The ACD Method

Quote from drm7:

Intriguing call Mav. I noticed that X has been sideways this month, but NYMEX steel is up $30/ton during the same period. Maybe that's showing up in X's number line?
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What is showing up in X is that it's intra-day price action has changed it's behavior dramatically from the rest of the year. Trading is all about recognizing small, subtle and meaningful changes. Remember, obvious changes everyone notices. Also remember, the more rare something is, the more valuable the information.

As for my price targets, right out of the ACD playbook. The QTR target is the QTR A up. And the end of year target is actually the OR on the yearly ACD levels. We actually have a failed A down on the yearly in the 17.50 area. We have bounced off of it several times. Now this late in the year I would never use the Yearly A up as a target but proper protocol for ANY trade that fails at ANY A down on ANY time frame is a bounce at least back into the OR. I'm trying to illustrate my thought process here on how I generate my price targets. I don't just pull them out of the air.

Likewise, my upside target on Gold is 1550. Why? That is the Yearly A down. Gold bounced off it perfectly on the first touch and then went through it. Again, we can evaluate typical ACD behavior and see that markets have a strong tendency to retrace BACK to broken A levels on the upside or the downside. So any product that makes ANY A up or down on ANY time frame usually more often then not at some point re-test that level.

So if one "believes" the lows in Gold are in for the year, then logic will dictate that a reasonable upside target for Gold be that re-test of 1550. There was a reason Fisher called his book "The Logical Trader". :)
 
Quote from Trader.Fighter:

X is in a severe downtrend in many long term timeframes, in more short term timeframes is in a severe range.

Never understood the fascination for buying a downtrend without an uptrend to back your long play.

X needs to do a lot of bullish stuff before I consider it a buy signal.

Not because it cannot go up, but because there's safer, better plays out there.
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Welcome to the thread. I make 100's of trades a year. I only "post" trades that are unusual and significant and that people are not watching. Obviously you are not familiar with the ACD thread. I don't mind you posting here. But the etiquette we have established on this thread is to at least read the first 50 to 100 pages (it will go fast) before you jump in here and discuss. I can't make you do that, I can only request it. We have a very civil thread here, perhaps the only one on ET. This thread has been active for 4 or 5 years and as you can tell, there is a lot of info here.

I've been trading (for a living) for 16 years. It's my ONLY source of income. So I'm well aware of the proper things one should or should not do to trade. I don't call out trades everyday because I think it's pointless. But I do point out things that stand out to me in reference to ACD. Please read this last statement a few times OK? In reference to ACD. All discussion here should center in some reasonable fashion around the method or I will politely ask you to remove your content and if that fails, I'll ask for assistance from the moderators. I'm not saying this to be a dick, it's just that this thread is pretty rare on ET and I don't have any interest in destroying it by guys coming here and taking the thread off topic. It's not personal.

So in summary, if you or anyone else who is lurking has an interest in posting here, please provide us the courtesy of reading at least "some" of the early part of the thread. I'm not asking you to read the whole thing. The first 50 or so pages gives a good background and it will allow you to add value when you post.

Thank you and welcome to the thread.
 
Quote from Maverick74:

What is showing up in X is that it's intra-day price action has changed it's behavior dramatically from the rest of the year. Trading is all about recognizing small, subtle and meaningful changes. Remember, obvious changes everyone notices. Also remember, the more rare something is, the more valuable the information.

As for my price targets, right out of the ACD playbook. The QTR target is the QTR A up. And the end of year target is actually the OR on the yearly ACD levels. We actually have a failed A down on the yearly in the 17.50 area. We have bounced off of it several times. Now this late in the year I would never use the Yearly A up as a target but proper protocol for ANY trade that fails at ANY A down on ANY time frame is a bounce at least back into the OR. I'm trying to illustrate my thought process here on how I generate my price targets. I don't just pull them out of the air.

Likewise, my upside target on Gold is 1550. Why? That is the Yearly A down. Gold bounced off it perfectly on the first touch and then went through it. Again, we can evaluate typical ACD behavior and see that markets have a strong tendency to retrace BACK to broken A levels on the upside or the downside. So any product that makes ANY A up or down on ANY time frame usually more often then not at some point re-test that level.

