike

=============

Folks, what I find amazing is how well these maps work! I hope that someone will help Mike further carry forward this research; who knows if it may even have broader implications.

Also, for analyses of the bigger picture, fundamentals, and other markets including bonds, commodities, gold, etc., check out the weekend postings at my main site (you can access via http://www.ubtnb3.com/).

ChartsEdge map for 12/16

2008-12-26T08:03:00.000-05:00

Market Map for Dec26

Posted: December 26th, 2008 Author: Mike Korell Filed under: One-Day Market Map »

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Folks, I hope each and every one is having a special time during the holidays! Remember that you make it happen not only for yourself, but also for your loved ones and those around you!

Now, looking at this day map, it looks like it synchs up well with ChartsEdge's weekly cycle map from this past weekend (you can find at their site, and also posted at my main site you can find via http://www.ubtnb3.com/). If you want to know what ChartsEdge's cycle charts currently indicate for the upcoming weeks, you'll need their subscription (their site is listed to the right side of this page). Meantime, just remember that the direction of a Friday may or may not indicate what follows.

Chartsedge map for 112/24

2008-12-24T08:24:00.000-05:00

Market Map for Dec24

Posted: December 24th, 2008 Author: Mike Korell Filed under: One-Day Market Map »

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Folks, remember the markets close early today (check the holiday markets scheduled I posted earlier this week at my main site pointed to via http://www.ubtnb3.com/ (you can also use the "economic calendar" label to find it). Synching up this daily map with Chartsedge's cycle chart for this week indicates that a Santa rally seems more likely for Friday, but maybe it starts early this afternoon.

ChartsEdge day map for 12/23

2008-12-23T08:42:00.000-05:00

Market Map for Dec23

Posted: December 23rd, 2008 Author: Mike Korell Filed under: One-Day Market Map »

The chart for yesterday was shifted about an hour.

Chartsedge for 12/22

2008-12-22T08:37:00.002-05:00

Market Map for Dec22

Posted: December 22nd, 2008 Author: Mike Korell Filed under: One-Day Market Map »

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Folks, it looks like Chartsedge is using a bolder line in the disply of their intraday Market Map.

Also, look below for something new that Chartsedge is trying out, a "reversal" intraday map for today.

Reversal Map for Dec22

Posted: December 22nd, 2008 Author: Mike Korell Filed under: One-Day Market Map »

This is something new. This chart indicates reversal times for the US Equity Markets. It may deviate from the regular Market Maps since the data is derived from an independent source.

=============

Folks, this reversal map idea is something new for me too, so I'll try to "see" how it helps navigate through the market intraday. It's pretty evidence that it is pointing out the times when there's likely to be a reversal of some magnitude, so it should at least serve as an aid to timing when to be alert for these changes intraday.

Remember also to check out the analyses and commentaries posted over the weekend, including yesterday, at my main side (you can reach via http://www.ubtnb3.com/).

Chartsedge equities map for 12/19

2008-12-19T08:28:00.000-05:00

Market Map for Dec19

Posted: December 19th, 2008 Author: Mike Korell Filed under: One-Day Market Map »

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Remember folks, this is just the intraday map for today. This weekend we can look forward to Chartsedge's cycle chart for the upcoming week (in both equities and gold - check the Chartsedge site, or my main site reachable via http://www.ubtnb3.com/ where you can also see Chartsedge's new daily map for gold today), which should indicate the next likely swing movement for the upcoming week.

Yes, many are expecting a "Santa rally" - is it such a predictable thing? We'll see, but first traders have to get through today - opex!

Chartsedge for 12/18 - and equities

2008-12-18T09:35:00.002-05:00

Market Map fo Dec18, 2008

Posted: December 18th, 2008 Author: Mike Korell Filed under: One-Day Market Map

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Meantime, for the big picture, check out the analyses I presented (and some economics commentaries I quoted) at my blogspot that you can reach via http://www.ubtnb3.com/.

Something new - Chartsedge day-map for Gold

2008-12-18T09:33:00.002-05:00

Market Map for Gold Dec18, 2008
Posted: December 18th, 2008 Author: Mike Korell Filed under: One-Day Market Map »

This is a test of a new technique to use the BP sensors to predict Gold prices.

=============

Folks, this is something new - will look forward to see how well this works! :)

Meanwhile - check out the more big-picture analysis for gold that I reviewed yesterday, at my blogspot that you can reach via www.ubtnb3.com.

