Hey AshanD, what do you think of the euro? I was looking at the chart and assigned it a 2.5 point bullish view. The trend line is up, ML above zero although its in a down cycle (looks to be changing with the close of the current bar) and SL positive. Is this a bullish case and a good long signal? I'm looking at euro cash.
My Chick Goslin "Intelligent Futures Trading" Journal
- Thread starter AshanD
- Start date
Hi Jody, as Chick notes the point system is not really enough to trade off of. TO read the markets accurately you must be able to "read through" the lines. Ie trend may be pointing up but is it actual or is there a chance of a currency or commodity wide bear market? or is it just the opposite and this month long pause is just a brief one, enough to fool a 50 day MA, but internally there is a much larger bull market taking place? ML is above 0 which is good, but does the strength of the down cycle override that? Especially when anticipating what is "likey" to happen next? Did the cycle come off a a lower low or a big negative number (both weaken the intermediate term pressure) SL may be up but is it turning up from a downward ladder of lower highs and lows? Is it bouncing off extremes, coiling, etc? How well has it correlated to price energy flows recently?
Learning to read the lines in this way is a daunting task for a new trader. I remember it well because I kept a journal even when I first started and put a lot of emphasis into the point system. Every day i would try to make a case for a market which sounded sensible and then chick would write a completely different viewpoint in his letter with details that had eluded me.
Or sometimes the differences were mainly based on experience so not really my fault for not seeing them. That kind of foresight only comes with time. I am starting to pick it up in some of the more favorable situations, for example in my last post I mentioned why I would have longed crude oil but not natural gas, one thing I neglected was that my own "feeling" in the natural gas market was that downside strength was just too much even though crude was looking good for a crosscurrent buy. This should have been a positive for NG especially since it has tended to make spike reversals much better than crude for the last few months. Note how crude held its gains today and NG made a double reversal and plummeted once again.
I don't want to mislead, my chart reading ability is not even a fraction of Chick's, but I can tell that IT DOES COME with time. You just have to stick to this business for longer than you may like. I think another component is being very careful not to stray into too short of a trading timeframe. IMO intraday moves tend to be more erratic and based off of arbitrary noises that make chart reading quite difficult to learn (not to say it can't, there are many scalpers who would put my chart reading to shame)
I went off on quite a tangent so now your question.By marking the 49th and 39th bars on my chart (which I printed out and penciled) I see that a 2 week long dip is about to be dropped off so trend is strengthening to the upside (since the current price level is higher. Doesn't mean this picture could drastically change)
by marking a line through the 16th and 10th days I see that the ML will be ready to drop off a large up cycle of old SL values. The cycle was strong enough that it is likely that SL will be unlikely to strengthen to the point that it counteracts the dropping of these higher values with new higher values. Again this can easily be proven wrong with some upside strength.
SL can't really be anticipated like the other 2 but one can still eyeball the 10 day average close vs the 3 day average and it seems about even, which is what the line reflects. The SL cycles haven't been that great but there is somewhat of a ladder of higher highs and lows to the upside for the last 2 cycles (ML also)
External variables are the COT being negative (very minor factor in this picture, almost trivial) and Chick expressing concerns of a bear market. However he also said that it would only take a couple strong days to change his mind and we have gotten that, so the "Chick sentiment" is about neutral.
Chick has noted that crude oil may be the key factor here so I want to pay special attention to that market. What that means is I am looking for unusual weakness on days that crude goes down and vice versa. I also want to watch for how well the currencies and metals are going to be holding.
Overall I am bullish in this market but not for right now because intermediate term pressure has been flowing to the upside but now looks to be ready for some relief. I could easily be wrong in this assessment but I am trying to be more picky now and will not make a trade on this market for likely a week minimum.
Learning to read the lines in this way is a daunting task for a new trader. I remember it well because I kept a journal even when I first started and put a lot of emphasis into the point system. Every day i would try to make a case for a market which sounded sensible and then chick would write a completely different viewpoint in his letter with details that had eluded me.
Or sometimes the differences were mainly based on experience so not really my fault for not seeing them. That kind of foresight only comes with time. I am starting to pick it up in some of the more favorable situations, for example in my last post I mentioned why I would have longed crude oil but not natural gas, one thing I neglected was that my own "feeling" in the natural gas market was that downside strength was just too much even though crude was looking good for a crosscurrent buy. This should have been a positive for NG especially since it has tended to make spike reversals much better than crude for the last few months. Note how crude held its gains today and NG made a double reversal and plummeted once again.