So if one "believes" the lows in Gold are in for the year, then logic will dictate that a reasonable upside target for Gold be that re-test of 1550. There was a reason Fisher called his book "The Logical Trader". :)
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What struck me immediately about your X call was when I put it on a weekly chart, it has been 'building a base' for the longest time. Logic as I understand it is the stock won't die, so something is keeping it afloat. Guess the trick is in the timing.

That expression comes from Alexander Elder's Entries and Exits which I read years ago. He featured an old timer who traded off Monthly Charts and paid a charting service to courier chart printouts to him, which he kept in custom built hanging cabinets, like you see in a map room. Spent most of his time travelling with his wife following his granddaughters who were competition ice skaters in Europe. Obviously not concerned with where next months rent was coming from.

I get your logic completely.

P.S. Do those charting services still exist?
 
Quote from Maverick74:

Welcome to the thread. I make 100's of trades a year. I only "post" trades that are unusual and significant and that people are not watching. Obviously you are not familiar with the ACD thread. I don't mind you posting here. But the etiquette we have established on this thread is to at least read the first 50 to 100 pages (it will go fast) before you jump in here and discuss. I can't make you do that, I can only request it. We have a very civil thread here, perhaps the only one on ET. This thread has been active for 4 or 5 years and as you can tell, there is a lot of info here.

I've been trading (for a living) for 16 years. It's my ONLY source of income. So I'm well aware of the proper things one should or should not do to trade. I don't call out trades everyday because I think it's pointless. But I do point out things that stand out to me in reference to ACD. Please read this last statement a few times OK? In reference to ACD. All discussion here should center in some reasonable fashion around the method or I will politely ask you to remove your content and if that fails, I'll ask for assistance from the moderators. I'm not saying this to be a dick, it's just that this thread is pretty rare on ET and I don't have any interest in destroying it by guys coming here and taking the thread off topic. It's not personal.

So in summary, if you or anyone else who is lurking has an interest in posting here, please provide us the courtesy of reading at least "some" of the early part of the thread. I'm not asking you to read the whole thing. The first 50 or so pages gives a good background and it will allow you to add value when you post.

Thank you and welcome to the thread.
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Forgive me for making a slight alteration to your comment. I read every page in short order, so I believe my memory is a little fresher than yours, given that you created much of the content over time, and time is the enemy of memory. :)

I will list the etiquette in point form for all who newly arrive due to the endorsement in the other thread. I'm not making it up, it is what numerous posters here 'enforced' as this thread developed.

1) if you have a question and have not read Mark Fisher's book, please read the book first. At the very least, it means you are serious enough about this.
2) if you have read the book and still have a question, please read at least the first 500 pages of this thread. Almost everything you want to ask about application of ACD has been discussed at length and answered there. We used to say 200, then we answered the same questions 5 times and quality content increased, so we raised it to 400, then we answered the same questions 10 times with even more content, so now it's 500 pages.

Note: 'We' here does not include me, I'm just a consumer.

Truth be told, I used to feel a little sorry for the Johnny Come Latelies who asked questions that weren't answered, but I can understand the reluctance to answer the same question 5 or 10 times.
 
Quote from justrading:

Forgive me for making a slight alteration to your comment. I read every page in short order, so I believe my memory is a little fresher than yours, given that you created much of the content over time, and time is the enemy of memory. :)

I will list the etiquette in point form for all who newly arrive due to the endorsement in the other thread. I'm not making it up, it is what numerous posters here 'enforced' as this thread developed.

1) if you have a question and have not read Mark Fisher's book, please read the book first. At the very least, it means you are serious enough about this.
2) if you have read the book and still have a question, please read at least the first 500 pages of this thread. Almost everything you want to ask about application of ACD has been discussed at length and answered there. We used to say 200, then we answered the same questions 5 times and quality content increased, so we raised it to 400, then we answered the same questions 10 times with even more content, so now it's 500 pages.

Note: 'We' here does not include me, I'm just a consumer.

