Strategy – Explanatory Note

 

                               Explanatory 1 explanatory 2 explanatory 3

 

Explanation 1

How many types of trade I suggest?

We have 3 types:

 

  1. Short Term Trade - up to 8 weeks. This is a short term trade. Not recommended for everyone
  2. Intermediate Term Trade: Up to 3 months or more. This is suitable for everyone because it is not so risky.
  3. Investment: at least 3 months or more.

 

How certain am I with my SPX, Gold and USD, etc forecast for the next few weeks to few months?

 

As I always say, nothing is certain except death and tax. Trading is a probability game but given good analysis combined with good money and risk managements, we should be on the winning side and achieving good return along the way. 

 

  1. But for those who is with me since I started my publication around March 2013 already know that my intermediate- long term  forecast is very accurate - almost 100% accurate (big trend direction and even price target and Time). It is stupid not to adjust my forecast if I see something wrong with my analysis and make changes in my trading strategies. 

 

You all know that I have been bearish and warn constantly about panic decline of about 15-20% in DOW SPX from August-October since February this year. I also trade Gold shorts 60%- 70% most of the time as I remain bearish since the gold peak at 1920 since 2011-2012. 

 

  1. My Winning rate of Short term Trading is also quite high especially Gold and Silver. I don't really go and calculate it, if not wrong, gold is about 80% while SPX may have achieved about 60-70% (average 65%)
  2. Success of achieving consistent and good return does not fully depends on winning rate. Even if your winning rate is only 40-50%, you still can make good money if:
  3. Risk Reward per trade is high (win big, lose less per trade (at least 2.5 to 1) like what we did with Gold Trades) 
  4. Good Money and Risk managements.
  5. Draw down in any period must not exceed 15%. 

 

REMEMBER, BIG MONEY come from trading (especially investing) in the early stage of the BIG CYCLE which can last for 4-8 years. So, by now you should know what we have been waiting for.

 

Hope it clears up your mind and wish you well in your trading and investing

 

 

Explanation 2

Stop Loss

Most of my members are traders with some good experience and use their own stop loss. As each and every trader has a different risk profile, I leave the stop loss to individual traders. However, if you are a novice trader and need help about placement of stop loss, you can write to me provided you can tell me how much risks you want to take

There are a few types of stop loss strategies. There are no hard and fast rules for the level at which stops should be placed. This totally depends on your individual trading/investing style

  1. Use Technical: support and resistance whether horizontal or decline. Moving average or channel Or Fibonacci Ratio etc
  2. Use % stop loss
  3. Use Time based stop loss
  4. Use $ stop loss
  5. Use Trailing stop loss

 

Generally, I use $ for trading gold and silver and indices– ranging from $200-$400 per mini lot. I used wider top loss if the trade is choppy. Of course, my $stop loss is also taking account of support and resistance and others. For trading/investing on long term time frame, I used % stop loss matching Critical support/resistance

 

Entry and Exit Point

It is clearly spelt out but sometimes it must involve more flexibility for aggressive traders like what we did with current SPX trade.

 

Turning Point

It is just a forecast to anticipate directional change. Entry and exits does not depends on Turning point alone but involving more complex analysis using 3 other elements of analysis.

 

EXPLANATION 3

As I said yesterday, there is nothing absolute about trading/investing. Therefore, position sizing and stop loss are absolute important. 

 

I am quite sure, I trade bigger size than most of you. I normally scale in and scale out at different price levels at different time based on the following process

 

  1. First lot in...Then Wait for more signs to enter second lot. If no more further signs, I stop here with just 1 lot
  1. Second lot in...Wait after first lot is making some money and looks steady with more signs coming in, then hold the second lot
  1. and So on...till I complete my planned size

 

NOTE:

 

Never add to the losing trade. Only add on momentum

This is a very safe strategy ...Win big and lose small

 

Explanation 4

Longer term traders and investors should note the following:

  1. Follow My weekly update which may time the major trend change as monthly report may not be so timely
  1. All my updates and reports are sent to your email box. No Log in is required. Hope I can come up with log in page soon
  1. My website’s blogs are for public and of course you can read as it portrays the big picture. Very useful if you want to know my expectation about the market direction

Regular daily update is designed for active traders. So far, they all have done very well as accuracy is very high. It can be better if there is no ‘whipsaw’