Chartsedge for 12/17

2008-12-17T08:43:00.000-05:00

Market Map for Dec17, 2008
Posted: December 17th, 2008 Author: Mike Korell Filed under: One-Day Market Map »

Due to the Fed announcement, yesterday was an extreme example of of bias in a chart. The two reversals shown on the chart actually occurred as shown, but the market was so heavily biased to the upside that the chart was nearly unrecognizable.

=============

Folks, I had the uncanny feeling that yesterday was a sort of inverse from the Fed day in December 2007, when the market dropped like a rock in the afternoon. The next day, it gapped up about 30 ES points, only to mark a trap door on the 5-minute bars and fall the rest of that day - that was an important part of the bearish market that came to fruition in January 2008 and the rest of this year.

So, might today be an inverse of the day following the December 2007 Fed day? I'm not thinking that it does ... I'm thinking that we've got to assess it on its own. I remember the Chartsedge weekly cycle chart (you can find at their site, listed in "other sites of interest" to the right side of this page; or, look under the Chartsedge label (to the right) on this site); I cannot "decide" whether the huge move up yesterday already accomplished most of the expected move up for this week. I also remember that Tony Caldaro is looking for a "c" wave up to complete, and Andre Gratian is positing a small new high to complete a bearish wedge up; and both of these would call for a continued move up before a serious pullback or correction. Maybe these things will all come together by the end of this week, implying any further correction to occur later this month (after opex).

Well, judging by today's Market Map from Chartsedge, there will be a lot of people out there implementing that kind of indecision intraday - so in all events, be very careful out there today!

Markets comments; Fed day; Chartsedge for 12/16

2008-12-16T07:51:00.000-05:00

First, let me say thanks to DoctorK! for posting another insightful analysis incorporating VIX, at my main site (http://unbiasedtrading.blogspot.com, which can also be reached via www.ubtnb3.com). I was actually happy to see it countering my comment there about VIX looking weak, because I've been feeling that equities have another trip south. Perhaps the Bradley model's mid-December date may prove to be a cycle high rather than low, with a low yet to come later in December or early January.

Also folks, remember that Fed/FOMC day, which is today of course! can be a very risky day for trading. Often the next day retraces much or even all of the post-Fed move, and usually the next day provides much better risk/reward trading opportunities. Now, it's always possible for today to be different - but still, all traders (and especially those with less experience) are well advised to observe only, or work only with much smaller position sizes (and if wrong, never be wrong for long!).

And now, for Chartsedge's daily (intraday) chart - I must say, that this is the first time this intraday chart has been available, for a Fed/FOMC day, so it will be extra interesting to see how it "holds up" to the sometimes whipsaw action that occurs:

Market Map for Dec16

Posted: December 16th, 2008 Author: Mike Korell Filed under: One-Day Market Map »

There will probably be a slightly higher open today looking at the futures. This positive open should carry through for more than an hour before the selling begins.

Chartsedge Market Map for 12/15

2008-12-15T08:08:00.001-05:00

Market Map for Dec 15, 2008
Posted: December 15th, 2008 Author: Mike Korell Filed under: One-Day Market Map

Chartsedge BP for 12/12; and comments

2008-12-12T08:38:00.001-05:00

BP1 Forecast Chart for Dec12
Posted: December 12th, 2008 Author: Mike Korell Filed under: BP-Sensor Forecast

The S&P futures are presently trading more than 3% lower. The BP chart indicates that a reversal to the upside should occur within the first 30-minutes of trading with one more push lower into about 12:15 EST.

BP Trivia
Posted: December 12th, 2008 Author: Mike Korell Filed under: BP-Sensor Forecast

Yesterday I created a FTSE BP. You would think that such a thing would be straight forward. Of course, it’s not. What I am discovering is that traders in the US start having an impact on the FTSE market much earlier than I had thought likely. It seems that traders in the US, who are experiencing a different version of the Schumann standing wave than their Brit counterparts, start exerting influence as early as 5:30 EST. Prior to that, the US futures markets move pretty much in relation to the standing wave over London at the time.

I am quickly moving towards a more global approach to these charts. I expect that international market interaction and even the location of population and financial centers will come into play as refinements are added.