I don't want to mislead, my chart reading ability is not even a fraction of Chick's, but I can tell that IT DOES COME with time. You just have to stick to this business for longer than you may like. I think another component is being very careful not to stray into too short of a trading timeframe. IMO intraday moves tend to be more erratic and based off of arbitrary noises that make chart reading quite difficult to learn (not to say it can't, there are many scalpers who would put my chart reading to shame)
I went off on quite a tangent so now your question.By marking the 49th and 39th bars on my chart (which I printed out and penciled) I see that a 2 week long dip is about to be dropped off so trend is strengthening to the upside (since the current price level is higher. Doesn't mean this picture could drastically change)
by marking a line through the 16th and 10th days I see that the ML will be ready to drop off a large up cycle of old SL values. The cycle was strong enough that it is likely that SL will be unlikely to strengthen to the point that it counteracts the dropping of these higher values with new higher values. Again this can easily be proven wrong with some upside strength.
SL can't really be anticipated like the other 2 but one can still eyeball the 10 day average close vs the 3 day average and it seems about even, which is what the line reflects. The SL cycles haven't been that great but there is somewhat of a ladder of higher highs and lows to the upside for the last 2 cycles (ML also)
External variables are the COT being negative (very minor factor in this picture, almost trivial) and Chick expressing concerns of a bear market. However he also said that it would only take a couple strong days to change his mind and we have gotten that, so the "Chick sentiment" is about neutral.
Chick has noted that crude oil may be the key factor here so I want to pay special attention to that market. What that means is I am looking for unusual weakness on days that crude goes down and vice versa. I also want to watch for how well the currencies and metals are going to be holding.
Overall I am bullish in this market but not for right now because intermediate term pressure has been flowing to the upside but now looks to be ready for some relief. I could easily be wrong in this assessment but I am trying to be more picky now and will not make a trade on this market for likely a week minimum.
Yes I get what you mean AshanD. Anticipating movements in the lines are a bit daunting for me as someone who just got introduced to this concept.
As for my view on the euro, you can see some low prices being dropped off and this will lead the lines to turn up. As of this movement, the ML, SL and trend are all pointing upwards. But one thing that I cannot interpret well is the movements of the SL. Unless the euro can have a move big enough for SL to break its previous high, we would see a very slight divergence if prices remain or drop off. But still, price action shows a break out of a 3 months consolidation. I did an analysis on the USD Index chart as well it was bearish as well with all 3 lines pointing down. The euro being the strongest of the other majors now would be a prime buy for me.
By the way, did you notice gold? if prices are unable to move higher and it drops off, would that be a bearish divergence?
Please forgive me for posting all this on your thread and wasting your time explaining to me the nuances of it.
As for my view on the euro, you can see some low prices being dropped off and this will lead the lines to turn up. As of this movement, the ML, SL and trend are all pointing upwards. But one thing that I cannot interpret well is the movements of the SL. Unless the euro can have a move big enough for SL to break its previous high, we would see a very slight divergence if prices remain or drop off. But still, price action shows a break out of a 3 months consolidation. I did an analysis on the USD Index chart as well it was bearish as well with all 3 lines pointing down. The euro being the strongest of the other majors now would be a prime buy for me.
By the way, did you notice gold? if prices are unable to move higher and it drops off, would that be a bearish divergence?
Please forgive me for posting all this on your thread and wasting your time explaining to me the nuances of it.
Don't bank on my comments Jody, I am just showing you how I see the market and make decisions. Chick agrees with your assessment of the euro. As for gold suddenly dropping off, that would cause a bullish divergence, not bearish, if the SL continued to point up while price fell. This will only happen if the 3 days average is so much stronger than the 10 day average that one or 2 days of price weakness is not enough to turn the SL down (if the weakness is great this is a very rare outcome)
Chick's most recent letter
Note that Chick means different things for going vs being long. Going long means it is ok to buy, but when Chick advises being long he does not believe the situation is strong enough to enter but it is good enough to hold.
As far as his commentary, I understand the crude oil concern, I would have sold it if I had been long that contract today. I can also understand why Chick didnât like the coffee market, the upside move there was short lived so it wasnât the ideal pattern for a crosscurrent buy. But I donât know why he didnât like the crosscurrent buy in cocoa and that concerns me, I thought that was a solid pattern and I took a good sized position in that market with the expectation of good odds of a quick rally situation. It may be that softs are looking weak overall which overrides the conditions in cocoa, or maybe the market itself is just too weak and so the signal is not a good one. Regardless Iâm going to get out when the market opens.
