Category: Volatility Trading | Cozy Dragon Trading Club

All we need is a big blue swam bringing hope back home!

You know what? Communism has failed. Ecologist predictions of last 50 years have all failed. Big pharma have failed to find a vaccine against AIDS. Titanic has failed to cross Atlantic Ocean. Napoleon has failed creating a kind of European union. Romans have failed to keep their Empire together.

History is full of miserable failures but we don’t seem to learn from our mistakes. Nassim Taleb has found that somehighly improbable events ending up with drastic consequences could be due to a black swam. The idea behind if that you have never seen a black swam, you probably doubt they exist, not talking about predicting their showing up!

Was Covid a black swam? If you are a bit interested in big pharma history, you would know how they work. Their life would be very boring without epidemics, or even better pandemics where one can start making very good business with medicine, vaccine, medicine to cope with vaccine adverse reactions, improved vaccines, new medicine even long after the virus have completely disappeared. Since pandemics do not show up that often, it is best to create them, or at least let know all of us that there is one potentially very harming lurking by the corner of the street. This is what happened with AIDS, they said it was discovered in San Francisco, without giving any details, and then people started to get feared… fortunately this time, they could find a sellable vaccine. But how many times did they try? H1N1, Spanish Flu, …. No Covid is not a black swam, it has been long clear enough big pharma would try an other time to make big money!

Now if black reminds you of dark times, of morbidity, of whatever ghost stories, … all we need now is a big blue swam of hope!

Let’s be honest. Black swams are not that common but blue ones are even more rare, they will only show up if we all want it to appear!

Blue color is about hope, a bright future, water and sky, peacefulness, it brings positive values and tends to relax the eyes (try it, look at a blue sky!). We don’t want to talk black things any more: illness, death, mysterious societies, … As long as we play their game, they have the winning cards. If we have a strong positive message, they will be just ignored. Let me take one example: many doctors and health care workers have lost their job for rightfully rejecting the jab. What about they start a new life preventing people for becoming sick? Even communist party in China in the 1950’s pushed people to practice taichi chuan so that country is full of healthy people (that was before McDonald arrived in China). There is a lot to be built upon, it is not even secret!

Now let’s see if there is some positive news on the market!

S&P500 seems to be taking a bearish turn. The smoothed ROC has turned negative but careful there are hidden divergence (which I am therefore not showing ;-)) We have to stay optimistic!

Just look at how nice the S&P500 has sticked to the dotted warning line on this weekly chart. If index returns to green line (the random walk path), everyone can understand the bullish trend is intact.

Bitcoin chart is unchanged. I have seen many Hoorays with last days price action, but be careful!

Gold is still is in a flat market. Let’s look at weekly chart just below. As long as the price is enclosed in the green area, you can take the opportunity to accumulate. Price is probably kept under control by institutions which think we are stupid enough and won’t buy gold at this price! You bet! Inflation is here, hyper-inflation will come sooner or later, we will see an other big financial failure, and everybody knows having gold is the safest way to go through any crisis. We have a second solution which is Bitcoin, I will write something about it in an other post.

Uranium is one of them ressources to have these days, so I wrote a few weeks ago. It has gone up to one my highest warning lines. Now it is back to random walk path which is undoubtedly a nice entry area. As explained previously, wind farms and solar panels won’t do the work!

Platinium may wake up in coming weeks. Divergence with smoothed ROC, hitting the first warning line and buy signals on short term indicator. We are almost there.

That’s it for today. Aim at that blue swam! And until next time, trade safely!

Inflation? Hyper-inflation? No, a conspiracy theory!

Have you noticed any inflation? Pasta price up, gaz price up, … Everything you can buy, price seems to go up! According to IMF, it is only temporary and if you say otherwise, you are a conspiracy theorist! I must be one then :-))

Covid Kingdom is still under construction and they want each and all of us to participate in this exciting new adventure where a few people own everything and you get nothing, you will be enslaved to your master. There is one thing however that will make them fail: they are extremely bad economists, they are playing with the money and the money is exploding right now into hyper inflation fireworks, which will signify the end of the game not too far away! Get Gold, get bits of Bitcoin and you should be safe.

