Hurst Cycles - 8/7/2011 - Backup from VFM

I was thinking for a long time about closing down this blog and restricting my posts to VFM only going forward due to various issues. But after thinking for a while and after seeing a good response to what I posting on VFM, I am bringing that here also. Basically taking a backup because VFM has got a notorious history of losing older posts. I think this is valuable stuff so I want to keep it here as well.

Will be posting actively from now on..both here and on VFM.

I think this is very valuable stuff..Please go through if you missed on VFM. And you can also see how I traded using cycles.

Best,
Lee

FROM VFM - Link : http://www.vfmdirect.com/forums/show.cgi?topicid=1312717195#1313194596
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Hurst Cycles - 8/7/2011

Posted by: princely.k.mathew on 07-AUG-2011 (11:39:55)

Hello All,
Several months back, I cam back to this forum and I was trying to post more actively, revive my blog again etc..but over time I have found that I have not been able to concentrate on my blog frequently enough..so I stopped posting there..Over here also, I havent been able to do much constructive..

But anyhow, I have made a decision not to update my blog going forward..But I will try to give a weekly or bi-weekly update here on a normal case and in case of some important low or high, I will try to post earlier on an adhoc basis..Need to see how it will work out.

Now, as I mentioned in another thread, I have been dabbling in Hurst cycles methodology for past several months..And I like what I see so far. This is an abstract kind of methodology and I find very very few people out there who can practice this successfully.

A writeup on who JM Hurst was and what he did : "In the late 1960's a small group of private investors in California rented time on a mainframe computer---the only kind that existed at that time---and asked an aerospace engineer, J.M. Hurst, to help them in their stock market research. The results of over 30,000 hours of computerized data analysis were distilled and revealed in Hurst's 1970 book, The Profit Magic of Stock Transaction Timing , which has become a classic work on cycle analysis.
In the early 1970's Hurst authored a full-length course on cyclical analysis and on how to apply it to actual trading. It was published by Cyclitech Services, and Hurst taught the principles of this course in a series of seminars for a year or two. The material in this course is considered by many to be the clearest and most thorough material ever made available for those interested in learning about cycles and how to trade profitably with them. There were only 250 copies of the course ever sold. It has been out of print for the past 25 years.
In the mid 1970'2, Hurst, an intensely private individual, disappeared and has not been heard from again. We have had many customers over the years who were tremendously interested in Hurst and his work and were extremely interested in contacting him. They wanted anything he had written or done beyond his The Profit Magic of Stock Transaction Timing , but until now, there has been nothing available. I had only heard about this course in rumor for years. Only recently did I actually locate a copy of it"

I finally managed to get a copy of the book..very damn expensive..and have been studying it for past few months..I have to say its been enlightening to say the least..

I have dabbled in elliot and classical TA but I have not anything like this capable of pinpointing cycles to this level..I mean major lows and tops only this one can do..And together in combination with other forms of TA, it forms a very powerful tool.

A little bit about it..Hurst said that cycles move in a nominal model with deviations..there is a 5 day cycle, 10 day, 20 day, 40, 10week, 20week, 40 week, 80 week and so on. There will be deviations and thats what we try to figure out using Hurst methods..There is so much of work involved in the background that it will be futile for me to try to explain here..I will however try to explain bit by bit in future posts...But for now it will suffice to say, that the Hurst Theory trys to identify major price lows and highs in time...Each of this low and high will have a certain degree based on the timeframe..80 week low, 40 week low etc.

Most people will remember from my posts in beginning of year when Nifty was around 6000 when I said we are going to get an important low toward end of this year..Oct end/Nov mid timeframe..We will fine tune when we get closer. This was based on Hurst methods and specifically the 80 week cycle. March 2009 was an 80 week low..so you can imagine the potential for a rally from end of year..we will see..



This is what I wrote last week -

For now, if you see the chart attached, the 40 week low was in Feb mid, we had a good bounce from there..then the 20 week low was in June mid..Another good rally from there..and now we are moving into the next 20, 40 and 80 week nest of lows toward end of Oct/Nov mid timeframe. Right now, a 10 week low is due in 3 week or so of August..So I also expect market to remain week till then and even after that, the bounce we get will be weak..Infact I see potential for 5200/5150 to be broken before that..I mean before we get a good bounce..Then again another big fall from Sept mid or so into Oct end/Nov mid..Before all this is over..
I hope I made some sense..Hurst is tough stuff..But I have been dabbling in this for some time now and I have to say, I am very happy using it..Its complex..so not for faint of heart..

