Amos joined. Amos Hi Ory Hi Amos Mr_Steve joined. warren joined. Gary_Fullett joined. Amos Good Evening Jon hello Amos First chart again belongs to my contiuous chataqua to understand difficulties in trading Amos I am pretty sure that some of you are getting tired of my "negative" comments about weakness of systems and the ability of the market to toy with them-- but to me this is rather important-- and because it occupies my mind so much-- you suffer too BillC joined. Ory oh Thanks Amos Mr_Steve not a problem Amos Amos I may add that I have been giving a seminar on trading to a group of about 70 Retirees of RAFEL (the Israel defense industries) lately and I am about to start another series of 7 lectures-- and these are all engineers and Ph.Ds with Physics, Math and what not--- and they want to know how to preserve their pension in the next few years Ory we love your methodology Amos So when I try to educate them about market behavior-- you can imagine the drillings I get from all those sharp minds who do NOT except anything that CANNOT BE PROVEN MATHEMATYICALLY to them-- no matter what Amos So I am faced with some serious LOGICAL challenges by these folks ( who do not hesitate to call me late at nite with some grievences about the FLAWS I presented in this model or in that idea) mark joined. Amos so if you guys suffer from some of my on going battle with some "TRUTHS" about the market, Wcykoff, Utility of Models etc.---It is only because I am being challenged to the bitter end lately about same issues Amos First chart is 400 X # of the Nasdaq BillC left. Amos there is seemingly a clean count at the RH Phase (Right hand) and it calls for a drop to 1725 or there about Jon the msrket can be very predictable and logical at times to, like today Amos since it took out the LAST LOW in the last rally from 1700 to the 1920 --then it gives more support for the supposition that the count will be reached Amos On top of it it seems that we have a clear range between those two boundaries and the bottom of the range can be challenged again without any difficulty Amos The strong drop from the RHS of the clean count can be considered another indication that supply is winning Amos But the makret refuses to drop Amos and had nice rally last 2 days Jon maybe there is a bid under the market for the time beig with some much leverage being taken out of equities and being put into the bond market...no one left to sell? Amos The only reason I bring this chart which has nothing significant about it-- is to point (again and again) the fact that the market is very good at IMPLANTING images in our mind, SHORT TERM MEMORY is a thing the MARKET TOYS very much with (Long term memory is something very few possess and most data systems CUT long term charts from their regular services-- I talked about it in the past) Amos Jon, YOu are talking a languate that I simply refuse to relate to-- I cannot cope , dont know how to cope and for sure dont know how to make money with such arguments, Sorry Lady_K left. Jon the chart and price action will tell us Amos So you can see on the left side that the last decline from 1920 to 1700 was pretty much a stragight line with out ONE corrective rally to catch stops that were located at the "last high"-- this has an affect on trading. benoit joined. Amos We tend to "ESPECT" similar behavior because our eye can esily catch it and our mind tends to translate recent behavior to-- MOST LIKELY FUTURE BEHAVIOR Janet joined. rich joined. Amos if there is any modicum of utility to the ELLIOTT WAVE approach it has to do with the concept of alteration that Elliott introduced. He ofcurse DICTATED THAT IT MUST COME-- and that is not true-- but the FACT THAT he even MENTIONED THE FACT that market CAN alternate its Modus Operendi from one phase to ADJACENT phase-- is good enoug--simply to reming us that if we look at a chart and something on the left side (whatever the time frame!) looks a certin way-- it is WRONG to assume that the market will replicate itself Amos History repeats itself-- but never quite the same way Amos and in the market place-- this tendency of people to look at the left side of a chart and --ASSUME, HOPE, PREDICT, FORECAST-- you name the verb--- that the right hand side will look the same-- can be costly. period roger joined. Amos what is the solution?