Caseynotes

Dow in a bit of a flash crash and drops 150 points after dropping through 26241, may find support here at 26100.

Here is the Dax SSI chart from the post above moved on 1 week and highlights the precision that longs bailed having been buying the whole week from the 20/03 all the way down to the bottom at 11400ish. And that's where the sellers stepped in to start selling all the way back up to 12000. err. Standing back the overall chart is undoubtedly bullish and really retail traders should have only been looking for dips to buy, that's it. A fair majority of those 74% holding shorts must now be well underwater and hoping for a miracle. Institutional traders are looking at this, if they want those short contracts for themselves they may well try a stop run and then buy them all up, if they want long contracts instead then they are just going to run the stops over anyway.

I did see that go through but I've no idea if it would impact on price or not.

Not much on the calendar again today, markets still in wait mode. Time again for the 'this is the top' chart for all those who have been waiting so patiently for over 3 years for a bear market.

CryptoCred has updated and re-organised his free trading study guide (linked page 2 of this thread), here is the new link; https://docs.google.com/document/d/15c3rN15rkXldY8Te3GDG4NG7noaaoikydOoZQlElwXw/preview?pru=AAABaf3_sQE*PXVDTaKtvm5VtQcvpBug2w

Oil cruises up through the possible resistance level mentioned in the OP this morning with help from Trump who will now need to talk it down again 😂

On the US open Dow tests 26241 (red) for support which was resistance back in early Fed as well as the beginning of this month. Ftse and Dax keeping in touch with recent highs, they just needs Dow to kick up. H4 charts;

"OPEC and its partners are unlikely to decide on their output policy in April as it would be too early to get a clear picture of the impact of their supply cuts on the market by then, three OPEC sources said on Monday. The sources said the production policy by the so-called OPEC+ alliance is expected to be agreed on in June with an extension of the pact the likely scenario so far, but much depends on the extent of U.S. sanctions on both OPEC members Iran and Venezuela. “So far the likely decision is to extend the agreement in June. Nothing much is planned for April, just to discuss the OPEC and non-OPEC (cooperation pact),” one OPEC source ... (full story)

While the daily chart still presents as very bullish it's coming up to a long term support level which may turn into resistance. Big OPEC meeting Thursday so may see sideways movement til then.

Dax and Ftse putting in bullish engulfing bars on the European open 1 hour chart.

Minimal movement over the weekend, just sitting watching those highs. Not much on the calendar til Wednesday when there is the ECB rate decision and mon pol statement and in the evening the Fed minutes from the last meeting. Daily charts;

Interesting times, Dow and S&P fast approaching all time highs but also entering into triple top territory. The crowd are all sitting on shorts so the contrarian is obviously looking hard at going long. A US/China deal could be immanent (as it has been for the last 6 months, meh) and then there is the inverted yield curve *bites nails*. But here's an interesting chart, ISABELNET @ISABELNET_SA "Historically, a recession begins when the real Fed Funds rate exceeds GDP growth. We are far from that right now. So, this cycle should not end any time soon." This would make sense as high US GDP and low CPI is not recession territory, the opposite in fact. As ever when looking for a longer term trade price approaching boundaries is not the time to jump in, the time to jump in is when price is leaving the boundary, whichever direction that might be.

Quite right @TrendFollower, for retail traders the higher time frames should be a filter, if you are going to run against them it can only be for a short distance and you had better be constantly looking over your shoulder. So if you are intending to be in a trade for more than a day it's pointless trying to short a high in a uptrend or go long on a low in a downtrend and yet that is what started the downfall in every one of the examples above. It seems to be a lesson never learnt, it's always 'this time will be different' and it nearly always never is. If retail could stop that one bad habit it would make a massive impact on the '80% of retail traders lose money' statistic. That was the main reason I brought up the SSI data. Yes the SSI data can sometimes be used as a contrarian signal, that if (as now) 75% of retail are short the major US indices then maybe long is the way to go but sometimes the crowd is right and so like any signal it needs to be considered against other data. More importantly though is that the SSI data shows exactly when the crowd choose to go long or short and comparing that to the chart you can see exactly what's going wrong. They are repeatedly mistaking pullbacks for tops/bottoms. Pullbacks are a natural component of a trend but retail traders, because of a lack of experience, tend to cover their chart in lines and indicators so that every price twitch is going to trigger something and the move takes on unwarranted significance. As has been demonstrated in the posts above, retail are constantly getting caught out and trapped trying to call the top, then digging deeper instead of just getting out, and finally being forced out with large losses. A chart can be read but a market can't be known, no one really knows what's going to happen tomorrow. The best course of action is to expect continuation until the chart demonstrates that a change has occurred and then look to decide what it's changed into, if it's a new trend climb aboard at the next pullback.