Now in future posts, I will try to bring some more clarity to what I am trying to say...put up more info on longer and shorter cycles and so on..And what I expect going ahead..

I hope some people find this useful and I would appreciate comments and thoughts as always.

Best,
Lee


Posted by: princely.k.mathew on 07-AUG-2011 (12:00:54) [IP address: 197:253:94:----]




Ok now a look at the longer term cycles..see chart attached..the stacks of diamonds show major lows in the market..this is a weekly chart...so shows 80, 40, 20 week lows..And higher ones also like 4.5 year and 9 year lows..I dont pay too much attention to these but for me the 80 week cycle is very important..

As I mentioned earlier, the rows of diamonds or the semicircles indicate which cycle it is. The diamonds indicate the lows and on the extreme right you can see which low it represents..The semicircles help to visualize a bit more easier..Showing the rising and falling of each cycle...from the 9 yr down to the 10 week/80 day cycle.
You can see from my comments the important lows marked and the projection in time for the next important low. Complex spectral analysis is behind all this analysis..I will touch upon this more detail later.

Now shorter term, this is always more difficult to fine tune..but like I mentioned in my last post..We are close to another important low..I expect by 2nd week to 3rd week of August...This is the 10 week low from where we should get another pop up after which the decline should continue into another very very important low..the 80 week low around end of Oct or mid of Nov. This is what I have been saying since beginning of year and still reiterate the same..I will be looking to recommit long term fund around that time which I had exited earlier this year.

I hope I have been able to make some sense..Watch out for future posts. I will be focussing bit more on shorter term cycles in next post..probably tomorrow.

Comments are what will encourage me and make me go ahead..so I would always appreciate the same.

Best,
Lee

Posted by: princely.k.mathew on 08-AUG-2011 (08:43:29) [IP address: 197:253:94:----]

Hi Guys,
Thanks for your comments and interest...much appreciated!

Nikhil, from the other thread -
Yes complex..but maybe its for me alone since I just started couple of months back..Already I can see some differences in my approach and its a good thing so far. Account balance speaks!
And the good thing is over time, this might come also simple and natural to me..I hope so..Atleast I know a few Hurst Technicians doing a an awesome job out there consistently..It amazes me how they do that..

The difference b/w elliot and this is great..Elliot is too subjective..This is also subjective but there are some good guidelines to help us be on right side of trade..

I will try to post regularly on Hurst here..I hope it benefits folks.

I use this with some common sense, other market TA and its giving benefits..

Gera, you are right..Its very very useful for investor types..For traders, as you become experienced, you will be able to trade smaller cycles..And this is what a trader needs..However smaller cycles become tougher always..I find the 80, 40 and 20 week cycle best for trading or investing..Sometimes the 10 week and 5 week also work out..But need to be very careful when using these..

Lets try to figure this out together with live cases in real-time.

Now coming to the book, yes this is the first book that JM Hurst wrote..BUT I would caution against reading this because this was his initial work and later after long long years of research, he did a complete course for Hurst students..This is what I have bought and am studying now..This is what I said is expensive..comes to around 500$..

Link - http://www.traderspress.com/detail.php?PKey=99

Some history around JMH can be read there..

Hurst experts advised me not to read the first book but get the course and study that..So I will say the same also..But you cannot get the course online for 'free' anywhere..have to buy..it includes 10 audio cds and 2 extensive manuals..Once I study this fully, if anyone is really really interested, I can pass it on..but this takes time..Dont go for it unless you really are ready to spend some real effort.

One thing I'll say..this is one of the best market methods out there I have seen..But its difficult so most people give up on it..Here in US also there are very very few who use it successfully. I dont know of anyone in India who does..

I had thought of putting up a shorter term market cycles post today before market opens but its almost open..so later..let me focus on my open positions..I want to close all shorts today..I know my projected lows can still be a few days into future but there are few uncertainties here and I want to take my profits.

Later.

Best,
Lee


Posted by: princely.k.mathew on 09-AUG-2011 (09:32:43) [IP address: 197:253:94:----]
Well it looks like I was early in covering my shorts..hehe..but in a ultra fast market as this, I think I should be happy with the profits even though missed some..