-- simple. BE READY FOR A DIFFERENT MOVE--DON"T BE SURPRISED! Amos Next chart is the Euro Amos the rally from the very oversold 119 level to the 133 level is actually a rather feeble rally Amos but because it is taking now over 9 weeks== you can already hear mumbles about the resurrection of Europe (until last 24 hours when rumours of more failings started to surface -- because the makre dropped 4 handles) Amos Point and Figure charts have an attribute that is both a BLESSING and a CURSE -- depends on your character and your pocket Amos It IGNORES THE DIMENSION OF TIME Amos It is true that most chart services DO put a time scale at the bottom and STOCKCHARTS which is in the BUSINESS OF SELLING THIER CHART SERVICES even put each month as a number (1-9= Jan to September) and ABC for Oct, Nov, Dec) embedded in the chart . joined. Amos but most people cannot and do not know how to interpret that time on the Point and Figure scale (If you have one column that includes 3 thru 4 (goint thru the letters) would not understand that that column actually took over a year to form! Amos So on one hand P&F charts remove the issue of time and only show you actual moves , rallies and reactions in the market Amos but at the same time-- the fact that you look at a move which is strong, say and you have no grasp as to how fast or slow it was== can create some false impressions Amos this is an important issue-- and I am not giving a class about the mysteries of point and figure-- but since I just compared left hand side of a given chart to the Right side of it-- then you can ask the question of time interpretation Amos You do not see the large drop that happened before the low of 119 was reached PiggyBack joined. Amos but we basically dropped from above 150 to that level-- so the rally back to 133 is barely a 38% retracement Amos The reason I show this chart is to show that count can be misleading too many times-- and this is somehting you simply have to live with Jon any use in using tick charts that also eliminate time and show price action and actvity Amos Jon, what do you mean tick chart? Jon instead og time you measure number of trade and price action Amos how do you measure number of trades on point and figure chart? Jon no, not on p&f charts...the chart im talking about is called a tick chart? Jon every 500 trades would form a bar instead of 5 min or whatever number of trades you specify davidb joined. rich left. Amos OK, you must be new to WYckoff, Jon-- the system mandated the CONCURRENT use of BAR CHARTS WITH VOLUME = the Law of EFFERT VERSUS RESULT (volume can definitely be tick volume in intraday charts) --- PLUS the LAW OF CAUSE AND EFFECT which is POINT AND FIGURE CHARTS that only measure certain REVERSALS OF PRICE-- this FILTERING OUT any move that is SMALLER THAN THE FILTER YOU HAVE DESIGNATED-- thus calling it NOISE Jon time charts are noise too though Amos those two have to be used IN CONJUNCTION WITH ONE ANTOHER-- they show DIFFERENT ASPECTS OF THE MARKET and together should, once in a while- give the trader a BETTER INSIGHT about the true phase of SUPPLY and Demand Amos at any rate I drew a 50% projection-- based on the fact that many times the first impulse ends at half way and that gives a projection of 124 or so Amos next chart shows tries to guess the STEPPING STONE COUNT- since the CLEAN COUNT at the 132-133 leve has already been materialized Amos This is another dagner of FORECASTING-- if you guess the extenet of a count--you never know how long the market will be staying in the same area and perhapse create MORE CAUSE! Amos This is the danger of using this chart to predict Amos the truth is that you never know the count UNTIL IT HAS BEEN RESOLVED,. The consolation to this is that if the count is big enoug-- you really do not CARE if you lose the first part of the move-- because you sacrificed MAXIMISING CORRECTNESS OF MOVE-- TO PROFITABILITY Amos I will repeat again and again-- those who try to MAXIMISE PROFITABILITY IN THE MARKET PLACE will die in the end (REMEMBER ROTHCHILD!) Amos The count I have mared is to above 125 Amos there is NO SYNNERGY between the 50% projection (which may or may not be correct) and the count--- and lack of SYNNERGY is NOT a good thing Amos somthing to pay attention to-- if two approaches do not support each other-- the chance that you are WRONG ABOUT the TIMING -- is high. Just a hint Amos indeed the next chart shows you that the same count 20 X 3 which is quite a good count at these levels of the euro (you want