Could it really be this simple???
Posted by MC on Oct 24, 2008
In a bear trend…
Sell high, cover low
OR if you must
Sell low, cover lower.
Ideally short a bear rally to major resistance with a stop at just above that resistance cluster.
OR
Short a breakdown of major support with a stop at just above that support cluster.
In a bull trend…
Buy low, sell high
OR if you must
Buy high, sell higher.
Ideally buy a correction to major support with a stop at just below that support cluster.
OR
Buy a breakout of major resistance with a stop at just below that resistance cluster.
It really is that simple chart wise. We as humans muck it up with getting fancy, looking at the noisy timeframes and trying to out think the market and/or looking for a single level rather than a cluster. If you’re looking for magical levels and there are none. Trade the market structure and you’ll have a clear path as to where your trades should unfold. This technique will also give you the knowledge of risk/reward ratios before you ever risk a dollar of your cash. As for if the clusters work or not…that’s up to the market. 
Other thoughts…
Trade with the broad trend to up your odds of a profitable trade.
Keep in mind the S&R clusters given this volatility cover massive ground. This is why I’m cash and not trading futures, I cannot afford a proper stop in this environment. Be smart enough to know what your limitations are both mentally and financially!
Good luck
Deep thoughts…but I’m not Jack Handy
Posted by MC on Oct 12, 2008
I want to take this discussion to a WHOLE NEW LEVEL. It’s just sad that TB is withering and wilting. HELP me out here folks!
As a preface, derivatives are one of the biggest components of this exponential bubble…in fact they will probably be at the root of the demise of trading as we know it. The speed at which they have grown the money supply and shifted “wealth” is staggering. The extreme greed involved is likely to collapse this economy one day.
Anyhow, the topic at hand was where did that wealth go???
The big money cashed out on top which guaranteed the money supply from that vehicle would shrink. They took their profits and hold it in cash it would seem. Don’t believe for 1 second that their profit was lost…the big boys are too smart and controlling for that to happen. The game is rigged…flat out. That’s why everything is sinking…liquidation and removal of investments + profits, now leaving the rest of us with reduced profit, no profit or even losses putting us in the red. Anyone with a 401k can attest to the damages taking place.
There was a true reduction of money supply…but it wasn’t damaging to the real big players because they got out with massive profits. The damage as always is felt by the middle class and other working class citizens. We carry the load on our shoulders and suffer the losses so the fat cats can live lavish.
So I guess what I’m saying is “money supply” and profit are 2 different things. The markets money supply was greatly diminished but there was absolute profit taken and booked…in massive amounts. OIL, GOLD, SILVER, DOW…all had biiiiig profits at stake and all were liquidated. Big volume up high shows the profit was taken in droves. Think of a chart…big volume starting a bull and big volume ending it…what goes on in between is mostly retail and insignificant in relation to the big boys profit (though they do flip and keep the ball rolling). Ask yourself if you created the 2003 bottom and sold at the end of last year in MASSIVE amounts of volume…what would your profits be?
In fact I’ll go a step further…the bear market though driven by fundamental damage was triggered by liquidation popping the bull bubble. The selling of holdings for EXTREME profits is what essentially caused the bear. Bull markets start when massive amounts of money come into the market, and the bear market begins when that money is removed. The reason for removal with profit though is always a fundamental one if you think about it. They cause the markets to soar knocking things all out of wack valuation wise…THEY CREATE THE FUNDAMENTAL ISSUES. This ensures a constant cycle of boom and bust. They continue the cycle causing an exponential bubble as they re-invest base capital along with their big profits each time. Look at a lifetime DJI chart below. I prefer NON LOG because it really illustrates the exponential aspect to a greater degree.
It’s tough to grasp overall, especially because people in general don’t like to think about the markets as a ponzi scheme…but they essentially are, and a VERY lopsided one. One that we are told to count on to retire…and to invest in all throughout our careers. All along with the expectation it will continue to appreciate and make us rich by the time we retire. It’s up to people to learn about this stuff themselves and then trade/invest WITH the pros to ensure they don’t fall into the trap. Do NOT just dump into the 401k blindly and expect everything to work out allowing you retire worry free! After all it’s YOUR retirement not anybody elses…manage your nest egg accordingly.
…Random thought…
Deflation in relation to housing value is another can of worms. That artificially inflated portion of the money supply WAS lost. Still somehow the lending execs cashed out with handsome rewards…bastards. 
…Back to the scheduled program…
Now the fact is they usually shift profit into hard assets after they liquidate in the paper markets. Here they seem to be liquidating EVERYTHING at the same time…which makes me wonder how big of an event this is going to be when all is said and done. 
My main question is where is that profit going as the money doesn’t just evaporate. Did they raise the cash to pay their credit swap defaults (one thought as to why they need cash so badly). Who benefits by that exchange if it is in fact where the cash is going. And again were is that money going in the end, and when? When and where they put that money will be the next boom. Look for signs of their re-investing and follow their lead. This is a GREAT time to be looking for a new turning point in the markets, if you know what to look for.
