Thanks to everyone who participated in the chat this week. Here’s the complete transcript for those who couldn’t make it:
Zoomie: well, my wife was in labor, and i had a boy
CMaoxian: great zoomie!
Zoomie: ty :)
CMaoxian: how long was the labor?
Zoomie: "soft" labor at night, 12 hours,
6thworld: evening all
Zoomie: and only 1 hour of hard labor
Zoomie: 7 lbs 2 oz
Zoomie: 3 weeks early
6thworld: zoomie congrats!
Zoomie: ty
CMaoxian: hi 6th
6thworld: hi cm
skip: good evening
CMaoxian: 7lbs 2oz is big for three weeks early i think
CMaoxian: hi skip
Zoomie: i think so too
6thworld: that’s a big baby
Zoomie: i am runt of family
Zoomie: i was 6 lbs 6 oz
Zoomie: 6 weeks early
nickm: i think right on time :)
Zoomie: beinng bern arly did not afekt me tho
CMaoxian: i can tell you’re giddy, zoomie
Zoomie: ya, it’s great
6thworld: Yikes TOL has been taking a beating
CMaoxian: folks who set a buy stop above yesterday’s high in BIDU got murdered, lol
chud: i tried to dummy BIDU today and lost a few bucks
sally: what candle did you enter chud?
chud: sally: off the 10:15 bar using 5 min. chart
roger: Hi C hello everyone
CMaoxian: hi roger
james: howdy
jfra: hey all
Zoomie: hi
pj: hi
CMaoxian: are you guys familiar with the Holy Grail technique Linda Raschke wrote about in her book, Street Smarts?
roger: no
Trigon: heard about it but never used it myself
nickm: 20 ema pullbacks?
james: i’m not - i did read mike’s post about it today though - the link
jfra: no
pj: no
chud: i’m familiar with it from reading maoxian.com
6thworld: no
Zoomie: yes, but haven’t used it
skip: yes, but also haven’t used it
sally: no
Red: Howdy all!
CMaoxian: My StreetSmarts book is in a box in NY so i don’t have the original text, but here’s how LBR described it on her site:
CMaoxian: “The ‘Holy Grail’ trade was originally described in my Street Smarts book. The setup occurs when the market’s trend has been strong enough to cause a 14-period ADX to rise above 30. When the price then retraces back to the 20-period EMA, odds favor a retest of the most recently formed high or low.”
CMaoxian: The first step is to identify which sectors are the strongest relative performers of late…
CMaoxian: i keep a spreadsheet where i rank 24 different ETFs every week by long-term and short-term relative performance
CMaoxian: you don’t have to be this fancy, you just have to be aware of what’s strong
CMaoxian: here’s a look at a slice of the spreadsheet
CMaoxian:
CMaoxian: you can see how the rankings have changed week to week
nickm: can u explain how you rank them?
CMaoxian: but the top four sectors have been there for awhile as well as the REITs
CMaoxian: nick, i use a weighted average of their relative performance over the last year
CMaoxian: you don’t have to be that fancy
CMaoxian: i think everyone is aware that Oil Service and Energy and Biotech and REITs/Housing have all been super strong
jfra: no doubt
nickm: relative performance is ? relative strength (RS)?
CMaoxian: don’t confuse relative performance will Wilder’s Relative Strength Index (RSI)
CMaoxian: so once you’ve identified the strong sectors, you can concentrate on the stocks in those sectors alone
CMaoxian: by concentrating only on the stocks in the strong sectors, you narrow your focus which is a good thing
nickm: can u expand on your rating pls?
roger: C do you rank them by percent change..i.e relative strength..not RSI
CMaoxian: right, roger
roger: k
nickm: tx…
CMaoxian: next you run a scan looking for stocks in those sectors that have an ADX at or above 30
CMaoxian: so here’s an example from July 1 running the scan on the Biotech sector stocks
CMaoxian: 
CMaoxian: i’m using metastock to do the scan
CMaoxian: so four stocks came up and i can look at each of them individually to see if they’ve come into the 20-day EMA
james: ALKS meets that criteria now - it seems - if i’m understanding this right
jfra: so CM, the holy grail involves looking to take advantage of stocks/sectors that have pulled back and could resume their prior trend?
