The US is all an illusion…
Posted by MC on Aug 24, 2008
Here’s a rant I wanted to post for awhile. Call me wacko if you wish. 
It’s all make believe here in the US…roads, bridges, monuments, hospitals…everything has been created by fiat bullshit currency. It’s funny what the US has done on loan more less…a loan they could never possibly pay back. Look at the vast empire we’ve built here…all on a farce. Yet it’s done and here to stay so it’s tangible.
The US is perhaps the most crafty, conniving nation in the history of the world. The country with the biggest GDP and most workers/output can conquer all with what fiat and fractional lending has done for the US. The fact that our currency is…scratch that HAS collapsed (more less) and is backed by air is proof that they have paid workers in defaulting IOU’s it would seem. I’m beginning to wonder who the idiot is here though. Me who tries to live within my means while saving shrinking USD along the way, or the frivolous people? They are imitating what the US has done and which has worked so well to build an empire. They are buying things they can’t afford just as the US government does decade after decade. I seemingly will have nothing left as the USD becomes stretched further and further thanks to inflation devaluing my unbacked savings vehicle. Those that drink their paychecks away will at least have had fun doing it. Those that are spend happy will have tangible items where I will have defunct currency in a defunct bank account. As they say…live & learn right?
Rant back on the forum…please. I love to rattle cages and provoke thoughts. If I can turn just 1 person on to become a free thinker I’ll be a happy man! 
http://www.tradersbase.com/forum/general-discussion-misc/751-us-all-illusion.html#post4414
How to use MACD? What can it tell us?
Posted by MC on Aug 7, 2008
When it comes to MACD…12,26,9 is the stock and most widely used setting. Often stock settings have the most eyes and are the most valuable when it comes to indicators. In my example…12 is the slow EMA, 26 is the longer EMA and 9 is the smoothing line. The moving lines you see on plotted MACD are 12 (slow EMA) and 9 (smoothing line), the 0 horizontal level represents the 26 (longer EMA). In the background on MACD you’ll often see a histogram, this measures the difference between the slow EMA and smoothing lines and plots this data in an easy way to watch momentum change incrementally. Both pieces of MACD are useful for spotting momentum shifts and divergence.
With 3 lines of interest plotted you can have 2 major crossovers.
1)Slow EMA crossing the fast EMA (0 line) (red circle & arrows)
2)Slow EMA crossing the smoothing line (black circles & arrows)
Most use the slow EMA crossing the smoothing line as indication of a momentum change. Sometimes on longer time frames like the above weekly there is no divergence needed for a mid term reversal and when slow and smoothing cross its a big move. See the below link for an article I wrote on divergence.
http://www.tradersbase.com/forum/technical-analysis/469-whats-divergence-diverging-indicators.html
Note: The most recent down move has built bullish divergence (green lines) where price tested lows yet the MACD as well as the MACD histogram failed to even come close to their prior lows. This was a VERY bullish indicator. I would have preferred the volume had been lower on the 2nd test giving a 2nd and more important diverging indication though. That would have told me there were less sellers at a prior key level and we didn’t get that so I’m not a total believer of this rally yet. I will become more bullish if/when the same level (or lower) has very low volume aka: brings out very few sellers. I will become full bull when the red downtrend and structure resistance are cleared and legitimately defeated.
Bulls on parade today, but don’t forget the bigger picture guys!
Posted by MC on Jul 17, 2008
Still plenty of resistance ahead on the markets overall. DJI has no divergence on a weekly going into this move so perhaps the Nasdaq is leading off it’s divergence. Either way Nas has been the stronger market all the way in this bear really. In case some didn’t catch the tip on the charts…there is a nice ticker to help you spot divergence on highs and lows.
DOW is near the point of control…will she hold tight?
Posted by MC on Jul 12, 2008
I’ve added some more volume by price support lines and updated the chart.
To me this shows the volume and where the majority entered the market after the Y2K bear. Almost 2 years of consolidation setting up the bear to bull transition. No doubt about it…this is [B]THE [/B]key price pocket. Volume = market sentiment and it’s staring us in the face. Now the question is do the big money players have chips on the table still, if so they support that line…if not they let it tank through and get in MUCH below that pocket of support.
The above I posted on the web on Jan. 23rd.
