In my August post service on how to lose at trading the stock market, I examined what happened if a trader bought forcefulness inwards a technical indicator too sold weakness. The number was consistent losing. Doing what seems obvious inwards the stock market, to paraphrase Joseph Granville, is apparently wrong.
Let's accept a dissimilar approach to the issue. Suppose I desire to brand certain that a rising marketplace is genuinely inwards an uptrend too non merely making a random bounce. Similarly, I desire to ensure that a downtrend is pregnant before I bound on board. So I build an indicator that volition country me when a deed is pregnant vs. random.
Specifically, I accept a 20-day moving average of the S&P 500 Index (SPY) too calculate Bollinger Bands (a volatility envelope) higher upwardly too below the average. The bands are laid for 2 touchstone deviations of cost movement. Thus, if the marketplace closes higher upwardly the upper band, that agency that it has made a statistically pregnant deed higher upwardly its average. If it closes below the band, that agency that the marketplace has moved significantly below its average.
The strategy is to non assume a tendency is inwards house until the marketplace has moved significantly--not merely randomly--in a directional fashion.
So how does such a strategy fare? Let's update a post service from concluding May.
Over the concluding 3 years, buying closes higher upwardly the 20-day bands too selling closes below the bands has given us fourteen winning trades too 29 losers inwards SPY for a cyberspace loss of twenty points (the equivalent of 200 S&P cash or futures points). The average attain for winning trades was .48 indicate inwards SPY. The average size of losers was .31 point. The setup captures larger winners than losers on average, but cannot brand coin because in that location are too then many to a greater extent than losing trades than winners.
Of the 43 trades, 25 were long too xviii were short. Among the long trades, in that location were eleven winners too fourteen losers. Of the xviii curt trades, alone 3 were winners too xv were losers.
The superior functioning on long trades suggests that, when this setup works, it captures the longer-term tendency inwards the market. Interestingly inwards this regard, all 3 winning curt trades receive got occurred since July of 2007, which is when the electrical flow comport marketplace began. When the setup trades against the market's longer-term trend, the results are abysmal.
So what does this country us? If nosotros expect for a tendency to teach "significant" too obvious, it is also late. There is no systematic border chasing a deed that has already shut exterior a volatility envelope. Indeed, to repeat a decision from my before post, pursuing a countertrend deed exterior the envelope has such a piteous rail tape that it is promising.
The best way to lose at trading is to conk amongst the obvious. I've argued inwards the yesteryear that the marketplace is rigged against human nature: it is easy to lose coin buying inwards an uptrend, too it is easy to lose coin buying forcefulness too selling weakness. Success comes to traders alone when they overcome normal human biases.
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Saturday, February 6, 2021
Sunday, January 13, 2019
Info!! Trading Notes For The Calendar Week Of March 21, 2016
Friday, March 25th
* Perhaps the most mutual psychological challenge I listen from traders is how to maintain a positive mindset during periods of drawdown. It's rattling hard to lose coin for a stretch of fourth dimension when you're pouring your pump together with best efforts into markets. But at that spot is no surer agency of missing opportunities than becoming self-focused together with negatively focused. This recent article focuses on how nosotros tin sustain well-being together with a positive mindset fifty-fifty when everything seems to hold out going wrong.
* Stocks bounced from their short-term oversold province of affairs noted yesterday amongst the swing overbought/oversold measure. I am watching breadth closely here, every bit it would non surprise me to run across a to a greater extent than selective stage of the marketplace wheel going forward. The relative functioning of little caps is of item interest.
* I'm seeing increasing utter of straight monetary stimulus to economies. I suspect this volition hold out actively considered if nosotros larn a renewed deterioration of fiscal weather together with concerns re: deflation. The implications for asset prices (weak currencies, rigid commodities) would hold out significant.
* I've been putting considerable function into a gear upward of swing measures that rail overbought/oversold weather together with volatility. These are based on trial time, where each bar represents an amount of book or toll drive inwards the market, non a unit of measurement of chronological time. The OBOS mensurate captures momentum together with value effects on a swing basis: swing returns inwards ES convey been best when we're significantly overbought (+.54%) together with significantly oversold (+.49%). Returns convey been subnormal betwixt these extremes (-.05%). Although I bespeak to maintain the specifics of the mensurate proprietary together with express to the managers I function with, I'll happily update periodically on this blog. Swing returns from electrical flow levels of OBOS together with vol convey non been significantly positive or negative.
