Archive for February, 2011

Wave Patterns — Dump-bump-dump, A, B, C downwaves

Posted on Feb 28, 2011 by .

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The first pattern, on the left, derives from observations by ourselves.  That is, in an uptrend a downwave, often violent and quick creates a  downwave (dump, or sell-off)   which is arrested by buyers looking for bargains causing the bump.  They are shortly punished  for buying a downwave by another dump.  The wavelet plays itself out and cannier traders jump on the issue and create a power bar up and a surge (seen as the dotted line is crossed).  This pattern often furnishes us with an opportunity to re-enter a trend we exited (for whatever reason).  This pattern seems to be fractal and operate on large and small scales.  The trade can be signaled by the penetration of the dotted line and/or by the making of a new high.  The bottom of the wavelet down furnishes a good Basing Point (but with a tighter filter than a full trend filter).  Ironically buying when a new high is made is probably more conservative — although many many investor/traders shy away from buying new highs.

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The Peggy Lee Pattern…

Posted on Feb 26, 2011 by .

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Gray-bearded traders will remember (if they haven’t been overtaken Alzheimer’s) Peggy Lee and her disillusioned song, Is That All There Is?  Which sort of encapsulates our reaction to the 4 day wavelet we (perhaps) saw end Friday.  Is that it?  Where is the double dip, the purging of the wicked and the return of fire and brimstone?  The lack of follow-through makes us think that that’s all there is.  On the other hand, paranoia is often one of the valued characteristics of an investor/trader.  In general we are probably much more inclined to take trades in apparently risky situations because we determine how much to risk and are always willing to terminate a trade when that point is hit.  The  favorable thing about the downwavelet is that the talking heads can now stop harping about the 60 day wave.  We can start a new one.  Which we expect.

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Buying opportunities? F, GM, C. Maybe not yet, but soon….

Posted on Feb 24, 2011 by .

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F, GM and C — among others look oversold.  Of course they can go from being oversold to being really really oversold, but we bought a little of GM and F (always loved cars), and readers should start thinking in terms of buying and adding on.  NOT TODAY.  Wait for prices to start up again first.  Our buys are in line with our style — motorcycle riding, bungee jumping rapid running, bull running — you know that never satisfied with risking our neck we have to risk our capital too.  And we will have a tight stop on them. F right here is sitting on the support line.

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Waves and whirlpools and rapids. INDU power bars.

Posted on Feb 23, 2011 by .

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This is not quite as extreme as it seems.  It’s an hourly chart, but it dramatizes the last two trading days.  Extreme power bars — daily moves of more than 1%.  Those look like trading signals to us.  Remember, trading signals, not investing or trend following signals.  Don’t come with crocodile tears if you change your method back and forth based on a day or so’s action.  And remember.  Trenders win.  While traders kill each other to get the last chair when the music stops, trenders watch with amusement and scorn.

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