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oh dear, permabear Keith McCullough of Hedgeye is even blocking his own subscribers now should they dare to cast aspersions on his multi year repetitious recession calls  😂

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Edited by Caseynotes
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fair go, the failure to break through the blue rectangle was crucial for further downside. Now looking for resistance (sellers to step back in) and the most likely area is just before the red 29400 de

That is the 50% retrace for  the Dow and S&P. 

Interesting S&P daily shaping up 👇

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Yesterday key support confirmed for Dow at 28451 and now looking to test near term resistance at 28933.

Ftse looking at Brexit today and wondering, S&P with Dow looking at near term resistance.

Not much on the calendar today.

The WHO reported the virus outbreak was a dire emergency but travel was fine, no restrictions necessary.

US democrat senator and speaker of the House of Representatives Pelosi says Trump can't be acquitted of any crimes because he hasn't actually been charged with any, er, the impeachment trial continues.  

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54 minutes ago, Caseynotes said:

Yesterday key support confirmed for Dow at 28451 and now looking to test near term resistance at 28933.

Ftse looking at Brexit today and wondering, S&P with Dow looking at near term resistance.

Not much on the calendar today.

The WHO reported the virus outbreak was a dire emergency but travel was fine, no restrictions necessary.

US democrat senator and speaker of the House of Representatives Pelosi says Trump can't be acquitted of any crimes because he hasn't actually been charged with any, er, the impeachment trial continues.  

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Not denying the mid- to long-term outlook is positive, but if anyone tried to trade in the last week or so they would have been stopped out by the enormous whipsaws up and down.

Buy and hold, if you have a perma-bullish outlook?  (Or even just if you understand the nature of capitalism and stock markets with their permanent REQUIREMENT for continuous growth to survive)

As per Daniel Kahneman in 'Thinking Fast/Slow', stop looking at charts every day and only readjust your 'portfolio' every few months?

Stop getting whipsawed by this 'volatility' that 'day traders' talk about, but for most people just results in being stopped out?

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9 hours ago, dmedin said:

Barely even a correction ...

Fibs, Pivots, candles ... none of the tools of TA can help to trade this.  It just has a mind of its own.

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good grief, it's like watching Stevie Wonder in a orienteering competition. 

There is a post from someone without any kind of a plan at all. I might have mentioned this before but without a plan you are adrift on a raft hoping to bump into land. Without a plan you are looking for everything and seeing nothing. With a plan you have focus, direction and a map to guide you. 

More about plans later, lets look at these useless tools you mention. First though consider the traps of technical analysis, it is a mistake to turn TA into a vanity project, more is not better, layering on TA causes confusion not clarity. Secondly it's a mistake to dress up TA and use it to add weight to your over riding bias, bias is like a blanket draped over your head, it makes you look ridiculous and you can see much clearer without it. Thirdly people expect too much from TA, TA is like a charade that is trying to point to possible futures based on recent history but most of the hand jiving is total nonsense, stick to first principles.

So let's get Stevie to take a look at your chart, Stevie says look at those 3 near touches and rejection of the 50 MA. Price rejection at a line in the sand. That is as much as you can ask of TA and it's enough. What about the 2 bounces off the 60% Fib Stevie says, I personally think Fib draws too many lines but there it is. Stevie's asking why have you got these indicators and not even looking at them. The answer to that is that you're really waiting for the market to send you a postcard telling you where it's going be next week. 

In actual fact it is trying to do that, when the market is occupied in a two way auction price is basically standing still (time moves the chart sideways), once that auction process is over price MUST go either up or down but you can't know in advance when or which way, bias, opinions and predictions are pointless. Guessing won't cut it. Your job is recognise where the market is in the cycle and to wait and catch the breakout, or if you miss that then try to catch the first pullback of price on route to the next auction level. And you are never even  going to be sure where might be but there should be some prime candidates based on previous price action (old support and resistance levels). So some multi time frame analysis and a few indicators to draw lines in the sand, great, now about that plan.

I started the Trade Planning and Testing threat because I got so bored watching souls wandering lost in the desert, no map, no compass. To my surprise the ones who needed it most were the ones who couldn't be bothered reading it let alone do it so here is the concise version for the especially lazy.

You need to build a simple rules based system that fits you and has a verifiable positive expectancy. Decide on your market, time frame, market conditions  trending or a ranging, % of account risk per trade, and bolt on a risk/reward (stop loss amount/profit amount) of 1:2 R/R for testing purposes.

Your system will need a basic premise eg 'dip buying in an uptrend'. You will need an indicator to signal entry and most importantly an indicator that filters out more losing trades than winning ones (think about that). You do not need to catch all the trades, or the best trades, or the longest running ones, in fact the more trades you don't take the better off you are likely to be.

Eyeball backtest your simple strategy over 20 trades, you need a 'win rate %' vs 'risk/reward ratio' that plots above the red line on the graph to be profitable, for 1:2 R/R (2R), that's a win rate of 35% or higher.

The above won't take you very long to do but you may need many attempts before finding a system that survives backtesting, but so what, it hasn't cost you any money, just time.

After backtesting comes forward testing on demo and if it survives that then test on a live account with  smallest position size your broker will allow.

So get planning and good luck (though you won't need it if you have a good plan) 

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18 minutes ago, dmedin said:

Dax and Dow are taking a huge dump, but U.S. Tech 100 isn't.  What to make of this divergence? 