=============

Folks, remember to check the Chartsedge RSS feed to the right (under "other sites of interest" where the Chartsedge sites are also shown) for any updates through the day.

And, just my comments - remember that Chartsedge's weekly cycle chart for this week showed downtrending all week. As the BP charts have done a great job of pointing the way intraday, for the week there hasn't been the exact downtrending indicated from the weekly cycle chart, although the futures drop this morning may be a sort of "catch-up" for today to align more closely with that cycle.

Also remember that the Bradley model showed a cycle extreme for December 14, which is Sunday. We'll have to see whether that expresses today or Monday. Or even if the date is so exact. There are probably many looking for the equities markets to pick up and rally into the holidays, and after that into early next year. And with opex (options expiration) at the end of next week, not to mention FOMC on Tuesday Dec. 16, we could be in for some more volatility over the next several trading days.

Markets update (other than equities as such)

2008-12-11T11:35:00.000-05:00

VIX weakness is indicating either a confirmation for equities to continue moving up, or some may interpret a complacency level signaling a potential sell. So long as it's moving down, however, from a swing trade perspective it would need at least a trigger movement upward.

Looks like currencies, gold, and the dollar are signaling a move confirming both the move up in oil as well as, potentially, a positive sign for equities assuming that dollar weakness (with VIX weakness) signals more risk appetite for stocks and less concern over deflation. Maybe the deflation concerns reached a bit of an extreme recently.

The euro looks testing up toward the 135-136 area:

What gives me pause however, is that judging by the UUP etf, the dollar may have tested down by its 200 dsma earlier today. Of course that's a decisive break of what looked like a triangle (hence a tri trap). There's a distinct possibility, however, that this move represents a jab toward that significant moving average, likely to be followed by a reaction upward, before a real move down later on:

But gold, represented by the GLD etf, looks like it wants to test up to its own 200 dsma:

And good volumes in oil the past several days, and especially yesterday, indicate a solid low may finally be in, at least for some weeks or months:

Looking at bonds intraday with the TLT etf, those look like they are hanging on rather well and not rolling over yet:

All in all, a mixed picture at best in terms of risk appetite. Clearly there's some movement either toward risk appetite, with weakened VIX and oil and gold up. But bonds hanging on, and the dollar giving indications that the next move may yet be to the immediate upside, indicate that the "all clear" signal isn't complete yet. Okay ... maybe people are either waiting for the Fed on next Tuesday (or just waiting to get through the mid-December time window!).

Chartsedge BP for 12/11

2008-12-11T09:11:00.001-05:00

The following is from Chartsedge for today (remember to check for any updates with the RSS feed to the right side of this page):

BP - Equities
Posted: December 11th, 2008 Author: Mike Korell Filed under: BP-Sensor Forecast

BP1 - FTSE
Posted: December 11th, 2008 Author: Mike Korell Filed under: BP-Sensor Forecast

I happened to be up early and decided to try to create a FTSE chart. The nice thing about this chart is, if successful, it will predict not only the moves in the UK, but also those on the Globex futures markets as well. This chart stops at 8:00 EST due to the ‘tail wagging the dog’ effect of the New York markets.

Overview - SPX, bonds, dollar & VIX

2008-12-10T17:08:00.001-05:00

Either VIX is doing some kind of a triangle ... or it's a pretty good imitation - either way, following it out of the consolidation seems like a good idea:

The U.S. long bond hasn't completed a trend reversal ... yet ... although looking peaked (so to speak):

U.S. Dollar, rather similar to VIX:

And the SPX - whatever else we might say about Elliott Wave and cycles, it needs to show whether or not it is ready to break above the 50 dsma (after being away from it so long, after the "bow tie" formed in the moving averages back in August/September):

Chartsedge BP and equities for 12/10

2008-12-10T08:27:00.003-05:00

BP2 Forecast Chart - Dec10
Posted: December 10th, 2008

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Folks, it looks like the BP chart did a real nice "job" yesterday mapping out the equities markets' action that unfolded. Remember their explanation of how to use it - the actual level of the intraday cycle highs and lows may be different than indicated, so once you establish during the day that, for example, that first rise wasn't as high as indicated, that clued you in that the remaining action of the day would also be weaker than indicated. So, the intraday cycle high toward the end of the day, was also relatively weak. Interestingly, this caused the BP chart to "fit" well with the Chartsedge weekly cycle chart (which you can see at my main markets location (http://www.ubtnb3.com/ pointing to http://unbiasedtrading.blogspot.com/) from the weekend's posts.