Explanation 5

  1. No matter what (experienced or novice), you must know where to place stop loss and your trailing stop loss. As a general guide, I use my own stop loss strategy but there are a few others that may suit you. I suggest you work out your risk profile and read some books or attend some short courses. For my own trading purposes, Normal stop : $200-$400 for Gold, $250-$300 for SPX, 40 points for USD Index but sometimes, I use wider stop loss or tighter stop loss which depends on prevailing market condition. If you are not a good trader, I suggest you trade less with a wider stop in terms of Dollar
  1. My newsletter and Updates generally do not publish complex analysis with detailed calculation (in any case, it is quite complex and tedious job for me to write and explain) etc. My newsletter and updates gives you the expected turning point and price of entry and exit based on charts given. This is in line with most newsletters in the market. I suggest you read some easy books first if you are a novice trader.
  1. Moving forward, I will define Short term trade as (up to 8 weeks), Intermediate term trade as (up to 3 months) and Investor (3 months or more) so that you guys have a better ideas about the duration of trades. 

 

Explanation 6

What should I do when I missed the entry and exit level you suggested?

 

  1. First of all, my newsletter is designed for all with some experiences. If you have no experience at all, I suggest you 1.attend easy course in your area. 2.read at least 2 easy books
  1. If you are a novice, just follow my intermediate term trade and investment only till you are familiar with my short term trading approach. When pick up some good experiences, then you can follow my aggressive trade more regularly. If you missed the entry/exit level, you can also ask me straight away for suggestion if you are not sure
  1. If you are a trader with some good experiences, you need to establish your own risk profile for 1. Stop loss 2. Position sizing 3. Profit stop
  1. If you are a trader with some experiences, you can establish/limit your own range in term of entry/exit level (certainly must be close to my suggested level if you closely mirror my trade). Like a few hours ago, I suggest to ADD GOLD short position. You might miss the adding if you insist to add 1170-1172 but if you add around 1167-1168, you are now ahead with some profits. Similarly if you place Silver order over 16.10, you missed the trade. Well, there is no hard and fast rule you must follow my entry/exit level 100%.
  1. As I try my best to suggest the range for you to enter and exit, generally, you won’t miss the action
  1. Investors should only follow my Intermediate and long term entry and exit suggestion

 

Explanation 7

How I create my Road Map -prediction?

Nobody (probably except W.D Gann) can be so exact with the future prediction but still, he could not do it all the time.

 

Prediction is just like looking at the BIG picture from a distance. When the TIME (like a distance) draws nearer, then we can see the details of the picture better and better.

When we see better, then we make some adjustments (if necessary) and then we can ACT on POSITIVE EXPECTANCY and CONVICTION.

 

Explanation 8

 

Depending on individual risk profile. If you are risk-aversion trader, just follow my intermediate term. Aggressive follows Short term trade

  1. My updates/signals are based on Entry/Exit Level. Not so much on Time. So, Time zone difference does not really affect.
  2. You can Mirror my trades based on suggested Entry and Exit. All these signals generally given ahead before US session opens. So, you should have enough time to get in
  3. However, sometimes (not that often) even Day Session (Asian and Aussie Time) are choppy and occasionally, you missed the entry if you don’t read my emails in night time your time
  4. Read my updates regularly during night time (U.S Time and Europe) to enable you to Plan / place trade straight away (in the night time)
  5. If you missed the trade (as it moves out of the suggested entry range, you may need to decide for yourself on what action to take. Missing the range a bit is OK. If you are not sure, you can always write to me for further suggestion

Thanks

 

Explanation 9

Correlation SPX GOLD USD Cycle

 

Correlation is very important but it does not mean that it has to work all the time. Sometimes, it deviates from one another within a certain period of times due to some different reasons. I will explain in my next monthly report

 

SPX and USD has a different Cycle but sometimes they move together simply because their short term Cycle converge together (all points lower or higher during a certain period of time). I think SPX should drop lower (low may be around Feb-March) while USD should be in the new uptrend starting soon. Indeed, very soon.

 

One thing you must remember, CYCLE can invert (supposedly high become low and vice versa. If USD is in new Cycle up, that does not mean Gold must come down and SPX must go up within a short term cycle.