* Here is a swing volatility mensurate that looks at the volatility of the trial bars. Note how we're close levels that convey lately corresponded to marketplace peaks. This is yet roughly other argue I'm watching breadth closely.
Thursday, March 24th
* Thanks to Aaron Fifield for interviewing me for the Chat With Traders podcast. We demeanour on a set out of topics relevant to factors that brand for trading success. He's assembled an first-class lineup of interviews worth checking out.
* We've seen a recent pullback inwards stocks together with oil; yesterday's closed saw an expanded set out of stocks making novel lows amidst relative weakness amid little caps. I volition hold out tracking breadth closely here, every bit nosotros mightiness hold out seeing a to a greater extent than selective stage of the recent marketplace strength. Below is a nautical chart of stocks across all exchanges making fresh 3-month highs vs. lows:
* I've been exploring a swing overbought/oversold mensurate based on trial bars. As you lot tin see, we've lately entered oversold territory. As long every bit these swing lows are occurring at successive toll highs, I'm willing to give the produce goodness of the doubtfulness to the bulls. The nautical chart tracks the mensurate through the recent motion higher.
Wednesday, March 23rd
* We saw an early on selloff due to the Brussels news, precisely this was bought relatively early on inwards the NY session. It's a skillful trial of how, inwards a momentum environment, participants desire to larn long fifty-fifty on relatively little dips. That beingness said, my breadth volatility measures (volatility of daily breadth numbers) has been coming downwardly together with that has led to subnormal returns over the near-term horizon.
* Interestingly, we're hovering close our highs, precisely yesterday saw alone nigh 40% of SPX stocks trading inwards a higher house their 3-day moving averages. During these momentum periods, corrections tend to hold out rotational together with we're seeing roughly of that. Housing, financials, consumer staples, utilities--all convey been off their highs recently. Technology has been stronger.
* My wheel mensurate continues inwards elevated territory, in 1 trial to a greater extent than dissimilar much of what nosotros saw inwards 2015, where push clit led to weakness. That continued elevation on a shorter-term wheel mensurate suggests that a longer-term wheel is at play together with that this has been to a greater extent than than a bounce inwards a demeanour market.
Tuesday, March 22nd
* We're seeing roughly consolidation overnight next a little upward twenty-four hr catamenia yesterday. While SPX closed higher, nosotros returned to underperformance of little caps together with the set out of stocks across all exchanges making novel monthly highs dropped from 1660 to 886. New monthly lows likewise dropped, however, every bit we're soundless non seeing distinctive weakness inwards whatsoever sector. Volume together with volatility dropped; VIX is forthwith below 14. More on volatility below.
* Below is a short-term mensurate of the set out of SPX stocks making fresh 5, 20, together with 100-day highs versus lows. Notice how nosotros convey stayed elevated for a set out of consecutive days together with how this is different from what nosotros saw through much of 2015. Whereas "overbought" readings were opportunities to sell concluding year, then far inwards this rising we're seeing momentum together with push clit leading to farther strength--one of the signature characteristics of a fresh marketplace cycle.
* Despite the market's push clit together with momentum, the rally has non had a lot of fans. I honour on the Stock Twits site, for example, that messages regarding SPY are 40% bullish, 60% bearish. That ratio hasn't changed much during the concluding 2 weeks of gains. I likewise honour that shares outstanding for the SPY ETF convey in 1 trial once to a greater extent than dipped, forthwith dropping below their levels from 5, 10, together with 20 days ago. Very interestingly, the set out of shares outstanding for SPY has dropped over the course of pedagogy of the rally from mid-February. Share redemption has to a greater extent than oftentimes than non been associated amongst superior returns over a multi-week horizon.
* As mentioned above, volatility has dropped over the course of pedagogy of this marketplace rally. Equally notably, my pure volatility mensurate (volatility per unit of measurement of trading book for the ES futures) has dropped significantly (see below) together with is getting to levels that convey been seen at recent marketplace highs. I am rattling opened upward to the possibility that we're going into a different stage of the marketplace wheel where we'll run across lower volume, less drive per unit of measurement of volume, together with to a greater extent than of a grinding trade. For traders accustomed to the drive that nosotros saw for the starting fourth dimension duet of months of this year, that transition to a depression vol authorities tin hold out challenging, requiring a fresh approach to setting targets, stops, together with asset periods.
