Slope Of Hope with Tim Knight

Speaking of Meditation......

There Goes the Neighborhood

To newcomers - - please note that it's imprudent to bother clicking on a URL from anyone that doesn't have an avatar. By and large, legitimate posters have avatars, and nitwits like Ned don't.

As an aside, I will mention that the OIH pushed near to the $166 level that I was hoping for in order to get some good re-entries, and those have been done. There are many splendid retracements ou there in the world of energy and metals.

Above is just one good example.

Thanks again, everyone, for the marvelous responses to my "psychology" post from this morning; I am always in awe of the incredible group we've got here. Huzzah, Slopers!

Man on Wire

I saw this movie last night; it was totally engrossing (and quite relevant to trading!)

Remains of the Day

This isn't a psychology blog, but psychology is a very important part of trading (it could be argued that it is the entire basis of trading, and the various analytical approaches are simply attempts to decode the psyche of the human participants).

One interesting phenemenon that I'm facing with myself is how to handle trading on a day which follows a day that went poorly. And when I say "poorly", I'm not necessarily talking about a loss (although that's part of it). I am really referring to a day when things just seemed to go wrong. In the three days prior, I felt like the Rudolf Nureyev of trading; on Thursday, I felt like the Fred Flintstone. Everything seemed to go wrong, and I felt really clumsy.

So one can make up "wrong in the head." I've been very concerned all night about what today would be like, and if the market would spike higher. Quite obviously, based on the latest economic numbers, the market will gap lower, so the easy mindset to have is something like this: "Yesterday was awful, and the market reversed way higher, and that felt bad. I am going to avoid that. Today I'm going to sell the puts I've got for a quick profit and avoid having that pain again."

That's very close to where my head is at, but the intellectual side of me knows that it is wrong, because that isn't technical analysis; it's simply an emotional reaction. So what would happen if a person bailed left and right on index positions, made a profit, and then watched the Dow go down 500 points? Then you're really off your game! (And in such a poor mindset, one would probably gobble up index puts at a much higher price and at the worst possible time!)

It would be interesting to hear in the comments section what people do to center themselves and clear their heads before the trading day.

Brutal!

For a bear, nothing feels better than a day that starts off strong but gets weaker through the entire day, only to completely collapse at the end. Tuesday was a lot like that.

Today was the total opposite. All through the night, the GLOBEX had been very negative, and after the employment figures came out, the S&P was down something like 20 points. The market opened down hard, and it spent most of the day fighting its way higher. Near the end, the climb become frantic, and the Dow wound up over 300 points higher than it had opened. Yuck!

I felt extra bad because I had carefully looked at the OIH and decided it looked pretty bullish. I bought a bunch of it early on, but I sold those calls later in the day for a good profit, declaring that I had lost faith in the longer-term prospects (I had targeted 170 at a level I thought the OIH could reach in the coming days/weeks). Anyway, the OIH also lurched higher, and frankly now it looks more bullish than ever! So it was doubly disappointing.

It also isn't lost on me that the SLIX indicator (that is, the traffic on this blog) spiked dramatically on Monday, and this is often a sign of a major reversal. Shame on me to ignore SLIX, which is something you'd figure I'd be pretty close to respecting! If tomorrow is going to be a big "up" day, I'll be kicking myself even more for not simply going totally into cash on Tuesday, which would be the SLIX-appropriate thing to do.

In spite of Lehman Brothers being at death's door, the $XBD looks like it may have bottomed on July 15th and might be ready to head higher; look at the similar patterns I've tinted below (added to which we didn't come anywhere near the prior low).

The candlestick pattern on the ETFs is horrifying. Look at the gargantuan bullish engulfing pattern on the DIA.

The same is try of the IWM (and so many others). This is particularly exasperating since the IWM (and SPY) broke beneath the lows set on September 5th. Indeed, early this morning, it seemed like we would have another sensational multi-hundred-point down day on the Dow.

The extremely oversold NASDAQ is sporting the same bullish engulfing patterns. I absolutely don't think today broke the bear's back, but a sizeable rally could be in the cards before we resume the downtrend. This is what I'm really concerned about.

A slightly less scary chart is the minute bar for the Russell 2000, which plainly shows that resistance (represented by the horizontal Retracement line) is still intact.

All this week, I've been pointing out the bullish potential of gold and energy. The OIH finally caught a bit of fire today, and gold seems to have firmed up on its fan line. I have a handful of bullish positions in gold, and a rally here could push the $XAU back to the mid 130s.

The graph on OIH looks as compelling as it did back in January 2008. I'm angry with myself for not letting the profits on my OIH calls run. This could be a very meaningful move higher.

It's pretty obvious I'm not feeling as jolly as I was in recent days! It was a rough day overall, including the terrible technical difficulties this morning. I can only hope tomorrow is a better day all around.

Shorting Russell, Ags

I think the $RUT remains the best bet in terms of an index short. In addition, although I made some quick profits on my OIH long from this morning, I do not have faith in this after all. Looking at a lot of the ag. stocks, the patterns are simply too bearish to believe that the whole energy/ag sector is headed into new strength.

I have taken advantage of these observations by purchasing puts in the items I felt had most cleanly retraced. I still have a smattering of calls in mostly gold-related issues, but to be honest I'm not crazy about them, and I've set the stops in there to do their work.

I've got a series of meetings this afternoon, so I won't be doing a post until later tonight; thanks!

America Movil

OK, all technical matters are functioning again (gritting teeth............) Here's a new idea for your consideration - America Movil, symbol AMX, with a stop at 47.09

Totally Off Kilter

This morning I feel like a world famous race car driver sitting behind a Yugo. Technical difficulties are completely blocking my ability to trade, and today of all days requires finesse and access. Jesus! Infuriating.

I can at least say that OIH is finally starting to behave itself; I got into a big long position this morning and it's doing well.

I am just all afluster this morning, and it doesn't feel good at all.

Gap Filled

Because a certain broker that I shan't name (although its 3rd and 4th syllables rhyme with "TradingDistress") can't seem to get their technical act together, it's been a rather perturbing morning. In any event, let's hope the filled gap on IWM and SPY is all the bulls can muster.

Shoe--->Other Foot

It dawned on me this morning that now I know what it feels like to be a bull.

And, no, I don't mean unattractive, simple-minded, and clueless. I mean I know what it feels like to be in control of a market.

When I was "fighting the bull" (market, that is), it was incredibly frustrating. I felt my analysis was sound, my trading was prudent - - and yet I kept getting smacked. I felt a lot of anger and resentment. I hated the market.

That must be what the bulls feel like now. Because now I'm totally at peace with the markets. And I am not feeling the "flip side" of the ugly feelings above (that is, boastful, vengeful, etc.........not even vindicated!) So now I know what it feels like to really be on top of a market and feel confident about what it's going to do next.

The strangest thing of all is how easily I am able to take losses. I can drop $30,000 in portfolio value in a single day and not be the least bit upset about it. Is it because I don't like money anymore? No; it's simply because I know I'm going to make twice as much back the next day (or thereabouts). So I don't get rattled by "losses", because I know the setback is extremely temporary (such as when I was down $30k on Monday and made three times that much the very next day).

The real trick, of course, is to be able to transmogrify into a bull whenever the market truly does turn. Because I don't want to spend the rest of my life being happy with the markets only on those rare occasions when we truly are in bear mode!

Just for the hell of it, here's the LEH chart.