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It is our contrary stance that markets are always wrong. The value of anything is simply the current price to which the last two parties agree, at a specific moment in time. This rather emotionally charged mechanism is all that is required to set a plethora of market prices on a daily basis. Opportunities arise when at any time, participants involved in the discovery process have false incentive, are incited by fear, greed, or ignorance toward a compulsion to agree on price levels further and further away from the most basic tenets of reason relative to the time period at which the price discovery is taking place. Such opportunities present themselves intra-day, while larger imbalances are recognized months, or even years after excessive maladjustments. The level at which a given market is quoted vs where it "should be" fundamentally, technically, or otherwise are rarely one in the same.
Price discovery exists in a perpetually dynamic state of flux. Thus is our argument that the current market price is always wrong at its inherent common denominator. That said, it becomes a foregone conclusion that at any moment in time, half of all adversarial market participants (traders) are dead wrong.
Investing or Trading "Nirvana" may be defined as getting "long" or "short", on the right side of a market either early on, or in the middle or final phase of a super extended long-term directional mega-trending market. In this case, "The Trend is Your Friend." We should add to this particular catch phrase that yes, "The Trend is Your Friend," (contingent upon where and when you get in and out of it, and shall remain friendly until such time as it ultimately terminates its existing larger degree cycle.)
The price discovery process being one of great emotion is fraught with frailty and temperament, subject to change on a moments notice, and then change back again. Where are these larger degree terminals? Where does it all end? In short, it never ends!
Safe-Haven authors,
whom we greatly support and admire, are rather generous in sharing with
us, pending fundamental and technical arguments relative to present and
future price discovery imbalances that we all should remain cognizant of
and highly regard.
Many such arguments presented have immediate and direct impact, while others go ignored only to become quite relevant many months hence. In the interim, astute investors, institutions, and traders alike are searching for answers to back their short-term positions and long-term portfolios.
May we boldly suggest that most all of the immediate and long-term answers lie simply in the proper interpretation of the footprints left behind by the collective culmination of pairs, telegraphing motive and intent via price patterns graphically expressed on a simple bar chart.
What then is the best
way to perceive this fragile process of ongoing emotional price
discovery? Is there a discipline or group of methods by which we can
accurately discern what the discovery process is inferring? Is there
some high tech algorithm, inter-market interface program that can tell
us when to go long, short, stand aside, or hold various sectors and
indices? Perhaps there is, but we suspect it is a bit simpler than that.
After more than 15 years of trading, investing, and intense study of financial markets, it is our firm opinion that good old fashion chart analysis with proper application of Fibonacci Ratios, Trend Lines, and Elliott Wave Theory is just about all one needs to navigate the markets safely, and with the highest levels of confidence.
So what is the solution? We are of the firm belief that the solution rests upon the distinct separation of analysis and execution. In our opinion and real-time experience, incorporating such a strategy yields far superior performance.
Over the years, similar to the two party price discovery system, we have found the best approach to assertively navigating markets successfully also requires two parties. We have metaphorically morphed and characterized the navigational process of these two parties to that of a "Matador" as he masterfully orchestrates the "Taming of the Bull."
"I, Matador" We have coined this engineered dual state of control, "I, Matador."
Matadors as we have described them, do not prognosticate, hold onto, or ballyhoo grand predictions. Nor do they aspire toward Guru Status. It is strictly the successful execution, and ongoing process relative to the immediate business at hand, that may then only temporarily satiate the incessantly starving mind of a Matador.
The navigation arm continually monitors and accurately plots the safest most reliable course, otherwise known as the dynamic market forecast. The "navigators" nourish the tactical arm with regularly updated road maps inclusive of destination targets, detours, short cuts, risks, and potential hazard zones. The navigation arm is NOT emotionally concerned with open profit, or loss as they are entirely removed from the highly charged adversarial discovery process itself. The singular focus of the navigation arm is continuous identification and anticipation of dynamic directional movement across varying degrees of trend. Its prime directive is feeding this vital information to the tactical arm, which then deploys it to engage in the adversarial discovery process.
The "tactical" arm is the second part of the duo, which extracts the key directional information provided by the navigation arm. The tactical arm assimilates the information to suit their varied objectives, and with calm assertion, applies it to their advantage upon taking part in the otherwise emotionally charged price discovery process. It is up to each tactical team to fully develop and strictly adhere to a diligently managed risk strategy based upon adequate resources and realistic objectives. The singular tactical focus is to act prudently, with an assertive calm discipline strategically engineered to execute pre-planned assaults based upon the directional coordinates received from the navigation arm.
The tactical arms sole purpose is to book profit, and manage risk exposure relative to the time frame and risk at which each team is geared to travel.
Together the two arms become one, morphing into "I, Matador. Neither bullish nor bearish, their combined stature is that of the most brilliant Matador, masterfully orchestrating his will over the most dangerous adversarial terrain. As "Brothers in Arms," they assert their skill with deadly force in the face of an opponent far more powerful than they as one.
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Financial
markets have long been a venue of intrigue, perversity, excess, and
mysticism of sorts. As such, many of the baffling conundrums through out
financial market history have led to many catch phrases. One such phrase
is that "The Market is Always Right."
Many
participants jump back and forth to the various sides of price discovery
in an effort to join with those in the "right" for the moment.
Some may be reducing size and taking profits, while others are
attempting to gain initial entry, while yet others may be getting out
for good.
Sweet Emotion...
And the
Answer Is...
As
many have in the past, and as many more will do so in the future, shall
come to find out the hard way that this seemingly common sense approach
is without doubt, quite a lot easier said than done. There remains one
small and elusive aspect of executive application that gets smack in the
way for the majority of participants. That small but poisonous fly in
the ointment would be that of sweet emotion.
I
Can See Clearly Now...
We
emphasize, "Taming the Bull" simply because at the very
largest degree of trend, equity markets are inherently bullish. They
unfold on an upward path of progress with intermittent episodes of pause
and regress. Some such episodes are brief and painless, while others may
be prolonged, frustrating, and costly.
The
notion of "I, Matador" embraces the concept of two distinct
operational arms. The "navigation" arm and the
"tactical" arm. However, unlike the two adversarial parties
agreeing upon and setting price in the course of discovery, the two arms
of the Matador act in tandem, sharing the same objectives, while
focusing their respective concentrations distinctly apart from one
another.
Ride
Captain Ride...
Go
On; Take the Money and Run...
One is a
Lonely Number...
