Book: Kane Trading on: A Totally New 5-Point Pattern
February 27, 2005 Commentary (weekend edition)-
Well, that was one of the best weeks for trading in as far back as I can remember. My methodology pointed me to more setups than I could have taken advantage of. I won't go on about the subscription service, but a lot of this I pointed out before the fact in there. The service is purely educational, but it really helps people to see things I am watching before they unfold, and then to be able to watch as events transpire, and to hear what I may be doing.
An example this week was the BKX. I had a great setup with that, and I pointed it out well ahead of time. I was watching the key bank stocks in case the reaction I was watching for started to play out. My focus was on issues like BAC, JPM, WFC, C, STI, and some others.
Let's start with the setup. Again, I'm going to pull some text from the service, taking parts of posts from the days as I showed this while it unfolded. I'll use quotes to show when I am lifting text. I hope this format is going to work well for everyone. This way, I can show some of the really great things I put together, and you'll get a lot more in here for the time I have to give for this column.

Chart 1
"The BKX is in position to form a fairly large ABCD pattern on the daily chart. Two tight groupings came together, and there is a trendline from the first two swing-lows from the run up (the first keying point for the line is not shown here). Notice the turns at key Fibonacci retracements for the potential B and C points. I threw in a symmetric time projection for the ABCD, but I'm suspecting if this does come together it may complete sooner, perhaps at a .618 time projection."

Chart 2
"The BKX that I just mentioned, well, it's at the area. The talking heads on TV were saying that the financials have a lot more selling to go, and they should follow through strongly to the downside tomorrow. Hmmm, we are coming into an area that I want to watch, the breadth was so extreme it points to a possible bounce coming, and everyone on TV, all day, is saying the financials will be destroyed tomorrow for sure.
Well, from all that I only know one thing for sure, and that is the odds don't favor the TV crew being right, especially when they keep yammering the same thing over and over. All I can say is that if they are right, this market may be in some serious trouble."
"That was a very rapid plunge into the top area. Recall how I said sometimes the best setups look downright scary."

Chart 3
"The BKX is reacting right off the upper area, and the talking heads were wrong, as usual."

Chart 4
"Now, did I nail this one, or what? My read on the talking heads was dead bang. This one gave a multitude of setups in the key banks stocks. As I said, I was watching stocks like BAC, JPM, C, WFC, STI, and so on. The two I really have zeroed in on are BAC and JPM. I showed how I interpreted the BAC entry area."
And I'll finish with BAC, and what it did.

Chart 5
The chart shows how I constructed an entry using a variation of A Pattern Trade Entry Technique that I haven't published yet. I explained in detail what I did, and how I got what I thought was a superb entry trigger around 45.50. (This new technique is really awesome in my opinion, and gives me a specific entry trigger in a certain type of setup that gaps. I really like it because it gives me what I think is a very reliable trigger when there is a gap and many traders would shy away. I would write it up if I just had the time.)
Now, keep in mind that this is a 15-minute chart that I am showing here, for detail. The setup and traded timeframe are up quite a bit from here, in case you were thinking that I might not be sitting through pullbacks that deep. This one is in full management phase now, as are many others.
The opportunities this week were just incredible for my 'Trading Plan'. I wound up going wire to wire every day on the minis, even though I was trying to just play the cherry setups on the 3 or 5-minute charts. It was that good from a trading standpoint. It seems like money is coming in all over and things are really moving. I can't recall seeing so many harmonic setups. Take a look at another one I pointed out a little while ago, soybeans. They had a double pattern convergence and I was triggered right off the bottom. Look at the chart and where they are now.
EBAY was bouncing from one harmonic setup to another intraday, like I just don't remember seeing before. Combined with some median line work I do, the setups were amazing. I'm really hoping all this continues. Maybe the market isn't all that much better, and I'm just pulling more things together and seeing what was always there? I don't know, I just know it sure is a lot of fun. Oh, and draw a trendline across the last two key swing-highs from January and February on the S&P and look at where we are now.
As I wrap up I want to mention that I went ahead and changed the free shipping special on the full book set purchase to a two-week trial of the subscription service. Most people that buy the books and take part in this special will want to wait until they get the books and digest the material before they start the two weeks. I'm flexible on this, and you can start that whenever you want, just let me know.
The next commentary will be next weekend's edition, posted by Sunday, March 6.
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