Survival of the Unbiased
by Dominick A.K.A. "spwaver", TradingTheCharts.com | April 28, 2008Print
I'm sure a few heads were turned when I first posted the chart above, which suggests the S&P could rally to 1430 before finally deciding whether this is a bull or bear market. What makes this chart great is it underscores the nature of unbiased trading: no matter what your personal convictions are, or your interpretation of economic data, the market has not decided bull or bear and neither has the unbiased trader.
In demonstrating how TTC plans its trades from charts, not bias, last weekend�s update showed how news from the G7 actually suggested another high in the euro by forming an ending diagonal pattern, shown above in a chart posted last Monday. For most, however, the news suggested to sell euros, but those who shorted the initial decline had to take a lot of pain as the rally into our expected high unfolded in textbook fashion. By the end of the week, the chart looked like this:
Recent updates have also emphasized our proprietary pivot numbers, which we use to gauge price action and market direction. Several of these are shown in the chart below overlaid on the S&P futures to show the market's recognition of these levels.
Regular readers will recall that 1360 has worked as a sort of on/off switch for short term bullish or bearish outlooks. With resistance holding ten points above that level, it was easy for us to expect further upside and devise the following chart:
Last week�s update mentioned specific patterns reserved for members only, and the S&P chart above shows one of those patterns. Notice the suggestion of a diagonal to close the week leading to the Fed meeting, and the guidelines showing when the pattern would be invalidated. After this chart was posted, the ES did in fact trade down to the low 1380s and then, as you know, rallied to close the week near 1400. Attentive members captured 20 points in a single afternoon on this single trade in this single market.
Copyright © 2008 Dominick A.K.A. "spwaver"
Disclaimer: Market analysts are always welcome to contribute to the Forum or
newsletter. Email me @ Dominick@tradingthecharts.com if you have any interest.
Ideas from this update are provided as general information and are not investment recommendations. TTC accepts no liability whatsoever for any losses resulting from action you may take based on the contents of its charts, commentaries, or price data. Each person must do his or her own research to determine the appropriateness of taking a position in any financial or commodity market. If you are uncertain, please check with your licensed financial advisor or broker prior to taking any action. Securities and commodities markets inherently involve risk.