CMaoxian: yes, jfra
CMaoxian: of the four, only ALKS met the criteria on July 1
CMaoxian: here’s the ALKS chart
CMaoxian: 
james: oops i meant now
CMaoxian: yes james, now as well, but there’s a difference
CMaoxian: you see on the ALKS chart i posted how the Japanese candlestick is a hammer? that’s a good thing, whereas the candle ALKS formed today is ugly
CMaoxian: you could still put a buy stop above today’s high in ALKS, but i doubt you’d get filled
jfra: it also hasn’t pulled back to it’s 20EMA
CMaoxian: anyway, the recent swing high is the immediate target and you could either take your profits there, or take partial profits and let it run
CMaoxian: it traded down to its 20 day EMA, jfra
CMaoxian: your protective stop goes below the bar that you entered above
jfra: it did on July 1, but it’s above it now..no?
CMaoxian: it traded down to it today, jfra
jfra: gotcha
chud: you think daily is the best time frame for holy grail entrys?
CMaoxian: the Holy Grail can be used on any time frame, chud, and i hate trading off the daily time frame as you know
CMaoxian: so you just scan all the stocks in all the strong sectors every night, see if the ADX is at or above 30, and then manually review the charts to see which look best
CMaoxian: Folks who have day jobs are attracted to the daily time frame because it’s something they can do, but i much prefer daytrading
james: let’s use another sector - the biotechs dance to a completely different drummer
roger: C any site to find sector components..??
roger: or are just trading the etf’s?
CMaoxian: roger, i look at the component stocks that make up each ETF
james: prophet is nice roger
roger: thx
sally: do you use any sentiment indicators with the grail?
CMaoxian: no, sally
james: Prophet
jfra: so u use daily to identify stocks and then get micro on them…
nickm: roger Yahoo! finance has good list
roger: thx james
roger: thx nickm
james: that too nick
chud: jfra: you can set up the scans for any timeframe you choose
CMaoxian: here’s Schlumberger:
CMaoxian: 
Dreamtrove: Jello
CMaoxian: As you know, SLB is an Oil Service/Energy sector stock
sally: pudding?
chud: i’m currently still holding half of my position in a successful holy grail trade of XLE.
CMaoxian: dozens of Energy stocks all set up on this day
jfra: do you start scaling out at immediate target?
CMaoxian: jfra, that’s a personal choice, some people just exit all, some exit part and let the rest ride
james: i’d have to admit - i’d be early entering that trade
CMaoxian: did you enter it on the same date SLB set up, chud?
chud: yes, above the July 18 bar
Dreamtrove: chairman, i question this trade
chud: i sold half at the previous high
Dreamtrove: what’s the info on which you’re buying pre-pop
jfra: nice chud
CMaoxian: here’s Burlington Resources, another energy stock, different date
CMaoxian: 
CMaoxian: a nice reversal up candle to get long above in BR
Dreamtrove: i’ve seen a lot of similar charts tank though, I don’t think what we’re seeing is a technical event
Dreamtrove: It looks like technically it could’ve gone either way, but there was positive news
chud: technically it could always go either way
james: ok - let me clear something up - there is no volume study on these charts? - the red line is an avg of the adx?
CMaoxian: it’s a high probability trade, dreamy
CMaoxian: no james, the thick red line IS the ADX
james: ok
CMaoxian: i just stuck it in the volume panel for space reasons
Dreamtrove: is this adx overlayed on the volume then?
CMaoxian: yes, dreamy
CMaoxian: left scale for the observant is ADX
jfra: interesting stuff
CMaoxian: Utilities have been super strong too, so here’s a boring utility stock that set up
CMaoxian: Public Service Enterprise, 6th’s home utility i believe
6thworld: this is quite an interesting way to set up a trade
CMaoxian: 
chud: in my charting program, for ADX, I am given DXPeriod and Average. What would you set Average to on these, if DXPeriod is 14?
CMaoxian: it ain’t called the Holy Grail for nuttin, 6th
6thworld: wouldn’t you say that everone is trading this setup then?
james: there’s 2 entries on that chart - yum yum
CMaoxian: everyone who has read Raschke’s book and has the patience to look for them every night might, 6th
sally: what is your win percentage on this set up, cm?
CMaoxian: i never play it, sally
CMaoxian: i’m just yacking about it
sally: :-)
jfra: CM, it doesn’t matter that the ADX might be sloping down and heading below 30?