A look at recent Dax. Always take your lead off the daily, it's clearly uptrending so you are only looking for opportunities to go long if you are not trading intraday. On 22nd Mar price broke down past the recent low and the SSI tells us retail started shorting (A), bad move. Don't drill down time frames looking for indications to short because you will always find many, it doesn't matter what your indicators say when the daily is still in uptrend, wait first for the daily to signal trend change by not only putting in a lower low but a lower high as well, then you can look to the lower time frames. Indicators only indicate possibilities, stamped candles are reality. To rub salt into their self inflicted wound retail continued to run shorts all the way up (B) until they finally puked at C. It's the same story over and over, trying to pick tops and bottoms, doubling down, holding losers. Don't bother with bias, you can always find something on the chart or an indicator to support it no matter how wrong it is. Just read the chart and let it tell it's own story.

@andysinclair, you've cracked it, well done.

Aha you may be thinking, but that's just dumb indices retail traders, FX retail traders know their stuff. Take a look at usdjpy. The absolute precision in which long traders who were buying all the way down bailed (at the very bottom), and where short traders started selling (at the very bottom). That's not pure luck. To buy high and sell low with such precision must take as much work as doing it the right way around. This SSI chart is using US time zone. See how it looks in GB time in the 2nd pic/

1 - Doubling Down. 2 - Holding Losers. 3. - Trying to Pick Tops and Bottoms. I started discussing the SSI and COT data in the Indices thread but I want to encapsulate and collect the basic points together to show the main reasons why retail traders fail. Using the Dow as an example, so retail traders went net short starting 2nd Jan (pic 1) which coincided with the rally failure in the recent down trend, fine (pic 2). But the pullback reversal itself failed on the 8th Jan, the bears had had their chance and blown it, time to get out of those shorts right, the chart had turned bullish. But the % net shorts kept increasing all through Jan and stayed net short 75% - 80% all through Feb while price was storming up the chart. Then holding on to losing trades all through the March consolidation. Retail had got it wrong so initially doubled down and then hung on to the losers. Look at the 3rd pic which shows the COT data for the same period. Small speculators went net short 2nd Jan same as above. Large speculators on the other hand had been reducing their net longs but come the start of Fed were confident enough to set about increasing their long exposure again. Back to the top chart again. The consolidation through March and maybe those losing trades would come good right? That's desperation tactics not a planed strategy. But look again, in the last week there has been a price run up to test the recent high, what does that mean for retail, why it's another opportunity to go short again of course, I mean it must be the top this time right? 80% of retail traders lose money for a reason (or 3). It used to be said that 90% of retail traders lose 90% of their account within 90 days. The SSI graph show exactly how this is remarkable accomplishment is achieved by so many.

The indices got a boost overnight from China president Xi reporting the trade talks are going well (he does't usually comment). US NFP today 1:30 and the word on the street is it could be a big number after last months dismal 20k which was due to a freezing Feb. The mid-week ADP was 129k and the forecast for today is 172k. Presenting a guest appearance in the charts today, the AUS 200. Daily charts and all, except the AUS, are itching to go higher.

That's interesting and worth knowing, I wonder how often that situation occurs, presumably more likely on less traded assets.

Dax backs down after topping yesterday's high, Dow trying to rise after a slow start and special guest index AUS200 hovers around it's daily chart support level. H1 charts;

Dax really wants to push higher but being held back by Dow. 1 min Dax with 1 min Dow (Dow 100 ema only), once the Dow ema heads upward Dax should be away.

Was just comparing the SSI data from FXCM with the COT and the Dow daily chart. Both the FXCM and COT confer that small speculators and retail (sameish) decided that the week starting 2nd of Jan was the time to go short on the Dow and have been flogging that horse ever since. Large speculators were reducing there long exposure through Jan but started piling back in increasing long exposure again from the start of Feb, but not retail, oh no, they knew better. Gulp.

Interesting survey results from Bloomburg on interest rate expectations up to Q4 2020. A/ not much change. https://www.bloomberg.com/news/articles/2019-04-04/central-bankers-are-hitting-the-pause-button

Dax made the running yesterday while the others keep in touch with recent highs. After the good news on the trade talks the inevitable downer that one major sticking point was China's insistence that all tariffs be removed before signing. Some initial sell off in Dax on the European open this morning but with all 4 posting green daily candles yesterday starting today anticipating continuation. H4 charts with S&P daily.

ADP nfp a miss at only 129k