And today's initial morning strength is surprising..I think we are seeing the initial signs of a cycle low forming..I am still confused about the degree..I thought it might be a 10 week one but I feel that is unlikely now..So that leaves the possibility that its a 5 week low..We will need more data to confirm what it is..Meaning few more trading days...Whatever it is,looks like it might give a decent bounce.

Trading this wont be easy..But keeping your size small and stops very close, you should do fine..

So if the low is coming in today or tomorrow, we should see a rally for the next 2 weeks or so..August last week/Sept first week next top?

Let me stress again - We are seeing unprecendented conditions in the market now;;; Take my comments with some salt;;; Do your on research before doing anything.

Bala, Nikhil, will definitely try to do more work on this here..Feel free to ask questions in the meantime..

Btw GANN is too much for me..I have only seen one person use GANN to some success and that he used to combine with HURST as well..SO..

I will try to come back with a chart later..maybe tomorrow when things clear up a bit more.

Best,
Lee

Posted by: princely.k.mathew on 10-AUG-2011 (21:18:23) [IP address: 10:219:161:----]
Ok so far, so good..we did get the low..what next? Well, most likely we are right now in a wave 4 from the top with wave 5 still pending..so what we are seeing right now and over the next few days/weeks will be multiswing action and very fast markets..better to stay out if you arent nimble enough..I went long the day we had the huge gapdown, covered yesterday and even started few shorts..After a retrace, we should have one more pop high lasting few more days..maybe more to complete this wave 4 after which wave 5 down should start..This will likely be a longer affair going down into the 20, 40 and 80 week lows I had mentioned before coming in toward Oct end to Nov mid timeframe..It can extend into December also so we will fine tune as we go along...

Best,
Lee


Posted by: princely.k.mathew on 12-AUG-2011 (09:58:18) [IP address: 197:253:94:----]

I was holding some longs awaiting one more burst higher but I am not happy with what I am seeing so I am dumping the longs and going small short..5230-5250 range has to be cleared for next upmove else downward pressure will be on..

Too tired to respond to other posts or to post chart..so seeya all on the weekend!

Best,
Lee

Posted by: princely.k.mathew on 13-AUG-2011 (00:16:36) [IP address: 10:219:161:----]

So short was the correct move after all.I should have added prices in above post to make sense..but never mind..Short from around 5160 for now..wait and watch what next week brings. My gut still thinks that there is one more small upmove left but the market seems to think otherwise so I will go with the market :)

Bala, not surprised with the correlation. The 80week or 1.5 year cycle is an important one..I will try to describe more below.

Ranga sir, thanks..I dont like to read much into so called experts views..And I mean those who come on TV and those who send out emails..Not unless I know who those folks are.

Anyhow..

So I have some time right now..Thought I will explain a bit more around cycles and how it works. Might be a little deep, so anyone not interested to understand more around how this works, please excuse.

First of all..around cycles - I have taken some excerpts from online to write this up..So..

Cycles are extremely important because they help us frame the market within the dimension of time.

The first thing we should do is ask what cycles are - cycles are the observable tendency of prices from go from top to bottom to top to bottom at regular intervals. The price index will move upward from one trough until it reaches a crest (top), then the price index arcs downward into the next trough, or cycle low, as we sometimes refer to it. We can see the evenly spaced bottoms on the price chart that give evidence of the existence of cycles, but what causes this to happen? What is the cyclical force behind the price movement?

A stock market chart is a picture of human emotions expressed in the form of price movement. Fundamental events don't directly move stock prices, it is the emotional reaction to those events that moves prices. In a much broader context there are recurring events in nature and in the business cycle that affect human emotions. In other words, natural and fundamental events do affect the market, but only through the filter of human emotions. This is why it is so difficult to design economic or market forecasting models based on fundamentals -- humans can react quite differently to the same fundamental circumstances at different times.




There are two 10-Week Cycles within one 20-Week Cycle, two 20-Week Cycles within one 9-Month(40week) Cycle, and 2 40 week cycles within and 80 week cycle(18 month cycle) and so on. Where cycles of different lengths make their lows at the same time, they are said to be "nesting". This is a very important concept..Because higher cycles tend to make the lows at the same time together, its called nesting..This is why LOWS are very important and easier to identify..But tops tend to be spread out - called topping formation. This is also the reason why if you are bearish on the market, shorting is very difficult and you need to be very nimble. See the attached diagram too see what I explained above about cycles..Also my earlier charts should help illustrate what I am explaining here.