2 coffee sold for a small loss at 1.4275.
I also got out of my yen contract for almost a wash at 9.424.
I was wanting to short wheat and have done so today. The short term pattern was very negative with ML on a solid down cycle and SL on a downward price ladder of lower highs and lows. Only thing that concerned me was my concern for the group trend direction, which Chick doesnât seem to have. 2 contracts shorted at 8.21.
Bonds required a bit more speculation and i would have left this market alone if I had no input from Chick here. ML is still up and it looks like it will be up for another 1-2 days unless there is significant short term downside, however, after Friday odds of that are looking better. Bonds dropping on a down day in stocks are a very negative sign. Also, the type of grinding move in one direction like seen here can produce the sharp selloffs like in what recently happened in other markets. 2 contracts shorted there at 115.135
Chick's most recent letter
Note that Chick means different things for going vs being long. Going long means it is ok to buy, but when Chick advises being long he does not believe the situation is strong enough to enter but it is good enough to hold.
As far as his commentary, I understand the crude oil concern, I would have sold it if I had been long that contract today. I can also understand why Chick didnât like the coffee market, the upside move there was short lived so it wasnât the ideal pattern for a crosscurrent buy. But I donât know why he didnât like the crosscurrent buy in cocoa and that concerns me, I thought that was a solid pattern and I took a good sized position in that market with the expectation of good odds of a quick rally situation. It may be that softs are looking weak overall which overrides the conditions in cocoa, or maybe the market itself is just too weak and so the signal is not a good one. Regardless Iâm going to get out when the market opens.
2 coffee sold for a small loss at 1.4275.
I also got out of my yen contract for almost a wash at 9.424.
I was wanting to short wheat and have done so today. The short term pattern was very negative with ML on a solid down cycle and SL on a downward price ladder of lower highs and lows. Only thing that concerned me was my concern for the group trend direction, which Chick doesnât seem to have. 2 contracts shorted at 8.21.
Bonds required a bit more speculation and i would have left this market alone if I had no input from Chick here. ML is still up and it looks like it will be up for another 1-2 days unless there is significant short term downside, however, after Friday odds of that are looking better. Bonds dropping on a down day in stocks are a very negative sign. Also, the type of grinding move in one direction like seen here can produce the sharp selloffs like in what recently happened in other markets. 2 contracts shorted there at 115.135
The bonds trade was overanticipated and stopped out for a big loss at 116.30. However Iâm still bearish on this market.
Iâve been chopping a lot of trades this month (euro, cocoa) and even missed a few trades that would have posted good gains (gold and crude) so these two combined are probably going to spell a bad month.
The market is a tough beast and may take me out again, but I feel bonds is another case of me on the correct side but with timing slightly off. I donât like that yesterdayâs simultaneous down day with stocks not being repeated today, but that is just one factor. Other factors are the price is now a good âdeal.â SL and price are on a bearish divergence, SL falling from extreme highs and making a lower high and low, ML requires less speculation to anticipate down now. Overanticipating the ML is the biggest mistake I made yesterday, hopefully Iâm not doing it again here but I think the case is much better now. 3 bonds shorted at 116.305.
Sugar is also very negative, and has been. I was afraid to short it because I was watching out for crosscurrent buys in this group which have happened and without affecting sugar much. That reminds me of what Chick said earlier, sugar is fairly resistant to intermarket influences. Price is not that good, but on the other hand there is a solid concurrent downside pattern here. SL has made a lower high and low but is also at 0 now so there is a slight short term upside risk. Iâve shorted 4 contracts at .1359 due to the rest of the picture.
Now that the whole grain group is showing weakness I feel much better about my wheat shorts. Corn and soybeans still have a strong uptrend however, but corn has made a huge month long island up top and this can mark significant trend reversals. Overall I still like the short side in wheat.
I am heavily short right now which concerns me when crude has not been that negative, and the metals and currencies have both been very strong. All of this indicates an overall positive outlook across the commodity markets. However stocks continue to surprise with their negativity which mitigates this somewhat. Both stocks and bonds are feeling very âpeakyâ right now, I could be completely wrong on this, but the lines in both markets are at or near extremes.