Bulls are still out there, because plenty of cash is there so only few industrial constraints prevent from going higher faster. This is what we see on Semi Conductor index:

Price Channel have no specific sense but you see that the one I draw is in sync with medium and long term indicators. Only short term shows weakness. Silicium might be missing so companies like Qualcomm will only increase their selling price while waiting to manufacture more. There can still be a drop to 3000, which be a good oppoortunity to invest, especially in light of 5G deployments.

Coming back for a second on inflation, you can see below that ground coffee price has just doubled in 2021. Here is the deal: consider how many coffee you drink in a year, do you yourself a favor by buying stocks of a coffee company, they give dividends so you get free coffee!

I always mention oil on this blog, because without oil, our society will just stop! No more cars, no more plastic, … Green electricity will not replace oil. Take a note: green electricity will not replace oil. NEVER!

Crude oil is up 10% since last post. Good for your portfolio. Of course, you need to have many stocks of Exxon, BP, … if you want them to pay oil for your car with dividends. At least, it may buy you extra free coffee!

If you wonder why gaz is more and more expensive, just look at the chart: +128% since Jan 1st! This is not going to stop any time soon. Windfarms are deployed everywhere, but since wind is not a continuous supply, then you need a gas power plant to manage electrical grid. Gas supply being limited by other geopolitical issues, price can only go up!

Last one for today is Bitcoin. BTC is still quietly hanging around, gathering ressources for the next leg. This next leg will be up towards 100k$. That is because of wider adoption (Salvadore, …), it is safer than fiat money, it does not have a country (miners can hop to new country any time), transactions costs become faster and cheaper with Lightning network. While I expect price will go down to 35k$, I am waiting for this cheap entry!

That’s it for today. Until next time, trade safely!

There is no such thing as self-fulfilling prophecies!!

Extract from Britannica:

Self-fulfilling prophecy, process through which an originally false expectation leads to its own confirmation. In a self-fulfilling prophecy an individual’s expectations about another person or entity eventually result in the other person or entity acting in ways that confirm the expectations.

A classic example of a self-fulfilling prophecy is the bank failures during the Great Depression. Even banks on strong financial footing sometimes were driven to insolvency by bank runs. Often, if a false rumor started that the bank was insolvent (incapable of covering its deposits), a panic ensued, and depositors wanted to withdraw their money all at once before the bank’s cash ran out. When the bank could not cover all the withdrawals, it actually did become insolvent. Thus, an originally false belief led to its own fulfillment.

We live in a world full of narratives, that we are asked to believe without asking questions. Most common ones are “Covid19 jabs work as expected” or “climate will be so hot by 2100, it will be a great disaster”. Those making those prophecies have no capability to justify their statement, so they have engaged in a deception process, which they can no longer escape, or at the price of their future if any. For jab, it is easy to manipulate data, hide facts about adverse reactions, … For climate, you won’t be there to verify since you will have died from the jab long before!

Those who disagree with the official prophecies are nicknamed conspiracy theorists, which is the ultimate insult to stop any debate about any topic. Now, we can look at these conspiracies theorists prophecies, right? All that they have predicted for the last 18 months is happening even faster than they would have imagined: vaccination failures, lockdowns, blaming non vaccinated, future climate lockdown, forever pandemic, …. Self-fullfilling? No! With the help of internet, these guys are very well informed, and read quite well through the plans, which makes politicians nervous and forced to accelerate in vain attempt to take back control.

Here is one of those idiot:

J. Trudeau is an imbecile! He has taken away freedoms from the people for a ridiculous virus, freedoms that they fought to get over the centuries, and now he will only give them back only if they take a poison pill!

Here is my prophecy for Trudeau and alikes, when jabbed people will wake up. There will be no mercy!

Climate warmists are no better, they try to spread fear and have started almost 20 years ago a narrative prophecy, whereby climate is changing fast due to human produced CO2. There is of course no proof of relationship between CO2 level and climate behavior. At time of dinausors, CO2 level was twelve times higher, the tree were gigantic size compared to today… but anyway, since people don’t ask questions, it is a good reason for future climatic lock down, where all data will be manipulated, there will be C02 passports, and who knows, maybe even CO2 vaccines!