to change the filter as the volatility changes)--shows how quickly the euro added 3 more columns to the count-- in a rather short period of time! Amos Must keep and open mind about these things Amos The next chart is a small filter in the dollar and the clean count of 7 at the bottom was reached FAST AND CLEAN Amos so if the market is to continue to rally-- it needs to build a second phase CAUSE-- or a stepping stone, a Wyckoff called it Jon a pause that refreshes Amos How it is going to go about it-- is FUTILE TO GUESS-- just WAIT and HAVE PATIENCE because the LONGER it stays in that phase-- to build the next cause-- the farther it will go--- so WATHING WITH PATIENCE SHOULD BE EASY-- because you know that looking for a bigger TIGER Amos Jon, this is NOT a restaurant Jon ? Amos You have to come to my lectures with a sandwich and a potty Ory i,m ready Amos Mr_Steve Amos you are to cool! Amos Another hint about point and figure charts is the count I marked of 7 davidb left. sb2010 left. sb2010 joined. Alvin joined. wyatt the 50% hint is neat ty Amos Amos this is a clean count of sorts-- not the classical one but many times it works-- it is sort of "distribution on the way up" on a very small scale--you can only use it if it results in a strong WALL on the right side of the "CLEAN COUNT" and the assumption is that the cause starts with the FIRST HIGHER HIGH (at the time it seemed important buying-- but after the 7th coolumn-- when the shapr drop occured-- we "KNOW" that it was actually SELLING- so the next higher high and the next one and the next one-- are simply smart selling (profit taking if you wish) and collecting those columns and still calling them a "CLEAN COUNT"-- is a CORRECT WAY OF dealing with point and figure charts Amos I am not sure it is part of WYckoff-- but it is part of me. o take it or leave it Amos YOu can see that that count calls for 8200 which is not a bad measurement farmer left. farmer joined. Amos next chart is trying to "GUESS the next move-- and here is the FAULT OF THAT GUESSING Amos sicne we basically have reached the targer of the DOWN COUNT and the low near 8200 "looks like a spring-- I rush to count the coutn of 5 at that level as a CAUSE Amos But you can see that when I tried to trade this cause-- I wrote IF THIS IS A SPRING! Amos this is an important issue-- a spring is not a spring UNTIL it has proven itself Amos I cannot tell you how important this statement is for longevity in this market Amos You guys are meeting in the room daily and exhcange many trading ideas and methods and approaches--each of you brings to the room their plethora of experience and savvy Amos but in the end-- each and everyone of us is trading their OWN SOUL , their own level of GREED, AVARICE, FEARS, HOPES and NEEDS Jon thats why successful trading is 85% about mastering oneself Amos In the long run-- in order to survive in this business--- one of the most important things to do is to avoid being whipsawed, avoid trying IFFY trades, Avoid making assumptions about the market and SIFT AND FILTER for those situations that have HIGH LOK Amos falling pray to small hopes-- is very tiring in the long run Amos long ago I talked about EMTIONAL DOLLARS vs ACTUAL DOLLARS-- I think it is time to run this thing again because it is very important-- I will make a note to talk about it in the near future Amos At any rate this leads me to the important subject of tonight Jon discipline through money mgt. and trade mgt are the keys i have found because all the skill in the world and hard work will be for not without it Amos sorry for the delay Amos I made some noted to myself last night Amos and was sure I wrote them in the body of the letter to Gary-- and was looking for them-- NISHTU! Amos So I have to regroup my thinking by heart Amos Then next chart is the oex and it says in the body of the chart-- the CURSE OF WYCKOFF or any other model Amos This is something that bothers me to no end lately Amos First look at the chart Amos I marked the low of 2003 and the high of 2007 as a full range and it is clear that the low of the large quartely bar marked by the arrow is the exact 50% of that move Amos now look back from that bar and count 10 quarters back-- what do you see? Amos a market that sits for 2 and a half years in a narrow range and does NOTHING! Amos how do you cope with it? Tommy left. Jon you trade intra-day rathr tham invest Amos what do you talk about