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The Art of Trading
by amory
have just been browsing some of the other forums & came across a heading re Oscillators which are to the dedicated trader what vibrators are to .... thank you amory. where was I? yes of course, and never have I read more accumulated empty meaningless rubbish (including one or two contribs by yours truly) in all my days.
but by far the worst & most idiotic utterance is to do with the Art of Trading. there is no such thing!! at best, it may be a skill or a knack, some have it some don't. put it that way and I can live with it. but Art???
it puts me in mind of Mae West when she replied to a lady who exclaimed "my goodness" upon viewing her latest mink: goodness had nothing to do with it darling!
likewise the market. there are times when the market tells you buy! and you can muddle thru with any system you like and afterwards lay claim to fame. and when the market says stay away if you know what's good for you, and those who refuse to listen will soon retreat nursing their wounds. even as we speak, empty wallets litter trading-floors worldwide.
artists, in any case, seldom make money. bullartists included. VanGogh never sold a picture in his life, and it wasn't for want of trying.
seeing that no-one is trading any more other than in order to hastily lose their money, why not talk briefly about WPL? elsewhere, I have discussed their way of timing good announcements, and how no-one trades their options any more. look for yourself if you don't believe me. their daily turnover of ETO's is nothing short of pathetic. it would seem that others beside myself are awake-up to their little tricks. let's take all this as read as they say.
a sleeping giant? a snake coiled to strike? they've got to be something, their price action is nothing to write home about and yet no-one in the world has more potential. STO and some little tiddlers like VPE, AYO and even that sad sack of a PTZ run circles around them.
but let us return to their options because they hold the key! for a start, there are no significant option expiries for november, so forget about those. December is a different story. there are quite a few open positions with striking prices from $13 on upwards. bearing in mind that whoever manipulates the share, will do all within their power to ensure that a maximum number of options expire worthless, they wil see to it that nothing important is allowed to transpire this side of whatever is the expiry date for December.
in a pinch, they may let the dec 13 enjoy its little moment in the sun (it might be difficult to push the share this low within the next 5 or 6 weeks) but rest assured that they will not allow them to rise over $14 within that period of time! everything from there on up, will have to bite the dust. that's december expiry I'm talking about.
is there a lesson to be learnt from all this, a plan that might be formulated? indeed there is, and those of you lucky enough to read my postings on this forum, may well benefit and may good fortune be with you!
watch closely their behaviour pattern just before above-mentioned date (dec 28 or dec 21, one will have to make sure). are they straining at the leash? is the price attempting to break out of the $14 restraint? (why 14? why not 13.50? there are some 13.50 calls, but very few, not enough for a professional manipulator to worry about).
is volume increasing? watch out for tell-tale signs! an increase in option activity, bless their dear little hearts?
if so, get some January calls the day before expiry or one day after at the latest, and you'll be all set for their brilliant announcement of another massive find or a new take-over offer from Shell or whatever. timed as it were, to get a new batch of suckers in & push the price temporarily sky-high. temporarily meaning for a week or so before they plummet down again.
reading this back, I feel that some of you might think I am recommending that you should be among that batch of suckers, far from it. remember I said buy before, not after the announcement! be out of them within the first week of January, at the latest!!
Woodside, tsk-tsk! the tiger is baring his fangs. up 36 cents to 1390, and all that within one day!! doesn't that send shivers up & down your spine. well, something of a frisson. surely they don't intend to leap the 1400 barrier in one mighty bound!!!
suddenly, there's all this enormous option activity. none up to Thursday, heaps on Friday. they look like a lot of spreads, whatever. is something cooking?? as mentioned elsewhere, they are not greatly worried about people making money on the November calls. there are hardly any, that's why. are they rounding up a batch of suckers for the Decembers, or is something more sinister afoot? the suspense is unbearable. WPL up 36 in one day, and option-activity to boot, where are my smelling-salts?? this share will be the death of me.
amory
P.S. I hope MIM and WMC are watching what goes on. they use the same (I nearly said shabby) technique from time to time, but Woodside is the master. if the average un-exercised option expiry - all the money down the drain - is 90%, then Woodside's would have to be closer to 99%. am I exaggerating? go on, surprise me! make my day!