Here is the key: ASK QUESTIONS! DON’T GIVE UP UNTIL YOU GET A FULLY JUSTIFIED ANSWER! No adverse reactions on vaccine? Show me the proof! You want report from hospitals! CO2 impacting temperature? Show me the corresponding studies, correlations over centuries, and show me data integrity!

Coming back to finance, Janet Yellen makes a prophecy of severe upcoming financial crisis if debt ceiling is not raised: rocketing intest rates, stock market crash. It is precisely BECAUSE of this debt ceiling raise THAT interests rate will eventually go up (hyper-inflation like) and that stock market will crash. Course n°1 or 2 in economics for dummies!

So again you should wonder and ASK QUESTIONS before the corrupted governments tries to dry your accounts because you are not jabbed, you have a car that is polluting too much CO2 and you have invested in stock markets, you little stupid!

Market Review

S&P is still in strong long term uptrend (above the blue river). There is a divergence (smoothed ROC second indicator) which points to possible trend change. Short term indicator at the bottom shows its third short signal in 3 months, which we can use for covering portfolio and more should market reverse).

Bitcoin is still up as well but you can see that bottom the short signal. Since we can not short Bitcoin, I am waiting for this short signal to reverse, might be the start of next move towards 75k$. Reason being US$ value going down as debt ceiling is raised. Philosophical question: is debt a currency? :-))

SOX (semi-conductor index) is important index to follow as it has some predicitive power. Semi-conductors are needed everywhere (for AI, 5G, …) so if sector is not looking good, expect some nasty wave on technology sector! What does it do? Slower than before but up! So my prediction is market crash is delayed! You can ask me questions, I will answer! :-))

Oil is flashing a buy signal. Not good if you need to refill your car tank but having stocks like OXY and you get a refund via stock price increase and good dividends! Do not forget electric cars together with wind farms and solar panels will just not work (you will be able to recharge your battery once a month at best and at huge price). Oil price will go up, same as CO2 explained last week! Get ready for it!

That’s it for today.

I might loose my job in the future in line with ‘no jab no job’ policy in my country. I will surely have plenty of time to write by then. You can support if you wish with BCH address:

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That’s it for today. Until next time, trade safely!

The boring market report April 7th 2021

The so-called pandemic continues to weigh on some parts of the world (e.g Europe) while some countries like US or Russia seem to see the light at the end of the tunnel! We will therefore continue to be driven by good news but also possibly by new lock-downs as politicians find it is convenient to keep people under control … until people awaken!

Bitcoin is still floating at high levels. Many expect a sharp correction to 40k or even lower, which is not impossible as can be seen in the short history of Bitcoin. Others still point at even higher targets.

I have been a bit too optimistic as can be seen from chart below:

After going through reaction line, there was just no resistance but the problem is volumes did not pick up immediately, resulting in this range bound market. As long as Bitcoin hovers over green average, no worries, I am not changing my position.

Tezos reached my objective almost on time, landing me a cool 40% profit! Nothing to be proud about that. Trade is not over, the volumes, as opposite to Bitcoin, are picking up and reactions lines will most likely be broken for further up move.

Nasdaq has resumed its uptrend in strong volumes. The new objective is 14130 points. A divergence with MACD histogram tends to confirm new all time highs are coming. Before going full speed, just spend some time a weekly chart below: no major correction since early 2020, plus a MACD with stratospheric value and a divergence with MACD histogram indicates some trend change in the future (remember it can be down or just an horizontal wandering)

I was kicked out of the Moderna trade for a small loss. What happened?

MRNA had made a bottom on orange reaction line (blue circle)and started an up move after down slopping the blue reaction line. Volume was low but I thought divergence MACD and its histogram would support me. Market thought otherwise, volumes did not pick up and MRNA even crashed the orange reaction line, which told me to get out even before my stop was triggered! See you on next reaction line, maybe…

That’s it for today. Until next time, trade safely!