for 2 years--which method do you use? how do you avoid losing again and again after you have decided that THIS IS IT-- IT CANNOT stay so long in that narrow range-- it MUST GO? i Amos is it SHORTENING OF THE THRUST? Amos Dont' we need a test of the low? brad joined. Amos Isnot the OSCILLATOR TERRIBLY overbought---you name it Amos THen the market runs to the high point and reverses and collapse Amos You tell me-- what kind of WYCKOFF BEHAVIOR IS THIS? Amos where is the distribution? where is the AR and the test? where is the SOW? etc. Amos then at the bottom-- where is the accumualtion? where is the range after the AR? Amos this is reality Amos Here is what I am going to say about this-- and if I mumble-- forgive me-- because it is still NOT COMPLETELY FORMED IN MY MIND Amos what is a model? Amos what is a trading method? be it wyckoff, bollinger bands, Markt Profile, Elliott, Pattern recognition, Models gallore etc? Amos it is a way to try and MAKE SENSE OF MARKET BEHAVIOR Amos it is a way to say that the market DOES HAVE LAWS OF BEHAVIOR the same way that all PHYSICAL and CHEMICAL proecess have rules from Newton to Boyle... Amos We NEED some clarity, we cannot meandre in this forest aimlessly-- we need ORDER Jon why not simplify it and just read the price action babr by bar every day Amos Well-- this is beautiful and as far as I am concerned Wyckoff is the MOST LOGICAL and reasonable approach of them all Amos Jon-- I do not know your background and how much money you make trading--but if you read history and account of good traders-- they ALL have certain PHILOSOPHIES that guide them-- without it-- you are lost Jon yes, everone must have trading plan Amos Some have used their simple philosophies and made fortunes-- Warren Buffett read GRAHAM AND DODD book that was written in 1940 like millions of other students== HE IS THE ONLY ONE who made BILLIONS with the idiotic idea to buy undervalued companies and stick with them roger left. Amos So the philosophy itself does not make money-- but you cannot make money without SOME PHILOSOPHY Amos so what is the problem? Amos I am almost sure that the problem with matering a certain model-- no matter what-- has the curse of making you feel like you KNOW! Amos Take the WYckoff principle Amos it basically describes in accurate details the ACTION OF THE CM Amos in order to do that-- IT ASSUMES that the CM WILL ACT the same way each and every time--- or AT LEAST that is the way it will act in CLASSICAL SITUATION when true distribution and ACCumulations take place Jon you can have any philosophy too but again with any system it will come down to discipline of money mgt. and trade mgt that will utlimatel determine if you become a good trader Amos ALAS, embedded in this idea is the thought that the CM can manipulate the PUBLIC in a certain way and the PUBLIC will react again and again the same way (Jesse Livermore says the same thing-- I think that is where WYckoff got his ideas) Amos Jon-- everything you say is correct and good Jon thats is because the average investor allows fear, greed and hope into the equation Amos but the fact that 90% of the traders lose-- means that such words as DISCIPLINE of MONEY MGT.--are empty words-- how do you acquire those? why do those 90% violate them? Amos Yes Jon-- how do you NOT allow fear, greed and hope into the equation? I need a solution-- not bombastic statments Jon because trading is the hardest thing to do because it requires self mastery and very few are capable of this Jon you need a trading plan with rules Jon you follow your plan no questions asked Jon if you no you plan makes money and have confidence in your plan then you follow our plan Amos So to continue-- THe basic tenet of any Approach to trading-- any philosophy, is that on the other side of the CM -- who knows and has the money to do it is that his methods will SUCCEED to cajole the public to TAKE THE OTHER SIDE and that various classes of traders will fall pray to his market plans Amos The buying climax is the point where ALL WEAK SHORTS surrender Amos THe bottom of the range is where many shorts jump on the wagon and the role of the range and the LPS-- is the point where most of the smart traders will have enough DOUBT instilled in their mind and pockets (mainly because ENOUGH TIME has passed and their position does not show profit-- sometimes it is done with Futures and OPTIONS expirations--other times-- just