Book: Kane Trading on: A Totally New 5-Point Pattern
February 13, 2005 Commentary (weekend edition)-
Today I'm going to cover some new things going on here at Kane Trading, and then we'll look at some charts. Lately I have been getting a fair number of requests for a better way to work with all the information in the commentary archive. I now have one hundred and forty six archived commentaries, if my count is correct. Some people study and dissect every last one of them. It is hard to organize, print, search, study, and so on, all this material on the website.
I have been asked if I had any suggestions as to what could be done to increase the efficiency and such of dealing with all this. I decided the best thing to do was to put the archive, in Microsoft Word format, complete with charts, on CD, and make that available. I assumed this would take me almost no time to do, since I write all the commentaries first in Word, and then put them into HTML format. I have all the original Word documents in my own archive just for them.
I e-mailed back to the people who inquired and told them of my plans, and immediately started selling copies. My plan was for a launch of the CR-ROMs page today. Although I am going to meet my self-imposed 'deadline', when I said I would have them available soon I didn't realize I was walking into yet one more trap. Here's what happened.
Unlike what most people would do I wasn't going to fire these one hundred and thirty nine (from Nov '03 - Dec '04) Word documents onto a CD and ship it off. I had to go through every last one and at least in a cursory manner make sure the charts were there, the text was there, and that nothing was obviously out of the ordinary. It turns out that was the right thing to do. I found I had 'lost' two of them completely (I recreated them from the HTML files), one had an extra chart (which led me to correct the web archived post), one had the introduction but the rest was missing (again, recreated from the HTML document), and so on.
I now have it all cleaned up, as best as I can reasonably do, and I have a 'cleaner' archive for myself. Here's the problem. If I were to spend just a paltry five minutes to go through the document, do all I needed to do and so on, let's do the math. Five times one hundred and thirty nine is a little over eleven and a half hours. Oops. I didn't count on that when I promised I'd have this ready soon. I guess I didn't really think I had to do anything but fire them up.
As it turns out, too, I later discovered one change I wanted to make to all of them, so I went through and opened each one up and did that. Then after all that I found it 'didn't take' for some reason, and had to go through them one more time, this time varying the procedure such that it did take. Three passes through altogether. Nothing like two and a half solid days devoted to something you thought would take you a few minutes. How do I get myself into things like this? Anyway, it's all done now and is ready to go. Take a look at the new CD-ROMs page for details. I think this is an unbelievable resource for the readers at a very nominal cost.
I'd also like to again mention that the subscriber section has been going really well, with me overdoing it way too much, as usual. I have discussed some amazing setups in there, many before the fact so the reader can follow along as things unfold. I have been laying out a lot of my methodology with a detailed level usually only seen by working with me one-on-one in the mentorship program. I am sharing many newly developed setups and pattern variations that I use in my own trading, and that I have not published in any form at this time. If you like my methodology this service may be of great help to you.
Let's look at some charts. I want to show a setup in GOOG this week that was a real home run. I posted this live in the chat room, as well as mentioning it to a student. I laid this out in far greater detail in the members' section than I will be able to do here. In my opinion this wasn't a rare setup opportunity, it was one of a great many that I find on an almost daily basis. There are more opportunities out there than I could ever take advantage of. I will lift some of my text here from the members' post.
I was watching GOOG for a possible move down to close that gap below and come into an area I may watch for a possible long setup. Then GOOG formed a bearish ABCD, set up to continue the downtrend, perhaps right into the area I was watching. The harmonicity was as good as I have ever seen. The ABCD was also in Fibonacci proportion to the previous correction. When this came together I couldn't even believe it. Let's look at the setup.

Chart 1
I thought it might be too good, and something was 'wrong' with it. Look at that ABCD in the BC leg (highlighted in blue)! My book readers know how I feel about that. I watched on the 1 and 5-minute charts as GOOG hit the PTA. The 1-minute was fascinating.

Chart 2
A 5-point pattern formed, and I was concerned when it turned back up, although it didn't even challenge a logical stop just above the X point. It then formed what looked like an ABCDE correction in Elliot, and soon after violated a trendline, and gave a pullback retest. Given this is a wild stock and this is the 1-minute chart, it's amazing how many ways it set up a possible entry. This was one incredible setup. As I said, I pointed this setup out in advance to a student, and called it in the chat room.
Here's what it did from here.

Chart 3
GOOG sold for the entire day, and my management plan kept me in most of the position for the entire move. Pull up a 5-minute chart and look at the last thrust down. GOOG formed an unreal ABCD pattern, and reacted right off it. I called this one in the chat room, too.
I'll show the rest of the follow through from the next morning.

Chart 4
GOOG continued to drop even further. That's about a sixteen-dollar drop straight down right off the pattern. I had 'context' like crazy on this one, and there are a lot of things going on that we don't have any time to get into here. I not only had this setup, I had reason to think the area it reached was likely to be reached. I had previous setups and gaps and just a slew of things I was watching.
Pull up daily and 60-minute charts and see if you can lay out some of the things I was looking at. GOOG has been trading so harmonically it just defies my imagination. Recall the setup I showed in this commentary, in advance, shortly after GOOG went public. This stock started out harmonically, and in my opinion it hasn't stopped acting harmonically.
When GOOG turned in late January in the 176 area, it was dead on a new pattern that I'm working on, one which I now share with my mentorship students. GOOG ran up about 40 points off that. And all of this forms part of my 'context' on this one. GOOG just seems to do pattern after pattern.
The really fascinating thing to me is just how many setups occur every day in so many issues. This is the type of thing I show in the members' area all the time. I expect to see setups, just not so many. Maybe I'm just getting better at spotting them, and maybe the market is just acting more harmonically at this time, I don't know. Regardless of the reasons, it seems like there is more than enough to work with.
The next commentary will be next weekend's edition, posted by Sunday, February 20.
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