Tezos – new departure to the moon?

I possibly mentioned Tezos earlier. Maybe I had not drawn the action and reaction lines. As can be seen from graph below, the trend is still up, Tezos has been taking some leisure time around the reaction line and seems to be going up again. You can draw triangles if you wish, but note there is no special scientific theory backing up such figures!

On the downtrend from 5$ to 3$, of course volume was big, it has decreased a lot but stays at high level. This is why we want to stay with the major trend which is up! Divergence between MACD and its histogram also points to same conclusion. The next reaction line is quite far away, objective could be reached by end of March if we are lucky and market is strong enough!

How do I play it?

I already have a position that I bought at 2$ (green arrow) and I halved it at 5$ (objective was 4.57$). New objective is 6.23$, 40% on top of current price with a stop at 3.70$. So I am buying half a position to restore one full line, half a line invested for as long as long term trend is up, the over half is trading to increase profits. The stop applies only to half my position.

That’s it. This is no recommendation of course. Until next time, trade safely.

Moderna – could the vaccine make your money?

Whether you are anti-VAX or not does not matter, money does not smell! Let’s look quickly at Moderna chart.

My system rings the bell, saying there might be an opportunity today. The 9-day average is point up, as well as the 48 which is still bullish. Only the blue 18-day is still showing negative slope.

The objective (drunkard theory) is 200$ and as can be seen from reaction line, there is zero resistance in the near future. Nothing seems to prevent reaching the objective. Stop of course at 126$

But wait? MRNA is down 7% today… it it? That’s good because distance to stop was big at close yesterday, meaning your position should be small, whereas today we can have either a bigger line or stay with small line but with a better risk/reward ratio!

This is no advice of course. This is how trading goes, we take the bet, and if we are stopped out, then it’s life, we cut the line and forget about MRNA.

That’s it. Until next time, trade safely!

Bitcoin: when is the story going to end?

Sorry I have been away for a few weeks to attend other businesses. I was also working on the future eBook which is not as easy as writing for a blog. There must balanced information, not too much to avoid overwhelm reader but enough anyway to kick curiosity and critical thinking! So should I write about inverted Laplace transform? Well answer is yes, but I need to make it simple for casual reader out there!

For this return I am going to talk only about Bitcoin, which has gone again over the roof. You may see everywhere Bitcoin is a gigantic bubble that will explode maybe tomorrow morning, leaving all of those with fortunes in Bitcoins … broke! Nothing can be further from truth, because as long as some countries tolerate Bitcoin as a concurrent to local currency somehow, those who forbid are also getting late on its technology and all the improvements it can bring in terms of security, cryptography, …

The ‘problem’ with Bitcoin lays probably with the price paid to miners which is halved every 4 years, and so Bitcoin price has to go up or the mining can not be profitable over the long term. That being said, price has only one direction over the long term: it is UP! Until it is pushed out forcefully by a better bitcoin….

Let’s look at the chart:

I have drawn the action-reaction lines, which is the only way to predict when and where the next top might take place. There is hidden symmetry in the market which you can see clearly, Bitcoin has been stopped by down slopping reaction line then wen through when many weak hands thought Bitcoin was going down back to 10k$.

There is almost zero resistance now until beginning of April. I expect the trend will be a bit slower. From exponential, coming back to parabolic more sustainable move is all we want!

That’s it! From now on, I will post some trading opportunities on some selected Nasdaq stocks with action-reactions line for your reading pleasure.

Until next time, trade safely!

The boring market report, Feb 3rd 2021

We talked about the short squeezes, which if coordinated, can lead to strong bull markets. This is usually the case when prices reach an area around the one year high, which is seen as resistance, and so many are shorting to benefit from a price reversal. This works from time to time, but the back testing does not validate it on markets, all stocks, … so be careful!

Coming back to our random market model, it is easier to pick up a trend when it starts, and drive it until it wears out. That is what I am doing with Bitcoin and Etherum. Bitcoin has walked back from its recent top to the random walk path (RWP) and is ready to pick up again. MACD is still largely positive, no reason to exit for now. A partial profit was of course welcome in January.