The levels I posted back then are coming up. 10,700 remains the most important level I can see. If we stay above that, the point of control is upheld and long term investors will hold albeit with a load of steamy crap in their pants at this point. If we break below there with conviction (especially close below) I’d look for massive bloodshed to accompany the crap in the pants.
I’m looking at that volume pocket as a fault line, if we break that open it’s going to be like an earthquake when we have plate shifting at the earths core.
Here’s an updated chart. In bell curve terms this is a chance to revert and test the MEAN. This testing is something the market does all the time on different timeframes. It’s how value is probed in a 2 way auction. Goes higher, no interest…revert to the mean and see if there’s interest. If there’s no interest there it goes lower till there is no interest and then back to the mean. From the mean any direction could be tested FWIW, including chopping around and coiling at that section of price. My signature sums up how I feel about market movements.
Heatmap of 6 month performance on the Snp500
Posted by MC on Jul 1, 2008
How about an S&P 500 heatmap of 6 month performance. This shows what’s actually holding up since the bear came out about 7-9 months ago.
Basketballs and The Market?
Posted by MC on Jun 26, 2008
You start with a basketball from Walmart bought at the reasonable retail price of $10. At some point the owner signs the ball Michael Jordan and claims to be selling a MJ signed ball. The bidding goes up because what was worth nothing and was common, is now all the sudden deemed a rare piece of memorabilia triggering peoples emotions and greed. As the bid goes higher so does the interest in this item, it must be worth even more otherwise why would people be so interested right? The advertised price is now extreme and the original seller, knowing it was a fake, prances away with $990 in profit. Now the new owner only bought it based on his greed, so he turns around to try and sell it for $2000. Only now there is no COA (certificate of authenticity) and people are questioning the validity of the signature. Now his offers are now in the $500 range, because there’s still a slight chance it’s legit and greed tells bidders they could still resell for profit. Fast forward…it’s been exposed a phony signature. The bid collapses and now is back to being worth $10. The owner tucks it away for a few years till he has a garage sale. There someone buys it for $20 despite being told it’s a fake. The seller is just happy to get some money back, and the shady buyer knows the signature is passable. The new owner opens an auction with new naive customers who know nothing of the prior auction. What do ya know, he sells the ball for $1000 again, and the cycle repeats over and over.
Of course there’s allot more in the markets movement than a clear cut point A to point B. This is a simplistic look at things to say the least. One thing to take from this may be that what transpires in the middle is essentially noise and greed driven. The greed portion can linger on for quite some time, as long as the hope of selling for profit is around. Now on the other hand, the extremes of the range often have quick reactions thanks to fear being the stronger of the emotions.
Another reason I feel this is a fair depiction of the market is the fact that the ball holder creates the bag holder. This market is not a fair game, there is deception at work. The “smart money” in the market preys on “dumb monies” greed and fear. “Not fair” some would say, well no, but what in life is fair? LOL
Michael_Jordan_Basketball.jpg)
The 2 Chains of Supply and Demand in Speculative Vehicles
Posted by MC on Jun 25, 2008
The market doesn’t sell goods nor services. It runs on hopes and dreams of profit
We’re trading/investing in a pretend slice of a company or contract with the hope that enough people will be joining us on our side of the see saw to profit.
The issue with this see saw theory though, is there really are 2 supply & demand chains at work in these non tangible markets. Since there are no hard goods, the scales can be tipped or manipulated by those with deep pockets. Maybe to a lesser extent on futures with no real limitations on open interest. But certainly heavily with stocks where there’s a set amount of shares to soak up before you’re in relative control.
So instead of this…
We have this…
I’m not saying it’s a must we over complicate things as a daytrader or even short term swing trader. But in general it’s very beneficial to learn to read the accumulation and distribution patterns of big smart money. I’m sure since this dual S&D chain is nothing I’ve seen talked about, many will think I’m a bit crazy. I won’t argue that, but I will argue that there is absolutely 2 chains at work in the speculative markets.
Chain 1 (Smart Money)…
1) Smart/big money accumulates low (Chain 2, step 2), in gradual increments in the downtrend (once they start to see a value imbalance and the dumb money begin to throw in the towel).
2) A large portion of the float is now in strong hands and an uptrend ensues with the occasional balancing period or correction.
