Grounded Versus Ungrounded Assessments

All of our decisions are based on our personal assessments of what is going on, whether we are traders in the market or shoppers in the supermarket. A grounded assessment is an assessment that can be agreed on by a hypothetical jury of our peers. Anything else is an ungrounded assessment. For example, you see your friend is wearing a shirt. The statement "He has on a shirt" is a grounded assessment. We all agree on that fact (provided, of course, that he actually does have on a shirt). If you say, "He has on a nice shirt," you have rocketed yourself into the land of ungroundedness where truth cannot be determined by observation. Almost everything that we say or hear about the market falls into the ungrounded world. Ungrounded assessments create never-neverland market analyses. Here are some examples of ungrounded market assessments.

* The market is topping out.

* The market is oversold (or overbought).

* We are in a third wave.

* This is a short covering rally.

* One should never take more than a $500 loss.

* Never risk over 2 percent of your total equity on one trade.

* The seasonal activity will take this market higher.

All of these statements are totally ungrounded assessments and do not, in any accurate way, describe the market or market behavior. Ungrounded assessments create chronic losers. If you are a losing trader, I can assure you that one of the principal causes is that you are making decisions based on ungrounded assessments. Grounded assessments are real, verifiable, unambiguous, and accurate, and they come directly from the market itself. The material and indicators in Chapters Three through Ten include only grounded market generated assessments. Basically, all of our observations (assessments) go through a part of the brain(the reticular activating system, or RAS), which acts as an analyzer and gives us only the information that passes our filters (what we want to hear). In no way does it give us a true take on reality or on what is really out there. A camera does not have an RAS to filter its incoming information. It just records what is present in a certain vibratory octave. It will take a picture of a yellow vehicle with black writing on it, and that is what you get. We, however, identify the yellow vehicle as a school bus and immediately all of our prejudices and preconceived notions jump to the forefront rather than seeing what is actually there. We think about slowing down, not passing, and watching carefully for small children.

Our actions are not based on grounded assessments but on our history(belief system) with that particular concept. It is said that generals always fight the previous war rather than the one they are in. We traders generally trade our last mistake rather than what is happening in the current market. In other words, we set up our own prejudices based on past experiences, and any incoming information will be filtered to make sure that it does not contradict our belief systems. If reality does conflict with our belief systems, we will deny reality and distort incoming information to keep our unquestioned beliefs intact.

No wonder we perform so miserably in the market even though we may have been extremely successful in other professions or businesses. In the market, you either confront reality or you create losses. If we want to climb off this ladder to distress, we must confront what is really going on in the market rather than our ideas about it. I will briefly review here what is going on. I refer the reader to my previous book for a more complete description. The primary purpose of the market is to find immediately the exact price where there is an:

Equal disagreement on value and an agreement on price

The last time you bought a car, you and the dealer or person you bought it from had to agree on a price. Before the price could be fixed, you had to negotiate a disagreement on value. Without a disagreement on value, there is no market. You wanted the car more than you wanted the money you were ready to spend to purchase it. The person you bought it from wanted your money more than the car. All free market transactions must have these two elements. When they are present, you have created a commodity or stock market. When someone tells you the market is "oversold," it simply means that the market went lower than the person thought it would. It says nothing about the market. I respect the analysts' right to use this or any other term, but there just isn't any such condition as oversold or overbought. The primary function of any market or exchange is to make sure that this condition does not exist, even for a second. Whenever you read that there is a 60 percent bullishness in bonds, it only means all the bears haven't been surveyed. If the market were 50.01 percent bullish, the price would have already gone up. Here is the truest statement I can make about the market:

The market is where it is because that is where it is supposed to be, and it is supposed to be there because that is where it is.

Think about this for a moment. Once you grasp this concept, you will:

1. Know more about the market than 90 percent of those who have money invested in it.

2. You will have started down a yellow brick road to more profits.

The market is where it is because, at this point in time, this is its fair value simply because you have an equal number of contracts buying and selling at that price. Don't get me wrong: I'm not trying to convince you of anything. I don't have even a thimbleful of missionary bloodin my veins. If you really believe there is such a thing as bullish/bearish consensus and/oroversold/overbought conditions, be my guest. Would you also like a spare tooth to put under your pillow tonight for the tooth fairy? It is time to get serious or get ripped off. "The marketis . . ." definition above is a true, brief, and accurate description of what is happening everytime a commodity or a share of stock is sold or bought. We don't need all the millions of ungrounded assessments (opinions) floating around. In our private tutorials, we strongly suggest that there is no need to seek out any source for information other than the market-generated information. Reading the Wall Street Journal, Barron's, or Investors Daily; subscribing to advisers' newsletters or hotlines; or tuning in to financial TV or radio is more destructive to your financial health than smoking is destructive to your physical health.

