The Big Picture: Nov 5, 2012

NOTE TO MEMBERS:

It can be challenging to satisfy the desires of both long-term investors and short-term traders with respect to forecasts.  And, investors of all stripes have expressed an interest in being able to tell at a glance what the current forecast is.  So, I am trying out a new format for posting market expectations.

I will post major channels and harmonic patterns on the market pages (such as http://pebblewriter.com/markets/spx/ ) for those who want a quick snapshot of the longer-term picture.  It will also include brief commentary about major trends, general expectations and key price levels.

The daily posts will focus on shorter-term information generally geared to swing trading, economic commentary, market interactions, etc.  Any new ideas or forecasts such as our analog work will also be introduced here.

I’ve also been exploring various ways of passing along information on when I make a trade.  Note that my personal trading style is fairly active.  I don’t usually day trade.  But, if I see an opportunity to capture 10-15 points when a harmonic pattern completes, I will usually do so.

My approach is simple: if I can make 1%+ per week on average, I’ll have a decent year.  As of mid-October, we’re averaging closer to 3% per week.  Sometimes trades take several days to work out, and sometimes several minutes.

This past Friday was a great example. We reached the middle of our target range indicated by the analog we’re following.  I thought there was a possibility we’d move even higher into the range, but saw a bearish H&S pattern completing.  I posted:

The little H&S played out, so we could see a sell-off down to around 1412 or so.  I’m closing my long position at 1423.50 and playing along on the downside, with the expectation of going long again either later today or tomorrow…There’s a high potential for being whipsawed here.  Longer-term investors might want to hang in there.

Less than two hours later, we had reached our target:

We just reached 1412.91 — close enough to my 1412 target.  Divergence is mixed, with positive on 5, negative on 30, even on 60, 4-hr and daily.  My gut feeling is we’ll rebound here, but I have nothing to hang my hat on other than a couple of hazy RSI channel lines and a cynical attitude regarding TPTB.  I’m closing out my shorts here and will stay in cash over the weekend.

Between the run-up we enjoyed from 1405 to 1423 and the move back down, we made a little over 2% — a nice trade for an unleveraged account with no exposure to specific names in less than a week.  But, it could just as easily have taken several weeks.

Bottom line — it’s up to all members to decide whether to play along or not.  Just know that if you do, there is always the possibility that my position may not be held for very long. Long-term buy-and-hold investors might wish to focus on the forecasts and big-picture harmonics.

Short-term traders, on the other hand, might want to keep an eye out for the blue boxes in the daily posts highlighting my position changes during the day.  I’m also exploring sending out Twitter messages to highlight trades.  It’s simple, fast and cheap for both of us.  And, you can set Twitter to text you or email you messages.  Please let me know your thoughts.

And, please let me know your thoughts on the format below.  Again, this is the overview from the page:  http://pebblewriter.com/markets/spx/   I’ll continue with the daily post shortly.

Thanks.

 

ORIGINAL POST:  9:25 AM

major channels:

major harmonic patterns:

3-year

1-year

close-up

 

forecast:

We’re currently following an analog that has been very accurate since March 2012.  SPX reached our target range of 1428-1451 on Friday, then dropped out of a rising channel.

continued for members…


lock

Sorry, this content is for members only.

Click here to get access.

 

Already a member? Login below

Email
Password
 
Remember me (for 2 weeks)

Forgot Password