CMaoxian: probably jfra, but i try not to overthink things
chud: holy grail = 100% win
6thworld: chud i doubt that
Zoomie: LBR notes that the ADX will turn down, as the stock turns down, and approaches 20 EMA
chud: thus "holy grail"
Zoomie: that is OK, and expected
sally: there is a holygrail site
6thworld: chud that would be the 10,872% question
Dreamtrove: well, chud nothing is 100% because there’s always the potential of news
CMaoxian: like anything else, this prolly works about half the time ;-)
6thworld: brb, screaming baby
jfra: Does Raschke have a setup for when investment banks botch an IPO by around 100mil?
james lmao
CMaoxian: they didn’t botch BIDU, they got it just right, an oblivious public pushed the price to stupid levels
jfra: true
james: they did price it at 64 PE
james: at 27
CMaoxian: the public prolly whipped up by those fat obnoxious bastards on CNBC
Dreamtrove: chairman, does this work when you change the timeframe?
chud: works for any timeframe dreamtrove
roger: hahahaaaaaaaaa
james: obnoxious? never
roger: CNBC=POS
sally: works even in intraday?
chud: yep sally
CMaoxian: yes, sally
CMaoxian: last chart is of a REIT
CMaoxian: 
Dreamtrove: is bidu worth it though, compared to sina et al?
nickm: i have seen it become a holy trap on some shorter time frames ( 5 min es or er2) because linda I think trades es
6thworld: is that today’s chart?
CMaoxian: these charts are all thru last Friday
CMaoxian: now ASN is interesting because you could say that price recently came in and you should be looking for a grail, but look at that candle… that’s fugly!
jfra: CM, you place sell stop below low of last dark candle?
Dreamtrove: so what’s going on here, just a bounce below MA and back up above?
CMaoxian: yes, dreamy
CMaoxian: below the candle you entered above, jfra
chud: that’s why you don’t try to get in early and buy intraday as it hits the 20EMA
jfra: thanks
CMaoxian: the REITs, the Housing stocks all put in major reversal bars last week
CMaoxian: so the top is in there, at least for a bit
james: anyone read the article in the NYT yesterday about bill gross not playing fair and lending out his bonds? pretty cheeky stuff
CMaoxian: didn’t read it james, send me the link
CMaoxian: ok, that’s my introduction to the Holy Grail
CMaoxian: hope you enjoyed it and my explanations were not the usual clear-as-mud
chud: is there else in Raschke’s book worth paying $150 for?
james: NYTimes article
jfra: ..lol..they were fine..
CMaoxian: borrow it from a friend, chud
chud: i aint got no friends
jfra: CM, we’re friends?
CMaoxian: i’d let you borrow mine ‘cept it’s in a box in NY
jfra: probably blocks from my pad
6thworld: hmm i’m close to NY
chud: the library doesnt want it unfortunately
6thworld: lol
james: basically its about pimco having 45% of the bonds the CBOT was using as the underlying in the june(?) contract - anyway - he didnt lend them out
CMaoxian: thx james, i’ll delicious that and look at it later
sigi: CM, great job….. I missed the first 15mins…… will you have the transcription on your site again?
CMaoxian: yes sigi, as always
sigi: Excellent ! Thanks as always!
sharkbait: nice explanation CM, and simple
CMaoxian: simple but not easy… the real trick is pulling the trigger
james: and chilling out through the drawdowns
jfra: CM, u run the sector strength scan on a weekly basis and then zero in from there?
CMaoxian: yes, jfra
Zoomie: good exercise, to run that scan
ks: CM, what happened to the gratuitous chick pic every friday?
CMaoxian: ks about a thousand people have asked me that. seems the chick pic was the best thing i ever posted
Zoomie: keep on top of stuff
james: lol
chud: I like to scan the IBD 100 stocks for holy grails
jfra: seems like it’s the same 5 usual suspect sectors..no?
6thworld: Indiana Scan and the Holy Grail
sally: what time period do you use chud?
chud: that’s on the daily time periods sally
CMaoxian: yes chud, that’s the same thing really, the IBD list is all relative performance based
james: lord - i wonder what the IBD % return would be if it weren’t published
sally: you take the top 50 ibd?
chud: all 100
jfra: CM, what happened to finding the hot stock du jour and picking spots?
CMaoxian: that’s what i do jfra, this was just a lesson i thought folks would be interested in… i NEVER trade off the daily
jfra: gotcha
Zoomie: do you find weekly charts trend better CM?
