Stock Market Highlight #23
Trading technique presented in "The $upertrader's Reference
Manual" successfully enters short positions in the stock market.
(COMMENT #s 720, 721, 724)
UPDATED 19981001
COMMENT 1998-720
1. As repeated throughout these COMMENTS this year, the process we've been using is
incredibly simple:
A. Turn the pages of the books,
B. Identify ALIGNMENTS, and
C. Make the market FORCE us into a position through use of PATTERN RECOGNITION.
2. One of the PATTERNS we've repeatedly used is shown on pages 205-9 of "The
$upertrader's Reference Manual".
3. There are, of course, many others.
4. As examples:
A. The trading technique presented on pages 94-101 of "The $upertrader's Reference
Manual",
B. The techniques presented on pages 236-7 of "The $upertrader's Reference
Manual",
C. The "Thrust" techniques presented on pages 115-6 of "The $upertrader's
Reference Manual", and
D. The techniques presented in "The 10-N-1 S&P Daytrading System" discussed
in COMMENT #s 384 on 980509 and 587 on 980818.
5. The ALMANAC I through VI trading systems presented in the last 6 "Almanacs"
would also qualify, of course, were only the pure PATTERN RECOGNITION entry component to
be applied.
6. And we've still only scratched the surface.
7. Such a PATTERN RECOGNITION technique as that presented on pages 205-9 can be incredibly
productive.
8. It's used in four primary situations, as seen in the following examples;
A. To provide low risk entry into a market as we've highlighted in these COMMENTS recently
in such markets as stock indexes DJI, DJT, SPZ, VLZ, NYZ, RTZ, and DJZ early this week and
just prior to the current break,
B. To provide liquidation and reversal of a current market position as has been
experienced in the wheat complex as highlighted in COMMENT # 713 of 980929, the CRB Index,
soybeans or the energy complex as seen in COMMENT # 712 of 980929 just prior to the
current break this week in these markets,
C. To provide protection from entry in a market which is believed to be primed for a turn
but which expectation simply does not work out as was seen in the bond market earlier this
week in COMMENT # 704 of 980927, or
D. To maintain a position in a market which is believed to be primed for a turn which
simply does not occur as was seen the last couple of days in such markets as the SFZ and
DMZ this week as discussed in COMMENT # 710 of 980929.
9. One should further note the switch from the PATTERN on pages 205-9 in "The
$upertrader's Reference Manual" to the PATTERNS on pages 236-7 in the bonds on 980930
in COMMENT # 718.
10. This latter entry technique, although SET UP, also did not provide short sale entry,
just like the PATTERN on pages 205-9 in "The $upertrader's Reference Manual" did
not.
11. Hence, although the upside move was missed in the bonds, the short position was
prevented by use of these techniques.
12. This in spite of the SET UP in COMMENT # 704 of 980927 being, in my opinion, CLASSICAL
and one of the top ten of all time.
UPDATED 19981001
COMMENT 1998-721
1. In the meantime, the story in the stock market presented in these COMMENTS in #s 692 of
980923, 701 of 980924, 704 of 980927, 706 of 980928, 715 of 980929, 717 of 980930 and 719
of 980930 has provided ample opportunity for the initiation of short positions.
2. Pyramid positions have even been suggested for those of a more aggressive bent and are
stunningly profitable as of the close today.
3. Hence, although the expectation presented in COMMENT # 707 of 980928 that the bonds and
stocks were about to begin working lower in tandem has not materialized, the bond position
has lost nothing while the stock position has gained immensely.
4. Isn't this how trading is supposed to work?
5. Can you see that the key is the 3 step process outlined in Point # 1 of today's COMMENT
# 720?
6. Isn't this easy?
7. Isn't this fun?
8. Go buy mama a new car with what you've made over the last 3 days from these incredible
simple trading techniques!
9. Wonder what all those Nobel Prize winners and former Federal Reserve Board Governors
who were running Long-Term Capital Management are doing?
10. Can you believe the central bank of Italy invested $ 250 million with these hacks?
11. Oh, well . . .
12. It's only (fiat) money!
13. Who are the officials who will do time in jail for this gross misuse of public funds?
UPDATED 19981001
COMMENT 1998-724
1. In COMMENT # 604 of 980826, we discussed the phenomena that many important stock market
crashes this century (most notably that of 1929 and 1987) reached their zenith 55 calendar
days after a major peak (FIBONACCI # = 55).
2. The September 980901 low was 2 trading days short of the Fibonacci 34th trading day
after the 980717 closing high in the DJIA reviewed in that COMMENT.
3. The 55th trading day from the Friday, 980717 closing high in the DJIA occurs Monday,
981005.
4. The 55th trading day from the Friday, 980720 intraday high in the DJIA occurs Tuesday,
981006.
5. There's an important election in Brazil this weekend and an important meeting of the
IMF/International Banking cartel this weekend.
6. It's hard to imagine that the markets will not attempt to stage a rally in anticipation
of collusive arrangements as a result of this latter meeting.
7. Nevertheless, if the stock market is down going into the last hour or so tomorrow, one
should be quite sensitive to a sharp selloff which accelerates late into the day Friday as
traders choose to not hold stocks over the weekend.
8. Weekend margin calls, under this ideal scenario, would then cause a 55th day
liquidation on Monday/Tuesday of next week.
9. It should be noted that, in the 4 weeks leading up to the July high, SPZ closed above
its Friday opening all 4 weeks and at or near the high of the week during this up phase of
the market.
10. From July to the 1st week of September, the SPZ closed below its Friday opening all 6
weeks and at or near the low of the week 4 of the 6 weeks during this down phase of the
market.
11. During the September corrective up phase, Friday closed above its open all 3 weeks.
12. Hence, tomorrow's close in relation to the day session open should be monitored.
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