A Layman's Guide to Technically Analyzing Medium-Long Term Financial Choppy Markets by GreenBicMan

Good afternoon my friends,

Since this has been the longest day of my life waiting for the Iowa Hawkeyes (go hawks!) game this evening, I have decided to write this educational post in analyzing the marketplace.

In this instance, we are looking at the "noodle" NASDAQ 100 FUTURES.

You will see this chart goes back to a little before 2006. When you click the link you should be able to magnify or just save the chart to your computer if it shows up a little small in the link.

We are looking at a DAILY CHART.

Now during my time on this board I have had a great number of debates pertaining to how there is either

• no way to tell by technicals what the market could do

• the only way to tell is by technicals

• a mixture of both

As to what I believe? Well.. sometimes I am not so sure, but what I do know is that

• nothing works all the time

• some things never work

• some people interpret things diff. than others (which makes anything impossible with a big enough subset of people)

• **Longer term historical results dominate everything (IMO)

This is only a small dive into the world of technicals, so I have kept everything at a very basic layman's pace, and if anything seems a little over your head don't be afraid to ask.

While I have been on this board, I have offered all my information without bias I believe; even though I am the "eternal optimist" I suppose you could say. I don't refer anyone to my "blog", I do not have advertisements, and I make $0.00 off the help I have provided.

In fact, I would say I have lost a good amount of money bc of opportunity cost throwing charts on here from high priced real time data feeds and charting software where I could have been spending that time running algorithmic simulations. So do not post on this thread and call me a disinfo agent etc. bc I am not, and I might be one of the nicest people in the world giving years of research to you over the past 6-8 months.


Also, before I go on, I am not always right.. In fact I am wrong about 40-45% of the time I would say - although I am better than flipping a coin, and I feel during especially during *long time windows* I am excellent. Yes that may sound "elitist" or "big of me" but that's just MO of course.

You might ask yourself at this point - why am I writing this? Well, number one I guess I feel I have a duty to provide actual real "Relevant" data to these boards as so much mis* and disinformation is posted it seems, especially relating to the economy.

Secondly, I suppose it is because I haven't taught myself everything that I know over my life, and I guess everyone likes to "pay it back" at some point. I have been trying to do that over the course of my time on these boards.

Even though in the first place 9/11 etc. attracted me to this site a very long time ago, even though my first registration on this board was in the beginning of this year with "xtc_savedmylife" screename.

So with that – on to the good stuff
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I have listed on this chart:

• "Point A" and the positive outcome of a Reverse Head and Shoulders breakout.

• "Point B" and the failure of a Reverse Head and Shoulders breakout.

• "Point C" - the new positive expectancy of a Reverse Head and Shoulders breakout.

• "Point D" - what we "technically" need to do to confirm this new breakout in the NASDAQ 100 Futures.

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1) Point "A"


• Where the arrow is pointing you will take notice of the "length" of that line extending from the midpoint of the blue line all the way to the bottom of the formation there. (yes I know my line is a few points from exact, deal with me here)
• Now we see the price “breakout” over that right-most shoulder.
• Once the breakout is confirmed (by testing that BLUE LINE AGAIN)
• We take the length of that original line and take that same length and take it straight up.
• That is the “PRICE OBJECTIVE” of the breakout.


Look, it is amazing, the NASDAQ FUTURES almost got to that exact point before the recent downfall… Coincidence? Let’s continue...

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2) Point “B”

The was back in 2008 – now some say there is no way you could have seen this all coming before it happened? Really? That is très intéressant as they say in Germany

• Now we are looking at a FAILURE of a Reverse Head and Shoulders

• Notice how we NEVER BREAK the right shoulder.

• Now repeat the previous process.

• Take a line from the blue line to the bottom of the formation.

• Take that same line all the way down (point wise)

• Ding ding ding! – only missed by about 90 points in the futures

Ok, so maybe this is making more sense now? But let’s continue either way, because hindsight is 20/20 right? What good am I if I can tell you the past but not the future? Ok, I will hope to satisfy your thirst.

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Point “C” – aka “The future”


• Same idea, should be a little more self explanatory this time

• We have broken the Blue Line once again

• Take that same line point wise and draw it up

• That tells me the future holds within 5-7 years 2593 on the NASDAQ 100 FUTURES which gives us a 500 point premium to our current historical high..

Now for this to happen, we need POINT D to come through - akin to JPM and friends picking me up as a technical analyst. -- Cuz’ I’m broke mang’


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Point “D” – aka “The confirmation”


• Almost 90% of the time, whenever you are dealing with a breakout relating to anything technical, you always see a test of the previous support/resistance.

• We need at some point soon to see the NASDAQ 100 Futures come back sharply or very close to our blue line to “confirm” this recent breakout.

