The simple lesson’s we once knew (By mmTesla)

The foundation of price movement as we all know lies in supply and demand. Take the emini, all it is intraday is an auction of who is willing to buy based on sentiment whatever that may be at the time. We have all heard of trading ranges, but for the sake of mutual understanding here is an example:

Chart is annotated.

http://screencast.com/t/YmIyODll

That is an intraday example of buyers and sellers carrying out the auction. Often times you may see a strong move up and consolidation for a few days then test lower. What is happening? Sellers who bought lower are selling, when prices fall back often to previous volume points of control or accumulation areas, it is solely price discovery to see, do we still have buyers down here? When a trading range breaks, sellers close the cupboards in the pursuit of a higher price to sell at, shorts begin to cover and as a result price goes parabolic.

My view of market price is that big buyers buy and later sell at higher prices, market makers, floor trader and other insiders brutalize the tape in between these major areas of accumulation and distribution.  Here is an example of something that may play out this coming week:

http://screencast.com/t/MWY0OWU2Yzkt

The target for if this unfolds is unknown however sellers have found that people are willing to buy above 1100, so if they accumulate they will look for buyers, and prices will continue until buyers and sellers once again hash out price.

Why these areas? Mainly due to the low volume pockets, especially given the much larger volume below where buyers and sellers have hashed it out and price has moved higher.  Where do trendlines and other examples of TA come into play, they are just an aspect for sellers and buyers to decide to distribute or accumulate. Notice when these are broken either supply or demand evaporates and prices sprints to find either supply to meet demand or vice versa. Re -testing trendlines, prices have broken above and have now met distribution and profit taking, they fall back looking for more buyers, if found the trend continues.

This may seem blatantly obvious as you are reading this, however I feel it is often overlooked. If you change your perspective of what your trading, for example if you view an emini contract as a physical asset and you see that people are willing to buy at 1110 and we are at 1065 where buyers and sellers previously hashed out price, then it is something worth buying to sell later on at a higher price. In order to do this you need to take long term bias out of the equation, price isn’t always reflective of terrible economic conditions, ask your self, are their buyers willing to buy higher up given previous price movement? If so, and you are near an area of accumulation than assume prices will rise and vice versa if we are at extreme levels and buyers aren’t found and there are areas lower where buyers viewed it as cheap go short. That is the essence of mean reversion trading.

Big picture:

http://screencast.com/t/ODgwYWNmO

The red line appears to be a place where major distribution would occur. A few reasons for it is that people who have held through this mess want their money back and would be taking it. Imagine Microsoft where it took a very long time for prices to break 30 per share because each time, millions of people tried getting out near the price they originally paid.  People who held through this aren’t going to trust the market and want out if we get there.

Hi Gang,

Can you say up 40% this week! …:)))

Things are working slowly…but coming along at OBB  I want you to know we will have disqus forum for swing traders, and the chat room for more day traders.

We have a live feed for those active traders and I will post graphs trades on blog, so no worries! You will also be notified by email for each trade.

So no fear we will cover you all the way around!

We had a smoking week and everyone made so much $$$$$ come on over and you will love it

Hey gang,

I will be in the Traders Blog on OBB until further notice, not the chat part

I feel that we have not properly introduced everyone to OBB and I take full responsibility for it, so please, go easy on your lovely host! That said, I want to take a minute to introduce you to OBB and give a bit clearer picture of how we envision the future. To begin we have this pretty little picture:

Now that you’re probably more confused than before, let’s break OBB down. Our vision is OBB representing the key 3 fundamental aspects:

Education- this consists of the OBB Education Series, which will help beginners learn the basics and intermediate traders review. The series includes interactive quizzes to test your knowledge and an expanding series of homework assignments. We recommend this content for the “paint drying” days in the market.

Community- this circle represents the OBB Live! Trader’s Community. Our goal is to create the largest, most in-depth community of option traders from all corners of the world. We have taken the time to integrate many of the usual social networking aspects into this part of the site. It also features a Community Blog where any member can post their market charts, thoughts, or whatever else is on their mind (within reason of course).

