Noel Campbell

Welcome back all Safety in the Market clients and Trading Tutors Newsletter readers. The market action on the Stock Indices over the past week has given us some indication that we are in for some volatility over the next few weeks, perhaps months.

David Bowden has said many times in the past that when it comes to Gann analysis, ‘Your hindsight will become your foresight, if used often enough’. There is great benefit in students just taking the time to pour over charts and find examples of the market proving the rules.

In a recent Issue of the Trading Tutors Newsletter I wrote about a pending movement in the New York Sugar # 11 (SB) contract based upon a 30 Year Cycle. As you would well imagine I have been closely following the Sugar # 11 contract over the past weeks.

Over the past few weeks I have put the topic of ISF aside. This week I have received several calls relating to how the price of an ISF relates to the price of the underlying stock. We advocate that a trader follows the chart of the stock to identify a trade and calculate the entry and exit points. The orders given to the broker are based on prices associated with the underlying stock.

Back in Trading Tutors Newsletter, Issue # 32, I wrote about a Head and Shoulders Pattern that has formed on Westpac (WBC). The diagnosis at the stage was that the stock was most likely going to bounce in the short term after retesting the support of the ‘neckline’. Two weeks have passed and with the market action of today it’s timely to review the prevailing market movements.

The markets are at an extremely interesting point at the moment. The run up of the overall index has been outstanding and the fundamentals of the economy are continuing to show strength. At the top of markets things always seem the most bullish and the news of recent times indicates caution may be in order for the contrarian.

One of the keys to successful ABC Trading is to work a strongly trending market. Markets only trend for about 30% of the time, which means 70% of the time they are in a sideways movement. These sideways movements are not the times that big profits are to be made. The trick is when the trend is on to stick with it and make hay while the sun shines.

This week I was planning to follow on from last weeks article about Scanning using the Starter Pack Pro Software. However, during the week the SPI200 has brought up an opportunity to share a diagnosis of a trade too important to overlook. The run up on the SPI200 over the past couple of weeks has been in the category of extraordinary. The run up lasted 12 consecutive trading days without a lower bottom on the bar chart. Point A for the trade was on 1 October (3151) and Point B on 17 October (3306), giving a Reference Range for the trade of 155 points.

The SPI 200 has experienced a remarkable run up over the past few days, perhaps exceeding the expectations of even the bulls in the market. Over the past couple of weeks, I referred to the potential for an opportunity on the short side, relating to the recent Double Tops in September. I can personally testify to the good profit opportunity that presented itself with this short trade. If you were still holding that trade, the story would be very different now. Suffice to say, I have long since covered any short position.

It has been an interesting couple of weeks on the SPI200 since the market topped out around the 3250''s.