I want at least one long position when Iâm this biased to one side, so the best pattern for this is silver. Silver has had 5 consecutive up days in a row, but SL is not on highs and actually has a very nice ladder of higher highs and lows. I probably would have let this one go under normal circumstances because there is still too much recent price strength for me to try to get in now, but I donât mind possibly giving up some risk/reward for a hedge in this situation. 1 silver long at 19.230
All my positions have wider stops than usual. Iâm trying to give my positions a little more room to work. I notice Iâve been selling the lionâs share of my trades after 1 day, and most of the rest in 2 days. This worked well last month when the market gave me unusual gains, but now that the market is not as good I am chopping trades too much. I donât like holding losers but that is a part of interday trading and someone who can do it well (not hold too much or too little) will make a lot of money.
Iâve been chopping a lot of trades this month (euro, cocoa) and even missed a few trades that would have posted good gains (gold and crude) so these two combined are probably going to spell a bad month.
The market is a tough beast and may take me out again, but I feel bonds is another case of me on the correct side but with timing slightly off. I donât like that yesterdayâs simultaneous down day with stocks not being repeated today, but that is just one factor. Other factors are the price is now a good âdeal.â SL and price are on a bearish divergence, SL falling from extreme highs and making a lower high and low, ML requires less speculation to anticipate down now. Overanticipating the ML is the biggest mistake I made yesterday, hopefully Iâm not doing it again here but I think the case is much better now. 3 bonds shorted at 116.305.
Sugar is also very negative, and has been. I was afraid to short it because I was watching out for crosscurrent buys in this group which have happened and without affecting sugar much. That reminds me of what Chick said earlier, sugar is fairly resistant to intermarket influences. Price is not that good, but on the other hand there is a solid concurrent downside pattern here. SL has made a lower high and low but is also at 0 now so there is a slight short term upside risk. Iâve shorted 4 contracts at .1359 due to the rest of the picture.
Now that the whole grain group is showing weakness I feel much better about my wheat shorts. Corn and soybeans still have a strong uptrend however, but corn has made a huge month long island up top and this can mark significant trend reversals. Overall I still like the short side in wheat.
I am heavily short right now which concerns me when crude has not been that negative, and the metals and currencies have both been very strong. All of this indicates an overall positive outlook across the commodity markets. However stocks continue to surprise with their negativity which mitigates this somewhat. Both stocks and bonds are feeling very âpeakyâ right now, I could be completely wrong on this, but the lines in both markets are at or near extremes.
I want at least one long position when Iâm this biased to one side, so the best pattern for this is silver. Silver has had 5 consecutive up days in a row, but SL is not on highs and actually has a very nice ladder of higher highs and lows. I probably would have let this one go under normal circumstances because there is still too much recent price strength for me to try to get in now, but I donât mind possibly giving up some risk/reward for a hedge in this situation. 1 silver long at 19.230
All my positions have wider stops than usual. Iâm trying to give my positions a little more room to work. I notice Iâve been selling the lionâs share of my trades after 1 day, and most of the rest in 2 days. This worked well last month when the market gave me unusual gains, but now that the market is not as good I am chopping trades too much. I donât like holding losers but that is a part of interday trading and someone who can do it well (not hold too much or too little) will make a lot of money.
Chick put out 2 letters Tuesday morning, here was the latter one that was a update/revised analysis of the first:
Will have to make this entry short but here is a rundown of my activity for today.
The silver hedge was a bad idea and sold for a decent loss at 18.950.
Bonds performed about expected for today with a short lived rally. Stocks were pretty negative but bonds did not hold their gains so I think this is a good downside sign, and with the ML/SL both negative I like this short. I lightened one position at a little less than breakeven (117) because I added shorts in other markets.
The sugar trade was not concurrent to the downside, in fact it was crosscurrent. How I made such a big error is embarrassing, Ensign windows had flipped the price window upside down and so the chart looked exactly opposite of what it was supposed to be (with no chart values except the last clsoe price on the vertical axis due to an error in the sugar chart) Meanwhile the separate pane for the ML/SL was correct and made the trade look like a solid concurrent mode. I correct the mistake after dumping my sugar contracts for a small loss at .13755. I wish I could do something to ensign for this chart error.
1 copper shorted at 3.6990.
1 mini natural gas shorted at 11.430.
2 cocoa shorted at 2956.
Will have to make this entry short but here is a rundown of my activity for today.
The silver hedge was a bad idea and sold for a decent loss at 18.950.
Bonds performed about expected for today with a short lived rally. Stocks were pretty negative but bonds did not hold their gains so I think this is a good downside sign, and with the ML/SL both negative I like this short. I lightened one position at a little less than breakeven (117) because I added shorts in other markets.
