Blog

I want to share an email I sent to my blog subscribers last week. If you don’t get these updates, please sign up in the sidebar. There will be more goodies and opportunities offered in these updates over the coming months (there was an offer to alpha test the Python course in the email, and those tester slots are now filled), so do keep an eye out for emails from me! I edited the update a bit below, but I think the comments on action around support and resistance, as well as the upcoming meditation experience are important highlights.

I hope this note finds you healthy, happy, and enjoying the beginning of a fantastic new year. (Well, I suppose we are actually about 1/12th through that new year!) I’m writing to share a few market thoughts with you, take a look at some of the recent activity on my blog, but, even more importantly, to share a few upcoming projects. Let’s hit those projects first.

• First, I will be creating and offering a Python programming course in the near future. I have made this decision after looking at the available materials (and paying money for quite a few of them), and realizing that there is nothing out there that takes someone from “what a program does” to being able to manipulate and analyze financial data in one, coherent course. A few things: once completed, this course will be a paid course, and will not be offered free, as my trading course is. (The trading course always will be free!) There may be some early bird specials as the various modules of the project are finished, so stay tuned for that. Also, if you are interested in being an “alpha tester” for this course, please send me a resume with your trading experience, programming experience, and language skills. [edit: those slots are filled.] I will select a handful of people to be first testers, but also expect that I will likely put you to work. 🙂 If you are interested, simply reply to this email.
• Second, I will be offering a four week guided meditation “retreat” through my blog, starting in late February. If you have always been curious about meditation, but didn’t know where or how to start, or maybe you needed some motivation, join us. More information will be available here as we get closer to the start date. This is being offered as my gift to the trading community, but the content and techniques will be universal. If you have friends who would benefit from or who might be interested, please point them to that page and to my twitter feed (@AdamHGrimes) for updates. (If you’re worried about time commitment, this is one of those practices that may actually seem to increase the time you have each day. Regardless, we will start with 5 minutes in the first days, gradually increasing to 20 minutes by the end of the four weeks. You can spend more time each day if you want, but do not let time be a barrier–No one is asking you to stare at a wall for two hours each night!)

Markets have been a bit more difficult to trade over the past month, as many major markets pulled into consolidations. In these consolidation areas, support and resistance become key concepts. Here is a snippet from our 2/2/15 Waverly Advisors research report that went out to our clients at the beginning of this week. (Also, we would encourage you to take advantage of our free trial and check out our work for yourself.)

Support and resistance are complicated subjects. Traditional technical analysis teaches that support and resistance are the most important concepts in technical analysis… Our work, and the success of our methodology, challenges much of this thinking. While most of the founding fathers of technical analysis extol the virtues of support and resistance, we might, with all possible respect, point out a few potentially confounding factors… Modern practice, codified in the formalized approaches of several certification systems for technicians, simply repeats these errors.

[Whenever markets decline, social media lights up] with dire warnings such as: “major support is about to break in US indexes!!!” The problem is, markets do not work like this. More often than not, support and resistance levels, when they have any meaning at all, act in a counterintuitive way. When stocks come down to support, that support will often be penetrated, and a quick recovery back above the level can be a good catalyst to take a long position.

So, while the rest of the world is watching for dire breakdowns of support, we encourage our clients to watch what happens when stocks engage those levels. (Use 1962 as a rough reference for S&P 500 futures, and 197.70 for SPY.) Ideal long entries would be set up by a day or two of weakness below those support levels, followed by quick recoveries, on the same or the following day, back above that support. We would look to buy the close back above that support, or the following open. Though this trade may appear to be counterintuitive, there is good long potential here, near the bottom of large consolidations. Fortune favors the bold, especially when the bold use correct stops and proper risk management.

Look for another update from me before the end of the month.

Good trading,