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Traders World Efrem Hoffman
Traders World Efrem Hoffman
Traders World Efrem Hoffman
Traders World Efrem Hoffman
Traders World Efrem Hoffman
Traders World Efrem Hoffman
Traders World Efrem Hoffman
Traders World Efrem Hoffman
Traders World Efrem Hoffman
Traders World Efrem Hoffman
Traders World Efrem Hoffman
Traders World Efrem Hoffman
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Traders World Efrem Hoffman

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  • 1. THE OFFICIAL MAGAZINE OF TECHNICAL ANALYSIS TRADERSWORLD www.tradersworld.com | May/June/July 2012 Issue #51 Trading Where Traders Go Wrong Dynamic Cycles Diversification Identifying Holy Grail? Tops and Bottoms High Profit Cup with HandleCandlestick Pattern Patterns The Critical Nature 1 of Volume www.tradersworld.com May/June/July 2012
  • 2. Advertisers Editor-in-Chief Larry Jacobs - Winner of 2001 World Cup Championship of Stock Trading OfficeMay/June/July 2012 Issue #51 2508 W. Grayrock Dr., Springfield, MO 65810World Cup Trading Championships 3 Contact Information 417-882-9697,800-288-4266Traders World Online Expo #11 5 Email: publisher@tradersworld.comThe Inside Technician 7-8 Copyright 2012 Halliker’s, Inc. All rights reserved.eSignal 12 Information in this publication must not be repro- duced in any form without written permission fromTraders Expo Dallas 14 the publisher. Traders World™ (ISSN 1045-7690) is published quarterly - 4 issues, (may run late due toSelfish Investing 17 content creation) for $15.96 per year by Halliker’s,ELWAVE 21 Inc., 2508 W. Grayrock Dr., Springfield, MO 65810. Created in the U.S.A. is prepared from information be-The Andrews Course 23 lieved to be reliable but not guaranteed us without further verification and does not purport to be complete. FuturesSacred Science Institute 28 and options trading are speculative and involves risk of loss. Opinions expressed are subject to revision withoutSacred Science Institute 30 further notification. We are not offering to buy or sell se- curities or commodities discussed. Halliker’s Inc., oneSacred Science Institute 35 or more of its officers, and/or authors may have a posi-Trading On Target 39 tion in the securities or commodities discussed herein. Any article that shows hypothetical or stimulated perfor-MMA Cycles 41 mance results have certain inherent limitations, unlike an actual performance record, simulated results do notForecasting Made Easy 43 represent actual trading. Also, since the trades have not already been executed, the results may have under - orJoe Krutsinger, CTA 54 over compensated for the impact, if any, of certain mar- ket factors, such as lack of liquidity. Simulated tradingTraders World Back Issues 94 programs in general are also subject to the fact that theyMarket Cycle Investment Mgmt 95 are designated with the benefits of hindsight. No repre- sentation is being made that any account will or is likelyKnow Yourself 102 to achieve profits or losses similar to those shown. The names of products and services presented in this maga-Murrey Math Trading Supplies 105 zine are used only in editorial fashion and to the benefit of the trademark owner with no intention of infringing onNaked Swan Trading 114 trademark rights. Products and services in the TradersJan Arps Trader’s Toolbox 123 World Catalog are subject to availability and prices are subject to change without notice.Elliott Wave-Compass 133Traders Book Library 1432 www.tradersworld.com May/June/July 2012
  • 3. Contents High Profit Candlestick Patterns Enhancing Market Trend Returns The Fry-pan bottom By Stephen W. Bigalow 78May/June/July 2012 Issue #51 Why Trade the Cup with Handle Pattern?Moving Ahead: Trading Dynamic Cycles By Dale Glazier 82By Lars von Thienen 6 THE 1:1 STOCK TIME EQUILIBRIUMThe Quest for the Hole in One Golf Ball ANALYSISBy Ron Jaenisch 22 & THE LAW of VIBRATION By Dave Franklin 88The Polarity Factor SystemBy Daniele Prandelli 27 How To Make Short Term Trading Your Long Term Investment StrategyTHE PHASES OF A TRADING CAREER Trading, the Operational Mainframe ofBy Adrienne Toghraie 36 Successful Commercial Enterprise By Steve Selengut 95Diversification The Holy Grail?By Kevin J. Davey 43 Gold / Mining Stock Index Divergences – Leading Indicator?Know When to Hold‘em, By Robert Miner 101Know When to Fold‘em!”By Joe Krutsinger, CTA 49 NAKEDSWAN TRADING By Efrem Hoffman 106Where Traders Go WrongFive Reasons Why Traders Fail Identifying Tops and Bottoms Using theBy Bennett McDowell 55 Sweet Pea Deep Dip Triple Oscillator Divergence ConceptDon’t Be Fooled By Jan Arps 115By Brady Preston 58 The Critical Nature of VolumeNOTES ON GAP THEORY By Jeffrey A. Killing 124Part 2from “Novy Principles of Market Flow Elliott Wave OutlookBy Leonard Novy 63 S&P and Gold By Peter Goodburn 129The Price of CertaintyBY Joel Rensink 67 The EUR / USD and Gold By Jaime Johnson 135The Vibrational Positioning Sequence (VPS)A Market Forecasting Model based on the Power Cycle Day Trading Course ReviewLaw of Vibrations 144By Anthony Scelfo with Thomas Hart 72 The Ivy Bridge Sonata By Larry Jacobs 146 Traders Book Library 1474 www.tradersworld.com May/June/July 2012
