Traders Magazine: JC Parets
Traders Magazine: JC Parets
PeoPle
J. C. Parets
www.tradersonline-mag.com 11.2014
J. C. Parets is the founder of the asset-management company Eagle Bay Capital based in New York City (contact: info@
eaglebaycapital.com). He is a 10-year veteran and well-known Market Technician. JCs work has been featured on CNBC,
Bloomberg, Fox Business and Business News Network. He is often quoted in the Wall Street Journal and online media, as
well as on his website www.allstarcharts.com and on Twitter @allstarcharts where he was recently named by Business
Insider as one of the top 100 Finance People to follow on Twitter. Currently, he is in the process of founding a hedge fund of
his own, which is managed on the basis of traditional price analysis and sentiment. Marko Graenitz interviewed him on the
phone stay tuned for some exciting insights into the mindset and trading of one of the leading technical traders as of today.
funds). In the late 1970s and early 1980s I first found out
the end of the day it was mainly all about selling certain
well above ten per cent, and investing in bonds was really
good relative to the stock market. I then went to college
in Connecticut.
in particular.
it was simply too big a company for me. I was still young
at the time and had little experience, but even then I was
surprised to find that, in spite of holding certain positions
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Time and again, price hits the resistance area from below, forming increasingly
smaller downside pullbacks. As soon as prices rise above the resistance, this
will traditionally be interpreted as a long signal. However, if there are no followup orders and the upside breakout movement falters, there is a high degree of
probability of a false signal being generated and prices plummeting.
Source: www.allstarcharts.com
real world things dont always pan out the way they do
almost everything.
and the bulls seemingly have the upper hand but do not
place any follow-up orders, and the upward breakout
generated.
use the setups too rigidly but look out for certain areas
lot worse. Of course, the hit rate will then be higher, but
why
false signals make for such good setups. Lets use the
line above and the false signal does not work (i.e. the
Time and again, the price will hit the resistance area
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PeoPle
www.tradersonline-mag.com 11.2014
Source: www.allstarcharts.com
of this was found in 2010 in the S&P 500 (Figure 5). After
the formation of a classic head and shoulders pattern that
was seen by more or less everybody at the time, there
Parets: This is the key benefit to be derived from trading
the market and they are now coming back as prices are
i.e. sell to limit their risk. Its like a trap that has snapped
shut, and the trader needs to get out quickly, all of which
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and
Similarly to the triangle pattern, there may also be a false signal in the case of
the head and shoulders pattern.
Source: www.allstarcharts.com
Parets: That all depends on how liquid the stock traded is.
When I trade extremely liquid stocks like Apple or Google,
Another
method
is
detecting
momentum
or
even
thousands
After the formation of a classic head and shoulders pattern, there was a downside break of the neckline at
the end of June 2010 (see arrow). This caused reputable analysts to announce the beginning of a bear market,
but what happened was the exact opposite: The short-term downside breakthrough turned out to be a false
signal and marked the start of a rally.
Source: www.tradesignalonline.com
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www.tradersonline-mag.com 11.2014
Parets:
Keep
your
ego
under
playing
are usually inclined to follow the herd and very much rely
realistic level.
long trades.
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