The sugar trade was not concurrent to the downside, in fact it was crosscurrent. How I made such a big error is embarrassing, Ensign windows had flipped the price window upside down and so the chart looked exactly opposite of what it was supposed to be (with no chart values except the last clsoe price on the vertical axis due to an error in the sugar chart) Meanwhile the separate pane for the ML/SL was correct and made the trade look like a solid concurrent mode. I correct the mistake after dumping my sugar contracts for a small loss at .13755. I wish I could do something to ensign for this chart error.
1 copper shorted at 3.6990.
1 mini natural gas shorted at 11.430.
2 cocoa shorted at 2956.
Latest letter from Chick:
Great to see 3 letters from Chick this week, he had been rarely commenting for the last few months and there was a 2 month period of no comments at all. Itâs always tough to tell but there is a chance he may be sending these brief letters out on a semi-frequent basis now. Of course Iâve felt this before and then he stopped after people nagged him to keep sending letters. So the letter situation is far from certain. It would be great to have my mentor on my side again, we will just have to see what happens.
If Chick does continue sending letters, anyone following my journal will see the difference in strategy and results. Chick trades differently than I do. Not significantly so, about 90% of our trades are based on similar decisions and timeframes though his decision process is more advanced and takes more factors into account where I will often do the opposite and intentionally neglect certain factors (mainly the news and COT data). The similar trades are entered and exited quickly, lasting no more than 1-3 days. His losses tend to be smaller, and profits greater even in these moves and he can re-analyze and flip sides on a trade quicker than I can. (When I take a loss on a trade I usually just leave the market alone)
Then there are those last 10-15% or so of trades that are held for a few days to a few weeks and capture large market moves. These trades had been the ones that generated the incredible results that I experienced early in my trading career. At times it was quite painful to hold onto them when there was a dip situation going on (or even when there wasnât, just profits were tapping what felt like extremes). But these special trades were so great in their profit potential against the risk they carried, that I concluded a swing/position style was the way I wanted to learn how to trade.
Heavily Chick biased commentary today (This is probably a good thing)
I felt that stocks were at turning point levels as well but they just kept on going down. Now with ML at -15 to -20 in all indexes (except NQ at -10) and SL breaking the negative ladder of lower highs and lows by creating a higher low, there finally looks to be a good sized upside reversal looming ahead, and these can be explosive after a downtrend in stocks. I donât see the relative strength difference that chick noticed today, ES, YM, NQ all look to have performed about the same (ER2 did better) If he was talking about the last few days then NQ was also stronger because ES and YM dipped harder the last couple of days.
I would have waited at least a week to see a change in price flow to the upside because any form of top/bottom picking has lost me money when Iâve attempted it myself. But Chick agrees with this trade and thatâs enough for me to place this trade with conviction. 4 NQ long at 1842.25.
The bonds trade worked well today. Very glad I was able to keep a clear mindset on this trade even after getting bumped out on a large up day that went against me, this is the type of thing I referred to above that Chick does much better than me. On a line basis I still strongly prefer the downside. The 2 issues are that Chick did not mention the bond market which concerns me, and I have taken a heavy position in stocks now so staying with bonds shorts would increase this risk further (because of the strong tendency for these markets to run against each other) Chick may have not mentioned bonds for any number of reasons (he prefers stocks a bit more, bonds situation is good but could change quickly, he doesnât want to write about it, etc) but I have decided to cash them for a good sized profit at 115.13. This trade basically washed the negative bond trade and âprobablyâ would have posted more gains if I held it.
Both natural gas and copper are at low prices (especially NG) but seem to be plummeting downwards. I have sat on the sidelines recently when I watched several against trend rallies in cotton, coffee, sugar, grains occurring. Now that Chick is discounting the trends in NG and is bearish in both Iâm confident taking larger positions in these markets with wide stops to guard against a sudden small rally which could happen at any time. Iâve added another copper contract at 3.6575, and natural gas contract (full size) at 11.524.
Cocoa has been the worst performer on the short side, the crosscurrent buy signal worked quite well there. (not unexpected because this market hit all the qualifications for a good crosscurrent buy) Crosscurrent buy signals tend to last 2-5 days so this one is near expiration. I thought about averaging into this position but although price is good, it has the worst lines for a short (trend still up marginally, ML down strongly but less so than other markets) Iâm keeping my 2 short contracts here but will not add to them.
