The ACD Method

Quote from kinggyppo:

thanks for the chart, es almost at 1260, what really bothers me is that there are no threads on et calling for a crash, now that is spooky!:p
More...

I saw one.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=243761

King, I was at a retail trading summit over the weekend here in Chicago. They had about 300 to 500 people there. And nobody was long and they were all bearish. The whole seminar had a pretty bearish tone. Negative sentiment is about as high as I ever have seen it. This selloff has been pretty orderly so far. I really don't think retail money is long and most mutual funds seem under invested.

I just don't think we have the same leveraged long exposure we had last August. I could be wrong of course.
 
I have spent a lot of time on here talking about "obvious" levels and why I prefer ACD over other forms of TA. And one of the reasons for that is because more often then not, I have different levels to focus on then people who look at say 200 day moving averages.

The 200 day is very messy and everyone right now is obsessed with it. All I heard over the weekend is about the 200 day moving avg. I think we need to break it decisively to rally. Too many people will be ready to get long if we just bounce off of it. We need to stop the longs out and get more shorts in.

Unfortunately the monthly A down in the ES happens to be that 1260 unch level on the year.
 
1260 is a wide nip in the middle of that mp chart, the wider, denotes more trades took place at that price,so the leftover shorts who rode it higher would be happy to break even, the wider the spot the larger number of persons holding a position at price,that bounce would normally take us to the spot above at 68-71 if it didnt stop then 1280 spot,but on the way down it didnt hit and bounce off those spots so if it doesnt get more than a dead cat bounce it's likely to drop to the 1241 area, by that time the 200 may be in the teen percentile and a very oversold area,also looking for the bonds @153 1/2 and the eur usd 121 area before any res or supp..eur and bond charts here http://www.elitetrader.com/vb/showthread.php?s=&postid=3542962#post3542962
 

Attachments

Quote from Maverick74:

I saw one.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=243761

King, I was at a retail trading summit over the weekend here in Chicago. They had about 300 to 500 people there. And nobody was long and they were all bearish. The whole seminar had a pretty bearish tone. Negative sentiment is about as high as I ever have seen it. This selloff has been pretty orderly so far. I really don't think retail money is long and most mutual funds seem under invested.

I just don't think we have the same leveraged long exposure we had last August. I could be wrong of course.
More...

I bet Dr J is raking it in on the brokerage, what did they discuss? I am sure it was a packed house, the option guy (Jamie Tyrell) does a great job on their videos.
 
Quote from kinggyppo:

I bet Dr J is raking it in on the brokerage, what did they discuss? I am sure it was a packed house, the option guy (Jamie Tyrell) does a great job on their videos.
More...

A little bit of this and little bit of that. Everyone was talking about Friday's close, the 200 day, Europe. Dr. J got long a lot of gold. He said there were some massive call buying on the open Friday after the jobs number in both June and July. The move in Gold looks real. I think Gold will be a good tell if the market expects to get this Chinese rescue of Europe.
 
Quote from Maverick74:

A little bit of this and little bit of that. Everyone was talking about Friday's close, the 200 day, Europe. Dr. J got long a lot of gold. He said there were some massive call buying on the open Friday after the jobs number in both June and July. The move in Gold looks real. I think Gold will be a good tell if the market expects to get this Chinese rescue of Europe.
More...

:)
 
Quote from Shanb:

Thanks for posting. Do you trade at a firm? What exactly are you trading...maybe you could share a bit with everyone here.
More...

I trade for myself but cut my teeth in the index option pits in Chicago for a market making group. I've traded a lot of different things over time. Currently, I stick to commodity futures and am working with a system that had shades of ACD before I knew what ACD was. When I came across" The Logical Trader", I decided I should revamp the system with an ACD overlay. That led me to this thread earlier this year.

What little I could share would be more option related or general experience than ACD so off-topic as far as this thread goes. Still, when I saw the Karen video and MF Breakout's comment that they should learn about naked premium selling, I felt compelled to speak out. Not saying, premium selling is innately bad, just that it is something that requires a great deal of care and active management as well as offering up significant risk beneath a calm surface.

To tie a couple of things together, there was another interview posted here recently with Jack Schwager. He makes a couple of references to optionality and ideas about being long optionality which can provide an asymmetric reward to risk ratio. He also talks about the risks of being methodically short low priced wing options which was "Karen's" strategy. I like to think of a futures position with a resting stop loss as a long option. In that context, ACD for me is the idea of turning those useful levels into long option trades which provide asymmetric profiles. Admittedly, I have more losers than winners but the winners tend to be much bigger and I always know where my exit is. Being short options is the opposite. Not knowing my exit is stressful and complicates decision making so it is not for me.

Sorry to be long-winded. The original intent was to express gratitude to Maverick in particular and the other regular posters here. Also, to at least wave a flag about the risks involved with premium selling as a passive strategy.
 
Watch this market into the close...Bonds coming off and some things coming off lows. Lets see if they can squeeze these shorts into the close.
 
You must log in or register to reply here.
Back
Top