Three Stories You May Find Useful

Both major markets are in uptrends on all key timeframes as we approach midday,
with bull cups in progress on the hourly in the context of daily uptrends. It’s
been somewhat of a straight up move right out of the gates, as many have chosen
the high percentage/probability daily pullback to position as volume and pace
has been strong. Heading into the afternoon, considering pullbacks on the 13
and/or hourly charts given the daily headwind with stops south of the respective
supports may be a worthwhile option.

You’ll note a format change in today’s charts which I’ve purposely incorporated
to provide a different perspective on our underlying traditional and time-tested
themes. The change reflects the temporary replacement of the traditional bars
with lines. Many faithful readers and school students know that I’m a huge
believer in simplicity, and so I thought I’d momentarily remove the bar “noise”
by providing a crisper view. 

And while lines may lack certain subtleties and the high-to-low price bar
history associated with bar or candle charts, you may be surprised at how the
clarity of the “lesser” information provides a crisper view often missing in the
bar jungle, especially when the charts are moving dynamically. No you won’t find
tails and dojis, yet some traders find it easier to time strong trend pullbacks
by focusing on the closes reflected by the lines.  In fact, when used with
Moving Averages, the combination is strikingly similar to the three-price-break
criteria which some follow religiously to detect trends by removing much of the
noise.

So if you’re finding yourself getting caught a bit in the chart noise, you may
want to consider creating a separate chart workspace with lines only, to kick
the brain back in gear. Those that trade alongside me know I’ll be using them
periodically in my own trading for a week, and we can all compare notes down the
road.

In the “trading is no different from peak athletic performance” category, Sunday
provided several comeback stories which can be useful to traders:

Nomar Garciaparra, one of baseball’s greatest hitters ever who is in the prime
of his career, was battling through an 0-19 slump going into Sunday’s game for
the first time in his storied career. What is he doing to try to improve? For
one, he’s not talking to reporters during times where it affects his mental
pre-game preparation. He got two hits in last night’s game against the World
Champions. 

With advanced apologies to Pacer fans, the Boston Celtics overcame a 16 point
third quarter deficit Sunday to enter the fourth quarter with an 11
point lead and won by ten.  What did they do at halftime? 
They quickly reviewed films of their first half and chose to intensify their
focus on defense.  That’s right, defense.  And by increasing their
defensive intensity, they managed a 27 point turnaround in less than twelve
minutes.

Lastly, Fred Couples ended a five-year 87-tournament drought over
the weekend with a victory, and has missed just one cut this year.  Yes,
that Fred Couples.  What did he do?  He chose to rededicate himself over
the winter and turned to non-nonsense swing coach Butch Harmon to help him
regain his lost form.

It’s those that can dust themselves off that survive. As is the case with many
top athletes, most successful traders I respect have gone through at least two
difficult stages in their careers — the difficult initial learning curve PLUS
at least one major make-or-break mid-career crisis where one’s rhythm and
confidence hit bottom over an extended period. Everyone goes through it, and if
they say they don’t, they’re likely in line for the former Iraqi Information
Minister’s position. I’ve spoken publicly many times about my own experiences,
as I will again in the upcoming

“Virtual Pit” seminar (more on that below).

Of course the added challenge in this business, is to somehow minimize the
capital loss during both times, so that there is something left when the
confidence and skill returns. For as there will always be another golf course
for the PGA pro (although he/she may need to requalify or otherwise rehab in the
process), continued trading and success will only be possible for those who
survive such a stretch.

Edwin Lefevre stated in “Reminiscences of a Stock Operator” — still one of the
great classics and assuming he really did write the book — that he went through
the loss/gain/loss/gain cycle multiple times in his career as he went through
what I’ll call his learning AND painful educational reinforcement times. Yet he
never lost his confidence and was always able to put himself in a position where
both capital and success could re-emerge. And I believe that merely keeping
himself in such a position is the greatest success story in his writings.

There are of course countless similar stories among successes. Assuming the
facts are as Edwin told, I have great respect for him and others like him that
openly tell of their hardships, for that is reality folks in this
business where there is far too much hype and promise from folks whose sole
interest is trying to sell picks and shovels to the speculators. Yes, Lincoln
did fail repeatedly and had a nervous breakdown before his eventual and historic
Presidency.

One of the reasons after some initial reluctance that I finally accepted Larry
Connors’ request to provide content here a few years ago was because he seemed
genuinely interested in helping traders become better traders and minimize such
challenging periods for all. I have strong respect for everyone who contributes
here, and especially for those who bare all. I know I’ve probably talked more
about my screw-ups than successes because I really do believe they provide the
best lessons. I also both enjoy and mandate incorporating live trading into all
of my educational tools to show trading for all it is — an achievable endeavor
for the survival of the fittest, yet one far from the error-free, pristine task
that many lead folks to believe.

Which leads me to the upcoming seminar …

As I mentioned last week, and as the result of strong feedback from our March “Virtual
Pit” session (I’ve posted the participant’s ratings below and specific
feedback appears on the seminar link), I’m pleased to formally announce that
we’ll be conducting another weeklong effort beginning on May 19. The effort will
once again include at least four full days of trading after Monday’s preparatory
session, plus midday and nightly informal roundtable discussions where we can
talk about everything from my biggest trading blunders to the age-old conflict
between fading trend pullbacks and waiting for confirming entries.

In this unfortunate era where travel presents great risk, it’s a blessing to
have state-of-the-art conferencing technology available to bring us closer
together.