(Excerpt from New Trading Dimension: How to Profit from Chaos in Stocks)

China Kangda ~ no clear sign of reversal, supp .45 , res .485/.53

NB: Tried as i might, i couldnt post my chart for Techoil&Gas. I will verbally describe the chart here instead: Techoil 's chart shows retracement from breakout of .75 region , as long as price can maintain above this level, good chance of retesting res at .815 .

Rising Above the Clouds of Doubt

To say that trading is simple, easy, and profitable is incredulous to most traders and absolutely absurd to others. Almost all traders experience a great deal of doubt. In this section, we are going to look at ways to rise above the clouds of doubt. This will ultimately happen only after enough experience in using my trading techniques to prove their overall profitability.

The key to rising above doubt is to again realize what game we are playing. The game is trading our own belief systems. If we want to change our results, we must change our beliefs. Beliefs are what we "know" to be true. We almost never question our deep beliefs, but that is exactly what a losing trader must do: question personal beliefs not only about the market but, even more, about themselves.

Very few traders know why they trade, much less how they trade. We all can spout our superficial reasons: to make money fast, to enjoy competing with other traders, to gain the prestige of being able to say "I am a trader," and so on. In your last trade, did you lose because you couldn't see the market going the other way, or because of a deep, unexamined belief that you shouldn't get rich that easily? If the latter, it's time to free yourself from some old beliefs.

Hongguo ~ As posted previously, conform to expectation. Target res .97





Hengxin ~ Reversal, supp .57 , res .755






Mapletree Log ~ Retracement from breakout, supp 1.06 , res 1.18






Rotary ~ Uncharted territory, supp .66/.60/.525

Your next task is to release, get rid of, or, at the very least, become aware of these beliefs.The best method is to examine the difference between process and content. Classical sciences have always tended to deal with content. "My head, it hurts" is an example of how the classical sciences divide everything into three parts:

1. The observer.

2. The thing being observed.

3. The process of observing.

Modern sciences (relativity, quantum physics, and the Science of Chaos) do not create or condone this separation. A quantum scientist would report, "I am in the process of headaching myself "- much more accurate description. Modern science does not believe there is any such thing as nouns. Everything is energy and all energy is process. Buck minster Fuller titled his autobiography I Am A Verb. This distinction between process and content will become very important to our proficiency at dealing with the market. In general, we are educated to be goal-directed, making what isn't more important than what is. We make lists of our goals, plan them out, and then neglect the present and live, in our head, in the future. The problem with living in the land of goals rather than the land of now is that when we center our attention on the future, we cannot concentrate on or even accurately observe what is happening now. We can't dance well while thinking about how we are dancing.

We can't trade well when we're planning what we are going to do (trade) tomorrow. Living in the now is a necessity to good trading. Living in the now is another way of saying: Pay attention to process rather than future goals or desires. One way of living in the now is to make sure that all our observations (or as many as possible) are based on "grounded versus ungrounded" assessments. Again, this is not an economic, fundamental, technical, or mechanical approach. It is a behavioral approach using only market-generated information.

(Excerpts from book: New Trading Dimension, How to Profit from Chaos in Stocks)

Merry Christmas!

How to Dance

Please take note that these are not so-called 'quickpicks' or stock picks or any kind. I certainly do not mean it to be so. These are just analysis of a stock's current outlook. Interesting ones i would leave comments beside them. And some are requested by our friends, not deliberately pick by me. I have mentioned that i would try not to chart stocks that i am currently holding, in the name of neutrality, however there are times when either they are too interesting, to not chart them or that they are requested. Below is hongguo which i am holding and i find too interesting not to chart it for all of us as case study.

Hongguo ~ within uptrend channel, supp .815 , target res .97






Genting Int ~ Superbull, penetrated upper bollinger band with increasing volume.





Suntec Reit ~ retracement, supp 1.64 , res 1.78






KS Energy ~ kiasu mode, rangebound btw 2.47 to 2.59






AsiaPharm ~ Ultrabull, res .65/.725





Dancing with the market
is moving with the flow of the market up,
down, or sideways
with a feeling of harmony,
trust, gratitude, and yes, even love.

To really dance well and enjoy the process of dancing, you must let yourself be moved by the music rather than follow any pre planned agenda. In other words, the dance floor (market) must become a friendly place. Friendly here means comfort, relaxed enjoyment, and a place where you feel friendly.

