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Saturday, August 21, 2010

Seeing What The Market Missed

If you don't know me or my work in the field of Technical Analysis, let me just say that I am no Guru; I simply have taken a different approach to the market. I believe in the market maxim, "To make money in the stock market, you have to see what the crowd missed".

The popularity of Technical Analysis along with the lack of imagination for many who employ the strategies and indicators, has led to a herd mentality and usually herds are led to the slaughter. This is why I have spent years breaking away from the herd, thinking for myself and not accepting the status quo that has been handed down in thousands of Technical Analysis books, videos, newsletters, seminars, etc. I've spent time developing my own custom indicators that effectively do what Technical Analysis was meant to do, and that is to uncover the movements of "Smart Money".

Based on my observations I make plans, create strategies and used tactics to fulfill those strategies. I've watched the herd led to the slaughter too many times. There's no end to the disinformation that you are fed on a daily basis, major media outlets have led the charge and I believe that their allegiance is not to the viewer, but to those who have the real money, those that move markets.

I created Wolf on Wall Street to do, exactly what the name implies. 

Trade Guild is here as a way for me to help the individual investor as best I can within the limitations of the site. I have dedicated many, many hours of hard work for the most serious traders and investors and that work is found at Wolf on Wall Street. I'm very serious about the analysis I provide and WOWS members are very serious about the market. If you are serious about the market, then take a look at what we are doing at Wolf on Wall Street. For now, take a look at my secret weapon, the teeth so to speak, of the Wolf... 3C. This indicator has been years in development and most of the hard work has been  in understanding how to use it properly, how to determine what is smart money, what is market makers, what the master plan is, and yes, there is always a master plan as you will see, crashes don't happen overnight or by chance, neither do rallies. Not only is there a bigger plan, but there are scores of smaller plans that are their tactics in establishing their goals. The Street works so much differently then you could ever imagine. I recently showed Wolf on Wall Street members the truth about leaks and inside information when I analyzed 21 stocks before earnings and called 19 correctly before they reported, a success rate of over 90%. So take a look at the charts below and think about whether Wolf on Wall Street may be right for you.

Here's a look at the major events of the last century and a WOWS trade from last month that is making members god money.

In the top pane is one of my custom proprietary indicators, 3C. In the bottom is a well respected and accurate indicator (light blue) by Worden, Money Stream. Even going back to 1929, 3C worked like magic. The crash of 1929 was not an overnight event, Wall Street had been preparing for it for months as you can see by the red arrows. When price rises and 3C fails to rise with it, we have a negative divergence telling us that "Smart Money" is selling/going short. While MoneyStream caught a minor move from March to May, as did 3C, it failed to see the distribution that 3C shows right before the crash actually took place. This alone should give you a new insight into how the market really works. The crash was being prepared for for months in advance. As you can see by the red box, 3C even went into a leading negative divergence, the most serious selling it will register, right before the crash.

Here's the crash that supposedly came out of nowhere in 1987, I've added one of Technical Analysis' most famous indicators at the bottom in yellow, OBV (On Balance Volume). Again, 3C shows this crash was planned for months in advance, MoneyStream and OBV had no hint of it, but 3C showed the actions of Smart Money as they sold inventory into higher prices, not bought, and then most likely went short. While the divergence stretches well over a year, using multiple intraday timeframes allows us to get very close to pinpointing the actual reversal. Even if you followed 3C and got out at the first divergence at the start of 1987, you'd still have saved money that was lost in a relative blink of the eye.

Now, the "Tech or Dot.Com Bubble" of 2000. 3C confirmed the uptrend all the way until early 2000 and quickly registered the negative divergence, smart money exiting their positions  and within month, years of gains disappeared, 3C again was the only indicator to clearly catch this exodus of institutional money.

While the pundits and talking heads on the financial networks were still talking about "Dow 20,0000", 3C gave several warnings that the "Housing Bubble" was coming to an end. 3C even shows us when the accumulation of housing stocks began several years before they took off to form the next bubble.MoneyStream caught the second warning, but there was no more real money to be made after 3C showed us the first signs of distribution during the May-July 2007 period. The money in the market after that was simply opportunity cost, and there was no further opportunity. OBV didn't show the slightest hint of trouble. 3C even caught the fast crash of February 2007 and then showed accumulation telling us there was further upside in the market from there.

The historic "Bear Market Rally of 2009" fooled many into believing the new bull market had begun, 3C called it for what it was , it warned of the mini crash in Dec. 2009-Jan. 2010 and the final top around mid-April 2010. Money Stream was ambiguous, OBV was missing in action.

As I mentioned, I use 3C in all timeframes for all kinds of trading. This is this past week in the SPY. Clearly 3C called the double top that led to the decline, OBV was pretty close as well, but no where near as obvious. Then 3C showed the accumulation that led to Friday's mid-day rally-this as the market was making new intraday lows, we knew we could purchase those lows for a small gain Friday.

What this means for Wolf on Wall Street members.... This is from the trade sheet, it's KIRK from July 26 listed as a short sale. I can't show you every trade, but Friday was an excellent day for our KIRK short. The trade was listed the night of the 26th.




3C showed us accumulation starting a small rally (white arrow) then distribution -this chart ends the night of the 26th.  This is how the market really works, the rally up was no accident, it was pre-planned, the fall of KIRK was no coincidence, clearly smart money sold into the rally, sold what they had accumulated and probably took up short positions. We knew the long trade was safe until about $17 although being an hourly chart, we could narrow the reversal down much closer. 



On this daily chart you can see where we had the short signal and the profit to date from our entry price. Friday was a good day for our KIRK trade, and this in less then a month.

I hope it is obvious to you that the market has changed very little in nearly a century. Smart money controls every aspect of the market, we are fortunate to have our "Secret Weapon, 3C" and many other custom indicators. We see, what others have missed and in doing so, we have broken free from the flock of sheep and have truly become the Wolf.

To learn more about how the market really works, to put yourself in a position to have a real edge that works, consider joining our Wolf Pack. If you are serious about what you do, you have to know the enemy before you can beat them and in a zero sum market, the winners take money from the losers, simple as that. 

Your access to Wolf on Wall Street is a click away. Read more about what we do at the top right side of this website.


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