CYCLES CYCLES CYCLES

The idea of cycles of prosperity and cycles of suffering is nothing new. The bible tells of the story of Pharaoh's dream, which Joseph interpreted as 7 yrs of feast and 7 years of famine. Even back then they acknowledged a pattern or cycle to matters. It is also evident that nature moves in cycles. The earth spins around once a day, while circling the sun once a year. Because of this we have seasons, which determines when Plants and Animals are born, grow and die. Other cycles govern when markets, societies and civilizations peak and decline i.e (K wave).


I also want to add that Circles are a form of cycles. When you run around the track, you make a full circle or when the hamster goes around his wheel, once around is called a full revolution. Its a cycle, there's a starting point and ending point.

With regards to Circles, you have one of nature's most amazing ratios besides Fibonacci, Pi explains the  relation of a Circle's circumference to it's diameter. It's a mathematical constant. Circles are everywhere=Pi is everywhere. The disk of the Sun. The spiral of DNA Double Helix. Pupil of the eye. Also in Physics, Pi describes waves of light/sound.

History repeats itself

Because all the concepts of technical analysis are based on studying historical data, validity of this premise is crucial. Several studies have shown that particular events occur repeatedly in the market. These events are reflected in market price, which is again the primary source of information for particular indicators and chart analysis. Many of them are based on patterns in human psychology that do not change. For example, one such situation is regularly visible when resistance (a psychological barrier limiting the price rise on the upside) is broken. If the price breaks above the resistance level, traders who have opened long positions cheer, but at the same time they regret that they didn't buy more. Traders with short positions realize they are on the wrong side of the trend and hope that the price will drop back to the level of former resistance, so they could exit their positions without incurring losses. Traders that have not yet committed any money in the market are waiting for the price to drop towards the level of former resistance as well, in order to be able to initiate long positions and capitalize on the upward trend, while buying cheaply. Because all these groups intend to buy near the level where the resistance was, this level becomes a support for price – prices will not fall under this level because of high demand. Technical analysis includes many such concepts.

Price Discounts Everything (this is NOT the Efficient Market Theory)

Technical analysis is a kind of market analysis that compared to the fundamental analysis does not require constant monitoring of vast amount of information from various sources. On the contrary, it is based on the belief that all relevant information are already reflected in the market price and any new information will impact the price as soon as they are released. That's why for the purpose of conducting technical analysis, all you need to watch is market price and volume traded. In case of futures, you need to watch for another figure – the open interest indicator (the amount of currently outstanding contracts in the market). Hence, it is completely sufficient for a purely technical trader to have only a data feed consisting of market price and volume traded in real time, which is usually already included in a broker's basic fee. We can say that while a fundamental analyst attempts to determine or at least estimate a company's intrinsic value, a technical analyst does not concern himself with this value at all. 
His only concern is whether the price of its shares will go up or down in the future. But, as opposed to a fundamental analyst he does not care why this happens. Thus, a technical trader does not have to subscribe to expensive information services such as Reuters or Bloomberg, and hence he can save a lot of money. Moreover, technical analysis can be applied practically to every market – to equities, bonds, commodity futures, currencies, etc. Therefore, a technical analyst has a substantial advantage over his fundamentally oriented peer, because he can always choose to trade the market in which there is currently most action, as he is not bound to a particular market.

Prices Move in Trends

The first and also the key premise of technical analysis is that asset prices tend to move in trends. Three kinds of trends exist- the upward trend (bullish), the downward trend (bearish) and no trend (sideway move). In case of a sideway move, prices oscillate in a narrow range for some time, whereas their future direction is hard to determine. According to technical analysis, a trend is in effect until it reverses. That's why most traders focus on trading the market at the time of trend reversals, as it is at that time when the biggest price moves occur, which means high potential for profitable trades.

However, there is not only one trend in a stock chart. On the contrary, there are several trends in one chart. For example, in a monthly chart we can find a long-term trend, which actually consists of many smaller trends. In a daily chart we can find a daily trend, in an hour chart an hour trend and in a minute chart a minute trend. Most of technical analysts recommend trading in the direction of the trend. They usually start by determining direction of the long-term trend and then gradually move to lower timeframes, whereas the key trend to watch should be the one corresponding to the time horizon during which we want to have the position open.

Technical Analysis: PRICE IS THE LANGUAGE OF THE MARKETS

Technical analysis can be defined as a method that attempts to forecast future price trends by the means of analyzing market action. It was established as early as 18th century. However, most of its methods as we know them today were created in the first decades of 20th century. The core idea of technical analysis is that history tends to repeat itself. That is why we can find certain situations in the market that occur regularly. These situations can be discovered by chart analysis and technical indicators, which we can use for our advantage – and that is precisely what technical analysis is trying to do. 

There are several approaches to technical analysis – such as the Dow theory, Elliot wave theory, Fibonacci's analysis, cyclical analysis and so on. The most commonly used methods can be divided into two major branches – namely chart analysis (also called charting) and statistical approach. With chart analysis, the analyst is trying to find patterns that price creates in the chart and that occur repeatedly. For example, head and shoulders or double bottoms are considered typical chart patterns. As soon as the analyst identifies such a pattern, he can make a trade based on the direction the price should follow based on the type of the pattern. 

Another branch of technical analysis is constituted by the statistical techniques, which comprise mostly the study and use of various technical indicators. These indicators are computed from historical market data and are mostly used for forecasting trend reversals or changes in strength of the trend. Many of the indicators yield precise buy and sell signals. There are several kinds of indicators – from the very simple ones like moving averages to the very complicated such as Swing index, for which the mathematical formula is several lines long.

It is the job of the technician to know how to use and which indicators to use, so to best figure out and plot the future path of the markets.

Market's Bull Market 6 Year Anniversary

The S&P 500 (SPX) this past Monday, March 2nd, closed at all time highs 2117.52.
After a 6 year ageing bull market, it seems like a good time to reassess where we are, what hurdles we face, and where we might be headed.

The March 6, 2009 intraday low of 666.79 makes you wonder sometimes what forces are at play. That friday we closed the day at 683.38 and never looked backed. The rally has surprised many, scared shorts several times, and amazingly still keeps going.

What can stop this Bull Market??

With many Big Money Managers, such as the Rothschilds (http://www.zerohedge.com/news/2015-03-05/lord-rothschild-warns-investors-geopolitics-most-dangerous-wwii) acknowledging the rich valuations throughout equities, markets can stay overvalued for long periods of time and vice versa.

Since computers (Programming formulas) run the show, I think we can learn a lot from numerology studies, as the Big Money get in and get out at certain price levels for a reason.

Before the Securities Act of 1933 (companies must release financial statements) the majority of Wall Street analyzed stocks & commodities by using Technical Analysis. Yes that does seem like a wild concept to grasp by many, since over 80% of smart money now uses fundamental analysis to guide their trading & investing. Even though that is the case, fundamental analysis can't explain price moves like technical analysis can.


In the following posts I will elaborate more on technical research which will help you navigate and time markets far better than any fundamental piece out there can.

Markets have a language … PRICE!

Mkt gearing itself for a bottom, then heading to 1400

The S&P500 had a typical oversold bounce which stopped right at resistance 1340...draw a line going back two and half months and you'll know the significance of that level. I'm still leaning towards a washout selloff coming in the next 3 trading days to 1311. If however we break 1340 and stay above it for over a half hour i expect the next wave to 1400 has started. Until then, i'll be waiting to buy June calls on the spy. I'll begin buying calls under 133.

On bullish on offshore oil driller called HERO. Buying the June 7 calls too.