fatigue and furstration) Amos in otherwords-- the WHOLE CONCEPT of the WYCKOFF principle is based upon the fact that the CM acts in a certain way-- and that must lead to the conclusion that the PUBLIC will fall again and agiain into the same traps! Amos well, folks-- it aint necessarily so! Amos and you see more and more EXCEPTION to the classical model Amos Perhaps a lot has to do with the explosion of information and too many people already "know" the tricks and the lines and the points of support and resistance Amos every morning on hundreds of sites the exact points of support and resistance for the coming day are advertised by Ashers and Ushers (see the guy on tfc-- he is pretty consistent)--but the same points are given at GVI and I am sure many other places Amos Perhaps it has to do with the fact that so many robots have already incorporated many ideas and models into their algorithms Amos I can think of many reasong- but the major point I am trying to make-- and it is tedious and unpleasant-- but must be part of your trading mind-- is that CLASSICAL patterns and behaviors---are a thing of the past Amos Hardly any of Edwards and Magee classical patterns-- from flags to heads and shoulders to any other SHampoo--- work any more Amos The soultion to this? FIRST TO BE AWARE OF THE PROBLEM! Amos Answers are found by Jon and his clique. Amos look at the next chart Amos I think it symbolizes the problem prett well Jon amos one thing i learned as a trader is that to be succesful we need to reprogram our brains. hope keeps you in tades longer than you should be in them. Fear keeps you from making as much money as you should because you sell to early fearing the market will take your profits away. traders must reverse these natural impulses of hope and fear. instead of hoping price will come back you must fear and instead of fearing the market will take your profits you must hope. Amos This is the daily dow from the April top Amos first we had the famous May 6 debacle-- that A famous WYckoffian called a most CLASSICAL WASHTOUT Amos I stood at that point and said it is a classical SIGN OF WEAKNESS Amos what is the truth? BOth of us are shit! Amos Indeed it was an important day- but what happened after that is a very UNCLASSICAL market behavior Amos instead of DOING SOMETHING-- the market chose to do the opposite-- like the famous cliche: Amos Dont just DO SOMTHING-- STAND THERE! Amos Can any of you , folks (55 in the room-- fibo major number) decipher the action of the last 4 months via ANY MODEL or philosophy? NOTHING WORKS Amos lower lows are fake, higher highs are fake what is this? Janet left. Jon black boxes manipulating the market with light volume recently Amos Well it is an IMPORTANT MESSAGE to all of us that the REAL CM-- is AWARE OF THE FACT that too many people understand or think they understand market phenomenon-- and he decided to PUNISH US ALL Amos Eventually, on the very long term charts we will look at this confusing and MEANINGLESS behavior and will say: "Aha, of course it was this and that!" Amos but at this point-- it is one garbled, random behavior that means nothing Amos SUre---- there were about 3-4 points of turning that if you went BLINDLY , as Jon suggests, and followed the Lines of the daily acton-- you could have made money joe_s left. Jon amos look a the spy today it traded very predictable at the open it went to yest. low then at 10am reversal time reversed and went to yesterday high. you can make money in this market with Wyckoff principles and TA everyday Amos Jon--in any scatergram or any random behavior you can find small sements that seem "predictable"-- I am looking for a method that will serve me EVERY DAY, not TODAY! PiggyBack left. Jon this works everyday come trade with me and I will show you it is possible to CONSISTENTLY make money in the market Amos At any rate-- I must stop this diatribe--- The main point I was trying to say is that the METHOD-- as good and intelligent as the WYCKOFF approach is-- creates a HOLLY GRAIL mentality-- and if you expect it to solve any behavir in the market-- all the time-- you are goi8ng to suffer periods of drawdown because the market will play aginast you Amos This is very important to understand Jon true that is why moeny mgt. is so important Amos This is why traders like Linda B Rascke likes Wyckoff-- but she will trade so many other models and systems from RATS to Roaches-- because