NEM's Unfilled Downside Gap At 48.75 From 12-7 Was A Sign
On Tuesday and Wednesday of last week NEM tested it's downside gap at 48.75 (from 12-7) with cycle lows on those days at 48.88 and 48.89. The fact that the downside gap at 48.75 didn't get filled, and, that the NEM Lead Indicator was a very bullish +2.15% two weeks ago and the COT data was also bullish, clearly pointed to a substantial rally. Ironically I was looking to trade XAU Calls long AFTER NEM's downside gap at 48.75 got filled, because often cycle highs or lows occur shortly after gaps get filled, but didn't buy because it didn't get filled, when it was actually a much more bullish sign that it didn't get filled.
So, I'm still in a learning process when it comes to trading a monthly/minor int term cycle long after a sell signal has occurred. Most your profits typically occur pre sell signal because the minor int term cycle is getting stronger/more parabolic and the risk reward ratio is favorable. After a sell signal (in rollover/flattening out mode) one should be trading much more modest positions because risk is much higher after a minor int term cycle sell signal, which occurred on 12-9. The fact that the minor int term/"monthly" cycles are getting longer is complicating things. They're really too long to call monthly cycles now. I'll have to call them minor intermediate term cycles or minor int term cycles to shorten it. Ciao
So, I'm still in a learning process when it comes to trading a monthly/minor int term cycle long after a sell signal has occurred. Most your profits typically occur pre sell signal because the minor int term cycle is getting stronger/more parabolic and the risk reward ratio is favorable. After a sell signal (in rollover/flattening out mode) one should be trading much more modest positions because risk is much higher after a minor int term cycle sell signal, which occurred on 12-9. The fact that the minor int term/"monthly" cycles are getting longer is complicating things. They're really too long to call monthly cycles now. I'll have to call them minor intermediate term cycles or minor int term cycles to shorten it. Ciao
posted by Joe Ferrazzano at
12:06 AM
4 Comments:
Joe,
You're right, these cycles are getting a lot longer, assuming we are where both of us think we are. I know it took gold a lot longer to run its B up than I thought it would - assuming that's what this is - I would have suspected it to be completed and done with last week, from a time (not an action) standpoint.
By
Jeff, at 6:01 AM
Further to that, a consideration or two for my fellow options traders -
(1) With long rollover periods after trend lines are partially broken, phasing in, even for minor int cycles makes sense, which it didn't so much before, because when cycles were shorter, the entrance window of opportunity was shorter as well.
(2) I'm going to start using longer term options than I've been using up to now - options meant to be held through a "monthly" cycle should probably have dates four or more months out (which also gives the possibility of waiting through more than half of an additional minor int cycle in case the sell signal would be missed).
By
Jeff, at 6:08 AM
Jeff,
I like to have at least a month until expiration when I trade options, even when the cycles were much shorter.
By
Joe Ferrazzano, at 7:25 AM
Hi Joe,
Yes, and you have additional considerations since you are using XAU. The premiums on the further out XAU contracts assume pretty high volatility lately.
By
Jeff, at 7:39 AM
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