CMaoxian: yes, zoomie
CMaoxian: Crude Earl is $64 a barrel, sheesh
chud: i’ve been liking the slowish action of this XLE etf
Zoomie: hey, it was bound to sink in for me sooner or later
CMaoxian: the XLE is very liquid, very tradeable
james: and the outcry about it mao is silent - earl’s gonna get much nastier
chud: and i don’t get paranoid about stop-running as much with XLE as individual stocks
CMaoxian: i need to make something clear, i read some nitwit say that trading and investing are the same because they’re both transactions
CMaoxian: that’s like saying apples and oranges are the same because they’re both fruit
CMaoxian: your approach to trading and investing should be 180 degrees different imo
CMaoxian: trading is short-term, chart-based, “valuation” means nothing, but you’re obsessed with taking a small loss if it goes wrong
CMaoxian: investing is long-term, fundamentals-based, “valuation” means everything, but you’re not too worried about getting a precise, to-the-penny entry
CMaoxian: trading is about reacting - making frequent quick decisions; investing is about thinking - making infrequent long-considered decisions
CMaoxian: ok, my rant is over ;-)
ks: What do you guys think of the long gold-short oil trade. The trade looks really compelling here
roger: gold vs dollar
james: yeah
chud: top pickers
jfra: I don’t know if my platform lets me trade ETFs
jfra: daytrade, that is
Zoomie: CM, do you "trade" the weeklies?
CMaoxian: no zoomie
chud: i bet it does jfra. just like stocks most places.
Zoomie: k, file and forget….I will find that hard
sharkbait: do you always break your entries down to an intraday time frame?
CMaoxian: what do you mean, shark?
sharkbait: do you look for set ups on a daily or weekly basis and then refine it down to finding your entry point on an intraday time frame?
CMaoxian: no shark, never
CMaoxian: not that you couldn’t do that, i just don’t
sharkbait: tx
CMaoxian: my daytrading philosophy is centered entirely on Unusual Suspects
chud: when you invest, do you enter willy nilly when your sentiment indicators tell you to get in chairman?
CMaoxian: pretty much, chud
roger: i think investing should be based on secular trends
CMaoxian: yes, roger
roger: trading is for instant gratification
chud: BBH closed at the 20EMA today, though the candle was pretty ugly
CMaoxian: yes chud, i think the market has put in a top here, not sure how long it will last of course
nickm: can u explain more how you look for UNUSUAL SUSPECTS?
CMaoxian: abnormal trading activity, nick
CMaoxian: explosive, crazy action
CMaoxian: BIDU qualified
james: it did on friday - no doubt
sally: no trend yet on BIDU, would you go long or short?
CMaoxian: sally i don’t really look at trend when daytrading, besides up being up and down being down
CMaoxian: if it’s not obvious which way it’s going i’ll stay away
nickm: i have listen to your last presentation on dummy trading… but was looking how to find candidates
jfra: I’ve been getting reamed recently with buying 10:30 breakouts that fizzle, drop back into the prior range, get stopped out from 1-3PM and then it’s up 20-40% 1-2 days later…low volatility is killing me..BCON, HOMS…
james: i tried to short it on friday - forget about it
roger: can’t short an ipo
james: a small - very small amount - basically to see if it was shortable
roger: don’t think you can short BIDU
CMaoxian: no shares will be available to short in BIDU for a good long while
james: not with 4 mil float
chud: doesnt it take 30 days from ipo?
jfra: yes
james: i dont know
CMaoxian: there are other rules that apply too, james
chud: those rules will probably save people money
jfra: like if the ceo’s broker is on vacation
james: lol
james: wicked action today in a lot of the oils - oil itself closed strong - but the stocks got pistol whipped into the close
chud: yea james, i saw that
roger: when in doubt get out
james: SU has been a pet of mine - and that didn’t act right at all
6thworld: ok, good night all
james: later 6th
sharkbait: SU didn’t have a bad day, did it?
Zoomie: see ya 6th
jfra: see ya
nickm: cu 6
chud: SU up but long upper wick
james: it closed up - but anyone who bought today has a loss
sharkbait: ok
jfra: yeah, not too nice
james: i.e. it gapped up
chud: no just ran up then came back down
chud: yea gapped up too sorry
CMaoxian: last Wed bar in Sunoco is ugly
CMaoxian: bearish bozu bozo acting as resistance
roger: C good dialog…good room…you still have same e-mail??
CMaoxian: yes roger, you can always reach me at chairman@maoxian.com
roger: cool cya
jfra: CM, do you set a daily p&l level that once reached you call it a day?