Thursday: how droll! it looks like someone has bought 35 november 1400 calls at 22 cents. yesterday that is. what's so remarkable about that? only the fact that he/she/they should see fit to buy one day before expiry of self-same option. closing price: the buyer is only offering 8 cents. this is natural enough, the price of 1408 being 8c into the money. earlier in the day the share touched 1428, hence the 22 cents payed by someone, FOR A ONE-DAY CALL. I've heard of spot-month, never of spot-day.
question raised above: are they buying or selling? we should know in the morning. open positions 123 contracts, will that be 35 more or 35 less? my guess: 35 more, i e 158 open positions when we check it out tomorrow morning, on the options page of the Australian. this should also tell us how many were done today, and at what price.
someone bought 35 at .22 (or maybe up to .22 would be more precise).
someone will have no doubt been watching the market closely today, to see if and when they make 1450 as that someone no doubt knew they would, or they wouldn't have spent maybe $7700 on a ONE-DAY CALL.
let's see what price they will have sold them at. looks to me like someone may have doubled their investment in one day, and my low opinion of Woodside - integrity-wise - will be fully justified.
or I may be wrong. someone may have seen a window of opportunity and quickly sold a hopeless looking batch of options, in which case we should see the open positions at 88. that's because open positions always lags one day behind trading, that's why one cannot tell immediately what was buying or selling.
Friday morning: curiouser & curiouser. fully expecting to find out whether that was buying or selling (the 35 one-day option contracts purchased Wednesday) imagine my surprise when the number of open positions for the WPL 1400 november calls remained unchanged at 123! where are the 35 contracts, what's become of them? it is all very strange & mysterious to this observer.
amory saw it coming, don't say I didn't because I predicted it on this & another forum: always one day after option expiry, the big big big announce!! the only surprise, why did they spring it at November expiry when there are hardly any november open positions?
couldn't they wait till after december expiry when they could have wiped a whole lot of option holders off the board? maybe Shell said they don't feel like leaving it till then, who will ever know?
the meaning of the word skulduggery is becoming clearer by the minute. to catch a thief, you have to think like one. it's not the final chapter. this deal will fall thru and the share will go back to its normal vicinity $14. THEN watch out for December expiry, one day after, that is!!
now for those of you naive enough to think it was all just mere coincidence, this should bring a wry smile to the faces of the hapless November call-holders who were wiped out the day before ... I like the way they tell you with a perfectly straight face that Mr Goode received the call from Shell that they wanted to meet him, and when? on Thursday evening, isn't that beautiful. a few hours after expiry of aforesaid calls. except of course for those - I've written about that before - who bought one-day calls, merely as a punt. or the ones who bought (again on Thursday) nice respectable December calls with a striking price of 1400, at 65c, and also some Dec 1450's at 37 cents. how is that for a quick 100% profit, after the totally unexpected merger bid!!
part of the bid is some free 1480 call options. guess what price Woodside next June? you think you'll be exercising those calls? guess again! they're all in cahoots against you, don't ever forget that.
between these two events casting their shadow, not surprising the market is hesitant this a.m. the listlessness could well carry over into tomorrow. NCP started out poorly but is now up 20 cents and the first serious seller is asking $22. carry on dreaming, amory.
or so they say, because the market hates uncertainty. that's in the US, whilst at this end people will be able to go back to their broker or futures offices or their charting, albeit nursing a sore head.
the RSI of the XAO which I use as an overall indicator, has at last broken out of that tedious 45/55 and below range and at 64 looks respectable, with some way still to run if August is any guide. that's the last time it was this high! ten weeks ago.
now honestly, who would have taken that into account? the market is not unlike real life, full of surprises. Quo Vadis from here, fellow Romans? who's to say?