Etherum is even stronger. The RWP has not even pointed south one day! I don’t know if it will go to 100k$, but 1800$ is surely next target in the short term!

Tezos might be a candidate for near future. MACD is in positive area after a divergence, so just monitor!

There are two crypto-like stocks (in terms of performance). One is of course Tesla and the other one is …. surprise…. Ford!

In spite of never ending pandemic, a looming economic crisis, everything is bull, except maybe dollar and gold. Strange, isn’t it?

That’s it! Until next time, trade safely!

Game stonks and other pratical tricks

Sorry for silence other the last two weeks, urgent business to attend. Anyway, while Bitcoin and stock markets have been more or less flat, then emerge the stories of Robin Hood young traders who want to bring down selected Wallstreet funds because they have huge short positions on their specific stocks. Let’s take a look!

While it is absolutely ok to use same tools as big funds, playing against the big boys in frontal MMA fight will definitely end badly. Why? Because the big boys are making the rules! If you are making insane profits and they are making insane losses, one will claim you are working against the highest interests of the nation (or any bullshit like that) and deserve spending 120 years in jail. We already see the central banks being very unhappy about usual folks making money (and not that much actually) and planning to ban the use. See example of India here. I am still bullish on Bitcoin, Etherum, and many others but the situation must be monitored very closely.

We can make lots of profits by using the methodologies already explained on this blog. Don’t follow blindly the Reddit forums. If you are ever asked why you have Gamestop in your portfolio, then just show the chart:

The random walk path was bullish, the prices objectives were some good distance, … a no brainer case! Of course, don’t forget to exit while you have huge profits waiting.

When does the WallstreetBets game stop? I will tell you. As long as they disturb only a few selected funds and push some stocks up, they can survive. But if suddenly, Robin Hood decides to short BlackRock, then it will be a different story!

That’s it for now. I will come back later. Until then, trade SAFELY!

[Beginner series] Trading with a pitchfork – Part 2

In part 1, you have learned how to identify key market turning points, which we have called Swing Point, shortened to SP. Swing points follow peaks and troughs in alternative way. Then we looked at short term and medium term SP’s. The last one are the ones we are interested in for drawing pitchforks.

Of course, the first question is why drawing pitchforks? Pitchfork is an interesting tool in the sense that is allows to identify trend in easy and blunt manner, no discussion is needed; then it gives buy and sell signal; it also measures the volatility! In short a dream tool, this is my Christmas gift to readers, but mastering will require some practice!

We are going to play with Exxon Mobil today. On the following graph, I have indicated the medium term swing points. Again take time to practice a bit here, because then it becomes (relatively) more difficult.

We are going now to number the SP’s, starting from the right of the graph, and in backward direction from 4:

Tough, isn’t it? Then your charting software should have a pitchfork tool. Select it and select the swing pints 1, 2 and 3. You should get something like that:

I am not going to explain the geometry used to draw the pitchfork, there are plenty of sites that do this. Let’s zoom instead on price action:

The green light is the median line, the red ones are the MLH (acronyms defined by doctor Andrew), are parallel to median line. After SP3, you notice that prices seem to adhere to the upper MLH, that is a sign of strength! At point 4, you can easily observe that price have not touched the median line, there is a gap between SP4 and median line, this is an other sign of strength and, according to A. Andrew, the minimum price objective for this situation is the price at SP3! The pitchfork is down trending and price have already exited the pitchfork even before SP4: this is the buy signal! We are all set up. We need to verify one last thing, the pitchfork made on SP’s 2, 3 and 4 should be trending up! Let’s draw:

Everything is perfect. We will look in future post the rules and how to find out where prices might be going, but let’s use for now the minimum price objective, so you need to place an order with stop at SP4 and objective at SP3, meeting your gain / risk sensitivity.

How did the trade go?

The min objective was reached only a few days later, then price has gone up since, landing currently a cool 33% at the time of writing!

This was your first pitchfork trade. Next time, we will look at the major rules to use pitchforks in safe and efficient manner.

Until next time, trade safely!