Slope of Hope Blog Posts
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I'm bearish, but I'm not insane. When things get somewhat oversold, I like to have at least a partial balance to my positions.
Lately, DIG has been my favorite. It has worked its way down to a really nice neckline. It's very liquid and behaves itself pretty well technically. I'm long 17,000 DIG just to even things out in case we push higher. After all, the US dollar's run has been pretty strong lately.
One would think today would be a peculiar day to short BIDU. Not for me. It has shattered its trendline, and I waited until it pushed as close to the underbelly of that former support line as it could, then I shorted it. This is not a huge position – 70 shares – but it's a pretty cool chart. Entry price of 381.75; target – I dunno – upper 200s I think.
A few days ago, my little girl had the following conversation with me:
Daughter: I can always tell which Dad is mine.
Me: How's that?
Daughter: You're the one who's always reading.
It's true. I read all the time. And last night, I scanned my shelves of trading and technical analysis books and picked up Trading In the Zone, which I've read many times before. (It's in my list of recommended reading.)
Most books about trading are totally useless, but there are a few gems. And those you find are gems, I suggest you read over and over and over again. Highlight them; think about them; absorb them. Because as I grow – and you do as well – as a trader, the book's message will be richer and more meaningful.
First lets see how our speculations from last week played out.It was said-
The chart says it all. Looks like a mirror image. Please note how the market quickly rejected prices highlighted in green in august 2008. But this time we also need to consider that we have a lot of support (volume traded) below."
Now lets see what happened in the following days:
You can see that price levels highlighted in green indeed got rejected but not as fast as in august 2008.The distribution(volume traded)below provided support and time to establish positions.
Now lets take a look at weekly market profile distribution charts of EUR/USD(6E contract used to analyze volume traded):
In one day we ran the whole last week range.We need to see if responsive buyers(buyers that buy market below perceive value)step in.Rotation back up to area of interest highlighted in yellow at least should provide time/opportunity to establish short posions(from short term scalping to longer term swing trade-depends on your trading style).Support areas of interest marked below
On Friday, October 16th, I started getting very serious about shorting the market by commencing the entry of many of the shorts I had lined up. I have continued this effort, and I am in position on 108 items.
I did another complete sweep of all my charts last night (which number over 1,000) to cull my next tranche of shorts for entry. I have 72 more candidates for shorting, and I am deliberating waiting for some kind of mild push higher to begin entering these positions.
If we can get above about 1071 on the /ES, I'll be comfortable commencing entry into these positions. In the meantime, I have one very large bullish position – DIG – which I entered yesterday in order to counterbalance all my shorts in the event of a push higher in the market (which seems to be happening as I am typing this). I'll be exiting that position at about the same time I am moving into my new shorts.
If the market can avoid a huge surge higher, I imagine I'll be in place with about 180 short positions once everything is done.
P.S. By the time I posted this, I was already out of my DIG position! I got out for about a 1.5% profit and am "purely" short again.