CMaoxian: no jfra, but i do set a daily loss level
jfra: I’m thinking of setting a win level, cause I ain’t been holding my early gains recently
chud: what yearly % return do you reckon most traders count on for a living?
CMaoxian: if you cut your profits short, you’re gonna burn out and go back to your day job answering the phone at some used-stock sales firm
james: depends on the account size chud
jfra: speaking of which, there’s the phone..;-)
CMaoxian: sell part, jfra, go to B/E and let ‘em ride
jfra: I hear ya
jfra: B/E?
CMaoxian: Break Even
Dreamtrove: what’s the loss level %wise?
CMaoxian: it’s a dollar loss level dreamy, which represents a fraction of a percent of the account
chud: i know james. but i’m trying to get an idea of what account size the average trader is using
CMaoxian: the average account size of the average trader is prolly about 1/10th the size of what it should be … most are massively undercapitalized
james: i would say 25K is average - i dont really know
james: so - they would need at least 100%
james: if not more
chud: 25,000 - they gotta be good
nickm: chud… local buzz is if you swing/invest try to get average 20% return… daytrading should be higher
james: precise
Dreamtrove: okay, but you can’t necessarily do that
Dreamtrove: I mean say you buy a stock at 10, you can’t set your stop at 10 immediately
Dreamtrove: and if the next trade is 9.92 etc.
CMaoxian: dreamy, jfra said he’s taking profits too soon which means he has profits
Dreamtrove: oh ok
Dreamtrove: profits are good
jfra: I go up quickly, and get hosed..trading too low priced stocks me thinks
Dreamtrove: solution to that is instead of selling, just move up the stop
CMaoxian: yeah or sell part and sit there waiting
Dreamtrove: low as in dollar or low as in mkt cap?
jfra: anyone want to partner..i’ll get in, u get us out
CMaoxian: taking partial profits has a great psychological benefit
Dreamtrove: yeah the sell half plan also good
jfra: I vaguely remember
chud: especially if the price reverses
Dreamtrove: not to mention statistical ones, it lowers your avg in price
Dreamtrove: lol
nickm: thanks CM … good night all
CMaoxian: right chud, and if it doesn’t reverse, you hate yourself less for not having made more… it’s easier to control greed than it is fear
chud: yep
CMaoxian: and on that note, anyone have any parting thoughts comments questions, etc?
Dreamtrove: okay here’s a question
Dreamtrove: I always screw up the scaling in idea
jfra: ..greeny cut rates manana?
jfra: lol
james: hell yeah
james: and the rest of the year
Dreamtrove: like I buy at 10, I buy more at 10.20, and again at 10.50, and then it tops at say 10.55 and tanks
CMaoxian: i never do that dreamy, so i don’t know what to say
james: ok - i’m out
jfra: S&P up 75
james: great discussion tonight MAO - thanks
jfra: later
CMaoxian: you’re welcome, james
sigi: I appreciate the discourse, education and the time you take to facilitate and initiate the chat, CM !
Zoomie: thanks CM, awesome chat
CMaoxian: get some sleep, zoomie, you’ll need it
Zoomie: ty
Zoomie: how old is baby CM?
CMaoxian: mine or yours? ;-)
Zoomie: your baby..
CMaoxian: baby T is now 7 months old
Zoomie: cool
CMaoxian: send a pic of happy family when you get the chance
Zoomie: k
jfra: dream, it’s overall mkt. based..these days that is more often than not a bad move
Dreamtrove: hmm okay
chud: yea Chairman, enjoyed the grail lessons. always good to have another 100% setup up my sleave
Zoomie: will do
skip: CM thanks so much…really enjoyed tonight’s topic
CMaoxian: anytime, skip
JohnD: Thanks CM, great of you to have us…
Zoomie: k, bye all
CMaoxian: thx for coming by, JohnD
jfra: CM, thanks again..great chat..
CMaoxian: my pleasure, jfra
sigi: Thanks again CM and Ciao!
CMaoxian: admin is doing the cut signal across the throat
chud: i think the chat users may be setting up a holy grail pattern
Dreamtrove: argh admin
pj: CM, thanks a lot. Great chat
chud: 50 by end of month i predict
CMaoxian: i’m thinking 200 chud
CMaoxian: an explosive breakout ;-)
Red: fabulous CM, cheers! and good night
CMaoxian: Good night, all, thanks for coming by
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