Monday, March 21st
* So often, inwards our trading goals, it's gear upward together with forget. We gear upward goals, precisely oftentimes neglect to follow through. This article draws upon recent research to position how tin nosotros transcend away to a greater extent than productive--better at pursuing together with reaching the goals that nosotros define.
* Stocks closed higher overall on Friday, together with we're forthwith seeing over 90% of SPX shares trading inwards a higher house their 20- together with 50-day moving averages. That is odd push clit off the Feb lows. My mensurate of upticks versus downticks amid NYSE stocks (NYSE TICK) showed corporation push clit on Fed twenty-four hr catamenia and, every bit the nautical chart below shows, has been inwards an uptrend on a cumulative basis, eclipsing its previous high. I believe we're pricing inwards a to a greater extent than favorable surroundings for equities, given QE overseas together with a moderating Fed.
* Yet roughly other agency of tracking the push clit together with weakness of shares is to await at each stock on the NYSE together with run across if it has closed inwards a higher house or below its Bollinger Bands. (Raw information from Stock Charts). As the nautical chart below shows, nosotros convey reversed the blueprint of internet weakness from 2015 together with early on 2016 together with convey been persistently inwards a higher house the naught line of piece of job inwards recent days. Bottom line, I'm non seeing the sort of deterioration that would ordinarily precede a major marketplace reversal.
* H5N1 spell dorsum I mentioned the shares outstanding inwards the SPY ETF every bit a useful thought approximate together with noted that it had been flashing bearish sentiment, fifty-fifty afterwards the liftoff from the Feb lows. Sure enough, history repeated together with nosotros continued higher. Now we're seeing an expansion inwards shares outstanding (net bullish sentiment). In the by that has led to subnormal returns for SPY.
* Perhaps the most mutual psychological challenge I listen from traders is how to maintain a positive mindset during periods of drawdown. It's rattling hard to lose coin for a stretch of fourth dimension when you're pouring your pump together with best efforts into markets. But at that spot is no surer agency of missing opportunities than becoming self-focused together with negatively focused. This recent article focuses on how nosotros tin sustain well-being together with a positive mindset fifty-fifty when everything seems to hold out going wrong.
* Stocks bounced from their short-term oversold province of affairs noted yesterday amongst the swing overbought/oversold measure. I am watching breadth closely here, every bit it would non surprise me to run across a to a greater extent than selective stage of the marketplace wheel going forward. The relative functioning of little caps is of item interest.
* I'm seeing increasing utter of straight monetary stimulus to economies. I suspect this volition hold out actively considered if nosotros larn a renewed deterioration of fiscal weather together with concerns re: deflation. The implications for asset prices (weak currencies, rigid commodities) would hold out significant.
* I've been putting considerable function into a gear upward of swing measures that rail overbought/oversold weather together with volatility. These are based on trial time, where each bar represents an amount of book or toll drive inwards the market, non a unit of measurement of chronological time. The OBOS mensurate captures momentum together with value effects on a swing basis: swing returns inwards ES convey been best when we're significantly overbought (+.54%) together with significantly oversold (+.49%). Returns convey been subnormal betwixt these extremes (-.05%). Although I bespeak to maintain the specifics of the mensurate proprietary together with express to the managers I function with, I'll happily update periodically on this blog. Swing returns from electrical flow levels of OBOS together with vol convey non been significantly positive or negative.
* Here is a swing volatility mensurate that looks at the volatility of the trial bars. Note how we're close levels that convey lately corresponded to marketplace peaks. This is yet roughly other argue I'm watching breadth closely.
Thursday, March 24th
* Thanks to Aaron Fifield for interviewing me for the Chat With Traders podcast. We demeanour on a set out of topics relevant to factors that brand for trading success. He's assembled an first-class lineup of interviews worth checking out.
* We've seen a recent pullback inwards stocks together with oil; yesterday's closed saw an expanded set out of stocks making novel lows amidst relative weakness amid little caps. I volition hold out tracking breadth closely here, every bit nosotros mightiness hold out seeing a to a greater extent than selective stage of the recent marketplace strength. Below is a nautical chart of stocks across all exchanges making fresh 3-month highs vs. lows:
* I've been exploring a swing overbought/oversold mensurate based on trial bars. As you lot tin see, we've lately entered oversold territory. As long every bit these swing lows are occurring at successive toll highs, I'm willing to give the produce goodness of the doubtfulness to the bulls. The nautical chart tracks the mensurate through the recent motion higher.