Not really that divergent, both were held up by support at the daily pivot, Dow more so and required extra effort on the part of the bears to push through which carried them a bit further.

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Edited by Caseynotes
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1 minute ago, dmedin said:

The day chart is more significant

you really need a min of 2 time frames the daily being one and perhaps the hourly to align trends. Weekly and monthly charts are of an interest but more of concern to hedge fund managers.

Also worth looking at a lower time frame chart that has noise reduction such as an HA 1 hour.

Look for a doji that tends to signal a directional change, bar colour change and tight MA direction change for confluence.

 

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7 minutes ago, dmedin said:

Why would anyone want to open a new long position at this moment in time?

yes if you were trading a H4 chart but within that chart on the lower time frames are loads of opportunities to jump in with a 20 point target bracket order.

So range play or against main trend have a profit target but when running with the longer time frame trend leave the target open and trail the stop instead.

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5 hours ago, dmedin said:

 

Not denying the mid- to long-term outlook is positive, but if anyone tried to trade in the last week or so they would have been stopped out by the enormous whipsaws up and down.

Buy and hold, if you have a perma-bullish outlook?  (Or even just if you understand the nature of capitalism and stock markets with their permanent REQUIREMENT for continuous growth to survive)

As per Daniel Kahneman in 'Thinking Fast/Slow', stop looking at charts every day and only readjust your 'portfolio' every few months?

Stop getting whipsawed by this 'volatility' that 'day traders' talk about, but for most people just results in being stopped out?

Besides over analyis due to TA, I think one of the least talked about criteria to successful trading is account size. The mainstream narrative is always promoting "huge gains is within reach even with little money to start". This is quite understandable given new retail investors are constantly needed for slaughter to fund the commission stream for brokerages.

 

A realistic starting amount should be a minimum low 5 figures. I can see many newcomers will be deterred to open accounts if the are told to start with a 25-30k minimum to have a chance of winning. Ever heard the 90/90/90 rule? It happens for a reason. And initial capital plays a key role.

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The start of the bear run.  Apple now getting crunched.  High volume selling.  You bulls need to go on holiday for a month....Test of SP 3000 highly likely...

Key was ...Which worked like a charm....Key day reversal on SP 500 last Friday 24 January.  fractional new high and close below the previous day's low. 

I do nt believe this is the end of the world....but it will be a correction that tbh the market needs.  

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51 minutes ago, cheviot said:

You bulls need to go on holiday for a month

A down turn could well run for a month as the graphs I been posting here since Monday on previous pandemics show clearly but will depend on progression. The affects on the economy are as much to do with prevention measures to prevent the spread of the virus as the virus itself, if infection rates continue as other pandemics then similar affects to the global economy will be seen as per previous infections, this is the reason for the recent market correction. Yesterday saw a sharp drop on rumours the first cases had been detected in the US as well as confirmed cases throughout western Europe. If the virus threat can be contained then there could just as easily be a quick return to previous market levels as to any further downturn. 

https://markets.businessinsider.com/news/stocks/dow-dives-coronavirus-sparks-slowdown-fears-stock-market-indexes-airlines-2020-1-1028864285

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20 hours ago, Caseynotes said:

here you go @dmedin, a short vid on how to scalp on the daily chart, just for you 😁

 

 

Seems to have gone?  I still don't use Twitter.  Just realized that the first time I saw someone using Facebook was 12 years ago and I still don't use it.  I'm getting old and useless.

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    • Yep - If the major cycle working out since 2016 repeats as its done for the past 225 years then the USA Indices are UP, UP,UP until the mid 2030's - corrections will be nothing like 2000-2009 corrections  Although chart is up to date - I wrote the below pre 2015 (can't remember exactly when) - as an absolute min I'd expect 22-25,000 for the SP500 to end on in 2034
    • Have to say Casey, your contributions on the on going Covid story (monumental ballsup) have been a tonic. Was sceptical for sometime but am more sympathetic to your premise regarding the pandemic and the reaction to it. Vaccines are such good PR, it is a shame that the general population are being used as guinea pigs for DNA altering drugs with as yet unknown and potentially damaging long-term consequences and side effects. Doubly bazarre,the governments of the planet are prepared to take the risk in the name of exigency. AZ is particularly dirty and incomplete, if not down right dangerous as to be considered a lethal weapon to some of the unfortunates unlucky enough to experience the more unpleasant side effects of being injected with it. Such is political expediency and exigency at the altar of public health. Forgive the unPC comments, but they are borne from experience, as my wife has had long-term reactions to the "cure". Most folk don't want to hear anything but the popular narrative, even if it vere's heartily away from some inconvenient truths. So thank you Casey keep up the good work, it's appreciated.
    • Don't think the bull run has ended, just a correction is very much on the cards. Timing of which suggests we have some room to manoeuvre but would not be surprised at all if the market tops out within the next couple of weeks, or anytime around 21/06....Suggest it is more a profit taking exercise than genuine full scale correction, which could/should be later in the year. Only mentioned this as markets have been red hot for months and swimming in liquidity, sooner or later some of that will be taken out in the form of profit taking. Suggest it may be a 10% er or even more. In the past have purchased  ETFs that short the market and like to buy the Vix at less than 20, as it's a fair form of insurance (Imho). Psychologically, the oil markets have a problem with WTI being over the $75, which at current rates of progress is due to top out sooner than later. Just mentioning it. 
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