Truth be told, I used to feel a little sorry for the Johnny Come Latelies who asked questions that weren't answered, but I can understand the reluctance to answer the same question 5 or 10 times.
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Haha, yeah I remember that. Honestly, people are just too lazy to do all that. I do agree that they "should" do that. I was just trying to be nice. If I told new lurkers all that it would scare them off although maybe that is why this thread has remained so strong is because we scared off the lazy and the bored and the only slightly curious.

For the truly committed, yes, read the book, read the thread and then read the book one more time. :)
 
Some fundamentals to support the X buy recommendation by Mav. First, I am the senior estimator for an industrial maintenance company. I deal with the steel industry and others all day, every day, quoting jobs and negotiating price. I have been in this sector for decades. I'm no expert but I do know who is doing what.
You want to play steel you have 3 big boy choices. X, MT and NUE. NUE is far and away the most efficient, the most forward thinking and they don't have the retirement legacy issues to deal with. If you want to invest long term in steel, collect div's and maybe sell some covered calls, buy NUE. It's the steady Eddie. Do a chart overlay between the 3 and you'll see NUE is much more stable, and is showing a divergence in price away from X starting summer of 2011 and has been going that way ever since.
Next would be MT. The absolute worst of the three. Stay away.
Then we have X. Still terribly inefficient, lingering legacy issues, and like the entire sector, is suffering from over supply and a economy running tepid. That's the bad news. The good news is they are taking great pains to address their vendor costs. Beginning August of this year they instituted a system wide change in how they put jobs out for quote and will accept bids. Pressure is intense on vendors to sharpen the pencil. X is wanting to become the WalMart of beating vendors to death. It will take awhile to work through the pipeline, but it will improve their maintenance costs dramatically, which run in the tens of millions of dollars annually, PER MILL.
None of the three are running at capacity, so they can handle an uptick in demand without hiring additional labor. Supply will run short, short, not out, by early next year. If you believe demand will pick up due to a improved economy, both here and abroad, X is the place to be between the 3. While NUE is steady Eddie, the P/E is high and new money will flow into X given a choice IMO. My only concern with Mav's call is he may be early.
This post has nothing to do with the ACD method and I will not address or answer any comments, as I don't want to get the basic premise of this thread off topic. I just wanted to add some fundamentals to support the buy call. I currently hold no position in any of the 3 stocks mentioned. Do what you will with it.
 
Quote from Maverick74:

What is showing up in X is that it's intra-day price action has changed it's behavior dramatically from the rest of the year. Trading is all about recognizing small, subtle and meaningful changes. Remember, obvious changes everyone notices. Also remember, the more rare something is, the more valuable the information.

As for my price targets, right out of the ACD playbook. The QTR target is the QTR A up. And the end of year target is actually the OR on the yearly ACD levels. We actually have a failed A down on the yearly in the 17.50 area. We have bounced off of it several times. Now this late in the year I would never use the Yearly A up as a target but proper protocol for ANY trade that fails at ANY A down on ANY time frame is a bounce at least back into the OR. I'm trying to illustrate my thought process here on how I generate my price targets. I don't just pull them out of the air.

Likewise, my upside target on Gold is 1550. Why? That is the Yearly A down. Gold bounced off it perfectly on the first touch and then went through it. Again, we can evaluate typical ACD behavior and see that markets have a strong tendency to retrace BACK to broken A levels on the upside or the downside. So any product that makes ANY A up or down on ANY time frame usually more often then not at some point re-test that level.

So if one "believes" the lows in Gold are in for the year, then logic will dictate that a reasonable upside target for Gold be that re-test of 1550. There was a reason Fisher called his book "The Logical Trader". :)
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Understand your concerns and appreciate your dedication to the thread, rest assure I'm not here to disrupt anything, especially a productive thread that's a gem in a cespool.

Fully aware of ACD and Fisher teachings, even implement some of the concepts in my own trading. On top of Fisher ACD I have other criterias, one of them is the concept of some sort of trend backing an entry; something I cannot find in X.

Best of luck with your trades and your thread, meant no harm at all.
 