• When it comes back we need to “bounce” off of it and not “breakdown” and fall back under with heavy volume, that would be a ca-ca-ca-catastrophe and I rarely would be worried about the future of our economy until a formation like that occurred. Do I think that will happen?

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Umm... about as good as a chance of myself getting laid living at my parents, but that is something Karl D, Seeking A, or ZH would probably lead you to believe though **remember, sex sells** - and yeah I know I probably just lost 50% of the readers attention with the last comment, sorry though, it’s the truth black and white IMO.


So there you go, the information previously presented is what large money managers will feed you at a HF or MF but without the 2% management fee and 20% of all your winnings.

By the way I failed out of college (hard to pass when its so boring you cant even find a way to go to class) and skipped 50% of high school, so by most standards I am technically an idiot as well – so I guess that is presenting both sides.

Hopefully with this previous essay I have opened a few minds up about the use of technicals, especially in choppy semi-long term markets such as this one.

Remember, this isn’t even as close to in depth as I suppose I could get into, but I would lose everyone in the first few paragraphs, and this tells as good a tale as any I believe.

I am really not expecting a lot of comments I suppose, this was made more to inform others and an outlet for me to easily express my opinions that I have been debating. At the same time I am willing to debate anything I have presented in this post. But I would like to keep it on a level where I don’t have to talk about me being “one of them” and profiting off of the lives of other people etc.. that’s garbage talk IMO. But I do hear it a lot on these boards, so if you are- just don’t post please.

Hopefully we have all learned something on this journey. Good luck to you no matter what side of the coin you sit.


And the chart - just remember to maximize it if you are having problems viewing

thanks for the info but I should tell you that I got a malware alert when I tried to open the chart.

Welcome, and-

You shouldn't have.. its goes to Sierra Chart Servers and I have posted many links from this server before.

But if someone else notices I will alert Sierra, but so far I have never heard of anyone saying this.

I use Malwarebytes anti-malware with real time protection. It's fairly sensitive, but I prefer it that way.
Could be nothing, my PC is locked down pretty tight, I would be lost without it. Second most important thing I have (my dog is definitely #1)

Interesting, could be bc I am linking to a picture maybe?

But yeah, dont worry bc its not anything harmful.

Nice chart. But you know there's only one outcome from the reverse h/s forming now... unless you believe the NQ's going back over 3000pts.

reply to post by mythatsabigprobe


I am not sure what you are saying

I have posted what should be the outcomes on Point C

That is the price objective IMO

reply to post by GreenBicMan


Sorry, 2600 as per your target. But the right shoulder hasn't formed yet so it's likely going to take your neckline up another 50pts or so before we get another pullback to form the shoulder. That'll be where we fail...

reply to post by mythatsabigprobe


We had a fail already (point b)

Anything breaking out over that previous trendline would indicate the "breakout"

I should have exaplined that much better

There can be no H&S in this instance because we have already passed over the "neck" which is that blue line, in the perfect world we would come test that once before before continuing higher like 2007 trough if you go back to the chart once more.

I have contracted the chart quite a bit, so if I expanded it, it would most likely show a much "detailed" picture of the past 6-8 months

But we did have one in April, and that will be contained in the next post

[edit on 26-9-2009 by GreenBicMan]

Thanks for bringing that up by the way..

This is the ES (SP 500 FUTURES)

Same idea.. they traded about lockstep over the past year, except NASDAQ has been a tad more bullish..

Here we are

Originally posted by mythatsabigprobe
reply to post by GreenBicMan

 

Sorry, 2600 as per your target. But the right shoulder hasn't formed yet so it's likely going to take your neckline up another 50pts or so before we get another pullback to form the shoulder. That'll be where we fail...

A Zoomed in view of the Noodle in past months where the shoulder would/does lie depending on how you view it

I think the winning streak has gone on for too long to consider getting in at this point. If you have stocks from before the crisis continue to hold them, if you bought at 7000-8000 hold them too but I think buying now would be very risky. That said, I have never been a big fan of stocks and I'm an ultra cautious person who always focuses on minimising risk rather than maximising profits.

It's very hard to predict the stock market due to the human factor and if you are to take any advice I feel Warren Buffet said it best - be greedy when people are fearful and fearful when people are greedy. Right now much of the mainstream world and media outside of ATS is starting to get greedy again in regard to the stock market. So be careful.

reply to post by Jacob08


Most of what you say I can agree with.

I am questionable as to the next few months of moves even though I think next week we go up. Like I said I think Nasdaq should come back and test again.. but at the same time I dont think you can go wrong buying at anytime if you are going to hold +1 year.

And I think most are not bullish yet outside of this board even, thats why the markets will continue higher. But I like the debate.

reply to post by mythatsabigprobe


I do ask at the same time though, if you believe in historical performance, why cant the noodle go to 3000?

It is that viewpoint that will make "retail" traders always "retail"