  • 4. NAKEDSWAN TRADING “Where traders come to convert their pain points into profit” Integrated Idea Generation & Risk Intelligence:  A New Framework For Converting Your Pain Points into Trading ProfitsI n this article, Efrem Hoffman, Founder & Visionary of NakedSwanTrading.com, features a new kind of market intelligence, called RiskWindows; and describes how the research service built around it, and generated by his proprietary software innovation, is offeringtraders a unique quantitative and leading indicator, which is developing a solid record ofanalytic accuracy. Real market data from today and tomorrow is utilized to test its predictive strength, andbuild industry traction from its ongoing performance. This is already being demonstratedby the stream of market calls made on NakedSwanTrading.com and its Twitter feed source,NakedSwanTrader. For a real-life sneak- preview of how our research is made actionable, lookno further than our illustration in Fig. 4, and our special webinar event (posted in March onNakedSwanTrading.com), regarding the precise timing of Apple’s reversal. Hoffman describes the financial markets as the most extensive and longest running datawarehouse on human social behavior that ever was – an elaborate laboratory having anunparalleled shelf-life for testing out new theories of how human experience and interactioncan impact your pocket book. [Every month more than 100 Billion transactions or 19.3 tera-bytes per year get executedacross all traded asset classes in North America alone, along with 41 trillion messages per daypushed out across the 13 U.S. Stock Exchanges, 9 Options Exchanges, and 60+ Dark Pools ofcapital assets] -- according to Interactive Data -- making the social media data store, of the Figure 1106 www.tradersworld.com May/June/July 2012
  • 5. more than 845 million people that record and share 30 billion traces of their daily lives permonth on Facebook alone [according to McKinsey Global Institute], look like a ball in the park. Tapping into this collective intelligence, he has also rigorously tested this research frameworkin the midst of financial hurricanes in equity, commodity, and currency markets, to successfullywarn investors right before the top of the Housing Bubble and Mortgage Meltdown; specificallypre-identifying, the demise of WorldCom, Bear Stearns, Lehman Brothers, GM, among others,before any signs of trouble emerged. A review of the much more mixed market settings,scrolling back as far as 400 years across world capital markets, shows similar predictiveintelligence. The richness of that information field goes some distance to explain why Wall Street is inan arms race to re-invent and make better sense of all this information. To address these growing demands, our mission is to play a leading role in the developmentand contribution of change-making technologies, to help transport this new science ‘Out of theLab and into your Trading Room.’ Stay tuned! -- Efrem Hoffman is bolstering his operating capabilities to makeNakedSwanTrading.com the premier innovation center and on-line destination for tradereducation, alpha-idea generation, and global risk intelligence -- all designed to make learninghow to maximize RiskWindows, for your trading style, a snap. That means eliminating your blind-spots to help you keep your wallet closer to your hip andon a competitive playing field with institutional traders. One research group inside NakedSwanTrading, known as the Big-Data Science and Human-Decision Network, is tasked with the challenge of mathematically sniffing out digital recordsof market data to look for deep structure that explain the HOW and the WHY of the market’shuman social wiring, and specifically quantifies how and when traders with different marketperceptions and time horizons are plugged into the global grid of fear and greed. We call thisanalytics engine, Bottom-Down Intelligence – first drilling down to the very first and smallest-scale transaction of an individual security, and then digging deeper into our underlying Figure 2107 www.tradersworld.com May/June/July 2012
  • 6. motivations for making trading decisions; and the interactions that shape the market outputsof our minute to minute transactions across groups of market securities. Another characteristic that is unique to our research strategy is that we defined a novelmathematical notation that corresponds to our discovery of an elaborate mathematical structure,which exists in and of itself, without fine-tuning parameters to match past experience. Thestructure dynamically traces out the extremities of price movement across all time-lines,while the mathematics of this solution framework decodes how, when, and at what valuationlevel market decision-makers (buyers and sellers) will observe and act on perceptions ofmomentum change into the future -- specifically when viewed from the perspective of eachperformance time-line. Hoffman likens what they do to building a telescope of human perceptions, saying that thetechniques they engineer are transforming our scientific understanding of market rhythms inthe same