she knows that nothing works all the time in the market Amos Jon, you keep saying Money mgt as if anyone knows what it means--- to each person money mgt is different. Many time the MOOD you are in, the sex you had last time with your wife (or, in Caliornia with your mate), the SIze of your last loss--- are more important determinants of your decision making process than anything else Amos Next chart is pork bellies Jon aamos all you have to do is read the candles/bar and volume and use Wyyckoff/technical analysis and you can be profitable day trading. People who move from one concept to another will never win in the end Amos if you dont think this is a joke-- then I don't know what to tell you Amos Don't know how many of you were cuacht in such a choking lilmit move--- it happened to me 3 times in my life and it amounted to between 25 adn 75k losses--- it is VERY HUMILIATING Jon not if it is written in your trading plan...you remove all emtions Jon traders should be risking the same unit of risk on almost every trade Amos but , as far as i am concerned this is part of the ROTATION of the CRB-- each group is allowed its run-- in its turn-- crude, rice, sugar, feedrs, pork bellies, GOLD is one exception because it has been going one way for a long time Amos Jon-- your last statment is VERY WRONG-- Risk parameters should definitely be a function of LOK--- I am sorry you said what you just said-- but for anther time Jon noy for traders just learning Jon not Amos Next chart is cotton-- this is major resistance area and unless the market feels there are enought stops above last high above 90--- prepare for a sharp reaction Amos Next chart is gold monthly Amos THE VERITY OF THE THRUST OF KR (erronesouly I wrote OKR-- please forgive me) is challenged Amos This is rather crucial point for gold Amos Again the KR was last dec and July was the FIRST THRUST Amos we are testing that thruse now-- and if we make lower low on the monthly chart-- then 1050 will be tested Amos next chart is just an observation of BIDU-- the chinese google- Next month is 21 from the bottom-- should be interesting to see if it means anything in Chinese Jon funny Amos Last chart is monthly dow and this month is 34 from the high-- will it meant anythng? who knows sb2010 left. Amos Notice that we are approaching the triplle expiration in Sept and if this juncture happens to be an Options expiration game-- then we may have to stay in a narrow range (look at the monthly range-- VERY SMALL!!!!--all the girations in the dow are BARELY ANY MOVES-- and the OPTIONS and the VOLATILITY is being crashed Amos HAOOK Amos open for questions Mr_Steve Thanks Amos for giving us something to challenge our thoughts about Jon yes, thank you Mr_Steve I have been wondering the same thing yoou have been talking about, what really works now days? Mr_Steve Very funny and dangerious time in the markets and the world warren this is like Atlas trying to find a place to stand! Thanks, Amos. Amos btw, as long as I shared with you the fact that I am trying to educate abunch of retired engineers and scientists-- you would be shocked to hear how much resistance comes from these acute minds-- to any subject that deals with the human soul-- frightening Jon right now intr-day trading is what works or short 1-3 day swings when right other than that you will lose money Ory ty Amos wyatt Jon that's correct Mr_Steve Brokers love in and outs Mr_Steve They make from every trade Jon so does your account in this environment Mr_Steve Amos Jon buy and hold with no hedge in this market and you are throwing money away Mr_Steve I would like for you to sometime explain some more about point a figure Mr_Steve Sometimes mine work and when they do not I am wondering what I am doing wrong Amos joh--warren buffet will have an argument with you-- and he has a few bucks to back his ideas wyatt Amos thank you again for the PnF hints I never connected the dots like that Jon depends if you can hold for 50 years and suffer the pain Mr_Steve Yes thanks Amos you are appreciated more than you think warren well, at least we share the same name! Ory very awesome Amos Amos yes warren-- like Jack Benny-- You money or your life....................... Amos ............................. Amos .............................. Amos I am thinking Amos ok folks AUgust VACANCE is almost over and the French are coming back warren he was one of the best! Amos gn Amos left.