I am not referring to the market, only the little counting gizmo on top. the market we won't know till it opens at ten am. doesn't the night seem long & weary when there is no DowJones to sit up for?
the answer, all my invisible friends out there, is that it is a very uncertain market. were it not for a benign DowJones, we'd be so deep in the doldrums the sound of snoring would provide the only sign of life on the planet.
that makes it hard to predict winners with any degree of confidence. miners & oil-drillers who come out with world-shattering announcements, barely cause a ripple, even under the most relentless prodding. even those which manage to double in price, making up for the uncounted losses suffered by hapless traders, even those ones are not really winners when on the strength of what they've got or say they've got, they should be up to ten times, not double! if they were smart, they wouldn't bother. they'd wait for better days.
it is not the hesitation in the Dow which worries me, that one seems to be consolidating prior to better moves ahead. no, I don't like the way our market, after the merest flutter seems to be running out of breath & almost into Overbought with very little to show for it. that's what worries me. like an old man ... (never mind).
a system which works 68% of the time, now that is not to be sneezed at. years ago (before satellites) I bet someone that I can beat the woeful weather forecasts. my system was very simple: each day I predicted that the weather tomorrow, rain or shine, will be the same as it is today. I finished up ahead, but there were days when I could have got soaked had I gone out without an umbrella.
such a simplistic system could equally be applied to the market. if it was up today, it will be up some more tomorrow and I wouldn't be surprised if that works two out of three. unfortunately, one could come badly unstuck on the turning points.
all serious trading systems contain an element of upbreak/downbreak indicators and no self-respecting chart is without at least a few of them in the top or bottom window. use them long enough and it becomes a visual thing, you tell at a glance which way they are heading. I particularly fancy the Williams%R but there are a dozen others I'm keeping an eye on.
herewith a quote from a Metastock expert:
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 36.94. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area.
that one was from the Equis Momentum Indicators expert, and the share they are commenting on is BHP. for the XAO, the RSI is more like 45.
I would say that anyone trading on 45/55 entry & exit points, is being incautious. always bearing in mind that the odds are at present heavily against you in any case. but if it works, good luck!
now for a brief excerpt from the latest Wall Street Detective:
Our opinion can only be summarized as follows. The market always fools the majority. And after a few more days like October 25, those that have any money left, will be very scared. And that fear will likely provide a great buying opportunity.
If it does not happen that way, then we have a very scary situation. For the U.S. market would be in a position similar to where Japan was in 1989. And if that is the case, then we could be at the beginning of a multi year bear market.
That is not our major assumption at this point. But if it does unfold in that manner, we could be in for a very tough time. And the election season, and a Fed that doesn't want to ease will just make things worse.
There may have been some last minute fireworks on Dalal Street. But Wall Street was a different story. Nortel fell by $18.38 to $45 following disappointing revenues sending other networking stocks tumbling. This effectively is a 29% fall. According to reports, the fiber-optics maker attributed the fall in revenues to a slowdown in optical sales growth coupled with limitations on how quickly it could install equipment and inventory glut on the part of its customers.
The tech-laced Nasdaq shed 190 points and closed at 3,229.59, a fall of over 5%. The Nasdaq`s third straight loss was its eighth-worst point decline on record. After four positive sessions, the Dow Jones industrial average, which flirted in and out of positive territory finally ended negative erasing 66.59 points. The Dow ended the day at 10,326.48. The Standard and Poor`s 500 index fell by 2.4% to close at 1,364.90, a fall of 33.23 points.
The other fiber-optic stocks which took a beating thanks to Nortel were Ciena, which lost $27 to end at $108.38 and JDS Uniphase, which dipped by $24.06 to close at $71. Despite announcing better than expected earnings another fiber optics leader, Corning, was at the receiving end due to Nortel. The firm`s stock dipped by $13 to $77.
On Friday, investors could expect some rally as the government releases GDP figures. Should the economic growth show a slowdown, the Federal Reserve might well consider lowering interest rates before the end of the year.
As far as internet companies are concerned there is some news to cheer. With Amazon posting a narrower than expected loss, its stock jumped by $2.31 to close at $31.88.
I am always amazed at some of the people who post on various forums under the heading of tech analysis. occasionally they actually strike a winner! most of the time they lose, but they don't report that. they write it off to money management. in my book a loss is a loss and when there is nothing but uncertainty around, I trade as little as possible, because it all adds up.
these same people treat anyone who watches the Dow, with contempt. take last night's Dow, up but the Nasdaq is down. what does our market do? nothing. what can it do? the Dow needs to jump - or fall - by about 200 or 300 points before we come out of the doldrums.
at which time, of course, they've all seen it coming. of course, of course.
