Posts Tagged ‘Fibonacci’

Charts From the Future: 5% Rule Update

Yawn!

As I said in our last 5% Rule Update, way back on May 5th, I’m not a big fan of TA.  We have our 5% rule and it serves us well enough but that’s a statistical analysis, not a technical one.  The only TA I put a lot of stock in is Fibonacci Retracements but that, also, is really statistical science and has nothing to do with trying to predict the movement of squiggly lines on a chart

The 5% Rule does NOT tell you which way the market is going.  It does tell you where the resistance points will be.  Of course, knowing that and knowing what kind of bounces to expect and knowing where a proper breakdown or break-out occurs is kind of useful and, when it coincides with the tea leaves that are read by the "real" TA guys – you can really have something good to go by! 

Unfortunately, the 5% Rule is not really a RULE because it requires a cynical background in statistics, especially regarding aberrant values or "outliers" and a general understanding of market history as well as current market events because all need to be taken into account in order to give you accurate "consolidation levels" from which we base out chart movement.

The great Harry Houdini used to enjoy amazing audiences with demonstrations of the supernatural, especially when he would pull back the curtain and reveal the frauds that others were passing off as reality.  That’s how I feel about TA - we can use these very simple scientific "tricks" to project the movement of the market and others can paint their charts and dress them up in whatever language they wish to make it unique but, to me, it still all boils down to the fundamentals with the underlying movement governed by normal regression patterns influenced by capital flows and sentiment. 

Whatever you want to call it, here’s our chart from May 5th, where I said: "So what lies ahead?  Most likely a retrace back to 1,100 (25% of our run) but if that holds and we consolidate a bit, I will be downright bullish.  I will also be impressed if we hold 1,145, which was our last breakout line but, for now, we have a 3.75% drop from 1,218 but a poor bounce yesterday indicates we are likely to get down to a 5% pullback from 1,218 to 1,157 and
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Cyclical Growth, Form and Fibonacci

Here’s a terrific article by Tim at The Psy-Fi Blog about Fibonacci numbers and Elliott Wave Theory.

Brief Intro:  Elliott Wave Theory, introduced in 1933 by R.N. Elliott, is based on Fibonacci numbers and is used to describe market trends.  Robert Prechter’s socionomic theory is an ambitious "theory of everything" based on Fibonacci numbers and fractals (patterns in nature), and extending to the ups and downs of markets, social mood, length of women’s skirts, measures civil unrest such as crime and war, etc. The theory is that all are related, dictated by the numerical series. How, is never answered unless you go mystic. While Elliott Wave counts appear useful for traders, the reason may be that many others use these numbers and patterns for determining buy and sell points. Also, the general notion that markets go up and down in waves, reflecting our collective psychology, makes sense without the grander notions of an all encompassing theory. – Ilene

Cyclical Growth, Form and Fibonacci

Courtesy of Tim at The Psy-Fi Blog

Ancient Ideas, Modern Setting

As an up-to-date in-your face sort of blog we like to make sure our readers are well informed about the financial world as we see it. So, starting back in Ancient India in 200BC and taking in medieval Italy and some early twentieth century anti-Darwinian evolutionary thinking let’s take a look at plant growth and snail shells, how twentieth century humanity’s inclination to see the Man in the Moon translates into modern financial theory and why physics may simply be wishful thinking.

At the root of this journey is a simple mathematical progression named after a man who never discovered it and was more concerned with accountancy than trading. Still, he’s still remembered a millennium after his death, which is more than most of us can ever aspire to.

