"Mountaineers do not climb to reach the top of the mountain, Csikszentmihalyi observes, but pursue the summit in order to climb." And perhaps they are pursued by the summit. Before beginning the observation of price: These are my beliefs, some strong and some not, some felt but many read. I want to write them out as a reference to contrast the changes that lie ahead. 1) The market is not about short term betting - but about short term betting of long term value. All the value is discounted upfront. People bet on expectations. 2) Over the short term market is a voting machine, but over the long term it is a weighing machine - Buffet. 3) Market is a complex adaptive system. Understanding critical points of such systems is critical. Outcomes emerge from behavior - are not caused by it. Wisdom of crowds. But also madness. Depends on diversity in the system. 4) At it's core both fundamental and technical analysis are about the same thing - estimating probability of outcome. 5) Reflexivity - more begets more until no more - Soros
Most traders trade their beliefs rather than market realities. Whether or not yours reflect market realities remains to be seen. In the meantime, you got your failed rally in LNKD yesterday. What if anything do you plan to do about it? (If you want to do no more than observe, that's perfectly okay as long as you're observing with some sort of intent.)
I started off with Market replay on Ninja. ES was free so I replayed that. First stab at this - I tried not to use any rules as such, but it is likely that some concepts from my previous attempt at daytrading colored the comments. This was from midnight to about 6 a.m. Each 5 min frame played in 20 sec. Don't have any experience with ES so not sure if it was a suitable replay period for practice.
Regd LNKD So the long term trend line passes through $170 and current price is around $175. Yesterday's action results in a doji on avg volume. I could set a sell order at $172. If it reaches this point tomorrow, it will be very close to the trend line there is a possibility of it going through. Or I could wait for it to first go through the $170 level and then place the short... From my existing fundamental view on LNKD, I would never buy at this level, because of the extreme valuation and expectations. But since I am trying to focus solely on price and volume for now, what makes me take a short view? Is it the gap up from 200d MA and failure to make higher high? - thus indicating high p of down movement?
There are no guarantees, of course, but yes. It's shown weakness and those who are looking for weakness will likely pounce. Or buyers may step up and propel it higher. But the probabilities for at least something of a decline are in your favor.
1. Yes 2. Yes 3. Yes 4. Buyers are still trying to support the price. There just aren't enough of them. 5. Buyers actually showed up the bar before. Look how far it rallied off the bottom. The next bar is just showing off. 6. Yes 7. Yes 8. Your reversal was 18 bars back. Price was unable to make a higher swing high or even match the swing high. Each subsequent bar was lower. From here on out it's all weakness. Connect the highs of each bar and look at the arc. It's all swooning downward. If you draw a "resistance" line from the 0340 bar to the 0455 bar, this weakness will become clearer, particularly if you draw another from 0455 to 0535. And so on. This is a slow-motion cascade. Bar 10 should come as no surprise at all.
" Pita: I'm tough, Creasy. - Creasy: No such thing as tough. There's trained, then there's untrained. Now, which are you? Pita: Trained. Creasy: Trained. Okay. Let's go again." Man on Fire. Been reading the Price and Volume thread from 2004. Plan for the next week is to focus on evaluating the character of the base. This will be for swing. The immediate feedback of day trading gives me many at bats so I will continue running replays and observing S & R. Principles are the same across both time frames. If a base is characterized by uncertainty due to generally low volume and narrow price range, then it is qualitatively much superior to one which is less uncertain. Because in a base marked with uncertainty, breaks through the base S or R signals a temporary resolution of uncertainty and thus likelihood of continuation. But in a more certain base, there is enough conviction for the other side to bring it back to the base. A question: When validating accumulation - it makes sense that vol should be low at S because the accumulators are not offering to the supply of stock. But then why is higher volume indicative of accumulation when price reaches R? Is not uncertainty going to be there at R too? Or are the accumulators demanding at R, causing more release by others?