6 month Dollar

Chart courtesy of Worden Brothers www.telechart.com

I've been thinking for some time there is some type of 6 month or 180 day cycle in the US Dollar Index. The attached chart shows some recent highs/lows based on a 180 day cycle. They are not perfect, nor show the highest highs or lowest lows, but they are related. Worth researching further, as well as shorter/longer term cycles that are in play at the same time. (There are always cycles within cycles, same as higher and lower time-frames).

Hmm....

The title says it all. Here we are, market-wise at a major intersection of the roads the market has taken and will take. New moon, 240 degrees from the 3/6/09 low, the upcoming 9/23 equinox, the September seasonality, and an NR7 day on Friday. Gold is 6 days over the 1000 mark, which is a major change from the last two probes of this level (which didn't stick, which is why they were probes). Bigger picture, this 90 cycle is interesting, both 90 days and 90 months. The 90 month cycle is worth looking at and shows interesting similarity to where we are today, and if the picture is right it doesn't look good for the "new bull market" types.

I am still captivated and in awe of professionals like Linda Raschke, Jeff Cooper, and Don Miller every day. They have never sent me a single piece of marketing mail and I think that is a major 'tell'.

Gold/Dollar

Charts courtesy of Worden Brothers


Gold is showing a big coil on the weekly chart along with the 3/10 oscillator. 975 and 925 look like the breakout levels. Given the chart of the US Dollar though, the guess for gold would be a break to the downside. The dollar is poised to continue a rally up after completing a three-swings-to-a-test (of the December low). The dollar turned its weekly chart up, came back in a bit, then closed strongly for the week. This is a change of character from the last time it turned its weekly up and then died at the end of July. The Euro is 60% of the dollar index and that will be the focus for the next few weeks.

Well, Golly Gee!

Not many blog posts recently as Facebook and Twitter seem to be takiging over the personal-update-space. Look at Tony Blauer's FB page for example. He's been well known for his work for years (I knew about him before he knew about Crossfit, but what does that matter!), but his FB updates are VERY well followed. It's the media and delivery maybe (a "hook"), combined with the message. Hey, I do remember something about marketing!

For myself, I have decided to make the goal for 2009 to compare my learning progress with skiing to that of trading. This is something I've thought a lot about the last few months (along with climbing). I would like to SHOW how I learned to ski and climb at relatively high levels, and then overlay that progression to trading and prove to myself it is similar and can be achieved. This is a work in progress, and something I think about every day. I used to suck at skiing, falling down a lot with lots of yardsales, but somehow got past it? How? What were those days? That's the path to follow to get this trading stuff down. Plenty of people ski every day and plenty of people trade every day....happily.

Pluses and Minuses

www.photontrader.com

Just wanted to show (and archive for myself) an example of a "-1+2" pattern. This is seen in several places in technical analysis as a short term pullback, but I found it in the Cooper/Reif course and Jeff Cooper often refers to it in day-trade setups. I haven't seen any distinct rules for the setup or what time frame it works best on, but I've used it on both a day and intraday basis. I use a 10 bar filter for it though, so for the -1+2, the stock has made a 10 bar low followed by 2 higher highs, with entry then on the 4th bar. The opposite, for the long side, would be a +1-2 pullback.

Where's Waldo?

Chart created courtesy of Worden, www.telechart.com

Wow, I haven't updated the blog in a month! Lots of action in the market, big rally was expected time cycle wise and it played out.

I'm watching the dollar index closely now (heavily weighted by Euro) into late April. That'll be 6 months from the October highs, which I'm using as the "high before the high" for counting purposes. Six months out could be a low for the index if this analysis works out. Exactly 90 after the October high there was a big reaction in January, adding some weight to that being a valid date. We'll see what happens after the next 90 days.

Going Downtown

You Look So Good
When you're coming down
Like A Rocket To The Moon
When you're coming down
I want your spirit
When you hit the ground

Well, It's six in the morning
And I'm feeling so good
Ain't got no clever words No More
So I won't be missunderstood

You Look So Good
When you're coming down

Sometime I got the blackest Spirit
Wants to hold you down
But the diamonds in your heart
Don't worry won't let you down

You Look So Good
When you're coming down
When you're coming down
When you're coming down
-- "Coming Down", Daniel Ash

Well the market has certainly come down, right back to the November lows.  Back to 1997 lows for the Dow.  But this week is 90 days from the November lows, which could be either a turning point (up) or an acceleration (down).  For the sake of sanity and overally well being, I'd prefer the prior.  It feels like any rally we have could be powerful, since the small intra-day "news pops" have been significant, so obviously buyers can BUY.

Things I've learned this week are:

• I am getting much better at reading intraday structure in terms of opening price, prior highs/lows, and key pivot points, looking for 3 swings to a test, re-tests, etc.
  
• Trading ES futures instead of SPY makes a LOT more sense and I feel more relaxed with it.  I'm still scared to death of the new platform though in case I buy or sell 100 contracts!
• Currency trades can be big winners, but I still take small profits.  Something to work on.