Wall Street closes higher after six straight weeks
by Sajith
Wall Street closes higher after six straight weeks
22 OCT 2000, 16:34:31
So, has the market bottomed out? Is it the turning point that the market been looking for? Will the market be able to sustain last Thursday and Friday`s rally that saw them finish higher for the first time in six weeks? These are just some of the many questions everyone on the Wall Street is asking right now. They all will have to wait till Monday to get answers to their questions.
Meanwhile, the Wall Street breathed a sigh of relief this week as all the three major indexes ended the week higher for the first time in six weeks. The market that has been really hammered hard since the Labor Day shot back in style towards the end of the week as many hoped that the horrific period when concerns about sagging corporate profit sent all three major indexes plummeting this fall. The Dow Jones fell below the 10,000 mark for the first time this week on Wednesday since March 14 this year. This week saw a frantic activity on third quarter results front as many high profile companies including IBM, Intel, Microsoft, Sun Microsystems, J P Morgan , eBay, Nokia and several others declared their latest quarterly results. While Intel, Microsoft and Sun surpassed analysts` forecast, IBM`s results came as a major disappointment to the market.
Thursday was one of the biggest days on the Wall Street in a long long time, one which everyone was looking for as corporate profit worries led the markets down in September and in October. The Nasdaq posted its third largest gains ever on the 13th anniversary of the `Black Monday`, the day the Dow Jones index fell by nearly 25%. On October 19, 1987, the Dow crashed by 508 points, or 22.6%. Thursday`s gains were largely due to very good results reported by Microsoft, Sun Microsystems, Nokia and many other companies that, to some extent dispelled the fears of Investors about sagging corporate profits. After last two brilliant days at the Wall Street, the general feeling in the market was that since the stock prices have fallen so much it would be difficult for investors to ignore them. That may have been the reason why several of the technology stocks that have been hammered hard since the Labor Day witnessed buying activity last week. It remains to be seen whether the rally continues neat week and the indexes are able to extend their gains.
Movement of the Wall street Throughout the week
Monday:
After last Friday`s whopping gains clocked by both the Nasdaq and Dow expectations were once again high for another such day, but it wasn`t to be. After posting its second all time biggest gain the Nasdaq Composite Index fell on Monday on fresh fears that chip giant Intel would miss analysts` estimates. Salomon Smith Barney on Monday cut its quarterly earnings targets for Intel to 37 cents per share and Credit Suisse First Boston said it was cautious on Intel`s results which are due today. From its high this year of above $75.81, Intel has lost more than half of its value.
Not surprisingly, the Nasdaq fell for the seventh time in eight sessions, bringing its losses to a total of 19% for the year. Intel, which is off more than 50% from its year`s high, dropped 11.6% on Monday. The Dow Jones Industrial Average, meanwhile, edged higher as investors lapped up some blue chip shares. J P Morgan and IBM, which are among the slew of high profile companies that report earning this week, attracted buyers. And Hewlett-Packard and Wal-Mart also moved upwards.
Tuesday:
US stocks plunged sharply on Tuesday, with the Dow Jones losing almost 150 points and the Nasdaq Composite Index sliding more than 2%, as investors were still jittery about sagging corporate revenue growth. Semiconductor and Internet stocks led the sell-off on the Nasdaq Composite Index, while the Dow Jones Industrial Average was put under tremendous pressure by the financial stocks.
Wednesday:
Disappointing third quarter results declared by the computer hardware and software giant IBM led the Dow Jones Industrial Average below the 10,000 mark on Wednesday. The Dow crashed to its lowest level in seven months amid continuing fears of low revenue growth rate among the technology companies. It was the first time that the Dow closed below the 10,000 since March 14, when it closed at 9,811.24.
IBM after reporting less than expected third quarter results on Tuesday plunged by $17.50 to $95.50, its lowest level since March of this year. IBM`s third-quarter net income was in line with analyst estimates but its revenues fell short of expectations. The computer maker reported earnings of $1.08 per share during the third quarter, as compared to 93 cents per share a year earlier. Among the major technology firms that reported after the bell on Wednesday was, software stalwart Microsoft, which was expected to have earned 41 cents per share in its fiscal first quarter as compared with 38 cents per share a year earlier. Microsoft shares advanced by $1.31 to $51.75.
