Ill share with you guys a little secret about predicting long term tops and bottoms. It's quite stupidly simple. Just use divergence. A lot of traders exclusively trade off divergence setups because they are so reliable... What is a divergence? When price rallies really strongly for a cycle, then it rallies weakly for a cycle after a dip. For the divergence to be valid it must occur within a certain amount of time from the high momentum rally. I get a chuckle out of how a lot of big players who know their technical analysis didn't manage to get their short positions on in this recent selloff... Since the .com bubble burst... 10 out of 12 major market reversals were divergent and could be seen beforehand. Last years divergent bottom was one easy one to predict, however... Nobody expected it to go that far... The setup appeared more like the 2008 divergence setup off the yearly pivot test... Each major long term market turn... From the start of the rally to 2007, the selloff into 2009, and the rally out of 2009. They all occurred off a divergence setup after a HIGH momentum surge. Marks with yellow X's are the ONLY two events where there was a market turn without a divergence. The market is a video game, nothing else. Don't hate the game.
Here was something I posted quite a while ago... You can check wordpress and confirm it's publish date. The most important part is this "If we hit new lows get ready for some fierce uptrends because of the weekly setup." Now, go have fun trying to figure out which new highs and new lows are trend signals, vs which ones are reversal signals! I prefer to first predict the market conditions for the week on the weekend so I am ready to trade the trade setups that should be coming through the week. It's best to be mentally prepared and technically prepared to trade a rally if one is setting up in my experience, same for vice versa... "Posted on May 26, 2012 Daily Outlook â A little bearish going into next week. Look for some decent intraday volatility. Id like to see a few days of consolidation here. If we hit new lows get ready for some fierce uptrends because of the weekly setup. Weekly Outlook â Very oversold. I expect bears to lose control of the market soon and for us to see a couple solid up weeks or so by around mid June. I wouldnât recommend buying though⦠Weekly rallies are just counter trend to the larger monthly market cycle right now."
Do you have a journal thread where you post calls in real time? Your after the fact charts are pretty.
I have a website. Just google this... "Weekly Outlook â Very oversold. I expect bears to lose control of the market soon and for us to see a couple solid up weeks or so by around mid June. I wouldnât recommend buying though⦠Weekly rallies are just counter trend to the larger monthly market cycle right now."
I generally assumed everyone knew when the major market turns were confirming... Divergence isn't exactly a complicated thing. And 90% of market turns occur on divergences...
There are a million ways to skin a cat, so I'm never one to claim that a strategy does not work or cannot work. However, don't you think that when you have a strategy which is so simple to automate, and a strategy which has been talked about a gagillion times, that such a strategy has not been back tested and backtested not just by the big guys you talk so condescendingly about, but even my the most simple of systematic traders? And if such a strategy is legitimate, that it would have disappeared by now since every trader in the world would have discovered it? Also, it's not wise to talk down to "the big guys." They are the big guys for a reason. Usually it is the winners who are the big boys, not the losers. That's the reason they are big. If they were losers, they would be non-existant or small on the way to non-existant. All that said, as my first sentence made clear, there are a million ways to skin a cat. Divergences are not my cup of tea so i have no idea whether it works as you say or not.