Walter Bressert Reads Market Via Cycles & Oscillators
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Finance > Currency Trading
Apr 18, 2007
Walter Bressert Reads Market Via Cycles & Oscillators
Walter Bressert earned a college degree in economics, which taught him "economists don't know much about the way the world works." An active trader for many years, Bressert relies on cycles and oscillators in his intraday futures trading, in which he primarily focuses on the S&P 500 contract. However, Bressert does use all form of technical analysis, but he calls time cycles "the glue that holds everything together-it gives me a time frame that nothing else gives me" he explained. "By studying cycles, I became familiar with the rhythm and every market has its own rhythm," he said. Back in the late 1980s, Bressert realized there was a dearth of written materials on cycles and oscillators. So, he decided to write his own book, entitled Power of Oscillqtor Cycle Combination. "Cycles give you the time. But, by looking at a chart, you can't see if it's overbought or oversold. Oscillators pick up that type of energy. If it's over 80-90 it's a probable top or if its below 30 or 20 or 10, it's a probable bottom," Bressert explained. "But, you have to know the bigger picture-what is the trend?" For this, Bressert, looks back to cycles. For example, "the trend for the daily chart is determined by the weekly cycle." Early in his career, when Bressert was trading on the floor "an old guy came up to me and said: 'Trading is really easy-when the trend is up, you buy dips, when the trend is down, you sell rallies.' Being young, I thought, 'What does he know?' But, about ten years later, I realized he had handed it all to me." Bressert stressed the importance of trend. "Know the trend and trade with the trend or anticipate the trend reversal," he said. Currently, Bressert is actively trading the S&P contract on an intraday basis and occasionally other markets. He favors the S&P contract because "it's liquid and can handle volume. It has sizable moves intraday and there are a lot of players-meaning the floor can't control the market," he explained. Bressert believes there are only three markets suitable for intraday trading: the S&P 500 contract, T-bond futures and the Swiss franc. Using cycles and oscillators has allowed Bressert to develop a mechanical type of trading system, which helps remove the emotional element of trading for him. "The market is emotion. It pushes all your buttons of fear and greed ... it ferrets out all your weaknesses," he explained. "The emotional part is what I had to control. I found out I was not too temperamentally suited to be a star trader. The way I found to overcome that was to find mechanical entry and exit patterns." Bressert doesn't ignore fundamentals. He uses fundamentals to "look at the big picture" and to see "if the market acted the way it should have on good news." Also, he doesn't hold positions heading into big reports. "To me, that's gambling. A big report takes away the odds-because the unexpected can happen." Looking ahead in the markets, Bressert is extremely bullish on the grains complex. "We should see a spectacular rally, we could see moves similar to the '70s," he said. "Grains could continue to rally into the summer, with the possibility of an intermediate term top in April ... Beans should continue above $8," he said. "There is very little grain available now," he explained. Farther out, "We could take out $13 in beans over the next two years and could seen $6-7 corn ... the drought cycle is due to hit," Bressert speculated. Bressert thinks the bull market in stocks will continue. "We should go substantially higher into April and the summer," he noted. In the precious metals arena, Bressert looks for gold to trade sideways to lower in April, "which will provide a buying opportunity in the second half of April." In conclusion, Bressert's advice for beginning traders is "study, study, study to identify things that work before they ever put their money where their mouth is. 90% of the people who trade commodities lose money. It's because they didn't do their homework."
Martin Chandra is a full-time investor. He has been researching investment strategies and make his own living. For more information please go to here.
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