way that astronomy and relativity revolutionized our discovery of the cosmos, orhow biology has inspired our design of more efficient information transfer, as well as lighter,stronger, and cheaper materials, with a more energy efficient purpose. To advance our capabilities in these areas, for the better part of 16 years, Efrem Hoffmanhas conducted ongoing scientific investigations to addresses the most elemental themesabout human market dynamics, namely, personal influence and salience of decision-makers,diffusion, and viral propagation of information -- that telegraph market contagion; as well asthe shape of the social network (code-named ‘i-Grid’) which gives rise to these attributes. His weapons of analysis have their home at the intersection of where first principles ofquantum physics meets the mathematics of social interaction. He has engineered a High-Definition Risk Map that shows what extremes could be expected Figure 3108 www.tradersworld.com May/June/July 2012
  • 7. over a period of time (branded under the RiskWindows Trademark); how devastating tail-riskevents like credit crunches, currency crises, and market crashes can be; and which assetclasses and global hot-zones are going to be on the forefront of recovery after prolonged riskevents. For retail investors, busy with their full-time commitments, as well as wealth advisersand professional traders alike, this could help them whittle down to a dozen or fewer areaswhere they could be focusing on high performance growth opportunities, and another dozenareas where they might want to go short in the near term -- out of more than 5,000 liquidassets – including stocks, financial futures, commodities, currencies, bonds, and global-asset-class proxies, such as today’s diverse array of exchange-traded funds (ETFs). This process isdesigned to yield ‘diversification without redundancy;’ namely, because our analysis allowstraders to avoid generating a large number of mediocre ideas that would otherwise drag downthe best performers. Our real-time market updates on NakedSwanTrading.com are specially formulated toput this information at your fingertips, so that you can enter your trading positions rightnear overhead resistance or baseline support, before your competition takes a piece of yourpotential profits. The service addresses three actionable time-lines, ranging from intra-day trading to 5 daysforward, 2 to 3 week trends, as well as 3, 5 and 9 month macro events. When we see a marketcrisis on the horizon, as we do today (see Fig. 3-7), we extend the outlook beyond 12 months,and upwards to 3 years. Efrem Hoffman summarizes his review of how he uses this proprietary information to builda unique market intelligence service: “By combining a forensic analysis of global trends -- and their inter-market variables --with a bottom-down research process, we are helping traders hunt down the hidden structures Figure 4109 www.tradersworld.com May/June/July 2012
  • 8. and subtle relationships between markets and the trading participants that create them.” Thistype of insight enables RiskWindows to give traders first-mover advantage in zeroing in onattack-points (see figures 1 through 7 for an illustration) -- special Risk-On, Risk-Off switches,that allow traders to sense upcoming short-term price trends, expansions or contractions involatility and liquidity, as well as anticipating buying and selling inflection points of all shapesand sizes, with just-in-time action cues. To account for how traders weigh in on events on different time-scales, we are the firstin the industry to create market momentum maps that chart out future perceptions of zeromomentum crossing points -- branded under the trade name, Momentum Perception Maps(MPM). This process begins by overlaying zero momentum isobars on a price chart, onefor each marginally longer trader time horizon -- starting from the tick (single transaction)level to multi-generation time-lines. Analogous to isobars on a weather map, which plot outboundaries of equal pressure, zero momentum isobars are curve-linear lines, overlaid on aprice chart, that represent constant price levels of zero momentum. When the full spectrumof such isobars are displayed at once, and across all assets covered, a 360 degree view ofglobal decision-maker pressure points are instantly rendered visible. How? By tracing out thegaps between valuation levels that correspond to future zero momentum crossing points ondifferent time horizons. These forward-looking valuation zones define what different tradergroups will see in hindsight on their momentum oscillators, such as MACD or RSI. Becausethe momentum jet stream, which these isobars telegraph, is versatile in shape and malleablein structure, many interesting and pertinent properties of future momentum change can bededuced and quantified with unparalleled resolution and lead-time. These properties areillustrated in Fig. 1 (step 1) and Fig. 2 (step 2), where we walk you through the constructionof a risk window from start to finish. They are further exemplified in our free weekly analysisof global markets on NakedSwanTrading.com. Specifically, these zero momentum isobars are designed to indicate how fast an asset willbe rising or falling in value – its speed or momentum. Moreover, contrary to the popular belief that a stock must first slow down, or even stop Figure 5110 www.tradersworld.com May/June/July 2012