My wheat contracts lost their profits and went negative today after a good sized up day. Iâm actually not that concerned about the upside yet but there are better shorts elsewhere. Only reason to hold these contracts would have been to keep the books neat ie let the trade keep working instead of taking the loss and positioning in better markets. Not a smart strategy so Iâm closing my 2 contracts for a loss at 8.31.
Great to see 3 letters from Chick this week, he had been rarely commenting for the last few months and there was a 2 month period of no comments at all. Itâs always tough to tell but there is a chance he may be sending these brief letters out on a semi-frequent basis now. Of course Iâve felt this before and then he stopped after people nagged him to keep sending letters. So the letter situation is far from certain. It would be great to have my mentor on my side again, we will just have to see what happens.
If Chick does continue sending letters, anyone following my journal will see the difference in strategy and results. Chick trades differently than I do. Not significantly so, about 90% of our trades are based on similar decisions and timeframes though his decision process is more advanced and takes more factors into account where I will often do the opposite and intentionally neglect certain factors (mainly the news and COT data). The similar trades are entered and exited quickly, lasting no more than 1-3 days. His losses tend to be smaller, and profits greater even in these moves and he can re-analyze and flip sides on a trade quicker than I can. (When I take a loss on a trade I usually just leave the market alone)
Then there are those last 10-15% or so of trades that are held for a few days to a few weeks and capture large market moves. These trades had been the ones that generated the incredible results that I experienced early in my trading career. At times it was quite painful to hold onto them when there was a dip situation going on (or even when there wasnât, just profits were tapping what felt like extremes). But these special trades were so great in their profit potential against the risk they carried, that I concluded a swing/position style was the way I wanted to learn how to trade.
Heavily Chick biased commentary today (This is probably a good thing)
I felt that stocks were at turning point levels as well but they just kept on going down. Now with ML at -15 to -20 in all indexes (except NQ at -10) and SL breaking the negative ladder of lower highs and lows by creating a higher low, there finally looks to be a good sized upside reversal looming ahead, and these can be explosive after a downtrend in stocks. I donât see the relative strength difference that chick noticed today, ES, YM, NQ all look to have performed about the same (ER2 did better) If he was talking about the last few days then NQ was also stronger because ES and YM dipped harder the last couple of days.
I would have waited at least a week to see a change in price flow to the upside because any form of top/bottom picking has lost me money when Iâve attempted it myself. But Chick agrees with this trade and thatâs enough for me to place this trade with conviction. 4 NQ long at 1842.25.
The bonds trade worked well today. Very glad I was able to keep a clear mindset on this trade even after getting bumped out on a large up day that went against me, this is the type of thing I referred to above that Chick does much better than me. On a line basis I still strongly prefer the downside. The 2 issues are that Chick did not mention the bond market which concerns me, and I have taken a heavy position in stocks now so staying with bonds shorts would increase this risk further (because of the strong tendency for these markets to run against each other) Chick may have not mentioned bonds for any number of reasons (he prefers stocks a bit more, bonds situation is good but could change quickly, he doesnât want to write about it, etc) but I have decided to cash them for a good sized profit at 115.13. This trade basically washed the negative bond trade and âprobablyâ would have posted more gains if I held it.
Both natural gas and copper are at low prices (especially NG) but seem to be plummeting downwards. I have sat on the sidelines recently when I watched several against trend rallies in cotton, coffee, sugar, grains occurring. Now that Chick is discounting the trends in NG and is bearish in both Iâm confident taking larger positions in these markets with wide stops to guard against a sudden small rally which could happen at any time. Iâve added another copper contract at 3.6575, and natural gas contract (full size) at 11.524.
Cocoa has been the worst performer on the short side, the crosscurrent buy signal worked quite well there. (not unexpected because this market hit all the qualifications for a good crosscurrent buy) Crosscurrent buy signals tend to last 2-5 days so this one is near expiration. I thought about averaging into this position but although price is good, it has the worst lines for a short (trend still up marginally, ML down strongly but less so than other markets) Iâm keeping my 2 short contracts here but will not add to them.
My wheat contracts lost their profits and went negative today after a good sized up day. Iâm actually not that concerned about the upside yet but there are better shorts elsewhere. Only reason to hold these contracts would have been to keep the books neat ie let the trade keep working instead of taking the loss and positioning in better markets. Not a smart strategy so Iâm closing my 2 contracts for a loss at 8.31.
Great day today!
