03/31/2012 Weekend Update

[KeiZai]

Velocity launches new ETN : http://kiddynamitesworld.com/velocitysh ... g-product/

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http://www.youtube.com/watch?v=V8ixnqRyfzU

[Al_Dente]

COBRA thanks for your participation with the weekenders. You make the weekend board pop with essential reading.

Baltic Dry $BDI has been frustrating and broken (as an indicator) for almost two years now.
I’ve been using $DJUSST as an imperfect proxy, based on the notion that many of the barges might be full of steel and iron ore and other building materials going to China (the biggest consumer of dry shipped materials).

I plotted this chart last month, based on valuable chatter on your board (and stockcharts has no iron-ore symbol).
We know and we can see here that China is soft (and is in an intermediate-term bear trend), and $DJUSST is soft, and both are rebounding just a bit this year, and SPY has “disconnected” and is way too far ahead of them both.
I like the way $DJUSST hugs China. By comparison $BDI is still dead as an indicator.
At some point SPY and China should realign, no?

[Mr. BachNut]

COBRA thanks for your participation with the weekenders. You make the weekend board pop with essential reading.

Baltic Dry $BDI has been frustrating and broken (as an indicator) for almost two years now.
I’ve been using $DJUSST as an imperfect proxy, based on the notion that many of the barges might be full of steel and iron ore and other building materials going to China (the biggest consumer of dry shipped materials).

I plotted this chart last month, based on valuable chatter on your board (and stockcharts has no iron-ore symbol).
We know and we can see here that China is soft (and is in an intermediate-term bear trend), and $DJUSST is soft, and both are rebounding just a bit this year, and SPY has “disconnected” and is way too far ahead of them both.
I like the way $DJUSST hugs China. By comparison $BDI is still dead as an indicator.
At some point SPY and China should realign, no?

The attachment 41steel.png is no longer available

Here is another chart that speaks to China, I think.

[Al_Dente]

Here’s the liquidity divergence:
As BB52x noted mid week, his DBV currency basket of 11 nations tied to IMF lending is softening, as is Cobra’s aussie/yen,
while the Eurodollar measures are strengthening a bit. [This chart is a simple overlay, NOT performance % based].

Here’s a zoom of the regular TED SPREAD, not inverted, still telling me the coast is clear on liquidity.
The “below 0.50 all clear” pink line has been a decent line-in-the-sand for about three decades, and perhaps “this time is not different.”

And an update on our EUzone compared to US banks chart.
DB Deutsche Bank Germany was holding up, now it looks like lower lows on all EUzone vs our $BKX.

Long story short: Bernank says liquidity, SPY responds bull, the other global liquidity measures are mixed.

PS: Happy April Fool’s Day to Kezai and all boardies
http://www.youtube.com/watch?v=nfNLspDL3ns

[Al_Dente]

COBRA thanks for your participation with the weekenders. You make the weekend board pop with essential reading.
...

41steel.png

Here is another chart that speaks to China, I think....

Mr. Bachnut: Loaded dumb question:
“loaded in” means a barge comes into port and is unloaded with imported goodies for us, like “incoming” imports.
“loaded out” means a barge in port is loaded up with lots of our goodies for export and then sails away full.
Or is it the reverse ???
I’m confused but I think I’m looking at our “trade imbalance”…. or……?
Thanks

[taggard]

Good Morning Cobra,

This market has been very difficult to trade last couple of months. Imagination is the key to be a successful trader in this market. .

You were saying it will be choppy...i almost lost hopes of trading this market.

Difficult to trade? Are you serious? This has been the easiest market to trade as its gone no where but up. if you think this market was difficult to trade you need to find another profession

Thanks for your suggestion. I have a full time job. I know i am not good at this. I am talking about trading options.

Trading options is adding a serious layer of complexity--esp if you are trading simple directional stuff. The trick to trading options directionally is to be clear on the three parts needed (1) a clear ability to trade charts ideally in 2-3 time frames. (this allows you to either switch time frames if one is less useful or clear or to fit one time frame inside another for more stability. (2) to really understand "simple" options stuff (time decay and so on). (3) understand that 90% of trading is in your head not on the charts or outside you.

An example of this is that you saw the market as hard to trade where as swayne99 saw it as easy. This illustrates how perspective is actually far more important than technical trading skill.

as for how good you are right now with trading that is of no importance at all--if you are serious and have strong desire. i myself started trading options using a credit card for capital in the middle of running my own business (12-14 hours a day 9 months of the year) being a landlord and having a fairly serious training schedule. at the time i used the ticker tape on clients financial tv as a chart. The situation was totally absurd. But it worked.

if you are having a bad time here is what works for me--it's only what i found and you need to test it to see if it works for you.