From:
Please feel free to sign up and discuss this further with me. 
Updated thoughts on the scope of this crisis…
Posted by MC on Oct 10, 2008
This is all crashing due to institutional liquidation so they can raise cash as Timmy and I talked about last night. Cash to cover their a$$es, not to buy back in…like he said to me.
It’s going to end up more about who is NO LONGER in the market more than the shorts or what retail thinks. Suck enough liquidity out of the market and this is what you get…a hard and paper asset drain. Now imagine what will happen if/when the early and late majority of baby boomers pull their funds for retirement. 
Now the unknown with the graphic above is how this removal of money supply will effect the paradigm. The above represents a more less fixed axis, but when something like fictional money supply is changing this dramatically the above is somewhat flawed. 2 things are moving at once essentially, the bellcurve is no longer on a fixed axis. What WAS is NO LONGER, as this is a fundamental shift. This drain is going to remove much of the “money supply” in this country and in turn globally. There will be more damage to come from companies closing or tightening up, job loss etc… I’m praying for a bounce so I can short and ride the wave. This has been a life lesson and this indeed will be in history books in the future. This is a BIG deal!
IMO they simply cannot hyper inflate to offset the amounts damage we have seen and have yet to see. I’d like them to slow down and trickle help in rather than fuel panic and use all their lifelines at once. This should be a slow recovery…VERY slow.
Stay safe and with the trend IMO. 
INFLATION >>>> KABOOOM
Posted by MC on Oct 9, 2008
http://www.tradersbase.com/forum/general-discussion-misc/812-more-vids-fractional-lending.html
Set aside the 50-60 minutes and watch these videos!!! Pass these on so more people can wake up to the reality of this economy we live in, or should I say that we are trapped by? The economy is NOT sustainable in the US nor globally and there will be a major earth shattering collapse at some point. This may or may not be the time but it’s going to be in my lifetime I bet (hope I’m wrong about the timing)! This could very well be it as we ARE in a global meltdown, this is not just a US issue currently.
The term inflation is tossed around too much…inflation does NOT do this issue justice. So let’s say 3% is our annual inflation right? You picture a diagonal line drifting up a bit each year right? Well it’s 3% of an exponential, ever increasing bubble, it’s not an arbitrary 3%. What does that mean in numbers…my simple mind can’t count that high and I think if you had the whole US population use all their fingers and toes to count it out we still would come up short. Yeah…it’s that big!
This is not Debbie Downer calling…its a REALITY check! Some may want to crawl back in their bubble of “homeland” security and pretend the issue isn’t real or that I’m a wacko. That’s fine and dandy by me…just watch the videos so you can recognize what went wrong when the $hit really hits the fan…assuming this isn’t the fan hitter right now.
We envy the “wealthy” so much that’s all people talk about and emulate. Those people are paper wealthy, look how fragile their precious “wealth” is. We just saw many, MANY “TRILLIONS” wiped off the face of the planet in less than a year. Hell in the past week even. That’s a drop in the hat compared to what could happen when this thing finally implodes. It’s simply not real money..that’s why I’ve called the US the most impressive empire built on lies before.
They could have bought us some more time by letting things correct, slowing down and not doing a “bailout” so quickly. But greed has a choke hold on people and no doubt they fear that if people panic too much they will cause the implosion well before the wealthy can make even more money off the middle class. This is why I don’t think this will be the big one myself. The fed is doing anything they can to prop the banks up and allow the game to continue. They are going to inflate the USD to worthless and then we will have to see a shift to a new currency. Ask yourself just one question…does your dollar go as far as it did even a year ago? Picture 5 years ago if you can remember that far back…10 years. Get it, we are in an ever INFLATING environment and there are 2 scenarios. They can allow it to go through a DEflationary period which will delay the inevitable but give us more time or they can hyper inflate which will speed up the coming demise that much quicker. Bailout says it all…they are looking to hyper inflate the debt out of existence. I won’t go beyond that because most will probably think I’m nuts. There are many more conspiracy theories about what that next currency will be…I’ll be looking at ammo as currency I think.
Money supply - Wikipedia, the free encyclopedia
Here is a great link for economists terms like what is the “money supply” and some other good information. I love wikipedia!
Economy of the United States - Wikipedia, the free encyclopedia
Wiki for the US economic data.
Take NOTHING for granted or as a “guarantee”. Enron had pensions right…how did that end up working for those poor souls? Social Security is a government “promise” not a contractual obligation. Keep that under your hat and don’t be surprised if they break yet another promise. Roth IRA’s are tax free gains right…well yes as long as the “promise” holds up, but it’s not a contractual obligation technically. That could very well change and you could see people’s nest eggs further erode or implode.
Back in 2005 for every $1 we added to our GDP we added $4 of indebtedness. To pay off our national debt we need each family to cough up about $150,000 and that’s before the effects of the bailout hit. We all have $150k saved up right? NO? You mean to tell me the average person in the US lives paycheck to paycheck with almost no, or NO savings??? But this is a very wealthy empire we live in…how can that be? Because Middle Class supports both the wealthy and the poor. Incredibly lopsided wealth distribution is another major issue but that’s a whole other rant honestly.
