Futures Market - Platinum Highlight #4
"Seasonal Arrows" reestablish long positions 1 day after 1998 low of the year in platinum market and pyramid the position.
(COMMENT # 446, 487, 490)
UPDATED 19980616
COMMENT 1998-446
1. In similar manner, we want to particularly focus on seasonal trade # 226 in "The 1998 $upertrader's Almanac - 1st Half Edition".
2. We can turn to page 322 and note the solid black arrow in the second chart down from the top.
3. This arrow tells us that this market has been historically correct each of the last 5 years (note, however, that the 1997 experience is not included in this study - you can determine that such is the case by either noting the "7" in the "Seasonals" listing on page 323 [bottom left column] or by turning to page 226 and noting the "circled star" to the left of the seasonal listing for this tendency [see listing # 226 on this page]).
4. Note how this market is also testing, but holding, its December lows.
UPDATED 19980701
COMMENT 1998-487
1. Let's move to the "The 1998 $upertrader's Almanac - 2nd Half Edition" and turn to page 72.
2. Can you see the "LAUNCHINGS" listed in the middle of the page?
3. Those with the "630" in front of them were highlighted in the previous COMMENT, # 486.
4. Now look at the last 3 with the "701" (today) in front of them.
5. Now let's look at the table just above, "ANNIVERSARIES THIS MONTH".
6. Note the dates for our three markets.
7. The one of importance is the middle market of the 3.
8. You should see the dates "729 712 708 726 701 701".
9. You can turn to page 355 where, if you're a newcomer, you can read a little about the significance of these various dates.
10. The first 3 dates are "unweighted" anniversary dates and identify those dates when the largest number of turns have historically occurred during the month.
11. The last 3 dates are "weighted" anniversary dates and identify those dates when the most important turns have historically occurred.
12. Hence, we can see that today is the most important date of the month for historically important "weighted" lows and total number of "weighted" turns.
13. How does this date compare with others during the year for this market?
14. To obtain these annual comparisons, turn to page 358.
15. Here we can see that these "weighted" values, though important to the monthly figures, are not among the more important dates relative to the turns which have occurred throughout the entirety of the year.
16. Now let's turn to page 306.
17. Here we can see from the long term seasonal chart (the one in the middle of the page) that, although the tendency is up over the next two months, on average, little is offered this month in this market.
18. In fact, we can see that, for both the last 5 and 10 years, the tendency has been strongly to the downside from mid-summer forward.
19. We can identify these moves by simply observing the "solid" (5 year) and "hollow" arrows just below the long term averages seasonals.
20. Isn't this easy?
21. Now let's go back to page 68.
22. Look at the information for today.
23. Let's go to the "FND" entry.
24. If you are not familiar with the importance of this information, review COMMENT # 486, even if it's only for the beans.
25. Can you now apply the same information to this market?
26. We last reviewed this market in COMMENT # 446 on 980616 just 1 day after the low of the year.
27. Note the strong seasonal listed for this market in "The 1998 $upertrader's Almanac - 1st Half Edition" in that COMMENT.
28. For the newcomers to "The 1998 $upertrader's Almanac - 2nd Half Edition", I have several times of late suggested the "Thrust" entry technique for this and a whole bunch of other markets (see COMMENT #s 461 OF 980623, 469 OF 980625, and 485 OF 980626).
29. This entry technique is explained on pages 115-116 of "The $upertrader's Reference Manual".
30. This is not the only one we will be chatting about over the next several months, of course, it is just the one that is appropriate NOW.
31. Hence, the reason we want to "Trust the Thrust".
32. Note that we do NOT want to blindly apply this, or any other, such trading algorithm.
33. Only when other factors are in ALIGNMENT (the key to our usage of the information in the books) should these entry techniques be applied.
34. Can you obtain a chart of the October contract for this market?
35. Can you see how this technique provided entry on 980616 and yesterday?
36. Now draw a down trendline off the 980416 and 980603 lows.
37. Now draw a second down trendline off the mid-May high and parallel to the first.
38. Note how we are right at that down trendline as of yesterday.
39. The problem, of course, is that, if you've just received the "The 1998 $upertrader's Almanac - 2nd Half Edition", we're now in the middle of two trades in progress in this market.
40. Risk is way beyond that which we like to assume in these COMMENTS (market generated stops are too far away).
41. Nevertheless, let's treat this action as a breakaway gap (see pages 132-33 of "The $upertrader's Reference Manual".
42. Note the lows of 980603 and 980629 relative to the 980615 low.
43. Many chartists will see a "reverse head and shoulders" formation (see pages 118-25 of "The $upertrader's Reference Manual").
44. So what to do?
45. Turn to page 369 of "The 1998 $upertrader's Almanac - 2nd Half Edition", the "ALMANAC VI" trading system.
46. To make sure you're not limiting the use of this information to only those markets included in the study, if you're not in this market, it is appropriate, in my opinion, to approach this market from the long side using the "ALMANAC VI" rules.
47. Even with this system, however, the risk, as previously mentioned, is larger than we prefer to incur. Thus, the trade is in but the lukewarm category.
48. Can you see how the "ALMANAC VI" trading system is already long this market from the mid 350s of early June?
49. The hereinabove further ignores the information from "The 1998-99 $upertrader's Book of Linear Time Cycles" which does not ALIGN with the above.
50. This position is, thus, NOT HOT but can only be considered as lukewarm.
51. The more factors one ALIGNS, the higher the probabilities of success on any one trade.
UPDATED 19980707
COMMENT 1998-490
1. The market in COMMENT # 487 should have gotten everyone off to a good start.
2. Let's now turn to page 300 in "The 1998 $upertrader's Almanac - 2nd Half Edition".
3. Note the uptrend in the middle chart of long term seasonality for the rest of the month or so.
4. Now turn to this, the 28th week of the year, and, specifically, to page 81.
5. Note this market in the "FND LAUNCHINGS" column.
6. If you're not familiar with these terms, you can turn to the "Index" on page 399 and note that they're explained on page 32.
7. The discussion begins at the bottom of page 32 and runs about 2 pages or so - shouldn't take but a minute or two to review.
8. Basis the December contract, this market made a new 10 year low on July 1st, right at the end of the "FND SLAMMER" for this market.
9. Are you beginning to see how this fits?
10. Now we turn to page 345 in "The 1998-99 $upertrader's Book of Linear Time Cycles".
11. See the solid line in the chart at the bottom of the page?
12. This solid line is the "Linear Cycle Index".
13. Note how it turns upward over the next few months from the low of the year in June.
14. Now look at the "histogram" (the vertical solid black bars) at the very bottom of the page.
15. Was this market supposed to make its yearly low around mid-year?
16. Is a 10 year low also the low of the year?
17. Isn't this easy?
18. OK, we've identified some information suggesting that prices should begin to turn up.
19. Now we want to use a trading technique which will provide us an entry point and a market-generated, protective stop.
20. In other words, to make sure that our analysis is correct, we want the market to ratify our analysis and FORCE us into the position.
21. Let's turn to pages 205-209 in "The $upertrader's Reference Manual".
22. Can you see how this technique is appropriate for use TODAY?
23. One of two things happens - the market either forces us into the position or makes a new low.
24. If the first instance, we enter our stop and go to the beach.
25. In the second instance, we still have the timing analysis suggesting a bottom, but we have to reanalyze and use a different entry technique.
26. So there you have it.
27. Can you believe how simple this process of trading is?
28. Just turn the pages of the books and pay attention!
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