  • 9. before plunging lower, we have discovered an anomaly in this occurrence at special points inan asset’s lifecycle, which we call attack-points -- located at the leading edge of risk windows. These points define when people’s perceptions of market sentiment can instantaneouslychange or be magnified without any application of force or external stimuli. This is a revolutionarydevelopment, Efrem adds, because it implies that black swan events have been misclassified.They are often born out of the background noise of prior crises. This intelligence can foreverchange the way traders defend their assets ahead of parabolic manias or market capitulations. As an illustration, you need not look any further than those times when a runaway stockor commodity heads into the stratosphere, only to find out later that it plummets back toearth without a shred of warning. What makes these special events counter-intuitive andexceptionally difficult to grasp or quantify, with any level of logical certainty, is that theyviolate a well guarded principle of classical physics – which we have all been endlessly trainedto believe ever since our childhood experiences with nature. These stories of our pastimeindicate that before an object (i.e. baseball or price) can fall back to ground level (fair valueequilibrium), it must first slow down, or even stall out completely as it passes through itszero acceleration point. Although this slight change in momentum can be usually exploitedto detect trend change in price, when a market is parabolic in nature and closing in on itshigh tick before the final bell rings, there is very little that a momentum indicator can tellyou regarding the opening transactions on the following day. But all too often, and with greatsurprise, markets can gap down violently, blowing through your capital preservation stops oreven decimating your option-driven income-generation strategy – even in those instanceswhere there is no sign of negative pre-market action. Traders can be guided to avoid these types of market train wrecks with potentially highlevels of consistency, by following our free weekly webinars, and subscribing to our ‘attack-point database,’ which we will be rolling out, in Q2 and Q3, as an online application servicesolution. It was our risk window analysis of these attack-points, as showcased in Fig. 4 (time-stamped on Twitter feed: NakedSwanTrader ), that enabled us to precisely predict and mapout Apple’s (symbol: AAPL) parabolic reversal, with high confidence, specificity, and lead time, Figure 6111 www.tradersworld.com May/June/July 2012
  • 10. as it plunged from its high point this past week, taking many investors by surprise. What should really get traders excited about NakedSwanTrading.com is that its marketintelligence is now signaling, loud and clear, unparalleled short and long opportunities inmultiple equity, commodity, currency, and bond markets, right as they are entering a largenumber of attack-points and critical risk windows, which are expected to amplify the frequencyof trade during the next 18 months and beyond. Figures 3 through 7 provide a sneak previewof such tail-risk that will likely impact several key markets, including the e-Mini NASDAQ 100Futures, Apple (AAPL), e-Mini S&P 500 Futures, SPDR S&P 500 (SPY), and Spain ETF (EWP). Start building your information advantage today by subscribing to our free weekly webinars;and checking out our latest market commentaries and archived videos trend pieces at: http://NakedSwanTrading.com ; Twitter Feed: NakedSwanTrader Fig. 1 Step One in the Construction of a Risk Window, as illustrated on the 89 minute pricesampling interval of the NASDAQ 100 Futures (June Contract) sell-off, which triggered nearApril 4th (as illustrated in Fig. 3), following the run-up on a breakout which began on March13, 2012 (as depicted in this figure). Fig. 2 Step Two in the Construction of Risk Window trigger points and attack- points,as illustrated on the 84 minute price sampling interval of the NASDAQ 100 Futures (JuneContract) sell signature, which was evaluated before April 2nd. Note: Attack-Points signifyzero momentum crossing points that are first observed by longer-term traders -- beforeshorter-term market players – this implies an inversion in the ordinary flow of incoming futureinformation, leading to short term momentum players running for the gates as soon as largeblock orders come in from institutional traders that act on information regarding momentumchanges first. Fig. 3 NASDAQ 100 Futures (June Contract) Risk Window for Sell Off which began nearApril 4th; 2738 to 2757 is overhead resistance ; 2633 is critical support; Extreme Base-LineSupport: 2535 if a spike low into May; Each price bar represents the price range of an 84minute time interval. Figure 7112 www.tradersworld.com May/June/July 2012