Now, as I commented yesterday, I am very curious again to see how the BP chart will interrelate, if at all, with the Chartsedge weekly cycle chart which indicated a downtrending week.

In addition, as discussed at my main markets location, Tony Caldaro's 912 resistance number seems to have really "worked" as the markets tested up by that area and fell off. I'm sure there remain more than one viable EW counts for what the equities markets are tracing out ... I've been playing with the idea of the rise still being part of a B wave in an expanded flat, but the length of time being taken up by this as a B wave seems "too long" to me. Tony's count is that the markets are working on a C wave up after tracing out an A up, and then last week being a B down. (And there are some other potential EW counts that can be theorized.) Once again, we'll see!

Also - remember to look for any BP chart updates, which will be indicated by the Chartsedge RSS feed under the "other sites of interest" links to the right. (Above the news feed links also along the right side of this page, where you can select news by the topics shown as links.)

Chartsedge BP for 12/9

2008-12-09T08:10:00.001-05:00

BP2 Forecast Chart - Dec09
Posted: December 9th, 2008

Chartsedge BP for 12/08

2008-12-08T08:07:00.002-05:00

BP2 Forecast Chart - Dec08
Posted: December 8th, 2008

Folks, here's the Chartsedge BP chart for today.

The more comprehensive discussions of the market for swing trading, are at my main site, accessible via www.ubtnb3.com.

Thoughts for the upcoming week of 12/8

2008-12-06T10:25:00.001-05:00

From what I've marked on these charts of the SPX, you can see I'm tilting toward the idea that we do see a move lower into mid-December. (Obviously if the market just marches up past the .786 retrace level at 880.41 rather than reversing down, then "something more bullish" would need to be examined instead!) I'm not in the camp that expects a mid-December low to go under 741; so, either way, I'm basically looking for a move higher into the coming months. Just stating my point of view - not trying to tell the market what to do (let alone arguing with the market - always a losing proposition).

Here are some thoughts I've marked, on the sentiment indicators using VIX and the bullish percent on SPX:

Below are some more reasons to beware of a low over the upcoming week and into the December 14-16 time window. (The Bradley model cycle chart was discussed before, look under the label at right side of my www.unbiasedtrading.blogspot.com page called "Cycles on Bradley Model").

Chartsedge BP for 12/5

2008-12-05T08:37:00.000-05:00

BP Forecast Chart - Dec05
Posted: December 5th, 2008

(Folks, today there's the chart itself, no additional comments. Remember, if you haven't already, check out the Chartsedge information - and correlate to the Chartsedge weekly cycle charts especially if you are swing trading.)

Chartsedge provides information on how to use the BP charts on their site (Chartsedge links and their RSS feed (which you should reference during the day for any updates intraday) are along the right side of this page). Since we're at Friday, and to provide background info you can also review over the weekend, below is Chartsedge's information on using the BP charts:

How to read a BP Chart

The BP charts represent a perfectly neutral view of the market. These charts assume that the number of buyers and sellers are always equal. This is, of course, seldom the case. One other thing to remember is that the markets are 24 hours, so buying and selling which occurs before the regular trading hours will many times cause a jump in prices at the open either higher or lower.

Let's take an example chart:

At the time that the market opened, futures were trading below fair value, so prices opened down. Lets take a look at the market moves in the chart below

As you can see, the market is lower at the open.

The BP chart shows that the bias of the market should be higher into 11:30-12:00. As a result, the market immediately reverses and trades higher into that time frame.

The fact that the lower high on the BP chart at 12:30 becomes a higher high in the market is an excellent indicator that there will be very bullish action in the afternoon. This is demonstrated by the weak pullback into 2:00 and strong rally into 3:45.

This demonstrates pretty much all of the important things to watch for when using the BP2 charts.
=============

Thanks to Chartsedge for such a useful set of charts for intraday, in addition to those great cycle charts by the week! (Yes, longer-term cycle charts are available directly from Chartsedge by subscription.) The information at their site on how the BP charts are generated is certainly fascinating and worth reviewing.

