The Novice Bear

I have been listening to Tom O’Brien for several years.  Tom has developed a trading system that he calls “Timing the Trade” which he has used to great effect for many years.  Tom’s system buys and sells countertrend moves and is based on price and volume.  It is not a very easy system to learn but I have found that coupling it with another countertrend system, like TD Sequential and TD Combo, one can drastically simplify the process of finding and analyzing charts. 

Using the charts that I have put together using Blocks 3.1, it is easy to find TD Sequential and TD Combo sell signals.  Using Timing the Trade it is possible to either confirm or eliminate the buy or sell decision.  Let’s look at SYNA.  As you can see, there are both Sequential and Combo sell signals with the current price being close to the stop loss point, making it a low risk entry point.  Although there have been several days since the sell signal was given, that particular sell level often holds as resistance for a secondary short point.  This is where Timing the Trade comes in.  In O’Brien’s method, he likes to look at “swing points” that he defines as points on the chart with high, abnormal, volume spikes.  Tom thinks of these points as areas were the most traders agreed on price.  The key is to compare later prices with the “swing point” bars.  If the price comes into the “swing point” with higher volume expect it to continue through it, if it comes into the “swing” with less volume the price will bounce off of it.   

The Sequential and Combo charts say to short it, but looking at the volume, one can see that the volume is expanding.  So using Timing the Trade, I would think twice before shorting it.