The Golden Ratio

In 1202 the Italian mathematician Leonardo of Pisa, aka Fibonacci, wrote Liber Abaci, a book which has three claims to fame in financial circles. Firstly it was one of the first books to introduce the Arabic numbering system to the West. Secondly it laid out the foundations of modern bookkeeping. Thirdly it presented the number pattern known as the Fibonacci sequence, although this had been known long before by Indian mathematicians. Only the latter has little significance in the development of science and business but, naturally, it’s the one


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Chart Junkie: Gold from Several Perspectives and Unemployment

Chart Junkie: Gold from Several Perspectives and Unemployment

Courtesy of Damien Hoffman at Wall St. Cheat Sheet  

Chart Junkie

 

Gold long term

“The Professor” Corey Rosenbloom at Afraid to Trade offers us a longer term look at Gold. Although it’s breaking out on the shorter-term charts, the chart above clearly indicates there exists resistance above which must be cleared for the next bull rally to run. (Source: Afraid to Trade)

gold in currencies 9-4-09_small

Gold Priced in Multiple Currencies

Precision Capital Management offers a very interesting look at Gold priced in multiple currencies. They state: “Gold is one of the leading indicators we follow at our website.  Everyone seems to have noticed the spike up this week in gold, but how do we determine if the move is real, or merely a fakeout?  To confirm that gold is advancing on its own merits as part of a longer term move, which is not the result solely of US Dollar weakness, we want to see confirmation of an up move in gold priced in other currencies.  Above shows gold priced in the Canadian Dollar (CAD), Australian Dollar (AUD), Japanese Yen (JPY), and the Euro (EUR).  When gold began its last advance in November 2008, the move was confirmed by higher lows in the commodity currencies of the CAD and AUD, as well as the EUR (even though there were lower lows in the JPY and USD gold).  Eventually, there were higher lows in the JPY and USD gold at the beginning of December 2008.  Accordingly, for the gold bull case, early confirmation would be to see current lows in AUD, CAD and EUR gold respected on the first pullback (especially in the former two as they are commodity currencies), preferably accompanied with a break through overhead resistance.” (Source: Precision Capital Management

Gold with Fibonacci Indicators

Gold with Fibonacci Indicators

Our partners over at RatioTrading bring us yet our third and final perspective on Gold: “As demonstrated in this chart, Gold has historically respected key Fibonacci Ratio levels and with Gold retesting all time highs, where could it be headed?  Well as we look historically over the past year or so we see that in many instances when the GLD broke out and made a new low, it went right to either a 1.272 Fibonacci extension ($73)…
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Which Way Wednesday – Fed Edition

Wheee, that was fun!

There's nothing like a good sell-off when you are prepared for it.  Roll out of bed and drop 20 feet unexpectedly and it's terrifying but willingly climb to the top of a waterslide to plunge 50 feet and it's exhilarating.  By the way, if you do drop 20 feet rolling out of bed – it may be a good idea to move your bed and if your virtual portfolio took a big hit in yesterday's very minor correction, it may be time to move some of those positions as well.

We were not just prepared for a drop, we were almost bored stiff waiting for it but, in the end, the call to cash out our bull plays into the weekend was a very solid one and now we have 150 points to go before we have to consider a re-entry at those levels.  So far, we have a very minor 1.5% pullback off a 15% run since July 13th so 1.5% more to go for a 20% retrace.  That will give us 9,118 on the Dow which is, amazingly right about our 5% rule off 8,650 (9,082 to be exact) so let's call that 9,100 and VERY significant.  Our other 3% pullback lines are S&P 980, Nasdaq 1,950, NYSE 6,400 and Russell 550.  This is the great thing about being the creator of the 5% rule – I can round off if I want to because, IT'S MY RULE.

I'm sure if Fibonacci were alive today he'd say: "38.2%, 40% – what's the difference, it's just a guideline!"  Fibonacci discovered his sequences in his search for a way to blend math, art and nature.  Clearly the stock market is ruled by math and human nature but too many chartists forget the art of the thing.  That's why our 5% rule bends around psychological chart resistance points, the flexibility we have to take market psychology into account is what allows us to hit our targets on the nose a year in advance but it's the "art" of it that tends to bother people because it does require an intelligent person to look at a chart and decide which moves are real and which are not. 

Why did we predict the market would be 40% off the top at
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Zero Hedge

UMich Inflation Expectations Spike To 3-Year Highs

Courtesy of ZeroHedge. View original post here.