Remember Einstein's most important question: Is the universe a friendly place? I want to assure you, based on not only my personal experience but the experience of over 700 people whom I have privately trained to become independent speculators, the market is a friendly place. Any unfriendliness always comes from us, not from the market.

We often hear phrases like "The market stopped me out." The market never in all its history stopped any trader out. We all do it to ourselves. Win or lose, it is always our own fault. That is because no one trades the market; we all trade our own personal belief system. Remember the Jimmy Buffett song "Margaritaville," where the singer concludes that no one should blame a woman; his problem is his own damned fault. Well, he was right.Those of you who have worked with me and are familiar with my work know that what I say comes largely from my own experience. I have had much help and advice from other traders and from researchers using modern technical tools, but the actual implementation of this research is a very personal matter. We are going to look closely at how we create our own internal struggle, which goes on whether we are winning or losing. My 40 years of research and trading experience have produced what I think is the most successful approach to trading available today.

Recently, I was offered a seven-figure amount if I did NOT show this materialto other traders. That money is a mere pittance compared to what is possible using these techniques. I have come a long way on this issue of dancing with the market, and I am amazed at how obvious it all becomes once a person starts experiencing the reality of this approach to trading.

I am reminded of an ancient Buddhist saying: "The road is smooth; why do you throw rocks before you?"We all do this in the market. All of us, at times, throw rocks before us, andit is difficult to dance on rocks and come out pain-free. So let's begin by clearing the debris and making way for a more profitable, peaceful, joyful, and abundant trading life.

(Excerpts from New Trading Dimension : How To Profit in Chaos)

Market Versus Me or Market And Me

Gems Tv ~ Flag completion, supp 1.36 , target res 1.46







CapitalRetail ~ hanging by the tread, supp 1.74





CapitaLand ~ Positive divergence with rsi, supp 5.90 , target resistance 6.40. Possible warrant play with more leverage. More risk as well.


The average trader feels that trading the markets is a highly stressful occupation. Below are some actual questions we have received from active traders:

* How can I both enjoy trading and make profits trading the markets?

* Why am I so addicted to doing this when there are so many disappointments (losses)?

* How can I keep serenity inside myself and my loved ones while living in this turbulent world of the markets?

* How can I stop worrying so much in such a threatening atmosphere?

* Why do so many traders/investors lose money so consistently?

* How can I distinguish among all the hucksters who are hawking their wares as being theanswer, when none of them seems to last even a couple of years?

* Why does my broker give me such bad advice?

* Why do all the newsletters I read boast of such enviable track records, but when I start trading them, they lose money?

Even when we are winning, there is an under current of fear that the next trade will probably be a loser. We exhaust ourselves as we try to control the present and the future while our minds futilely search for ways to recreate the past. We yearn to trade while being more relaxed, calmer, more in control, and excited about trading. To most traders, the possibility of that kind of life seems like a long-lost dream. The joy of trading is gone, and our life is filled with stress. We have tried all the hotlines, newsletters, psycho babble, books, and private sessions. Our love ofthe market is wearing thin. Something is very wrong. But what is it? We often blame government action, bad information, surprising crop and corporate reports, and other vagaries of the market. But these are not the real causes of our distress and our constant struggle with the market. The answer lies at a deeper level. After much research and personal experience, I have come to the conclusion that those who approach trading with serenity rather than struggle-those who have looked beyond the confusion and mastered the art of "dancing with the market" are consistent winners.

(Excerpts from New Trading Dimension : How To Profit from Chaos)

Dancing With Market

Ouhua ~ rock-bottomed, supp .44 , res .48






Semb Kimtrans ~ Superbull, supp .69/.65






China Sky ~ fallen Angel, supp 100MA 1.16, res 1.34






SinoTech ~ uptrend intact, supp 1.17 , res 1.30






Wilmar ~ hit support, supp 1.69 , res 1.30






FJBen ~ retracement from breakout, supp .62/.57

Most guys had this happen in high school. You ask a pretty girl to go to a dance and she accepts. Now you are in trouble! You fear you will make a fool of yourself dancing and not only will she never speak to you again, but she will tell all the other girls in the school that you are a klutz. You practice with your little sister and your cousin before the date. When you get to the dance, you are determined to make the dancing work. You try hard to be a better dancer than you really are (you are content-oriented). But because you try so hard, you end up stepping all over your partner's feet.