 

SPX, USD and Gold will rise together after April 2016?. USD and SPX will peak together, probably in 2017 but Gold continues to rise till 2023 at least. Too many things to explain. I suggest you read my blogs regularly or read my past monthly newsletters. Occasionally, I mention some fundamental reasons behind all these move

 

My key FUNDAMENTAL points:

 

  1. Huge Capital flows to US due to Serious problems (Europe especially) elsewhere but it is wrong to perceive US has less problems. Bad Time will start to hit U.S in late 2016-2017. USD might go up and up till 2017 but in the end it will collapse (from 1.45) due to reasons below. Many analysts have preached 'the demise of USD (since 2008) including well known people but guess what, USD till today is still alive. It is still Green! 

 

  1. Gold rise and rise because there will be government crisis (confidence + debts) in U.S.

Economic decline (already happen in Europe, Japan, China, Australia, Singapore, Malaysia etc) start to bite again. Stimulus measure re-starts...Not sure what will be the new measure. They can always invent something for ‘convenience’ (to protect their positions) leaving the next government to clean up the big ‘Sh..’ If the next government has the political will to clean, then that is oK but...

 

  1. SPX may go up and up after the major low set in Feb-March due to 1.stimulus measures 2.capital inflows 3. Real Estate decline again 4. Bond collapses (confidence in US government go down the gurgler)....Monies have to go park somewhere and that is stocks and Gold. But after the multi-year peak is hit, stocks will collapse like no tomorrow. 

 

After 2016, Every Tom, Dick and Harry will start to love Gold and Silver. We will see at least $5000.00 or higher gold by 2023 or may be extended. Silver should hit $120.00 or higher. 

 

Mate! I am not kidding. I have been saying Gold ‘drop and drop ‘ since 2011 till today (but many refuses to  believe me...understandable as I am nobody, nobody knows me...can't even write good English -my daughter (grow up in Sydney) told me, I don't deny that, never mind, I don't need good English, I play numbers as I was an Engineer)  but the tide is going to turn soon. Bottom line of course is profit.

 

Mate! Big Time is coming soon. Indeed, very soon. By then, I will keep on saying ‘'Gold up, up and up’ till I am over 65 years old-edging closer to 70. But unfortunately, My English is still the same- not good. But Hope our numbers (you know what I mean) are good, very good!

 

Explanation 10


Frequent Trading VS Investing-Trading (combination)

 

Most people define Trading and Investing in a different way. Here, Frequent trading means ‘Quick/frequent trading’(intra-day to 5 days-very very short term) and Investing/Trading (a combination of different duration-short term, intermediate term, long term, see below description) here means using longer term approach

 

  1. They are the same in one thing. Both aims to make money. The main difference is how you define the Time frame of putting money at work. But which one is better or make more money?

          Trading – buy and sell more frequently than investing,

  1. Which one is better or make more money? Depends on who you are (emotion, patience and discipline) and your skills. BUT, My 23 years’ experiences confirm one thing to me: At least 90% of the traders (very short term-frequent trading) are not making BIG MONIES. In fact, most are losing monies. If you make good monies (not losing) in this category is already good enough. You got to be the best of the best to belong to this category.

 

Yes, some traders make big monies by quick and frequent trading (intraday- 5days) but how many are they? Tell me who they are. Only a few! But who? You can get them to do it for you – you don’t need to subscribe my newsletter, though it is cheap as chips (hey, Mate, some chips are very tasty!). 

 

Well, if you think you are the minority (best of the best) to make BIG MONIES by quick/frequent trading, go ahead and surely I respect you. I am not saying it is IMPOSSIBLE but it is very hard to be one of the guys (best of the best) making BIG MONIES by trading intraday-few days.

 

I believe I can make more monies by being a ‘plumber’ (cutting+drilling) in Australia. It is a tough job but surely not as tough and stressful as a /FREQUENT/QUICK TRADING. Quick /frequent Trading is almost a ‘zero-sum’ game to most traders. 

 

Why I stop quick/frequent trading (intraday-few days)?

 

  1. Health reasons-very stressful 2. Age is catching up (better leave it to young people) 3. Emotion is a Killer and is your greatest enemy. 4. Simply hard to make BIG money, Yes, can make some good monies but NOT BIG enough for me. 5. This is the most important- I make a lot more monies with investing/trading approach. More-ever, a lot less stressful and emotional – no need to stick my nose to the computer screen (I have macula-degeneration problem since 2005) all day long and night just to see the price action up and down every mins and hours and more ....missing the dinner together with family...more...