Natural gas plummeted to the downside and the entire move was caught with a big and small contract (or 1.25 big contracts). The âstandardâ rule is that when SL is at extremes, one shouldnât try a long/short to that side without trend and ML clearly in the same direction, and natural gas did not have that because trend was turning but still about neutral. However Chick is better at reading through the trend line to find true market direction, he does this very well and can re-analyze and flip sides very quickly when he is wrong. This time there was no need for that and with Chickâs help I picked up over 900 points in this market in one day. It wasnât my highest gain per contract, but certainly my highest gain in a single day!
Question then became should I continue to hold or should I sell? A very skilled trader stops thinking in terms of âlocking in profitsâ or other arbitrary measures, he goes only with probabilities, risk rewards, understanding his own psychology, and bases exit decisions off of that. Chick trades like that. Iâm not that skilled so I was ready to cash, this is not the type of situation I know how to deal with proficiently anyways. SL was at rock bottom lows when I shorted and is still there. Price could do any number of things including making a huge reversal. The trend is turning and ML is strongly down so I still prefer the downside, I just donât want to give back these excellent profits. So I decided to sell my big contract at 10.605, and keep the little one. I can mentally ride through rallies with small positions much easier so I feel the type of positions I had worked out well for what I wanted to do eventually.
Copper is hovering in between the prices of the first and second contract I bought so I am holding 2 contracts for a small loss. This is a big position so Iâm feeling the pressure, but Iâve forced myself to look at the lines objectively and the downside is the clear winner. Only issue is SL coming up from lows (not extreme lows though) creating a minor bullish divergence with price, but Sl gets the least weight of the lines and for good reason. It is not uncommon for SL to detach from price flows and be completely wrong. Positive aspects of this picture are trend down slightly (though in a month trend will start dropping off fairly low numbers so the down trend has to be questioned at least a little) ML is strongly down and in a strengthening down cycle, which is what makes this market so appealing. Finally Chick supports this trade. All these factors make me comfortable with my heavy short position.
Stocks did well overall with the one exception of NQ which fell more than the others today. Looking at the charts I saw that YM was the most positive and ES was in-between. This definitely caused some concern because NQ clearly had the most positive line pattern with trend down the weakest, ML at âonlyâ -10 where the others were are -15-20 or so, and SL the most positive. Not only that but as far as relative strength goes NQ tends to lead, and this day produced a clear pattern to the downside with NQ (the âheadâ of the stock group) down and YM (the tail) up the most.
However I checked the news reports and saw that some of the major tech stocks missed earnings today, so the down day in the NQ was news related. News related movements are given much less weight than normal and since the other markets were up a decent amount today, news was clearly the factor in NQ being down. So I am content with holding my NQ longs once again. If anything this news created slump in the NQ will cause it to spring into life assuming a bull market is about to emerge. I almost added another contract but my risk analysis told me this was clearly against the rules.
Cocoa fell a good amount today. Still donât know what Chick is looking at to decide on this trade other than the crosscurrent buy signal expiring. ML is strongly down, but it seems TL and SL are both up, which I would âthinkâ makes this situation undesirable for the downside. Others in this group have also fallen however including sugar, and supposedly this group has the least amount of intermarket influence with one another. Obviously Chick knows something that I do not. Iâm continuing to hold my 2 contracts (a light position)
Surprising to see it so quickly, but one can clearly see after just one day how much it helps to have the guidance of a professional trader. For these longer term trades it normally takes a few days of chop before a trade can âworkâ but the natural gas market gave immediate, large profits today, and this was a trade I wouldnât have touched without Chickâs help.
On the other hand I can see that my own decision making would have still posted gains for today. I felt that wheat was still good for the downside and would have made money there (and cash out today because the lines are deteriorating now). I wouldnât have shorted cocoa, but I almost certainly would have cashed out my crosscurrent buy in that market yesterday or the day before (under the rule that these moves last no more than 2-5 days) Finally the bonds trade continued to work well today, so if I would not have gotten into stocks I would have taken good gains in that market. The case was still strong enough for me to take a light short today at 115.045. A short lived rally may occur soon but especially with only one contract I can ride through it. Stocks look good for the upside, which will help push down bonds, and the ML is starting into what looks like a large down cycle. SL in in the middle of a down cycle as well.
Completely up in the air whether Chick will continue to put out letters with any frequency, but if he does my postings will show them. Probably my account value too, the months I posted those large gains were when my account was about half the size it was today. I like to think that I read Chickâs commentary with a more experienced mindset now, having trading his method both independently and with his guidance. It will be very interesting (at least for me!) to see what comes out of this
Natural gas plummeted to the downside and the entire move was caught with a big and small contract (or 1.25 big contracts). The âstandardâ rule is that when SL is at extremes, one shouldnât try a long/short to that side without trend and ML clearly in the same direction, and natural gas did not have that because trend was turning but still about neutral. However Chick is better at reading through the trend line to find true market direction, he does this very well and can re-analyze and flip sides very quickly when he is wrong. This time there was no need for that and with Chickâs help I picked up over 900 points in this market in one day. It wasnât my highest gain per contract, but certainly my highest gain in a single day!
