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Welcome to this newsletter.

The market is falling at the moment and some market commentators and traders are calling this the end of the bull market, that the trend is over and it is time to sell. Also some are saying the market is now in a down trend. In my opinion making a “call” about the market can be fraught with danger for your own and others trading, because it sets up expectation. Also what time frame are they talking about? Daily, weekly or monthly? Also what method of analysis are they using and does it suit YOU and your objective?

One of the hardest things to do when trading is to stick to a method or system, particularly when the value of your portfolio is falling. It is impossible to stick to a method if you don’t know what your time frame is, because the temptation will be to look at different time charts and get confused.  In this newsletter I  thought I would explore this very important factor, because I know it’s a part of trading that many traders really struggle with…..choosing and commiting to a trading time frame.

Above is a daily chart of the All Ords, the last few weeks there is no doubt it has been falling, its in a downtrend in that time frame of daily bars.

As you should know by now I encourage traders to trade and think weekly, so what is the weekly chart of the All Ords doing? Is this a down trend or a pull back? What expectation, if any should you have?

Over a slightly longer time span but using a weekly chart it doesn't look so bad does it? Is that a down trend or a pullback, and should you be selling?

Ah yes! But what about indicators you say! The trend is surely down if you add a MACD, RSI, Stochastic, Volume, trend lines etc etc. OK, lets do that.

Hows that , better? Or just confusing? Are we in a downtrend or not? Is there

Volume support?

Trend line support?

Is the RSI a sell or a bargain?

MACD and Stochastic are showing what?

One trader could argue and say some of the trend lines are showing support.

The OBV is on support.The RSI is oversold. So is the Stochastic.The MACD is still above zero.

Or another trader could say:

The OBV is about to breakdown. The RSI is falling more. So is the Stochastic. The MACD is trending down. The price will fall to the lower trend lines on the chart

Who is right and who is wrong, and do you really need an answer to profit from a weekly system?

The point is this.

If you can keep your trading simple as possible, when challenging times like pullbacks in the market happen, psychologically it is much easier to do what you need to……stick to the system, rather than pouring over different charts of different time frames and indicators, the result being total confusion leading to uncertainty and indecision.

 If you know

1/ your time frame  (in this case weekly)

2/ your exit signal

What is the problem? Stick to your method and think longer term than the nightly news.

And remember that most traders fail because of two reasons, they have no solid method and lack commitment. Don’t fall into either one of those pitfalls and your trading will be a lot easier.

Last Weeks chart:

Last week I showed you a chart of the SP500 in the U.S. There is a problem with this chart that relates to the commentary above:

 It is not doing what most people expected.

Is not the world a mess? Why is this important index making new highs? Now we could explore together all the reasons why or why not it should or should not be so, but trading is about flowing with the market.

Yes we could add our indicators like I did to the chart of the XAO but as uncomfortable as it may feel, this chart is telling us, in the present moment, that the US market is going up, not down. I often talk about probability as perhaps the best guide: as opposed to making predictions. Below is a chart comparing the US SP500 to the All Ords, interesting to note that we follow the movements in the American market very closely. So a fair and probable conclusion would be that we will follow suit most of the time.

Melbourne ATAA last week.

A quick thank you to the organisers, members and guests that attended my trading presentation in Melbourne last week. A great crowd of people that made me feel very welcome. I was also thrilled to be invited back....I must have done something right :)

Until next time, cheers Peter.

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