 

Now, what is the best way/Time frame to make BIG Monies?

 

  1. Wait for the BIG CYCLE to come and get in, ride on it for 4-8 Years. Some Cycles last longer.
  2. Time frame for trading and investing. I used 2 approaches

    A. Use short term and Intermediate Term cycle (to get in and out based on 8 weeks and 20 weeks Cycle or even 40 weeks Cycle). But when Bull Cycle come (CAN BE up to 40 weeks or longer)
    B. Use some capitals for longer term investment, ignoring daily and even weekly noises.

 

How to allocate capitals in current market?

  1. 25% Short term (upto 8 weeks)
  2. 75% Intermediate term (up to 12 or more)

When new Bull Cycle come, CAPITAL ALLOCATION

  1. 25% Short Term (8 weeks)
  2. 50% Intermediate Term (upto 12 weeks or more)
  3. 25% Long Term (upto 3 months or more

Last Note: Yes, I did quite a bit of quick trading before (I use some effective methods) but age is catching up, can’t cope with the speed and stress (health reasons). Yes, can make some good monies for living (more than 3 meals a day +holidays) but I can make BIG MONIES by using the approach described above IN A BIG BULL or BIG BEAR CYCLE.

 

Mate! ”Go for Longer Term Trading/Investing (not frequent trading 0-5 days). You won’t go wrong! When NEW BIG CYCLE Come, go more for INTERMEDIATE and LONG TERM but remember, Long term does not mean BUY and HOLD to DIE (Cycle can go against your Long Term trade). Still need to get in and out within 1 year – Nothing goes up in straight Line!

 

TRUST ME...This is written out of my heart for all the members...I am not 100% against quick/frequent trading but if you want to continue doing that, I have some methods for you provided your mental mindset is FIRST CLASS.

 

Have CONFIDENCE- BIG MONIES are coming soon as New BIG CYCLE is approaching!

 

Hebrew 12:1...

let us run with patience the race that is set before us...

note: it is a different context (application) in the bible, but I simply borrow it only for positive encouragement to all of you

 

 

Explanation 11

If you read all my past articles (blogs) and monthly newsletter etc, you should know that I don't see any possibility of seeing hyperinflation. 

 

There will be NO HYPERINFLATION. Possibility is very much less than 10%. We will have hyperinflation only if U.S. got into debt crisis (yes it will, even without war) and at the same time, start printing heaps of monies for sending armies into World War 3 with China and Russia. So, do you think, U.S will go into War with China and Russia? It is NOT going to benefit anyone. 

 

I am a Chinese born in Malaysia but now reside (since 23 years ago) in Sydney as a proud Australian citizen. I am not pro-China or any countries if you know me. I pro-peace only. But if you know China and Chinese well, they will never like to go into war and invade any country. They had suffered more than enough under their own dynasty's rules (many periods), foreign invasion and imperialism.

 

Yes, They are very greedy economically (what to do-need to feed 1.3 billion people) but they need to do well in this aspects to prevent CIVIL UNREST which is the key concern of the Communist government..

 

Civil Unrest might lead to Civil War and thus split the vast (powerful) country. Without disruption, China will become no 1 world financial capital OFFICIALLY (whether you like it or not) by 2032. They need to be extremely careful in handling things to prevent disruption.

 

Don't you know that there are still about 80% of the China population living under poverty line, despite the vibrant and booming life in major cities like Shanghai, Beijing, etc. Most major cities in China (at least 20) are 2-5 times bigger than Sydney. One day, China will able to stand on its feet (without relying too much on Export economy) as the majority of Chinese crawl out of poverty. It will then able to focus on domestic economy (out of domestic consumption)

 

New Economic decline is at hand (I mean officially) and deflation is gaining the upper hand more and more – Europe still in crisis, China slowing down, Japan still in sick bed. And U.S will suffer a new round of economic decline soon. So, do you think hyper-inflation will come?

 

Don’t listen to Peter S, Williams, Jim R. and even Jim S. Most of the time, they got very wrong about timing. Also they like to blow things out of proportion. I am not saying they are wrong all the time and yes, they will be right again from 2016 about Gold and Silver but for the last 5 years, their advice hurt a lot of gold traders and investors.