In the week`s closely watched economic data, consumer prices rose 0.5% in the US last month, the government said on Wednesday, while the "core" consumer price index, excluding food and energy costs, rose 0.3% -- readings that both came in a shade above Wall Street forecasts.
Thursday:
The Wall Street very strongly bounced back on Thursday on the back of some very good third quarter results posted by tech giants like Microsoft, Sun Microsystems and Nokia to name a few. The Nasdaq Composite Index rallied sharply as it registered its third largest gain ever on Thursday following surprisingly strong profit results from several technology firms dispelled some of the profit fears that has haunted the Wall Street since Labor Day.
The day also marked a historic day. Thursday`s gains came on the 13th anniversary of the Dow`s biggest loss on record: Black Monday, when it lost nearly a quarter of its value. On October 19, 1987, the Dow crashed by 508 points, or 22.6%.
The Nasdaq Composite Index on Thursday surged by 247.04 points, or 7.79%, to 3,418.60. Thursday`s rise put the Nasdaq higher for the week, and if it continuous it would mark the indexes` first ever positive week since August. But the Nasdaq is still down 16% for the calendar year. The Dow gained 167.96 points, or 1.7%, to close at 10,142.98, bringing down its loss for the year to 12%. The S&P 500 jumped by 46.63 points, or 3.5%, to end the day at 1,388.76. however, the index is still off 6% for the calendar year.
Friday:
After posting its third biggest gain on the 13th anniversary of the `Black Monday` on Thursday the Nasdaq Composite Index reversed a six-week losing streak on Friday to end nearly 5% higher for the week. The Nasdaq managed to extend its Thursday`s gains as investors felt that some of the battered and bruised tech stocks were now good bargains.
After hitting a low of 3,026.11 on Wednesday the index ended the week up 13%. The Dow Jones Industrial Average also closed the day higher after it recovered from earlier losses. Dow also posted its first weekly gain in six weeks.
the Dow has a lot still to prove before it can be regarded as safely in rising territory.
drawing a comparison to last March, one cannot help feeling that there is a major barrier at 10400 to overcome, and even then, an actual rising trend may not be immediately evident.
until then, the cautious silence on this and other forums is fully justified. unless anyone chooses to disagree on the importance of the Dow to our market.
Technology market leader Solution 6 is expected to reveal it has slashed its profit forecasts today, after a review of the company by its new chief executive, Mr Neil Gamble, found several underperforming operations.
The news comes in the wake of profit downgrades over the past week by a number of technology companies including Keycorp, Melbourne IT, Reckon and Isis Communications.
Mr Gamble, who replaced interim chief Mr Lindsay Yelland two months ago, is also expected to unveil a restructure which includes staff cuts and divestment of a number of non-core assets.
It is understood the company could lop as much as $100 million from its revenue expectations, which the market has recently put at $400 million.
The lower revenue will force the company into a nominal loss, but this is likely to be offset by cost savings generated by the restructure.
The shake-up confirms Mr Gamble's intention to move Solution 6 away from the structure created under former high-flying chief executive Mr Chris Tyler, the Texan who undertook a series of rapid acquisitions aimed at making the group one of the largest technology stocks in the world.
Likely to be included in the restructure will be the divestment of accounting firm Montgomery Baggett and Drews, the business of Solution 6's former chief financial officer, Mr Tom Montgomery.
Mr Montgomery, a close friend of Mr Tyler's and one-time aspirant to the top job, left the company last month.
Solution 6 is also likely to divest its telephone call centre, DCF.
As recently reported, the company is also likely to cut its corporate staff by around 60 and move each of its geographical and product divisions into autonomous business divisions.
Mr Gamble's reforms are also expected to include the establishment of a special task force to oversee the sales and implementation of all accounting-related systems.
He is also expected to announce the closure of several units of the business that have failed to make a profit in the past few years.
Mr Gamble is also expected to reverse Solution 6's policy of integrating all of its acquisitions, instead leaving several businesses to stand alone.
The company's much-heralded application service provider business will be spared the knife, but will be placed under new management, with a more sober spending approach.
In contrast, Solution 6's highest-margin product - top-tier accounting practice management software CABS2000 - will be made into a separate business unit, to be headed by Mr Tom Crampton, a US executive recruited by Mr Tyler from AT Kearney