Just open your mind and for a moment be free from the news and lines of crap we’re fed every minute of every day of every week of …….
If you wish to return under that rock afterwards and pretend everything will fix itself and there is no underlying issue that’s your prerogative. That’s how America go this far out of wack in the first place though…complacency and turning a deaf ear.
There’s no harm in being prepared for the worst, but there is EVERYTHING to be gained.
Be open minded and wise,
MC
No bailout is needed…the US needs to come back to earth for a bit IMO!
Posted by MC on Sep 30, 2008
All kidding aside…this is a CORRECTION, not a world ending meltdown. They let the bubble go on for WAY too long, made lending way to easy and cheap and now people are losing money and have become panic stricken again like back in Y2K. WTF, people like the bubble profits from 1995 forward but act like Chicken Little when the same ATR hits the downside? The BIG gains can come with equal or bigger losses…that’s how ATR works. LOL The market BADLY needs a real correction, otherwise the higher she goes the bigger and longer the bear cycle will be. We are in a bull cycle that has probably near run it’s course. Perhaps 1 more push but I really feel it’s nearing time for a full bear cycle.
I didn’t use log scale…this illustrates the wild ATR our market is saturated in.
Time to look at silver again…
Posted by MC on Sep 25, 2008
Silver is near that 50ma and the top of structure resistance as shown on my chart prior. Silver has shown selling pressure on the prior push and now it’s lingering showing limited buying pressure. For a trader this is a low risk short with a clear and tight stop. As I’ve said before…no bias or silver hating here…just pointing out a obvious and sound trade setup.
Silver has a good chance of a double bottom backed by paper markets falling.
Posted by MC on Sep 5, 2008
While the paper markets are in breakdown mode…commod’s should bounce.
Silver looks prime for a bounce IMO. Tight stop and quite a bit of potential upside off this divergent test of the last lows, this is an excellent trade opportunity as I see it. 
Remember you’re counter trend if you’re long, the 50ma has crossed below the 200ma already. Pay extra attention to the red dots as they are double backed resistance (by ma and structure). The best trades (with the trend) would be to look for rejection at those levels and get short. Those could also be used for long targets which is classic textbook support and resistance.
I LOVE this chart example for TA…it just is clean and clear. I see too many people out there trying so hard to make sense of a shitty chart when there are TONS of other plays. If the chart doesn’t hit you quickly don’t bother trying TA. If you cant see a clear line in the sand where bulls and bears will interact don’t play it cause it will be hard to gauge risk/reward ratios. Trending plays are MUCH easier to work TA with as the side winning is already evident and of high probability to continue. Choppy sideways action is often like betting on red at the roulette table IMO…unless you wait for the breakout that is. The consolidation plays do tend to be more violent and can provide quicker profit if you are patient and quick enough to enter on the break.
Good luck.
More UVOL/DVOL at work.
Posted by MC on Sep 4, 2008
OK…I realize today was a big down day…but given 7 to .5 ratio of DVOL there had to be hidden buying of some sort in there. That many sellers would have had more impact than we had today IMO. Instead the dow has flattened out and traded relatively sideways.
Plus watch the TRIN…it’s very hyper extended and at these levels there is a good chance for a big push down which should in turn boost the dow.
JMHO.
More insight, building on my previous forum posts on context
Posted by MC on Aug 30, 2008
First see http://www.tradersbase.com/forum/technical-analysis/743-some-thoughts-volume-taken-context.html
Trendlines work the same as structure support in their use to see which side is winning the tug-o-war. A candle with a long wick bouncing off support with big volume could give insight that the bulls defended that level with vigor and probably ran stops to cause a spike they used to buy cheap. That same candle with no support causing the bounce would mean alot less in terms of a traders odds. This is why context is so important, the market 9/10 times won’t reverse in the middle of nowhere.
Now small/tight candles at support/resistance shows rotation and balance which I find as important as wicky candles. The more volume, the more rotation came in at that level. Everyone loves BIG candles, but super small candles with big volume are at least as important. If you see a big volume on a tight balanced candle get ready cause bets have been placed by both sides and only 1 can win that move in the end. 
Generally it’s a fade situation because if you’re at support and bears can’t drive it lower bulls stepped in to defend or vice versa at resistance.
Final thoughts for now…
BIG candles regardless of volume = momentum
Go with the flow till it retraces or balances/rotates.
Tight, high volume candles = balance nearing an end
Balance will give way to momentum soon, let the direction show itself then hop on the momo train.
Help me decide what side to take, the news has me confused!
Posted by MC on Aug 28, 2008
Why is news a joke? They are attaching news to whatever is moving at that given point, often flip flopped many times a day. This was a real treat though, what would you be here…bear or bull based on this news? 
And as said prior 1000x, pros use news to flip shares to the hyped up masses. Essentially the entire market is a pump n’ dump if you think about it. LOL