Following June's dip in 'hope', UMich Sentiment was expected to improve in preliminary July data but it disappointed in most aspects.

  • Headline Sentiment rose from 98.2 to 98.4 (but missed 98.8 exp)

  • Current Conditions dipped from 111.9 to 111.1 (missing 112.8 exp)

  • Expectations inched higher from 89.3 to 90.1

Still close to the best level in more than a decade

...



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Kimble Charting Solutions

Doc Copper Is Pushing Higher Off 18-Year Rising Support, Says Joe Friday

Courtesy of Chris Kimble.

Gold & Silver have been hot of late! Is Doc Copper about to do the same? Possible says Joe Friday.

This chart looks at Copper Futures over the past 27-years. Copper has spent the majority of that time inside of rising channel (1).

The decline over the past year has Doc Copper testing 18-year rising support and lows of the past 8-months at (2).

Joe Friday Just The Facts Ma’am- Copper is attempting to rally off of long-term support at (3). As Copper is testing the bottom of this support channel, smart money hedgers are making a bi...



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Chart School

RTT Plus Chart Book (Sneak Peak)

Courtesy of Read the Ticker.

The magic of support and resistance channel lines and how they direct price. Here are some chart disclosed to members via the RTT Plus service. All charts are a few weeks old. 


XAU bound by parallel channel lines.


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Newmont Mining support from Gann Angles.



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US Dollar index (DXY) dominate cycle ...

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Phil's Favorites

The PhilStockWorld com LIVE Weekly Webinar - 07-17-19

 

For LIVE access on Wednesday afternoons, join us at Phil's Stock World – click here.

 

Major Topics:

00:02:11 Indexes Charts
00:02:59 Energy Charts
00:04:28 S&P500
00:18:48 Money Talk Portfolio
00:31:25 7 Steps to Consistently Making 30-40% Annual Returns
00:35:41 Top Trades
00:45:33 Long Term Portfolio
00:49:34 WPM
00:50:34 NFLX
01:06:31 Petroleum Status Report
01:09:16 Money Talk Portfolio Review
01:23:40 AAPL
01:33:06 Natural Gas
01:38:43 Charts and Portfolio Reviewa
01:44:20 Trade Ideas

Phil's Weekly Trading Webinars provide a great opportunity to learn ...



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Digital Currencies

Cryptos Suddenly Panic-Bid, Bitcoin Back Above $10k

Courtesy of ZeroHedge. View original post here.

Following further selling pressure overnight, someone (or more than one) has decided to buy-the-dip in cryptos this morning, sending Bitcoin (and most of the altcoins) soaring...

A sea of green...

Source: Coin360

Bitcoin surged back above $10,000...

Ethereum bounced off suppo...



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Insider Scoop

Analysts Weigh In On Netflix's Rocky Quarter

Courtesy of Benzinga.

Netflix, Inc. (NASDAQ: NFLX) reported second-quarter results highlighted by an uncharacteristic decline in U.S. subscribers while international subscriber adds missed expectations. Here is a summary of how some of the Street's top analysts reacted to the print.

The Analysts

Mor...



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Biotech

DNA testing companies offer telomere testing - but what does it tell you about aging and disease risk?

Reminder: We're is available to chat with Members, comments are found below each post.

 

DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

A telomere age test kit from Telomere Diagnostics Inc. and saliva. collection kit from 23andMe. Anna Hoychuk/Shutterstock.com

Courtesy of Patricia Opresko, University of Pittsburgh and Elise Fouquerel, ...



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ValueWalk

Professor Shubha Ghosh On The Current State Of Gene Editing

 

Professor Shubha Ghosh On The Current State Of Gene Editing

Courtesy of Jacob Wolinsky, ValueWalk

ValueWalk’s Q&A session with Professor Shubha Ghosh, a professor of law and the director of the Syracuse Intellectual Property Law Institute. In this interview, Professor Ghosh discusses his background, the Human Genome Project, the current state of gene editing, 3D printing for organ operations, and gene editing regulation.

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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