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I have been wanting to write a review of the new Market Wizards book for some time, but it took me a few weeks to slog through it in my spare time. I'll come right to the point: I think I got more out of this book than any of the prior Wizard books. All of them are good, starting with the first back in 1989 (side note: years ago, I worked for one of the Wizards in the original compilation………..err, don't ask).
I think the quality and sophistication of the information in the book is a cut above the others, probably because the individuals featured in this volume tend to be seasoned managers of very large funds. If you're a serious trader, I urge you to buy the book; I heavily highlighted my copy, and I've retyped some of the favorite segments below. The quotations are from different parts of the interview, so please read its paragraph as an independent snippet. The only organization I've provided is to precede each block of quotes with the name of the person who was being interviewed:
I've long been a fan of trading on multiple time-frames with daily being my primary chart-of-choice. As a swing-trader, I rely heavily on other time frames like the 30-minute for determining my entry intraday and then the weekly to see if there are any longer-term problems that are coming to the surface that the daily doesn't clearly show.
I took a trade in Agrium (AGU). It doesn't have any flashiness/excitement to it, but it does show on multiple time frames how the bulls clearly have the upper-hand. As a result, I'm taking the recent weakness to establish a long position at current support levels with a tight risk and favorable reward scenario.
There are multiple technical reasons that suggest PBR is at or very near an important bullish inflection point: First, the June 28 low at 17.27 has the right look of a completed downleg off of the Feb 8 rally peak at 32.60. Second, the June 28 low also coincided with a higher low in weekly RSI momentum compared to the lower momentum low recorded in May 2012, which was higher than the lowest momentum low recorded in October 2011 (when NYMEX oil hit its low at $74.95).
All of this warns us that selling pressure is waning and that the price structure is vulnerable to an upside squeeze if prices climb above 20.70/90.
Lastly, all of the action since the October 4, 2011 low at 20.76 has the right look of an unconfirmed lower-low that concludes the ENTIRE stair-step decline from the Dec. 2009 high at 53.46. Notice that the most recent low at 17.27 is attempting to build a 6-week base ABOVE its lower channel lines amidst a very positive momentum set up.
To trigger initial bullish signals, PBR must hurdle resistance at 20.00-20.20.
It just so happens that earlier this morning, Brazil announced that it has discovered oil and gas in the Amazon, which is a two-edged sword at the moment — good for PBR but only if domestic and global demand strengthens. Perhaps my technical work suggests that PBR is cheap now, relative to its asset base, and after a 3-1/2 year bear phase, is starting to discount the next upside phase?