3) Once they’re done with the uptrend, they then distribute (Chain 2, step 1) at the top. This causes a lack of significant, sizable interest which is needed to keep the ship afloat.
Chain 2 (Dumb Money)…
1) Retail/Dumb money accumulates high (Chain 1, step 2) often all at once due to the emotion of the newly advertised high prices which appears to be a big bullish push.
2) Some realize the gig is up quickly and promptly head for the exits causing a sharp move down, setting off a new downtrend.
3) The remainder become bag holders and will gradually exit until their individual pain threshold is hit and they finally begin selling to smart money (Chain 1, step 1).
Rinse N’ Repeat.
All JMHO, but this is how I look at the market at this stage of my learning.
To me thinking there is only one S&D chain is like thinking the markets operate in a vacuum and that they are tamper free and pure.
I feel the better I get at reading the volume based disparities the closer I am to riding the trends on the coattails of smart money.
Disclaimers:
There are many additional nuances, like deep corrections with no distribution or where a breakaway gap is used to turn weak hands into strong hands, to name a few.
I’m not saying all retail is “dumb money”. There clearly are many smaller traders that know how to read the writing on the wall.
Things to look at on a weekly DJI chart
Posted by MC on Jun 24, 2008
I called for a pullback test back on April 18th. I never thought it would have went this way and taken so long, but here is our test finally.
Macd and macd histogram divergence on last weeks close, which is lower than the prior closes. 200ma is double support backing this trendline as well.
The bigger picture, why can it be important to not solely focus on micro levels and step back sometimes?
In addition to my micro level chart we can now see a more defined channel. Plus much more is visible that is acting as support now. So, we have the downtrend broken and testing (from prior chart), 200ma and a now an added swing high as support. How about a trendline from all the way back to October 2004? CHECK!
This is a crucial but fairly low risk level to get long IMO. If it fails to hold though look out, we could hit 11k fairly quickly if this stuff gives way.
Could get interesting on any hint of a rally, FOMC as Cire pointed out could make things even more testy and jerky.
As always JMHO.
Have OIL prices topped?
Posted by MC on Jun 23, 2008
I posted this chart on the TradersBASE forums back on the 15th of June, but seems I missed posting it here. 
We are still in that box so nothing has changed YET.
I found then, and still find that volume on the high fishy. And there’s now lots of news about speculation and possible legislation surrounding the insanity we call OIL. I think that may have been a case of insiders getting tipped off and selling into the strength, that sure is what it looks like based on my TA knowledge anyhow. Swamping volume at highs is usually distribution, and now leading up to bad news for oil IMO we could get a collapse and reversal shortly. That was my call then, and it’s still my feeling now. If oil plays can breakout of those box like ranges with volume then my tune would have to change, but I’m feeling pretty good about the short side here. There has been posturing inside the chop up here, but I feel that 33 mil tells the story.
Good luck, don’t pick a top, let the top come to you.
MC
A new thread, to help usher a new era in our country.
Posted by MC on Jun 22, 2008
http://www.tradersbase.com/forum/general-discussion-misc/686-insert-rants-here.html
I created the above thread to get some stuff off my chest. I rant about stuff alot, now I have somewhere to keep all those thoughts and have others join in to try and formulate a solution perhaps. Or to tell me I’m a lunatic, but either way I want you’re participation.
Excerpt:
Don’t let the government or lenders pull the wool over your eyes. They are in the belly of this horse handing out credit cards and loans. They are inflating the money supply beyond that which is healthy. They are tricking you into thinking you NEED everything you see on tv. They have enabled you to live beyond your means. They are ruining this country, if not the worlds financial future and economy. If they can’t be stopped or held accountable it’s OUR job as consumers to remove our heads from our asses do the right thing. If you can’t afford to pay for it RIGHT now, you can’t afford it. If you don’t need it, don’t buy it. It sounds so simple, but the ads and brainwashing that goes on makes people really throw logic to the curb and go with artificial impulses.
Where are my independent thinkers? Join me in giving logic and common sense some legs, let’s return these traits to our people.
Cost of the 2008 economic stimulus package = insta-flation of < $196 BILLION
Cost of hosting this forum = $50 per month.
Being able to voice my opinion = Priceless
For everything else there’s common sense.