The most compelling thing about this picture is the impression of power associated with major nesting points -- where all cycles are making lows at the same time at the 10-Week, 20-Week, 9-Month, 18-Month, and 4.5 Year Cycle lows. Visually we can sense that price declines into these major lows will be quite severe, while rallies off those lows will be explosive and powerful. Conversely, there other areas in the cycle structure where the cycle forces are mixed, with some cycles moving up while others are moving down, and it is hard to get a sense of exactly which direction a composite of these cycles would be pushing the market.

You will often hear reference to a cycle's "translation". This refers to the fact that cycles rarely crest in the exact center between troughs. More often they will crest to the right of center, called a "right translation" cycle, or to the left of center, called a "left translation" cycle.

In a bull market the market spends more time going up than down, so we will normally expect major cycles to crest toward the end of the cycle, with the crest being followed by the down phase of the cycle -- a right translation. (this is what we saw after March of 2009)

In a bear market we would expect to see left translation cycles with cycle patterns exactly the opposite of those in a bull market. (this is what we are seeing now)

Check the earlier uploaded charts for a more visual feel of what I have explained so far. Read read and read this again...These are fundamental concepts in cyclic analysis.

I will explain more later..this is just basics! :)

I will post charts with latest views either later today or early tomorrow.

Questions and comments are welcome.

Best,
Lee

Quick Update

Update - March 31st

Been meaning to post some charts for some time..Here are a couple with comments which show what I am seeing and my thought process here.






Careful out there!

Lee

30th March

I wanted to post some charts here..but dont have time to..

So..Bottom line is..yes very bullish..but I think trend is turning or might soon.

Book profits on longs and wait to see what will happen.

The TURN is coming...

OR else we go all DAMN bullish very soon.

Will post charts tomorrow.

Best.

Confusion

Will be very frank here..

Confusion reigns supreme.

Its anyones guess here what will happen.

5800 is the bull bear line as I said before.

I got out of longs today with decent gains.

Shorts..I am going to start building them today with stop of 5820.

Be cautious. If you are confused or not confident, pls dont do anything.

I will post some charts tomorrow which might clear some stuff...some more
views..more thoughts etc etc

Best

Week Ahead - 28/03/2011

In last update I mentioned above 5540 we can see a good rally and we did that above and beyond what I thought might happen.

There is no doubt - things are looking quite bullish now. I have tried to give some views in the charts below on possibilities. This week after an initial pop, we should see some pullback - Use that to exit shorts and try some longs. I got out of all shorts on Monday and took a bucketload of calls to cover the loss - I will close those today and wait to get some good long entries.

Longer term chart looks still bearish however I see potential of a change coming up.
Chart gives more idea. I will be moving focus to stocks going forward and wait to see what Nifty does.



Another look at the chart from far



Best of luck and trade safe. Do your own due diligence and do not follow anything written in this blog blindly.

Cheers.

Market - 25/03/2011

Quick update. Market at the cusp of the triangle today. Can go on upward to test 5600 today assuming we can sustain above 5540 area. 5600 is the higher end of the trading range - will it break out? A little bit of selloff is due for a reset soon because market participants are bullish now. However OI data is quite bullish and continues to suggest higher prices in the very short term.

More detailed analysis and charts over the weekend.

Best.

Market - 23/03/2011

Intra Thoughts

Interesting is all I can say. I am still bearish over medium term but short term is bullish no doubt. Lets see if we can test 5600-5650 levels. I am shorting at 50 point intervals for now. Scaling in. I dont think we will be able to sustain above 5610..but let us see if it will work out over time.

My current positions -

Short 1 lot at 5450
Short 1 more lot at 5500
Will short 1 more at 5550 and 5600 and then wait and watch.

Even though I say 'lots' above its a ratio of what I am doing. Meaning 1 lot can mean 10 also depending on the size if you know what I mean.

Let us see. I am a positional trader not an intraday one. Some folks seem to think I am over analysing and I can see what they are seeing from their perspective. Its all about timeframe. I mean an intraday trader cannot come here an make sense of what I am doing. That wont happen. My timeframe is 1 to 3 weeks. Remember that.

If it does not work out for you then please quit this blog. I will take a little bit of drawdown to make bigger gains. If you cannot stomach it then this is not for you.

Best.