Chartsedge BP for 12/4

2008-12-04T08:36:00.001-05:00

Note: before I post the BP Chart and comments from Chartsedge this morning, let me put up this reminder: the long term objective possibility for the US long bond at 132, was reached yesterday as it closed at its high of day, at 132.97. I cannot say whether it may quickly reverse or draw out a topping pattern - but all traders and investors should have their eyes on it.

Okay, now for Chartsedge's BP chart and comments:

BP2 Forecast Chart - Dec04
Posted: December 4th, 2008
Yesterday’s chart, once again, was shifted by one-hour. This time in the opposite direction. This chart is an attempt to get the placemennt in the timeline correct.

(Remember to check the Chartsedge RSS feed at the right side of this page for any updates they might issue during the day.)

Chartsedge BP for Dec. 3

2008-12-03T09:15:00.001-05:00

BP2 Forecast for Dec03

BP2 Chart - End of day Dec. 2
Using the new software filters in combination with some fine-tuning of the time frame it was possible to line up today’s action with some good accuracy. Here was the best result I could get out of the technique. I hope that tomorrow does this well.

(Folks, remember the Chartsedge site is listed under the "other sites of interest", and you can look for any updates to the BP charts and comments under the Chartsedge RSS feed shown below that list.)

Chartsedge BP charts for 12/2

2008-12-02T08:16:00.001-05:00

Chartsedge's comments for today's BP charts:
"At the start of yesterday’s BP2 forecast chart was a sharp move higher. In the past I have just ignored these spikes. Last night I went looking for the cause in the raw data and found that they were tied to frequencies which were days in length. In addition to the standard BP2 chart, I created a second BP2-Test chart which has the lower frequencies removed by software."

=============

Given that yesterday's move down encompassed all the movement indicated for the week by Chartsedge's cycle chart for this week, it won't surprise many traders if today's intraday action looks like either one of the BP2 charts indicated for today - the BP2 or the BP2 test. (Kinda looks like an EW triangle, doesn't it?) Also, remember to check the Chartsedge RSS feed to the right of this page for any updates during the day today.

For anyone who isn't familiar with these charts or how to use them, check out the Chartsedge site (listed to the right side of this page under "other sites of interest"). While they are remarkably indicative most days and most times during the days, they are still subject to continued testing and adjustment. (Not to mention the fact that any trader should be using several methods as well as proper trade management.) I will say that for swing traders, as I commented yesterday, many will actually be looking for a poke under yesterday's lows, followed by a trigger move higher (preferably tomorrow, Wednesday) before venturing into another long position. (Wasn't really "expecting" a setup to go long as soon as Wednesday ... but, will have to evaluate this market as it comes, as always!)

Chartsedge BP charts for today, 12/01

2008-12-01T10:05:00.002-05:00

Here are the BP charts from Chartsedge for today, 12/01/08, along with his comments:

BP Charts - Dec01

Just when I thought I had most of this new BP approach figured out, I get a curve ball. There was a substantial difference in the BP1 and BP2 charts for today.
What would cause this is the fact that BP1 is sensitive to a broad set of frequencies while BP2 is sensitive to only the lower frequencies.

I decided to create three separate charts indicating the combination of hi and lo(BP1), the lo(BP2), and the hi(BP1-BP2). This will be a good indicator of which actually affects the markets the most.

(So, the first chart is the hi (BP1-BP2))

(So also, the second chart is the lo (BP2))

(And, the third chart is the hi and lo (BP1))

(Note, the Chartsedge BP RSS feed is along the right-hand side of this page (below "other sites of interest") so you can easily check for any updates during the day.)

Chartsedge BP charts - info on daily BP charts

2008-11-28T08:26:00.002-05:00

The main updating continues to occur at the blogsite locatable at www.nobullnobearnobias.com and www.ubtnb3.com. However, I'll also post this here because of the importance of this information:

I post the Chartsedge.com charts for both the weekly cycles, and the daily BP charts, at the blogsite mentioned above. For example, here is the BP chart for today, 11/28. In addition, below is important information from Chartsedge:

"The NYSE closes today at 1:00. The chart is for the whole day.
"Futures are trading slightly lower which is in line with the direction forecast into 11:00-11:15."