Your life is ruined; you were never meant to be anything but an other-handed klutz. If you could have only relaxed and become a bit more process-oriented, you could have pulled your partner close to you, she could have felt your movements, and you both would have appeared to be dancing with some skill. The key to dancing well and profiting in the market is an ability to relax and simply go with the flow. That is what this book is about; getting with the process; letting go and going with the flow.

This material will defuse much of the miseducation of modern technical analysis and demonstrate the way the market really works and how to profit from that knowledge. When Trading Chaos was written several years ago, our goal was to take 80 percent out of a trend move. We wanted to get in on the bottom 10 percent and get out on the top 10 percent of the price movement. In the intervening years, we have sharpened both our research and ourstrategy. Today, our goal is not to take 80 percent from a trend move but to take 300-500 percent of the trend move.Previously, if there was a200-point move in a commodity or stock, we were well satisfied with 160 points in our pocket. Now our achievable goal is to bank 600 to 1,000 points on that same move. Unbelievable? Not after you have read this book and seen the results in your own trading.

(Excerpts from New Trading Dimension: How To Profit From Chaos)

Content Versus Process

Midas ~ Gold finger, breakout from 1.17 with volume, supp 1.10






China Milk ~ retracement complete? supp 1.28, target res 1.40

Genting ~ 'Air Genting', supp .44






Luzhou ~ flag complete, supp .835 , res .875






Wilmar ~ white candle, supp 1.80




Suppose that you are a space traveler. You have just landed from a far away planet, and you find yourself in a room where a chess set has been arranged on a table. You want to understand exactly what is going on in this strange Earth. You examine the chess pieces individually and notice that there are several different shapes and sizes. You want to really understand, so you do an "electron analysis" of each individual piece. You know the exact location, size, and makeup of each piece. You thoroughly understand the makeup and thecontent of the entire set.But unless and until you understand the process of playing chess, you will never understand the game and its significance will be lost on you. In over four decades of observing traders and trading, I have come to the conclusion that most traders approach the market with the same orientation as our fictitious space traveler.

Both are primarily concerned with content as opposed to process. Our space traveler will never understand the game of chess until he observes two people playing and competing against each other. This is not necessarily bad; it just doesn't have a great payoff. We traders do it with each other when we ask:

* How much did you make this month?

* Did you go long the gold?

* What kind of car do you drive?

* Will you show me your P&L statements?

* Can you give me someone who is using your approach profitably?

* Did you know that this market is heavily oversold?

All the above examples center on content rather than process. Both my scientific background and my experience in trading have convinced me that the primary difference between winners and losers is whether they focus on content or process.

(The above are material extracted from Bill Williams' New Trading Dimensions - How to profit from Chaos in Stocks.)

Friday

SP Chemical ~ consolidation mode, sup .645 , target res .70






Seksun ~ trading range, sup .39 , target res .43






Luzhou ~ porridge reloaded, sup .825 , target res .91

Seksun and SP Chem are 2 stocks that i noticed having good strong EPS growth in 2006. Trading through Technical Analysis would be like checking to see when a supermarket is likely to give discounts on its fruits, while trading on Fundamental Analysis would be like getting to know the cost of the fruits to the supermarket and guessing how high the price it is likely to sell in the future.

All Under Heaven

Very often, the greater truth belies the simplicity of it all. The hero is one who can forsake his own personal vendetta for the sake of the greater good. They say history is written by the victors, while heroes and villains are but just one hairline of difference. In trading, certain decisions have to be made, be it cutting of losing stocks going downhill or riding on climbing stocks, for the sake of your overall portfolio. When price of a stock goes up, it becomes a hero, when it goes down it becomes a panda bear. Such is the similarity between life and trading. Understanding trading, is understanding Life itself.


China Enersave ~ Compressed spring, supp .16, breakout lvl .175 , target res .20





Sembmarine ~ submarine rising.. again , supp 3.22 , target res 3.50





Chartered Semicon ~ beam me up scottie, supp 1.34 , target res 1.47

Live like No Tomorrow

We are often told to live our days like no tomorrow, literally, so that we can be more time-efficient or to treasure our 'lasting' moments. However like what Bill Murray discovers in the movie, the significant of living your day like no tomorrow is actually to live the day u would want it to be lived, with no regrets when tomorrow comes. May i wish all of us would live our days like theres no tomorrow..


Tech Oil & Gas ~ 2nd phase of uptrend, supp .775, res .835








FerroChina ~ China Steel! Uptrend, supp .765 , res .845

Just for Laughs

Enjoy your weekend and i will see you back on monday. Cheers!