Wednesday, February 04, 2009

Guesstimates on February 4, 2009

March S&P  E-mini Futures:  The short term trend in the e-minis is upward and the next upside target is 855.  I am still expecting to see a demand shock in the next day or two, but if we don’t get one I think this market won’t be able to make it even to 876, last week’s high, before it turns lower again.

QQQ: Support below the market is at 26.50. Strength above 30.00 will mean that the Q’s are headed for 34.00.  

March Bonds: The bonds have dropped into the 126-27 target zone. The next big move in this market should be upward. Any significant weakness below 125 will mean that a bear market is underway.    

March 10 Year Notes: The notes have yet to reach our 120 target. We think a substantial rally is imminent, but weakness below 120 would mean that a bear market is underway.    

Euro-US Dollar: The euro has traded sideways for several days after dropping as low as 127.50.  I think a rally to 137 or so is underway.  

Dollar-Yen: I think the 87.50 level will hold and that a rally to 100.00 is underway.  

March Crude: The 50.00 level is resistance and I think March crude will drop down into the 30-35 zone.

GLD – April Gold: The market nearly reached the 935 resistance level Friday. At this juncture a drop below 870 will mean that a move down into the 550-600 range is underway.

SLV - March Silver: Silver has rallied to resistance at 1250. I think the next big move will carry this market downward to 650.

Google: Resistance stands at 375. I think that its drop from 747 is over.

 

3 comments:

Anonymous said...

Carl,
I am a newbie at stock trading who has followed your blog for several months and who has the following observations. Technical analysis seems to be good at forecasting trends only until the next piece of unknown info hits the market. If the info is good news, the market gets a demand shock, if bad a supply shock. Because this info is unknown, it happens randomly -- 50% of the time it is good, 50% it is bad. Also, the info happens at totally random time intervals. Good info may be followed by bad info in minutes, hours, and days -- and vice versa. The reason you make profits is because of your discipline and the ability of your technical analysis to develop support and resistance levels -- you cut your losses immediately when the unknown info runs counter to your technical support/resistance levels and you let your profits run when the unknown info supports your technical support/resistance levels. To test this theory that your extensive snalysis really does nothing to determine trends -- short or long term -- I believe that if you did just the opposite with your system -- go short when you think you should go long and vice versus, you would make just as much money. The key is your identification of support and resistance levels -- not trends.
So when I read your blog, I ignore all statements on trends -- you along with everyone else has no clue on the short and long term trends in the market -- 50% of time you will be right and 50% of the time you will be wrong. I do find invaluable your assessment of support and resistance levels as those are the levels I enter and exit trades.

Carl Futia said...

Dear 9:26 am

You have made a reasonable observation, one that I have heard many others make - but I don't think it is true. The fact is that you cannot succeed in trading without having a "bias", a view about the direction of the trend in some time frame. When you bias is wrong, you typically lose money, but if you are doing things right losses should be small.When you bias is correct, profits should be substantial.

Lurkers on this blog and sundry other idiots like to say that they can make money consistently by taking positions opposite mine. But the information about my e-mini trading record in the right hand column of this blog shows just how wrong they are.

I also think that you would lose money by adopting views opposite mine on the trend direction but using my support-resistance tactics to trade. If you doubt this, give it a try.

All in all, I think your conclusions, while plausible and appealing, are wrong.

Anonymous said...

Newbie--you're on to something very important that good traders have learned. That's why you'll often hear traders say "discipline over conviction."

But where you are wrong is concluding that your odds of a winning trade are always 50-50. What I've learned (and continue to learn) is that along with technical analysis, sentiment (I'm a contrarian) and history (how markets have behaved in similar circumstances) can give you much more than a 50-50 chance of being right. This "edge" or risk-reward benefit has helped me make a lot more money than just relying on discipline and the 50-50 chance you described.

By definition, a 60-40 or 70-30 edge doesn't mean you're going to be right. But it's a huge benefit to your performance and confidence when you're actually pulling the trigger on a trade. Like all good traders, Carl uses a lot of indicators that he doesn't discuss. What I appreciate most about this site, though, is the massive amount of wisdom and "gut-feel" that Carl possesses. This can't be described, but can only be learned through years of learning and trading.

Blessings,
Jeff