Archive for February, 2008
You will never see anything else like this, for investors, I promise: this year’s Investools Investor Conference. In the Bellagio, mmm. I love that place. Last time we stayed there I stole the pillows because they were heavenly. Sadly, I got charged (expected) and yet they are now getting frumpy and gross. *sigh.
Anyway, this is definitely to be checked out (everyone who goes always raves about these conferences, I’ve seen it year after year! Even if it does mean you’re staying in only a ghetto version of that place we talked about last Friday…):
Time for another mini-lesson! A couple weeks ago we added some new studies to the ProphetCharts, among them the Ikimoku study. I’m in heaven – I’ve used it for quite a while and love it! Today’s we’ll look at this study, learn it, and use EUR/GBP as an example (since the euro is on fire, and that is the pair we’re doing our little experiment on)
What on earth is Ikimoku:
Ichimoku is a complex set of tools in one study. It is a matrix of momentum lines, trend filters and support/resistance areas … all built into one. Not only will you look sexy when you use it and sound exotic talking about it, you’ll also have a sweet set-up for excellent signals (I listed these in order of importance).
I’ll identify the Ichimoku components by simpler names than their difficult Japanese ones (labeled on the chart – please zoom in on the following charts as needed):
The dotted line: (I made it dotted – default is red and called Chikou) this thing usually hangs way over the price in an uptrend. It follows the price … 26 periods back! This determines trend direction. If today’s bar is higher than the bar directly below the end of the dotted line, the trend is up. Because it represents previous closing prices, it is also excellent support/resistance, used by drawing lines across from previous peaks in the dotted line (see chart to the left).
The fast blue line: similar to the fast line of MACD or stochastics. It’s computed measuring the average high & lowest low over the last 9 periods.
The slow pink line: same as the fast blue except 26 periods. One neat things about these lines, different than moving averages: because they represent highs and lows, the lines will at times be flat (representing trendlessness). These areas are support/resistance, especially the 26 period line. When the price exceeds the recent high, for example, the line will crook up again and stop being flat. Therefore, the slow pink line represents the short term trend.
The Ikimoku cloud: this is the funkiest part of the study. It’s calculated using the slow and fast lines, highest highs and lowest lows, some division, some time-shifting into the future 26 & 52 periods, bat wings and frog blood all mixed into a cauldron and spat out as the big, strange cloud hovering below price in an uptrend.
Cloud support and resistance: The cloud offers excellent support and resistance (ovals in chart on the left). The area of the cloud is like mud – initially there is some resistance and as you plow through it gets thicker and is harder to proceed. In an uptrend, the bottom of the cloud will be final and strongest support. The cloud is a bit like a price gap in this sense – a wide area of support/resistance. And the thicker the cloud, the stronger the support/resistance. The other neat thing is that the cloud expands and contracts with volatility.
The cloud also offers a view of price sentiment. If price is above it, sentiment is bullish and vice versa. Inside the cloud is like, of course, mucking in muddy no-man’s land, more of a neutral posture. The cloud can twist and flip-flop so the top part becomes the bottom: this too is a shift in trend sentiment.
Clouds often exhibit flat tops and bottoms. When price nears these areas, the cloud often exerts a gravitational pull and sucks the price in to it. You’ll notice on the chart above that many of the resistance tests were to flat cloud bottoms. A smart trader will be extra careful to not jump automatically in a breakout near a flat top/bottom.
Entries and exits: Stop losses are, surprisingly, often unaccounted for in this system, so you usually use them based on support/resistance etc. The traditional entry would simply be based on the fast line crossing the slow line. In context of the other components of the study, it works well. Exits can be crosses back the other direction.
Another method is a cross of price closing thru the slow line. This is perhaps a stronger entry signal than the fast crossing the slow line. Exits can be a cross back the other direction. This method includes a stop loss, maintained just below the line as you would under regular support.
Some traders trade the dotted (Chikou span) line crossing the price itself as a trade going in that direction. Other methods, better for longer term trades, are cloud breakouts and crosses when the top of the cloud twists and becomes the bottom and vice versa. I’ve always liked to use a slow Stochastics with it, which a Ikimoku purist would blanch at …
Remember that all of these entries and exits should be in context of the rest of the Ikimouk components (trend, sentiment bias, support/resistance) for you to be successful … and look sexy as heck doing it.
Like we said in the commentary in the beginning of the month, EUR/USD at the pullback from the highs and the bounce either it is now conceding to the USD or it is on it’s way to the mother of all ascending triangle breakouts. We got the breakout!
