If there is any piece of advice I've followed more closely it would be to emulate others who have previously traveled the path to success. While one's definition of success is a relative matter, one thing is for certain: someone in your current position has achieved the particular goal you are pursuing.
I am incredibly fortunate to have worked alongside traders who have literally made millions upon millions of dollars in the markets, and interestingly enough they all have one thing in common: in one form or another they have followed the principles of the best proprietary trader in Canada (who also worked for Haywood Securities). Some of those principles are what many of us have heard since we became interested in the markets:
- Keep your losses small
- Let your winners ride
- Buy when the herd is selling, and sell when the herd is buying
This particular trader without a doubt had a unique skill set that truly differentiated him, but I would venture to say that 80% of his success came from his ability to implement these principles without question. In fact, I am pretty sure that during March 2009 he was aggressively buying up commodity stocks and probably made an absolute killing. Let me ask you this: did YOU have the discipline to switch camps from bear to bull in March 2009? Were you able to clearly identify a change in sentiment? This is what he was very good at.
Anyways, on to tonight's post.
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Tonight's futures look dicey at best and I am almost 100% confident we are going to get some serious fireworks tomorrow.
Firstly, let me present the overwhelming evidence for the bullish case going into Monday.
DA BULLS
A small change in the McClellan oscillator has typically be associated with large moves during the following 1 to 2 sessions. Friday's $NYMO action clearly suggests something is brewing.
In the chart shown above, I've delineated the bottoms that preceded significant rallies over the past 2 years and they have ALL occurred when the $NYMO traded below -60.
Also, we are seeing significant positive divergences in not only the ESU9 futures contract, but also in currencies.
ESU9 Futures Contract
EUR/JPY Currency Pair
EUR/USD Currency Pair
All this plus my overly-mentioned ES forecast shown in my previous post - (Almost) Flat As A Pancake - and my statistical evidence for an up-week in my July 9 post - Kotov Syndrome - clearly suggest upwards pressure going into next week. But I shall not be caught off guard!!
DA BEARS
Let's be clear: the market will do everything in its power to convince the most amount of traders to hedge shorts with long positions all the way down, only to force those traders out of their positions and Monday has the real possibility of being no exception despite the overwhelming evidence in favor of the bulls at the moment.
Monday's plan: go long OR short on a massive scale. I have vehemently been saying that this leg of the bear market will give VERY FEW traders the opportunity to load up on the short side. Shorting on both strength AND weakness will be profitable.
That's all for now.