Experience- The OBB Experience! platform essentially utilizes all of the qualities Anna brings to the table. This is a subscription-based area of the web site that will offer access to Anna’s new $10k portfolio, trade ideas, watch lists, etc. within her blog as well as access to Anna during market hours via live chat.
This service will cost $100/month and give you full access. However, until we have all the kinks worked out of the system and everything is running smooth the Anna has graciously agreed to keep her services free.

I hope this somewhat helps to clear up the confusion that I again take full responsibility for. If you have any questions, feel free to email me at info@optionsblackboard.com and I’ll get back to you as soon as possible.

UPDATE TO GO TO MY DIRECT BLOG GO TO OBB = OBB EXPERIENCE = ANNA’S TRADE BLOG

Gang I am so stoked about Optionsblackboard.com We have a groundbreaking site here, we are a social network, blog, chat, private time with Anna, that is going to rock the trading world. We are self contained so no disqus problems and lots of really cool features.

Register and get comfy and you will be so rocked!  My partner and I are soft launching Monday and everything will have come kinks the first few weeks so bear (no pun intended) with us. To register just click on my picture banner on RHS of page and there you go!

Hotoptionbabe.com will be up for a limited time, but soon will completely meld in with OBB, so you might as well get all warm and comfy there. There are some terrific old faces (old as in experience and smart) and some brand new ones to be part of the community. If you want a be in my private back room with me and make some crazy coin, we will have all kinds of one one help and a live trading account that will follow with me. Forex is coming too, but I will discussing that as well.

Ok off to work out some kinks, and we can really make some great $ next week, so get ready

Working on a new post for OBB on markets, commodities and Apple

Hey gang,

This won’t be a long post as I am totally spent today, trading blogging and phone calls, but I did call for Google short on Sunday and yes it worked out to be technically correct. I do expect Google and Bidu to lead down the NQ tomorrow along with another down day for equites.

The Dollar ended the day up again and I do expect the strength to continue for a while longer.

I am doing a soft launch of OBB live on Monday morning the sub will be free for 2 weeks, so you can get comfy. Now get this …NO DISQUS!!!  We have our own internal server so no more drops or slow connections YEAH That will not happen. It has several different kinds of communities. I just love it, will I be migrating there for the most part, yes, but I will keep abreast of things here, but  the live trades and outlooks will be there first.  I know you will love it as I do.

There is no charge to be on the community part. And the live trading will be free for the 2 weeks as I mentioned. So here’s to another great day and love to you all!

Until I post a new post for tomorrow Hobsters. I will quickly let you know that I feel we have begun a trend reversal. There are many different opinions, like you know what. But ultimately NO ONE knows till it’s over.  So anyone that tells you they know for sure, you must know that is impossible.

Now have fun and it’s gorgeous here in Florida. I have some EW charts to post tomorrow along with RL and again my thoughts for this week because there is just a ton of earnings coming out…IBM, GOOG, AMD ect a huge list and I have some beauts to choose from

DJ SECTORS_COMBO_FINAL_010810.pdf

ok Gang here  is an update…Starting this week, I have to ask no more adding links to your own blog, it’s in your avatar. I have been very lenient with this, but now I am going into “TRADING WITH ANNA”  on http://www.Optionsblack.board.com so I appreciate you no longer doing this. There is a certain group who always has the class to ask first, before posting their own. Others not so much. I also appreciate the respect I show to others.

I’ve just finished reading the ever perspicacious Jeff Saut’s “Lessons Learned” of January 4. You can find it here. As I close the door on 2009, I have these reflections to share:

Reflection 1 | Learn how to embrace and thrive in uncertainty: While there are a multitude of people espousing multitudinous methods that are guaranteed to make you rich, understand in your bones that investing involves risk. Keep in mind that the capital of many ends up in the pockets of a few–the market is not an egalitarian arena designed to enrich all participants. Unfortunately, it is often presented that way. Why? Because you have capital that can be extracted into another’s pocket.