 

Yes, after 2017, we may see higher inflation (but not hyper-)   if everybody is racing again to print more monies due to severe economic decline (almost a certainty. That is why Gold from 2017-2023 is the generational buy opportunity. 2016 is just the starting point for Gold and Silver

 

 

Explanation 12

Yesterday, one of my oldest members (membership) wrote me a long letter talking about Gold, spiritual life, books, music, and etc. His name is Roger H.... (can’t disclose full name here) from East Coast, U.S.A Read his testimonial below:

 

I appreciate the depth of your writing and the content of the letter and the accompanying weekly and sometimes daily updates.  Even though my focus is entirely on long term–in my case meaning decades as I began accumulating positions in metals in 1999 for a possible long term move which is yet in progress and has yet  some years  to experience.  Simultaneously, I began moving out of all other “paper” assets meaning stock certificates of all nature other than those relating to metals. By following all the various terms of perspective of your writings I have overall successfully been able to time additional acquisitions of metals and  sometimes taking negative positions of trend changes of markets represented by the DOW.

Your letters help one to defuse emotions to some degree by keeping my eye on the ball for the longer term reward or direction.  Especially important when considering taxable events as short term  “successes”  values are sometimes  withered away by tax consequences. – R Hat.. ( Florida, U.S.A) -September 2015

 

Why I mention about Roger H...? In a way, I am indebted to him There are reasons below:

 

I started my newsletter in 2013 out of passion for gold and silver especially. My aim is to stand up for the truth –exposing the lies of the government and MSM.

 

I am nobody and also don’t know how to promote till recently (somebody helps me to promote a bit now) and a year on, I only have  7 members (today 5 oldest membership are still with me –Thanks them). I did not even receive enough membership fee to cover my costs. But, I carry on (though at times, feel like to stop writing) but because of R. Hat who incidentally pushes me on (Today, we have establish some kinds of friendship)

 

Till today, he does not know that his encouragements has helped me to continue writing and grow my membership many folds. I want to take this opportunity to thanks him. What he wrote to encourage me:

 

  1. He shared with me about his beautiful life experiences and his rich 40 years plus investment experiences, which taught me a lot. He knows Gold and Silver much earlier than me and seems to know much more in terms of Fundamentals.
  1. Despite his vast knowledge and experiences, he used to appreciate and praise me on what I write even on fundamentals (despite my Chinese-English). He likes my Timing and Technical charts a lot.
  1. Most importantly, He knows that I write newsletter out of my passion (heart) and with honesty.

 

Yesterday, he wrote me something that remind me to bring you to attention again:

 

  1. Buying Gold and Silver basically is a hedge against 1.governments (debts, lies )  2. War 3. Economic collapse 4. Catastrophe
  1. I am not against Peter S. Williams, Jim R., Jim S etc. at all . In fact, I respect them especially Jim S. (who has free website). I am not saying they mislead investors. I just want to clarify something here. Their timing indeed hurt a lot of late comers in buying gold around 1600-1900 (but it does help those who bought in cheap). 

They do have some very solid fundamental arguments here (which I totally agreed without a question) but some arguments are out of proportion –not synchronizing with Time. Too premature!. Tell me who can see the future of the governments. Not me...I can only predict (to the best of my ability) based on given data...Governments Lies, lies and all lies all the way...

  1. Mark my words here: Gold and silver will hit at least $5000.00. New Gold Bull Cycle is coming next year. USD and SPX has one big rise before the Total Collapse –even The Terminator Arnold Schwarzenegger (I’ll be back) can’t fix the problems.

 

Have faith in Gold and Silver. More importantly, have faith in God

 

 

Explanation 13

 explanatory 4

While I was updating my USD charts, suddenly the world's greatest legendary trader/speculator came to my mind. He is indeed a reminder to all of us.

Go for longer term. Trade less (on shorter term) but to trade more accurately from intermediate term-longer term.

 

Jesse was a trader, but he knew the value of staying with positions and sometimes not trading at all. Once he began to follow tips from others or trade when he should have abstained, all of his progress had come undone, and with it, his sanity.

We are fortunate to be able to learn from his mistakes and to sidestep the errors

Here are nine surprising things Livermore said regarding excessive trading:

  1. "Money is made by sitting, not trading."
  2. "It takes time to make money."
  3. "It was never my thinking that made the big money for me; it always was sitting."
  4. "Nobody can catch all the fluctuations."
  5. "The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages."
  6. "Buy right, sit tight."
  7. "Men who can both be right and sit tight are uncommon."
  8. "Don't give me timing; give me time."

and finally, the most important thing:

  1. "There is a time for all things, but I didn't know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. Not many can always have adequate reasons for buying and selling stocks daily — or sufficient knowledge to make his play an intelligent play."