Some Macro thoughts, Nifty shorter term and a look at a couple of stocks

Macro thoughts...Ofcourse this is only speculation. I think we are going to put in a very important low longer term toward end of this year - this will be a great opportunity for us in India to some some real good stock picking for longer term portfolios. I will be awaiting the next buy on my weekly chart. Shorting like I said before is always a game for the professional in my view. I feel retail guys should always be on the lookout for cash opportunities and focus on picking good stocks when there is doom and gloom in the markets.

I will show a great example in my next post on this and what I mean..What my plan is etc etc.

I think we are going to do a lot of volatile moves over next several months until we get a sustainable bottom.

Remember in 2009/2008, US market bottomed in March..We had our ultimate bottom in Oct and a secondary in March. What I mean to say is we are leading the US market by around 4-5 months. This time also we hit a top before them. Too early to say for sure if it was the ultimate top or not though I think it is for now.

Emerging markets are an excellent barometer for what the hot money is doing. And it does look like the 2009 March situation is playing in reverse. Just my take on this.

My very limited cycles knowledge also points toward an important low later this year. We will have to see how it works out over time.

At this moment I dont see any chance of 3500 on Nifty being breached. I think we might get to around 4200-3800 and stabilize over time.

Reposting my comment from earlier post here so ppl dont miss it -
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Stop losses are a real ART Yoda. I have kind of given up on them and instead am focusing on my signals.

Sujatha - tough question. For me this is where a bit of discretion comes in - mean to say more of feel kind of trading. Also simple supports and resistances.

I know the larger picture. Then I take a top down approach from there. For example 5650 broke, I was already building shorts from 5700 odd (gut feel) and when 5500 hit, I covered up, reshorted higher etc etc..I dont know - these kind of things just come my experience over time..And managing trades means I keep risk lower nowadays.

Leverage - I almost keep it at 100%..Mean to say if I have 5 lakhs - I will just short 2 lots = correct value more or less. To add 1 more lot, I need 2.5 more lakhs.

Trading hours big challenge - But I try to manage for a few hours. If I feel some important move will come, I will sit out the full trading day.

Thanks Bee..Read your mail also.

Thanks Prashant..

Ashish, you have asked a very difficult question. I will be completely honest here. Every trader will go bust several times in the stock market. No way out of it. I too have gone bust atleast 2 times. But I always made sure I dont lose more money than I can actually afford to lose.

I remember within first 2 yrs, I went bust once.

I studied lots and came back. Things went well for 3 years or so. Very extremely well for the next 1 year - got very overconfident and starting playing with huge amounts..started playing without SLs etc etc. Ofcourse I dont need to tell you what happened.

I have come to find that money management is the most important thing in trading. Understanding your risk and playing accordingly.

I would say right now, I play with less or NO leverage. Sure profits are smaller but need to keep greed under control. I am net on net okay now. Net profitable I mean. So yes it is possible and you can do it also. First thing needed is belief in yourself.

Lets continue this discussion.

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Now heres a look at a random stock just to show my methodology and how I trade with a top down kind of approach. This is for the long side only. Short side I just focus on Nifty. Lot of comments in chart - open in new window to read.



A look at nifty shorter term. Comments in the chart.



Range contraction is what it is. Today would be interesting for a variety of reasons. One thing I have noticed is the correlation b/w the Indian and US markets has diminished greatly over past few months. So todays strong US move - would be interesting to see how we are going to react.

The FIIs have been using this as a excuse to liquidate nowadays. I think that is when they get the volume to do what they want to do. Means good gap up on world markets; then sell off. It will be interesting to see if the same trend continues today.

5600 remains decisive for the medium term timeframe. IF and thats a BIG IF we manage to get over and sustain 5600 over next few days, then we can go above to test 5800. I would put this as a low probability for now and instead watch how we react at 5500-5550 range. I will be looking to put back on the shorts at this area and then see if we can get to 5600 or if we get back down to test 5300 area again - my money will be on this. Let us see.

Bottom line is this - Trend is down. Rallies should be used to short or exit from longs. How exactly you do this depends on your trade management and personality.

We will focus on EW counts next post.

Later.

More later.

Back Again

Okay guys..after a break of almost 2 years, I am back. I hope I will be able to consistently post here for a while.

What I have been doing for the past couple of years..a bit of soul searching..trying to improve my trading methods. More importantly trying to improve my money management techniques - this is by far the most important thing any retail investor/trader should do - But it is the one thats ignored by everyone..More on that later.