Quote from CaptainObvious:

Some fundamentals to support the X buy recommendation by Mav. First, I am the senior estimator for an industrial maintenance company. I deal with the steel industry and others all day, every day, quoting jobs and negotiating price. I have been in this sector for decades. I'm no expert but I do know who is doing what.
You want to play steel you have 3 big boy choices. X, MT and NUE. NUE is far and away the most efficient, the most forward thinking and they don't have the retirement legacy issues to deal with. If you want to invest long term in steel, collect div's and maybe sell some covered calls, buy NUE. It's the steady Eddie. Do a chart overlay between the 3 and you'll see NUE is much more stable, and is showing a divergence in price away from X starting summer of 2011 and has been going that way ever since.
Next would be MT. The absolute worst of the three. Stay away.
Then we have X. Still terribly inefficient, lingering legacy issues, and like the entire sector, is suffering from over supply and a economy running tepid. That's the bad news. The good news is they are taking great pains to address their vendor costs. Beginning August of this year they instituted a system wide change in how they put jobs out for quote and will accept bids. Pressure is intense on vendors to sharpen the pencil. X is wanting to become the WalMart of beating vendors to death. It will take awhile to work through the pipeline, but it will improve their maintenance costs dramatically, which run in the tens of millions of dollars annually, PER MILL.
None of the three are running at capacity, so they can handle an uptick in demand without hiring additional labor. Supply will run short, short, not out, by early next year. If you believe demand will pick up due to a improved economy, both here and abroad, X is the place to be between the 3. While NUE is steady Eddie, the P/E is high and new money will flow into X given a choice IMO. My only concern with Mav's call is he may be early.
This post has nothing to do with the ACD method and I will not address or answer any comments, as I don't want to get the basic premise of this thread off topic. I just wanted to add some fundamentals to support the buy call. I currently hold no position in any of the 3 stocks mentioned. Do what you will with it.
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Thanks for the background Captain. Let me give some further color on this. Obviously I don't follow all the steel related products. There is a steel ETF (SLX) but it's very illiquid. I've been following X for awhile as it's part of my sector basket. So by no means am I implying that of all the steel choices out there, this is the best one. However, having said that, I do follow this name closely and this is the first number line confirmation since January! That's a big deal in my world being that all my trades are number line based.

One thing I left out was the risk part, so let's fill that last piece in. I always use the monthly A downs as stops for my trades. For me, anything that is strong or should become strong should NOT confirm a monthly A down. So Tuesday of next week I will post the monthly A down level for X and rest assured, if it confirms, I'm out. It's as simple as that. I have a lot of trades on now and this is only one of them. So while I'm making a big deal about it for the purpose of this thread, it represents a small part of my book.

I do however like to illustrate these trades because I have found, in my experience, that when you get a number line confirmation on something that has NOT confirmed in a very long time, it provides the "opportunity" for a big move. Let me repeat this part. I'm looking for an "opportunity". I have no way of knowing if this or any trade will play out. But number line confirmations, especially rare ones, often lead to massive outsized moves where one can get in "early". I pointed this out awhile back on USD/JPY when that still looked like crap. I got a confirm way back in the low to mid 80's. Keep in mind, that yen pair had been dead for years with absolutely NO volatility. Who am I to make a crazy prediction on the Yen. But out of no where the thing confirms. So I broadcasted that on this very thread. And I said the same thing, I know this sounds crazy, but this Yen might actually break out to the upside. I even through a crazy crazy target out there that it might actually go to par. Well, it did and then some. I think it got a tad shy of 104. That is a MONSTER move for that pair.

As traders all we can do is two things. Look for opportunity and manage the risk if we try to capitalize on that opportunity. That's it. Everything else is just conversation. While the Captain provided a nice fundamental backdrop, all my trades are quantitative based, not fundamental. I'm not trying to make a statement about China or an improving economy. I update my spreadsheets every day and take all the trades it generates and GET OUT every time a risk level gets violated, no questions. I'll put my discipline up against anyone in the world. That's always been my strength. That and my propensity to out work everyone around me.
 
Sorry guys, forgot to post the monthly A down for X. The level is around 17.50. A monthly confirm would negate the X long. And to re-iterate, the upside targets are the QTR A up at 21 and a tag of the yearly OR at 25-26 by EOY.
 
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