USD/CHF confirming the play in the EUR nicely
Bearish Sentiment very evident in the Loonie, GBP/CAD
Franc the Pound – sell it short
EUR/GBP – looks great, Turtle trade, value accumulation
Comparison and contrast the speculation that Rates go up in AUD and NZD and down in USD – For Commodities it is a WIN-WIN
Dollar dives off of the high dive on worse than expected neg news in housing and Durable good orders AND Ben Bernanke is opening his mouth basically throwing inflation to the wind (when adjusted for the next interest rate drop it is now neg. This means that interest does not keep up with inflation.)
I PREDICT that the more you have patience in your currency trading, a long term perspective in you currency trading and the ability to postpone immediate gratification in your currency trading, the more likely you are to be a successful currency trader one year from now. (14)
Mona suggests the the ETF – RJA for commodity analysis
James Boyd suggested adding DBB and DBS into the mix
Audio commentary is here.
Commodities are where it is at
We got the better than expected GERMAN #’s
GBP holding well
$VIX is down while the yen and CHF are down
I PREDICT that if you’re unhappy with your Currency Trading and you say, “it’s not my fault” or you blame it on the market, “other traders” or large banks with “insider info”, then your currency trading will look pretty much the same at the end of this year as it did on New Year’s day. (13)
If you watch this pair, you may notice it’s gunning for getting below support this morning. It’s still in the area (currently at a low from mid-January), so it hasn’t breached it yet. Is it a good buy to enter a short position if it does?
This is where looking at the big picture comes in handy, and I mean big! Turns out that, looking back to 2003, if it break out to the downside we’re right at another major support level. It lasted for months, and was a major turning point from down to up. If you see a beak out over the next day or two, or whenever, watch out – I personally don’t like wondering if it will have problems going down further … I like every odd and degree of confidence I can get.
As designed by Chicago architecture firm Perkins + Will, the in-progress glass-tower is estimated at $1 billion and is known to feature, at the least, a health club, multiple “safe” rooms, 3 helipads, 168 parking spaces and require 600 servants to maintain, and physically, the structure stands at 27 stories, or 570 feet tall.
My personal favorite comment is at the bottom of the article:
One would think that a billionaire may have read a newspaper and noticed there are people who could use a few bucks to get vaccinations for their kids. Or maybe that’s just me. Reply| posted 01:33 am on 02/21/2008
Construction of Mukesh Ambani’s new house at Altamount Road, where real estate prices are now in the region of Rs 75,000 per sq ft, began in late 2006, and the first six floors are already in place now. The building is expected to be complete in September 2008.
According to the plan, the house will rise to a height of 173.12 meters, equivalent to that of a regular 60-storeyed residential building. However, Antilia will have only 27 storeys in all, which means each floor will have a ceiling considerably higher than the current average of nearly three meters.
Six floors for parking
The first six floors — which have come up — will be reserved for parking alone, and that too for cars belonging only to Mukesh’s family. Space for a total of 168 ‘imported’ cars has been earmarked here.
Floor for car maintenance
Sources said the Ambanis would prefer to have all their cars serviced and maintained at an in-house service centre. This centre will be set up on the seventh floor.
The eighth floor will have an entertainment centre comprising a mini-theatre with a seating capacity of 50.
Balconies with gardens
The rooftop of the mini-theatre will serve as a garden, and immediately above that, three more balconies with terrace gardens will be independent floors.
The ‘health’ floors
While the ninth floor will a ‘refuge’ floor — meant to be used for rescue in emergencies — two floors above that will be set aside for ‘health.’ One of these will have facilities for athletics and a swimming pool, while the other will have a health club complete with the latest gym equipment.
There will be a two-storeyed glass-fronted apartment for the Ambani family’s guests above the health floors. One more refuge floor and one floor for mechanical works will be built on top of these apartments.
The four floors at the top, that will provide a view of the Arabian Sea and a superb view of the city’s skyline, will be for Mukesh, his wife Neeta, their three children and Mukesh’s mother Kokilaben.
Air space floor
According to the plan, two floors above the family’s residence will be set aside as maintenance areas, and on top of that will be an “air space floor,” which will act as a control room for helicopters landing on the helipad above.
The plan states that three helipads are to be built on the terrace.
However, Brihanmumbai Municipal Corporation officials told this paper that permission for the helipads has not been granted yet.
“The residential plans were approved three-four years ago. Two levels of basement have also been shown in the proposed project,” Sudhir Shinde, deputy engineer at the BMC’s building proposals department said.
Nearly 600 staffers are expected to work full-time in the building, sources said.
According to BMC records, the total area of Mukesh’s Altamount Road plot is 4,532.39 square meters. The proposed built-up area is 4,778.09 square meters (only for residential purposes), and the permissible built-up area 4,939.81 square meters.