Question then became should I continue to hold or should I sell? A very skilled trader stops thinking in terms of âlocking in profitsâ or other arbitrary measures, he goes only with probabilities, risk rewards, understanding his own psychology, and bases exit decisions off of that. Chick trades like that. Iâm not that skilled so I was ready to cash, this is not the type of situation I know how to deal with proficiently anyways. SL was at rock bottom lows when I shorted and is still there. Price could do any number of things including making a huge reversal. The trend is turning and ML is strongly down so I still prefer the downside, I just donât want to give back these excellent profits. So I decided to sell my big contract at 10.605, and keep the little one. I can mentally ride through rallies with small positions much easier so I feel the type of positions I had worked out well for what I wanted to do eventually.
Copper is hovering in between the prices of the first and second contract I bought so I am holding 2 contracts for a small loss. This is a big position so Iâm feeling the pressure, but Iâve forced myself to look at the lines objectively and the downside is the clear winner. Only issue is SL coming up from lows (not extreme lows though) creating a minor bullish divergence with price, but Sl gets the least weight of the lines and for good reason. It is not uncommon for SL to detach from price flows and be completely wrong. Positive aspects of this picture are trend down slightly (though in a month trend will start dropping off fairly low numbers so the down trend has to be questioned at least a little) ML is strongly down and in a strengthening down cycle, which is what makes this market so appealing. Finally Chick supports this trade. All these factors make me comfortable with my heavy short position.
Stocks did well overall with the one exception of NQ which fell more than the others today. Looking at the charts I saw that YM was the most positive and ES was in-between. This definitely caused some concern because NQ clearly had the most positive line pattern with trend down the weakest, ML at âonlyâ -10 where the others were are -15-20 or so, and SL the most positive. Not only that but as far as relative strength goes NQ tends to lead, and this day produced a clear pattern to the downside with NQ (the âheadâ of the stock group) down and YM (the tail) up the most.
However I checked the news reports and saw that some of the major tech stocks missed earnings today, so the down day in the NQ was news related. News related movements are given much less weight than normal and since the other markets were up a decent amount today, news was clearly the factor in NQ being down. So I am content with holding my NQ longs once again. If anything this news created slump in the NQ will cause it to spring into life assuming a bull market is about to emerge. I almost added another contract but my risk analysis told me this was clearly against the rules.
Cocoa fell a good amount today. Still donât know what Chick is looking at to decide on this trade other than the crosscurrent buy signal expiring. ML is strongly down, but it seems TL and SL are both up, which I would âthinkâ makes this situation undesirable for the downside. Others in this group have also fallen however including sugar, and supposedly this group has the least amount of intermarket influence with one another. Obviously Chick knows something that I do not. Iâm continuing to hold my 2 contracts (a light position)
Surprising to see it so quickly, but one can clearly see after just one day how much it helps to have the guidance of a professional trader. For these longer term trades it normally takes a few days of chop before a trade can âworkâ but the natural gas market gave immediate, large profits today, and this was a trade I wouldnât have touched without Chickâs help.
On the other hand I can see that my own decision making would have still posted gains for today. I felt that wheat was still good for the downside and would have made money there (and cash out today because the lines are deteriorating now). I wouldnât have shorted cocoa, but I almost certainly would have cashed out my crosscurrent buy in that market yesterday or the day before (under the rule that these moves last no more than 2-5 days) Finally the bonds trade continued to work well today, so if I would not have gotten into stocks I would have taken good gains in that market. The case was still strong enough for me to take a light short today at 115.045. A short lived rally may occur soon but especially with only one contract I can ride through it. Stocks look good for the upside, which will help push down bonds, and the ML is starting into what looks like a large down cycle. SL in in the middle of a down cycle as well.
Completely up in the air whether Chick will continue to put out letters with any frequency, but if he does my postings will show them. Probably my account value too, the months I posted those large gains were when my account was about half the size it was today. I like to think that I read Chickâs commentary with a more experienced mindset now, having trading his method both independently and with his guidance. It will be very interesting (at least for me!) to see what comes out of this