Slope Of Hope with Tim Knight

Outliers

I read as much as I can (which isn't as much as I'd like), and one breezy read I had a couple of weeks ago was the hot-selling Outliers book by Malcolm Gladwell.

One of the chapters in the book is devoted to what he calls "The 10,000 Hour Rule", which, simply stated, postulates that for any person to achieve mastery in anything (be it music, ballet, writing.........or trading!) requires about 10,000 hours of practice.

That actually sort of jibes with my own experience. I only got really profitable as a trader a couple of years ago, and - surprise, surprise - I had by that time about 10,000 hours of experience charting. That's a very long time (I've been at this since 1987). Some might point out that plenty of people with no experience made plenty of money during the 80s and 90s. I think that's where the phrase "don't confuse brains with a bull market" comes from, becaise I imagine most of those folks have been net losers recently.

The goal, of course, is to achieve profitability in any market, irrespective of conditions. Not every day is easy, of course - - last week was a rough ride! - - but I hope I can continue to prove myself out through these hills and valleys.

Anyway, the book's a good read; you might want to pick it up. Only after you finish mine, though.

Why are Gold and EUR Diverging?

I'd be interested in knowing the group's opinion about the graph below. It used to be, I think, that gold and the EUR/USD moved in lockstep. Over the past month or more, these two have gone their separate ways. I'm confused, because looking at gold, I want to short it (and I have), but looked at the EUR/USD, I am bullish. This seems contradictory. Opinions?

Some Long-Term Perspective

I'll probably do a post this weekend, but I'll just say this quick tidbit for right now: as we, day to day, focus on every little tick, every little one cent move, and every little squiggle, let's not lose sight of this fact - - nothing even resembling a base has even started to form, and to my mind, the ultimate bottom is still years away.

I use my weekends to try to get organized and clear my head, and I could definitely use it after a week like this. Even though it was just four days long, it was a tumultuous four days! I'll see you here later.........

Spotlight Half Hour After Close

For those interested, I'll be hosting a Spotlight Session on TOS (I think with Tom..........) at 4:30 EST (half hour after the close). This will be my final post for a while, so I'll leave you with a final chunk of Put option ideas with stop prices.

ABC 38.47
ABX 40
AEM 67.39
ARE 66.58
AU 28.49
DRI 29.55
GILD 52.35
GWW 77.07
HRS 43.44
LLL 80.42
LMT 85.99
MHS 44.90
MIL 55.99
NBL 56.82
NEM 45.83
RGLD 49.81
SQNM 29.14
STRA 239.99
XTO 41.90

The Energies/Commodities Finally Kick In

I've been harping about this long enough. It's about time.

A Few Long Shots

 

My IRA account (which is full of high-risk, battered-down stocks - - all of them long positions) was doing well even earlier today when the market was down hard. Heartened by this, I have added this new positions with the corresponding stop prices:

BID 7.47
DDS 3.04
DYN 1.84
EK 6.14
FLEX 2.19
GFIG 2.60
HLF 18.27
KLAC 17.15
LSE 1.58
MRVL 5.65
OME 3.91
PL 8.38
RAME .76
SLM 7.89
STEI 2.78
WFMI 10.75

Downslope

Never overestimate the intelligence of the public.

I was just in my car, listening to the radio, and they were discussing California's budget crisis. Among the entities hit is the Cal State system, and they interviewed a senior at Cal State Hayward about the budget cuts. I'm paraphrasing here, but she said something along these lines: "It's important everyone have an opportunity to go to college. These days, you need a Master's degree to get any job. Plus all the baby boomers are coming. There are a jillion and two of them, and they need a place to go."

If I could respond to this young woman, I would point out a couple of things:

1. It doesn't take a Master's degree to get a job; indeed, the only jobs that are surviving this economy are the kinds of jobs that high school graduates (or not) can get. Those with higher education degrees are probably having a tougher time finding the high-paying jobs they believe they deserve than those who want to flip burgers;
2. Errr, the "baby boomers" aren't coming. They've come. And gone. It indicates an appalling ignorance of, well, just about anything to believe that the baby boomers are just about to enter college. The woman who believes this is, by the way, going to have her college degree in June.

Anyway, enough of that. The /ES has been rough-and-tumble today; I covered at 805 but re-entered at 823, and I'm hoping for a real tumble by the close.

Not So Smart

If the US is trying to figure out how to finish itself off, there's nothing much more effective than infuriating one of its largest creditors. I imagine that, before this year is over, China is going to financially flip out at us. That'll do the trick.

Guideposts

Well, I'm in better spirits this morning than yesterday morning. I shorted 40 /ES yesterday evening at about 825, and we're down 21 points from there. Plus, having read the latest Short Term Update from Elliott Wave International, I think there's finally a general direction now that makes sense (chart used with permission):

Their assertion, as you can see, is that we're in the following:

1. A drop down to near, but not as far as, the November lows (on the S&P, that would be about another 50 points from here);
2. A short-lived rally, not to exceed 858.13;
3. A stronger plunge, cutting beneath the November lows

They go on to conjecture that we would finally be in a position for a robust, lengthy rally before the mother-of-all-plunges began.

If this outline is more or less true, this is of tremendous help to a trader like me, and say what you will about Elliott Wave (which I know some folks called the "Idiot Wave"), it has been instrumental in my own trading.

For the moment, I am positioned to take advantage of today's drop, and I've got stops at 812.50 on the /ES to lock in my profits, even if some strength does emerge.

Evening Signoff

I used to call these "comment cleaners", but since certain Blogs That Shall Not Be Named have pilfered my little phrase, I don't tend to use it anymore. Anyway, I'm all charted out. I'll see you here in the morning.