  • 11. Fig. 4 Apple Inc. (symbol: AAPL) Risk Window for Sell Off which began near April 11thcrossing below $633.00 (as predicted in our NakedSwanTrader Twitter post on April 10th,2012; just above $640 level was overhead resistance level, identified at that time, and whichtrapped prices and reversing them as low as $571 so far, as of April 17th. Trailing resistancehas now dropped down to the $620 to $627 price zone into April 24th. Next significant base-line support comes in at $556 to $548 price zone, with a risk of a spike down to 538 to 526levels. Each price bar represents the price range of a 60 minute time interval. Fig. 5 E-Mini S&P 500 Futures (June Contact) Shorter-Term Risk Window (see Fig. 6 forlonger term outlook) for Sell-Off which began near April 3rd, crossing below 1415 attack-pointat the first red arrow; 1420 to 1430 price zone was overhead resistance, identified at thattime, and which trapped prices and reversing them as low as the 1352.50 so far, as of April10th. Trailing resistance has now dropped down to the 1396 to 1405.50 price zones into lateApril. Next significant support comes in at 1340 with 1330 to 1320 offering longer term base-line support into the May period. Each price bar represents the price range of an 89 minutetime interval. Fig. 6 S&P 500 ETF (SPY) Long-Term Risk Window for Sell-Off which is in place for theperiod of early/mid December 2012 through 3rd Quarter 2016, with the most precariousliquidity crisis playing out in the interval as early as Dec 2012 or as late as July 2013 into Jan2014, and possibly again in 2015. A violent long-term market sell-off with extreme downsidevolatility will ensue when Price trades below the 145.20 attack-points (the strip in time betweenDecember 2012 and June 2013, where the upper teal line hugs the upper yellow line), andparticularly while the upper white line is sloped up into the future in any portion of this strip.Longer term extreme overhead resistance, which covers the interval into the 3Q 2016 isresting at $156 to $157. $114.81 is baseline intermediate term support until mid-year 2013[in event of an all out market crisis -- Spain, being the canary in the coal mine when sellingescalates through critical longer-term support levels as illustrated in Fig. 7 -- before December2012, $128 to $123 will support market into year-end], until such time that price trades belowthe Red Horizontal Line (which rests at a level of 109.42) for at least one trading week. If thislevel is breached thereafter, then the $80 level to as low as $72.59 on a spike low is in thecards. If before 2017, price trades below $72.50 level for at least one week of persistence, anall out market meltdown into the $40.00 level (equating with the S&P 500 near 400 or lower)is a real possibility. As nearer these times, detailed crisis advisories and warnings will beissued and updated on NakedSwanTrading.com as well as our Twitter feed, NakedSwanTrader. Fig. 7 SPAIN ETF (Symbol: EWP ) Long-Term Risk Window for Sell-Off which is in playfor the period into April 2013 to as late as September 2013 marks the interval with highestpotential for crisis. Critical Support is now resting at a price level of $22.30. If prices tradebelow this level for at least one week, this market has no base-line support until $5.00. Theonly good news is that this support level rises to $10.00 in 2014 – that is if we are not alreadybelow this level when we get into this time zone. Until such time that this ETF trades above$28.21 for at least one week, EWP will remain one of the weakest markets in the world withlonger term overhead resistance starting out at $33.75 to $36, thereafter. A dire situationindeed! The113 www.tradersworld.com May/June/July 2012
  • 12. A Critical Alert Window was opened on AAPL starting in March which led to aprecise Attack-Point™ set up at the 633 level on April 10th. Traders had eleven full days to develop short strategies as AAPL was on the verge of a serious drop. Efrem Hoffman laid it all out on his HIGH-DEFINITION RISK MAP days in advance!! EFREM HOFFMAN is Offering His Market Intelligence on dozens of markets as they set up their exact Attack-Points™ for trading strategies. You can see the NEXT AAPL before it See Efrems exclusive article on ™Risk-Windows in this issue. happens! Enter Your First Name Enter Your Email Address We will NOT share your information with others. He has invested over 16 years of research for the purpose of identifying Tail-Risk Attack-Points™ on specific equities, futures, commodities and emerging markets as they enter their Critical ™Risk-Windows Efrem Hoffman states there are going to be extensive trading Critical See his decades of data mining experience using dozens of computers to Windows Setting up over the next 18 drive the analytical engine that distills the bottom down intelligence Months! Benefit from this analysis utilizing advanced math and physics tools to To learn more about Efrem Hoffman, go to: secure a telescopic and forward looking view of market rhythms and www.NakedSwanTrading.com human perceptions. www.nakedswantrading.com © Copyright 2012 Nakedswantrading.com114 www.tradersworld.com May/June/July 2012

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