I have found that the best way to do things is to focus on the bigger picture..Keep leverage down to a bare minimum. Have a clear idea on the RR ratio..Most folks dont try to determine the risk but instead focus on the reward alone and in the end get bombed.

Another thing guys - Option trading is NOT investing. I saw someone say on a forum some time back that they had 'invested' in 5700 calls. What the hell!...Thats not investing..its speculation lol.

Anyhow coming to the chart. I have posted something similar some time back. This is the weekly nifty chart with KPL's 20 period swing on it. So its a 20week swing. I have found this is the best way to catch the longer term trend and swings with a fantastic accuracy rate. You can see the buy and sell arrows for yourself. This tool is great for a longer term investor and trader.

As I mentioned before, when 5650 broke, I think our market has entered into a longer term bear. This will be negated only on trading above 6181. Over time the swing will come down and we have to keep monitoring this to determine buy point.

I think we are looking at a possible bad year in 2011 and if we get a good low toward end of this year, then I will start looking for possible longs toward then. It might turn out to be the buys of a decade if it plays out the way I am thinking it will...Speculation at this point but lets see. I will say more about this later.

More comments on the chart. Count the points from arrow to arrow. Only price as I have found that that is the only thing can be trusted. Most folks will focus on thousand different indicators which only muddies up the picture. Focus on price alone.



I have been trading on the long side last year until the swing turned down as shown in the chart.

Bear markets are tough to trade for the retail investor. Its a game best left to professionals. Still I am trying to do something on the short side - atleast trying to capture some of the down swing. Lets watch and see how this plays out. Patience will be of great importance here.

More later.

Amazing!

Well the bulls continue to amaze. Every little pullback is being bought..and yesterday it looked like some big money really came in..I only wonder why they are this late to the game but who am I to judge. Anyhow, on the log scale on the daily, Nifty looks to have broken out and next logical target is 3800 area. But keep in mind, market defies logic...Lets see how far this goes. I tried some shorts yesterday..monster moves stopped me out ofcourse..so nothing doing now...wait and watch...

Been thinking again about this blog for a while..And due to various reasons, personal and otherwise, I am taking a rather longish break from blogging..Not sure how long.
I have lots of personal changes coming up...will be moving to India in while and so on so I wouldnt have much time to continue this blog at the same level that I am doing now...Besides I am finding the whole thing stressful at the moment.

So I am going to step back a bit from blogging..And see how I can manage it..If I feel comfortable, I will be back with weekly or bi-weekly updates...For now, bye, take it easy in trading and always keep a watch out for the unexpected.

Best.

Da Wedge

Looks like we broke down from the wedge pattern and now backtesting it..Shorting with a tight stop has good risk-reward here.



Best.

The Week Ahead

EDIT: Intraday at 12:15PM - Interesting action on intraday charts...Here 15min..Looks like a break. I shorted the break..small size only. I missed shorting the open even though my gut told me to..Nevertheless shorted at the break shown in the chart.



Lets see.

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Another shortened week ahead..I have found that these kind of weeks throw me off a bit..I mean timing wise it can make things a bit 'OFF' but well we got to live with it I guess.

Market this week - I am again expecting we see a pullback. It could be very fast and could also be a sidewise shallow correction. Buying the pullback could be profitable..I think for this time. But dont be in a hurry to buy - In my very humble opinion. Lets look at some levels on the charts.

NIFTY HOURLY



NIFTY DAILY



NIFTY WEEKLY



TWO POSSIBLE COUNTS IN RED AND BLUE



As you know I am totally flat right now..I am not sure what I will do next. In 2 minds..I.E to let the market settle down a bit before going long again..OR try a quick and small short for 2 days? Tough call. We will see as it goes. Will update if I see something interesting or do take a position today.

Best.

OUT

Out of longs...from 3166 to 3374 odd..

Not doing anything now..

200+ pts..I will take that.

I will post some charts and thoughts later if I can.

Best.

Some Mumbo Jumbo

Some more mumbo jumbo from my side..more of an extension to the post below this..

Often I've wondered why we go through good patches and then bad patches..Is it luck or is it all in our head? I think its the latter..Even a gambler has good streaks...but again is it chance? is it luck? Or is it something else?

