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[NAV]

Being a good forecaster makes you a bad trader, cuz good forecasting is a sly art, couched in ambiguities, no money management responsibilities and requires a stubborn attitude to stick to your predictions even when you are wrong, hoping you will be right at some point in time ("I told ya so" day !). A good trader also makes a lousy forecaster, cuz you gotta keep flip-flopping out of your prediction, to keep your trades right and make money. I have seen many traders getting a good following on message boards, taking a intellectual position on the markets and getting self destroyed, sticking stubbornly to theories to prove the market wrong and themselves right. The reason i am bringing this up is because i got a e-mail from a reader of my blog. "Your forecast on market hitting the SPX 1493 on May 7 turned out to be right, although a trader had to take a lot of heat before that happened. Your next target seems to be SPX 1472-1476. Are you still betting on it after today's close ?. I hope you don't flip-flop on your forecast, if we make new highs here." I learn't a few years back to say "To hell with my predictions". Just to make it clear, a forecast is just a context for trading and gives me a trading bias. This is how i traded after i made that forecast ( all posted real-time here). Trade #1 Sell signal generated on May 7. May 7 - Shorted YM. May 9 - Took 40 points on half and stopped out on the rest at breakeven. Signal still on a sell Trade #2 May 9 - Shorted YM and got stopped out for a 15 point loss. The stop-out said my trade was wrong, but the signal was still on a sell. Trade #3 May 10 - Shorted again and made about 95 points average gain. Made good money and the signal was still on a sell Trade #4 May 11 - Shorted a partial position (60%) again for an average 35 point loss. Lost some money, and the signal turned to a buy. Trade #5 May 11 - Shorted again and covered for breakeven. Tried another short against a buy signal and got stopped out. Traded against the signal, but was a good probe. Flat now and enjoying the weekend. On balance, i made about 100 YM points in a consolidation range since i made that forecast on May 7, while the market is right back to where it was on May 7. What next ? Right now, it's a very confusing territory, if you are a VST to ST trader. IT (Weekly) trend and momentum is firmly on a buy. ST (Daily) is on a sell. VST (hourly) is on a weak buy. The reason i say a "weak buy" is cuz the hourly EMAs are flat, which means whipsaw territory. If we firmly breakdown on Monday, i will go short again. If we consolidate and rally again, i will go long. If we get an unearthly gap-up like Darris says, i will go on a vacation Have a good weekend all.

Edited by NAV, 12 May 2007 - 12:12 AM.

[Jnavin]

"When the facts change, I change my opinion. What do you do?" - John Maynard Keynes, reacting to a charge by a critic that he was contradicting himself.