1. stop trading money--and start paper trading until you get to the point where you are hitting 70% of your trades. Now technically you can win with only 45% of your trades being good and just having a great win loss ratio. (eg hold winners and bail losers such that your losers are 1 and your winners are 1.6) The advantage of hitting 70% is that it requires discipline and focus and will give you some serious confidence. and more to the point you have to actually figure out what you are doing wrong out of habit. hitting 45% means you really can keep a lot of habits (both technical and psych both are deadly).

2. figure out what sort of trading works best for you--this is not one size fits all. and there is no advantage at all to trading a lot--if your concern is either making money or learning. if you are in this for the rush--take up BASE jumping or something safe. You really need to control that need for excitement if you want to win longer term. it's good to enjoy stuff--but any emotional swings (high on wins and low on losers) means you are not even close to there yet. if you are working full time and trading options--being clear on exactly what works best is even more critical since you are both engaged in complex stuff--and are shot on time. it can work--you just have to be very clear on what you are up to. A KEY IDEA HERE IS THAT FOCUSING ON THE TYPE OF TRADES THAT WORK FOR YOU WILL GENERALLY AMPLIFY YOUR EFFORTS TO HIT 70%--so only do the trades you have the best chances of--and you will move much faster in that direction.

3. if you are hitting 70% on paper and have a pretty good idea of what works best for your situation--then start scaling in. ALWAYS REMEMBER "IT'S NOT ABOUT THE DAMN MONEY". in fact to get started after a down time or when learning--starting so small that losses are ensured by fees spreads etc is generally the whole idea. if the trade shows a % gain (ignoring the fees) that is a winner at this point. THEN SCALE UP SLOWLY--TILL YOU ARE WHERE YOU WANT TO BE TRADE SIZE WISE.

4. above all remember that you have to think of trading as a continuum. a series of events all linked together by time. so each trade must not be treated lightly--yet the point is it is only 1/1000 of the next 1000 trades. IF YOU KNOW WHAT YOU ARE DOING IN TERMS OF HITTING 70% WINNERS--AND YOU ARE CONTROLLING YOUR LOSERS (THIS LAST IS KEY when shit goes bad--walk away and don't think twice) YOU CANNOT FAIL TO WIN net-net OVER 1000 TRADES.

Knowing this continuum stuff at a deep emotional level will give you the strength to continue---so it's critical to establish this as soon as possible.

5. the route to all 4 points above is comprised of two things. record keeping in detail (i use about 25 fields on an excel work sheet and a journal with text--when i am in learning mode--i want to know everything about the trade so there there are before during and after charts copied--my emotional mental and physical states--any kind of mental chatter is interesting as it shows weakness very quickly--am i in good shape? sleeping and eating right and so on. The point is to vastly overdo the record keeping at first--to much is just enough--and then back it off as you get more of a system and understanding of both what you are doing and (far more important) who you are. be 100% honest and careful in your record keeping. it's tedious--but it works. look at the results for "outliers" or odd stuff that you didn't expect or consider--often the solution to your problems appears odd at first since it is outside your current habit set.

the other thing is to let go and RELAX--consider this quote from a world class martial artist

I asked Don how he came to realize his talents and he explained it all started with PRACTICING CONCENTRATION. When he was a young boy every summer he visited a circus near his home. A carnival magician took a liking to him set the boy home with an assignment to look a regular drinking glass and report back how many things he could observe about the glass.

After the first week Don could only list 10 different characteristics such as smoothness reflection and translucence. By the end of the summer however he managed to describe SEVERAL HUNDRED more!

He said the concentration from this transformed him in many ways from that way forward.

Concentration states are difficult to describe for they come about in paradoxical ways.

For example they require a degree of INTENTION BUT RESULT IN TRANFORMATIVE LEARNINGS WHEN THE INTENTION IS LARGLY FORGOTTEN. T

hey are completely natural phenomena yet we seldom recognize them when they come upon us.

the point here is you have to concentrate and be very relaxed--and not as focused on the outcome as most people are. then you can see what is actually going on and not what you think is going on. you don't want to "think" you want to "reflect or observe" market action. as swayne99 pointed out--perhaps a bit harshly--if you are lined up with market direction it was easy. The way to line up with market direction is to RELAX--AND DEPEND ON THE BASIC RULES.

"whatever is going on will continue until it ends--when it ends you will see it on a chart (because it looks different)" So we don't need to think a lot or anticipate--we need to just really 100% be aware of what is going on right now--and when it changes change with it. the first step to doing this is to be relaxed and fluid--and let the market do the work for you. it will talk to you if you listen.

good luck with your trading

ps think carefully about the name you have chosen to use online--there are different ways to be lazy--some are good some are not good. consider the story below--just bumped into it on the way to cobra's


http://sivers.org/kimo (there's no speed limit-lessons that changed my life-derek sivers)

[BullBear52x]

U have taught me a lot.

ha??? I did?