I have had some stupendous periods of gains and good trades .. I have wondered what made me do that..What created that? And why does it not continue ad infinitum? I believe its all about being in the 'zone' .. Now what is being in the zone..simple..I am sure we all would have played some kind of sport in our life and during some point of time, we would have been playing at the top of our game in a particular game..and NOTHING you do...NO MATTER what you do, it always goes right..Thats the ZONE.

Now traders also have this zone...I have found myself somehow stumbling into this ZONE sometimes..Its mostly by accident but sometimes by design as well..And once we are there, usually something stops the streak and reality snaps back..I think a lot of it depends on having the right amount of confidence and also the right amount of common sense...Most expert traders remain in the ZONE permanently and trading for them is like a second nature..Traders like me..well not quite there even though we'd like to be there...Its a tough game this trading..No matter what you do in life..what all you do successfully, nothing can prepare you for trading successfully except for trading itself.

Its a tough road..Most give up..

But heres to sticking on the road..And getting into that permanent 'ZONE'!

Thoughts on the market later.

Best.

WOW

..I mean just wow...Been a long time since I've seen something like this...Market digested the big gap down and just powered ahead like its a new bull market..My decision to cover and go long in the morning paid off nicely..Position size was not as big as I would have liked but lol, I'll take it...Beer money :)

The markets are getting a bit ridiculous now..I still have a bad feeling this wont end well..but well thats just me..We shall go by what the market does...200pts in one day from low to high!!...well I wont complain as I caught all of this move...Still its amazing how this is going now...Looks like no one wants to miss the bull bus.

As you might have observed(lol, right), I havent been in good form lately and whenever this happens, it pays to step back a little and regroup before trading again...Bad streaks good streaks call it what you will but I believe its all in the mind...I guess I might be finding my groove again..Keeping fingers crossed.

Trading in the Zone is a good book by Mark Douglas on psychology in trading...I recommend this to everyone..More than often the enemy is within us..I want to also sincerely thank SS(Timamo) for encouraging and helping me during this time. Thanks!!! :)

Footnote: I would be very careful in the market now..Its close to euphoria now..You know what comes next..It can run some more but the last 5-10% of the rally is dangerous to catch - use extreme caution folks.

More later.

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Getting Interesting...

Back into the grooove... :)

Getting interesting in here...down to first support..taking a stab at some small longs...Not sure of timeframe yet.



PS: Dont get into this trade unless you have balls of steel! :)

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Pullback and then...

So we are going to get the pullback..And what next? Dont know..lets look at the charts.

HOURLY


DAILY


Looks like after this pullback, we might make one more attempt at the highs..Maybe a bit higher as well before a more serious pullback..As of now, the megabearish scenario is on hold...After a rally with this much momentum, we need to look to buy the dips..For NOW...Not to say this cannot change quickly as well...

For NOW, the hourly is on an uptrend and the 20hr swing is on a buy..until this changes, it pays to buy the dips...Overall(1month-2months), I believe we shall top out and have a downmove but its not possible now to say how far this goes, so lets not try to predict and instead play the hourlies.

I might look to go long today on the pullback..small amounts only..As you might know, Lee needs to get his GROOVE back :)

In other news - Cramer calls the bottom again :D

Visit msnbc.com for Breaking News, World News, and News about the Economy

LAST TIME WHAT HAPPENED -


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Pullback due this week....

Lots of discussion regarding following the trend..I agree that we need to follow the trend..But tell me? - How do you define the trend? Hourly? Daily? Weekly? What I mean to say is where do you decide that the trend changed?

The market over the past several months have been rangebound...A large range but still rangebound...Anyone trying to trend trade on the daily would have been burnt...Maybe it is changing now..Do not know..Since the daily was burning me, I decided to move to the hourly. Since then the market has not given a meaningful pullback..just surging ahead on top of gap ups and new found optimism.

I am open to a new mini bull starting but this action is not healthy in my very humble opinion..Up on gaps..Same can happen in reverse.

We should see some sort of pullback atleast..this week and then maybe power up higher..The 3240-3260 area is of obvious importance as I have pointed out in previous charts. We are this close to taking it out...So lets watch that...If long and market goes above that, setting stop a little under that might be prudent.

For shorts, I am still waiting for the hourly to set up a sell so that I can go in short in bigger size. Unfortunately its not happening...Maybe that is the plan..Power ahead like this till 6300 without any pullbacks? :)

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