Ghost of If You Can Draw A Straight Line

Today, if not on the 11th, would also be a "mechanical SLA sell" in the daily for ES.

 

True. I've posted ES charts but the ES people seem not to care. The mean of their TC, tho, is around 25.

 

Well done Db. It reached 40 as predicted. A nice 80 pt move today.

 

And now that we've reached the mean of the channel, we either go back to the upper limit or we work our way down to the lower limit:

 

The SLA/AMT for posterity. Those who are ready to move on from the scratching phase may want to look at loosening up a bit. But if you're not ready, then stay right where you are until the time is right.

 

When you use the term "mean" is this just a simple 50% of the range regardless of price structure or are you looking for the price level that the range is revolving around as in the chart posted? Would you consider the third pink horizontal line to be the mean of the previous range (maybe a little low)?

 

It was great watching it forming in RT.

 

The mean is more or less the middle of the range, though it needn't be arithmetically exact. Outliers, for example, are generally ignored. What matters more is how price reacts to whatever the mean seems to be. But the price is the horse and the mean is the cart. If price is hovering near the top of a range, the mean will of course be higher than the median. The term "midpoint" could be used if that word weren't used in other applications, and it is helpful to avoid confusion as much as possible, though I often fail.

As for the horizontal pink lines, they highlight swing highs and don't have anything to do with ranges. The only mean I highlighted was the one labeled as such.

 

The market was ripe all day long today, so I've covered the entire session in two separate charts, morning and afternoon.

Again, the entries aren't noted since everybody who's interested by now knows where they are. The message at this point is to focus on price, not on lines, and give price a little room to breathe. A lower high is a lower high, a rejection is a rejection, LLs and LHs create a downtrend, even though it may not be as pretty as the one in the book, and all of these convey a message that tells you who's in charge. If you know who's in charge, you'll be fine.

 

You can talk all you want about what a stock should be doing or why it isn't doing what it should be doing. You can talk about inflation, interest rates, earnings, and investor expectations. Ultimately, however, it comes down to the picture. Is the stock going up or down? Knowing the reasons behind a stock's movement is interesting, but not critical. If your stock goes up on a given day, they won't take your money away from you if you don't know why it went up. And if you can explain why it went down, they won't give you back your lost money. All that really matters is a picture, a simple line on a chart. The trick to visual investing is learning to tell the difference between what is going up and what is going down.

--John Murphy