Reflection 2 | Learn how to lose: Much like any other endeavor that is important (your health, your relationships, your reputation) you can undo quite a bit of good with a few stupid moves. Ultimately, you win by learning how to lose. Lose small; win big. The obverse is much too easy to embrace. Unfortunately you don’t learn how to lose in other venues; you learn how to win. You will fail in positions you take. Learn always how to fail better.

Reflection 3 | Conviction v. Bias: At what price?: There’s a line between conviction and bias–it is drawn with the time and dollars pencil. Make sure that you know how much you want to pay for that pencil to draw the line between the two.

Reflection 4 | Commiseration v. Collaboration: The blogosphere offers unlimited availability of opinions. You’ll have no trouble finding opinions uttered by very smart and erudite folks that perfectly aligns with yours. Best to seek out people that disagree with you and try to understand their arguments so that you can find potential holes in your thinking. I’ve never seen any business venue where commiseration led to good outcomes. Commiseration and collaboration are not the same. Commiserate less; collaborate more.

Reflection 5 | Your mileage may vary: I’m always amused by the examples of the great investors (Buffet, Graham, Lynch) and the idea that all investors can achieve such results. That is simply not true, for the plain fact the market place necessarily has to have two opposing opinions for a transaction to take place (a buyer and a seller). If it were so easy to attain such status and cultivate prescience regarding investment decisions, there would never be a buyer when you want to sell or a seller when you want to buy. Plus, there is so much more at play than can ever be codified in a way to make investing a “color by number and you’ll get a masterpiece” type of endeavor. Not every golfer will be a Jack Nicklaus (yeah, already the name avoidance!). Again, you don’t have to be the best to beat the market, just a bit better than the rest. You CAN do that.

Reflection 6 | Own your decisions and be a sport about it: It’s your money; your decision. Railing about how stupid other people are who are on the other side of a transaction and making money is whining. Griping about the “They” who are propping, dropping or holding the market up, down or sideways is detrimental to your mindset of owning your decisions. Fairness in many of life’s venues (go visit a hospital or an unemployment center) is absent. If you are expecting it in the market, you need to recalibrate your expectations. Whining is not a strategy that will yield good results.

Hey gang

It never ceases to amaze me (and I am sure,  you) how far the market can go in either direction when you think it just can’t go anymore! It can be quite frustrating and maddening.

Now I am not a perma bear nor am I a perma bull, but let me ask you if you look @ this chart, how in the heck can you feel comfortable going long??

sorry fixed the typos was on a long conference call!

Hi Hobsters

I hope everyone had a relaxing a enjoyable holiday and are ready to rock and roll for 2010! HOB has new bold colors and a new energy that I plan on rocking out for the new year! Let’s move on and try to make this as profitable as we can this year, as 2009 had lots of twists and turns.

Now as far as market direction, I really don’t see any huge changes coming in the first 1/2 of 2010. What I do see is an impending correction that is long overdue. What exact time/date will it happen, well no one knows that, but we know it will happen. To me that would be the perfect opportunity to go long. I don’t see more than 10% or around the 1020-1040 area, but as we know the market is a constantly moving breathing creature. For the short term as in next week we just might continue on the path we had Friday after meandering around a day or two.

In the short term we can go here

It’s possible that we either take a corrective bounce up to 111.78 then  continue down 110.52 or go straight there. I am more inclined to think we have a slight bounce before getting our correction. But in markets you never know for sure till it has occurred.Here is a view of the daily SPY for a longer term look

In essence this is a stock pickers market as we may chop around until we get this correction. I see us going to around the 1228 possibly the 1381 FIB RL, but first things first,  which would be the 1228 area.

Gold has a bit of a bullish correction due, but for the most part will chop around sideways before going higher, so I will just stay out of that trade.  Unless I see a perfect setup.

Here is a perfect short set up. JAS overbought bearish divergence. I have on a Feb 35/30 bear put spread on.

Anna