There's also important information about the BP charts generally that you should note if you have any interest (as I do) in these charts:

Future of the BP market forecasting tools

"During the last two weeks it has become obvious that these charts are a huge success and have the potential to develop into possibly the best trading tool available for intraday index trading. The focus of my efforts is presently on the BP2 sensor, but I am working on something radically different for the BP1 unit. Presently the BP1 data is heavily smoothed with an effective sample rate of only once every 5-minutes. I plan on taking that sample rate down to be equal or possibly better than the BP2’s 1-minute rate. A third sensor is under construction which will incorporate much newer technology with the ability to have it’s operating parameters modified as needed. BP3 should go online around the first of the year 2009.

"What about continued access to the charts? At this time I am leaving these charts as a free service of Chartsedge.com. I plan on developing an automated version of the charts which will provide real-time 24-hour charts with notated reversal times. The charts will be much larger. This service will be as a subscription service for a nominal fee and will include the ‘best performing’ BP sensor forecasts.

"For now, I am changing nothing about access, but plan on continuing improvements to these amazing devices. I encourage you to share any of the charts from Chartsedge.com as long as they are left in their original form and are not sold. RSS feed is available by clicking on the link to the right. That gives you immediate access to all the BP charts as they come available."

======================
The link to Chartsedge.com and the BP page is on the right-hand side of my blogsite I mentioned above, under "other sites of interest" which is where you can sign up for the direct RSS feed they mention above. If you want to go directly to www.Chartsedge.com you will find the weekly cycle charts there, and the daily BP charts are at www.Chartsedge.com/wp which is where you'll find both the RSS feed for those as well as another link to their weekly cycle charts.
(Will also continue to post those free BP charts here for your convenience, along with keeping the Chartsedge.com and BP page link in the "other sites of interest" listed here.)

2008-11-26T12:19:00.001-05:00

Information about market hours for the Thanksgiving holiday tomorrow (Thursday) in the U.S.:

On Thursday, November 27, all U.S. securities markets (including equity, option, and fixed income trading) will be closed in observance of the Thanksgiving Day holiday. Some Bond and Mutual fund trading will close early on Wednesday, November 26 and Friday, November 28. In addition, there will be no Pre-Market Trading session or After Hours Trading session on Thursday, November 27.

On Friday, November 28, the Pre-Market Trading session will take place at its standard time, but all U.S. securities markets will be closing early at 1:00 PM ET. Due to the early closing of U.S. Markets, the After Hours Trading session on Friday, November 28 will take place from 1:05 PM - 5:00 PM ET. All regular-hours stock orders submitted after the market close will be routed for the next regular session.

Due to shortened bond trading sessions on Wednesday, November 26, and Friday, November 28, mutual fund cutoff times may be earlier than normal and will vary. Orders received after a fund's cutoff will be processed the next day.

Equity orders placed between Monday, November 24, and Wednesday, November 26, will settle as follows:

Trade Date ------------------Settlement Date
Monday, November 24------Friday, November 28
Tuesday, November 25------Monday, December 1

Wednesday, November 26---Tuesday, December 2

The Canadian markets are open on Thursday November 27. In observance of the Thanksgiving Day Holiday, any new orders or change orders placed after the close of the U.S. Market on Wednesday, November 26 will route to the Canadian exchanges on Friday, November 28.

Nov. 17, 2008

2008-11-17T09:01:00.003-05:00

Market news and financial-related items will continue to be updated here. Chart analysis and related comments and updates will continue at www.unbiasedtrading.blogspot.com (also accessible from www.nobullnobearnobiased.com). The intraday focus including intraday cycles / channels, market data, stock quotes, and updates will be the focus of www.ubtnb3.blogspot.com.

Updated information

2008-11-14T08:55:00.003-05:00

Updated information for this blogspot is now being placed at www.nobullnobearnobias.com and the related blogspot (website currently being pointed to) at www.unbiasedtrading.blogspot.com - please go there for all current and updating information.

Thank you!

Oil daily chart 11/11/08

2008-11-11T17:04:00.005-05:00

The Elliott Wave pattern suggests a possibility that oil drops under $55, in which case it should then be ready for a substantial move up. If oil does move down to that level, it may do so in a zigzagging manner that exhibits a contracting wedge shape - if this happens, it's worth watching closely for bottoming indicators.

2008-11-11T16:58:00.001-05:00

2008-11-11T16:43:00.003-05:00

2008-11-09T09:30:00.002-05:00

$TRIN

2008-11-07T01:18:00.001-05:00

This long-term monthly chart of the $TRIN does paint a picture of changed mood in the markets.