Can we apply the above rules to the bullish USD? - I have been sitting on it since the first 2 entries from 93-94.00? See how it goes.

 

I will apply more of the above 9 rules ALSO when Gold, Silver, enters the new 8 years Bull Cycle and  SPX enter the last phase of the big rally till 2017 (waiting for major low to set sometimes in March 2016 )

 

 

 

EXPLANATION 14 

 

Mirror my trades and Best Strategy

 

If you really want to mirror my trades, you can’t be too selective (unless you are very experienced). I suggest you follow every trade in order to produce more consistent result. Take the latest 3 trades as an example, we have winning trade in Gold and USD Index (very good profit now) and losing SPX trade. If you just follow SPX, then you miss out the other 2 trades.

 

Subscribers who follow my trades for 12 months or more may agree with my assessment.

 

My Short Term Trading Result is better than average.

  1. My Short Term Forecast is reasonably accurate
  2. My winning rate for gold is about 80% (I don’t keep official record)
  3. My winning rate for SPX and USD is about 60% (I don’t keep record)

 

My Intermediate Term – Long term forecast so far is uncannily accurate. We don’t trade much on intermediate term but certainly, the result is better than Short term

 

NOTE: Moving forward, I might suggest less aggressive trades to improve short term winning rate especially SPX. My newer approach/signal alert will base on 3 critical Resistance (first, second, third level) and similarly with 3 Support level.

 

Normally, for short term trading, we rarely encounter the 3rd Critical Resistance level (this as defined as the major trend change if breached like 2105-2135 in SPX). First Short Trade signal will be released if lower critical Resistance (first level) if I think the trend is still down and expect to reverse at this first level of Resistance. The current Short entry is based on the second critical resistance 2065-2075 and The 3rd Key Resistance is 2105 and if punched through, I will focus on LONG

 

If you are experienced traders, you know 40% wining rate is good enough to make good monies if you consider Risk-Reward as 1 to 3 (even 1 to 2 still good) and also using the appropriate money and risk managements.

 

The Best Offense Is a Good Defence, so focus on your disciplined strategy especially Money and Risk managements. Attend a short course if you are not sure about this

 

https://www.aaii.com/journal/article/sell-rules-to-build-your-stock-investing-performance

 

 

ADDITION

 

My Trade Entry basically are depending on:

 

  1. Trend Direction (Technical)
  2. Expected Turning point (Timing)
  3. Short Term Fundamental and sentiment noises
  4. Critical Resistances/supports (to be in line with 1 and 2 above).

 

Generally, If I short from

  1. Critical Resistance 1 (it is for aggressive trader only)...with wider stop loss ($200-$300 stop loss per mini lot)
  2. Critical Resistance 2 (it is for both aggressive and intermediate)...with moderate stop loss ($150-$200 Stop loss)
  3. Critical Resistance 3 (it is for aggressive and intermediate)...it is with very tight stop loss ($100-$150 Stop loss)
  4. If break-out Resistance 3 (key level for a trend change), Then we start Focusing on LONG.

I apply the same to the LONG entry in line with Critical SUPPORTS

 

Longer Term Investing

 

On a major trend change (from BULL to BEAR or from BEAR to BULL), Longer Term Investors can start to get in early and slowly building up positions for 6-12 months hold. Of course, we will assess and reassess the long term positions to maximise the return

 

NOTE: Those who mirror my trades, I suggest you get familiar with my Explanation (so far we have 14)

 

Explanation 15

 

It is almost impossible to make even small monies (forget about big monies) from trading and investing if you can't establish the trend direction. Establish the possible trend direction on intermediate and long term basis is THE FIRST STEP to lay the foundation of making consistent profits. 

 

It is quite pointless to analyse anything without a 'CLEAR CONVICTION" about the trend direction in the first place.

 

 

  In the words of Tom Basso in the book Trade Your Way to Financial Freedom.