If so you are more than welcome. I learned so much every day from all of the great minds who share here.

[Mr. BachNut]

COBRA thanks for your participation with the weekenders. You make the weekend board pop with essential reading.
...

41steel.png

Here is another chart that speaks to China, I think....

Mr. Bachnut: Loaded dumb question:
“loaded in” means a barge comes into port and is unloaded with imported goodies for us, like “incoming” imports.
“loaded out” means a barge in port is loaded up with lots of our goodies for export and then sails away full.
Or is it the reverse ???
I’m confused but I think I’m looking at our “trade imbalance”…. or……?
Thanks

That's right. Loaded in are imports and loaded out are exports. The chart is intriguing in that the "import" line (read Asia) has made a lower high and is making a lower low. Perhaps it is just a cooling off after a post recession surge, but visually it just does not look consistent with things getting better. Perhaps the boats are just filled up with ipads, which do not take up a lot of space...

[Mr. BachNut]

The interesting thing about the TED Spread to me is that it has stopped declining. Theoretically, if the European banks are OK now, the spread should be headed back to where it was before the crisis flared. It isn't.

[Mr. BachNut]

I am market neutral at present. It is not for lack of a signal but because I have conflicting signals. For example, I have a McClellan setup that says short but it is on hold due to a money flow index indicator that is positive. It is consistent with a theme of the market that is ready to pull back but is being supported by a lot of incoming liquidity. So, I am in wait and watch mode until things clear up.

[BullBear52x]

This is weekly breadth, summation indexes lead before a big dump and when the volatility index give a go on this weekly, everything breaks apart. this is a little time consume just a head up what's coming, let the charts speak for itself.

[BullBear52x]

IWM for two months now, looks like 83 is all she wrote this time?

[grachu]

this rising wedge on the russell looks nasty almost feels like a great short
do you think the russell goes faster down than the SPX?
just wondering the theory of shorting the weakest of them all..

[Al_Dente]

Baron von PapaBear52x
Just please go easy on sleep-overs with TVIX.
One of these days you’ll catch that huge gap down, but u are betting on that gap down being 9:30 am ET tomorrow morning.
Oy, sheeeeeesh, yikes….
Some folks on board aren’t as nimble or as wacky as u.
We should/may/might have plenty of time to catch her without sleeping with her just yet….IMHO…. blablabla ….luv u…

http://www.youtube.com/watch?v=7UHfu4w7jS8

[BullBear52x]

this rising wedge on the russell looks nasty almost feels like a great short
do you think the russell goes faster down than the SPX?
just wondering the theory of shorting the weakest of them all..

If we are heading into recession "IF" the small cap will hurt the most. and look at the recovery part, SPY is moving higher as you can see.

[BullBear52x]

Baron von PapaBear52x
Just please go easy on sleep-overs with TVIX.
One of these days you’ll catch that huge gap down, but u are betting on that gap down being 9:30 am ET tomorrow morning.
Oy, sheeeeeesh, yikes….
Some folks on board aren’t as nimble or as wacky as u.
We should/may/might have plenty of time to catch her without sleeping with her just yet….IMHO…. blablabla ….luv u…

http://www.youtube.com/watch?v=7UHfu4w7jS8

No ball no glory

[Al_Dente]

Baron von PapaBear52x
.....

No ball no glory

Dang, I wish I had that classic King Cobra post from January (?) on disqus about “ball or no ball.”
U know the one I mean, as I recall even U replied to it !
It was masterful, and I didn’t save it. It should be in our posting “Hall of Fame.”

[BullBear52x]

Baron von PapaBear52x
.....

No ball no glory

Dang, I wish I had that classic King Cobra post from January (?) on disqus about “ball or no ball.”
U know the one I mean, as I recall even U replied to it !
It was masterful, and I didn’t save it. It should be in our posting “Hall of Fame.”

How about early worm got eaten first.

got to go see you 2maro

[Al_Dente]

Other contenders for the King Cobra “Hall of Fame”:

“… when every push up gets weaker and weaker, then a reversal is possible…”
“Signals don’t work until price confirms.”
“Never underestimate the power of the bulls.” [and bears]
Paraphrased: “Just imagine you are blindfolded, and you are trying to guess the top…..”

(Please feel free to add your Cobra favorite)

And my motto these days; my last post today I promise
http://screencast.com/t/5nMHi4cu

[Al_Dente]

Ok I lied
One final FINAL post that puts the Keizai/Lumber/McClellan link (from earlier) into chart form that we can all follow.
Bear.
Thanks keizai and everyone for posting valuable charts, chatter, and links.

http://www.youtube.com/watch?v=HBZ8ulc5NTg