Let's break down the term Trend Following into its components. The first part is "trend". Every trader needs a trend to make money. If you think about it, no matter what the technique, if there is not a trend after you buy, then you will not be able to sell at higher prices..."Following" is the next part of the term. We use this word because trend followers always wait for the trend to shift first, then "follow" it.

 

Trend following is used by commodity trading advisors (CTAs) as the predominant strategy of technical traders. Research done by Galen Burghardt has shown that between 2000-2009 there was a very high correlation (.97) between trend following CTAs and the broader CTA index.

 

Let me tell you about my conviction for the trend direction with respect to the following markets.

 

Intermediate (up to 3 months) trend direction for

 

  1. SPX: Down unless 2105-2115 taken out. Still expect to see 1800 or lower by March 2016
  1. Gold: Down unless 1230-40 taken out. Major trend change is 1280 taken out, which is very unlikely. Expect to see Gold around 960-1040 by the end of te year.
  1. USD: Up. It has clearly bottomed and is building bigger momentum for the next big move. 

 

Longer term trend direction (more than 6 months) for 

 

  1. SPX: Up. Expect the last phase of big rally starting from major low in March/April till 2017. There could be an adjustment if Cycle invert.
  1. Gold: Up. Expect a new bull Cycle after seeing final low in Gold by April 2016. There is a possible adjustment if Cycle invert or extended
  1. USD: Up and Up. Expect a last phase of big rally before the big Cycle top out in 2017.

 

Nobody or No System is perfect including mine. There is no 'Holy Grail' !!!. 

Holy Grail is :  Flexibility and adjustments are warranted when necessary due to fundamental changes (like government policy etc). 

 

Example, Mr Draghi (Mario) is still talking Q.E and favouring more Q.E. and one day if US facing a new economic decline (likely after 2-3 rate hikes), Yellen will talk a new Q.E and if true to the case, she will implement again. 

 

If all this talks and implementation in place, what do you think of SPX, GOLD? The rise of USD is due to different factors which you should know by now. So, for a period of Time, Gold, SPX and USD all move up together. They will be friends till the markets start to question their fatal friendship (never last).

 

 

Explanation16

 

Stocks and Central Banks- Almost unprecedented Action and Feeling!

 

Nobody cares about the current sick global economy. Nobody also cares about the sick earnings for the second time in a row for the last 2 quarters.

 

What they care and believe is : Q.E., Q.E., and more Q.E. Hey It is not about Location, Location and Location anymore. A bit digression here- Sydney property has peaked. Don’t migrate here –too expensive. My area medium price is about $2.4 million – hey, it is not Rupiah, it is AUD. Yes, AUD is dropping against USD and even SGD but still not bad against most currencies.

 

Japan started the first big Q.E 2 years ago, then Mr Dracula of EU started his own version of BIG Q.E. And finally ‘Middle Kingdom’ –China’s Red dragon breathes out its fire to warn against everybody

All these Q.E. (stimulus measures) surely fuel the big rally one after another in stocks. It give unprecedented feeling to all traders – it is OK, market will never tank because of one Q.E. after another one- none stop.

 

That is one of the reasons, I mention that we will see last parabolic rise in stocks till 2017 before the historic crash. SPX will hit at least 3200 by 2017.

 

Meanwhile, I see that ‘basing pattern’ (rather than slingshot) is a higher possibility before it takes off to a new bull market in stocks. Consolidation patterns seem to be in the range 1970-2134 before the final take off in March 2016 to blow-off top in 2017.

 

http://schrts.co/3MdjKj

 

It looks like we might see 2134 by 6-9th this week or Monday week for the Short term Top. My Cycle keeps on telling me 6-9Th is the Cycle bottom but now seems to get 'Inversion' which means it is likely to become the Top before coming down within the likely basing pattern.

 

This is one of the most difficult trade I have encountered. In any case, soon it will be over whether we gain or loss. Once resolution is completed, we should be able to trade the direction in a more predictable wave. 

 

Explanation 17

 

Most of my subscribers have some good experiences and I am sure they follow my trade signals/direction but may execute with their own strategies and risk/money managements.

I bring this up because if you don’t allow some leeway yesterday for gold short (buy back 50%shorts), then probably you missed the short buy back as the price only rebound to 1123.50 (my alert is 1224-1230).

My experience tells me 1. never add to losing positions 2. Add on momentum or on more signals triggered.

If you are able to do that, you can scale in and scale (a few times) out based on your own strategies.

 

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