Wednesday, March 23rd
* We saw an early on selloff due to the Brussels news, precisely this was bought relatively early on inwards the NY session. It's a skillful trial of how, inwards a momentum environment, participants desire to larn long fifty-fifty on relatively little dips. That beingness said, my breadth volatility measures (volatility of daily breadth numbers) has been coming downwardly together with that has led to subnormal returns over the near-term horizon.
* Interestingly, we're hovering close our highs, precisely yesterday saw alone nigh 40% of SPX stocks trading inwards a higher house their 3-day moving averages. During these momentum periods, corrections tend to hold out rotational together with we're seeing roughly of that. Housing, financials, consumer staples, utilities--all convey been off their highs recently. Technology has been stronger.
* My wheel mensurate continues inwards elevated territory, in 1 trial to a greater extent than dissimilar much of what nosotros saw inwards 2015, where push clit led to weakness. That continued elevation on a shorter-term wheel mensurate suggests that a longer-term wheel is at play together with that this has been to a greater extent than than a bounce inwards a demeanour market.
Tuesday, March 22nd
* We're seeing roughly consolidation overnight next a little upward twenty-four hr catamenia yesterday. While SPX closed higher, nosotros returned to underperformance of little caps together with the set out of stocks across all exchanges making novel monthly highs dropped from 1660 to 886. New monthly lows likewise dropped, however, every bit we're soundless non seeing distinctive weakness inwards whatsoever sector. Volume together with volatility dropped; VIX is forthwith below 14. More on volatility below.
* Below is a short-term mensurate of the set out of SPX stocks making fresh 5, 20, together with 100-day highs versus lows. Notice how nosotros convey stayed elevated for a set out of consecutive days together with how this is different from what nosotros saw through much of 2015. Whereas "overbought" readings were opportunities to sell concluding year, then far inwards this rising we're seeing momentum together with push clit leading to farther strength--one of the signature characteristics of a fresh marketplace cycle.
* Despite the market's push clit together with momentum, the rally has non had a lot of fans. I honour on the Stock Twits site, for example, that messages regarding SPY are 40% bullish, 60% bearish. That ratio hasn't changed much during the concluding 2 weeks of gains. I likewise honour that shares outstanding for the SPY ETF convey in 1 trial once to a greater extent than dipped, forthwith dropping below their levels from 5, 10, together with 20 days ago. Very interestingly, the set out of shares outstanding for SPY has dropped over the course of pedagogy of the rally from mid-February. Share redemption has to a greater extent than oftentimes than non been associated amongst superior returns over a multi-week horizon.
* As mentioned above, volatility has dropped over the course of pedagogy of this marketplace rally. Equally notably, my pure volatility mensurate (volatility per unit of measurement of trading book for the ES futures) has dropped significantly (see below) together with is getting to levels that convey been seen at recent marketplace highs. I am rattling opened upward to the possibility that we're going into a different stage of the marketplace wheel where we'll run across lower volume, less drive per unit of measurement of volume, together with to a greater extent than of a grinding trade. For traders accustomed to the drive that nosotros saw for the starting fourth dimension duet of months of this year, that transition to a depression vol authorities tin hold out challenging, requiring a fresh approach to setting targets, stops, together with asset periods.
Monday, March 21st
* So often, inwards our trading goals, it's gear upward together with forget. We gear upward goals, precisely oftentimes neglect to follow through. This article draws upon recent research to position how tin nosotros transcend away to a greater extent than productive--better at pursuing together with reaching the goals that nosotros define.
* Stocks closed higher overall on Friday, together with we're forthwith seeing over 90% of SPX shares trading inwards a higher house their 20- together with 50-day moving averages. That is odd push clit off the Feb lows. My mensurate of upticks versus downticks amid NYSE stocks (NYSE TICK) showed corporation push clit on Fed twenty-four hr catamenia and, every bit the nautical chart below shows, has been inwards an uptrend on a cumulative basis, eclipsing its previous high. I believe we're pricing inwards a to a greater extent than favorable surroundings for equities, given QE overseas together with a moderating Fed.
* Yet roughly other agency of tracking the push clit together with weakness of shares is to await at each stock on the NYSE together with run across if it has closed inwards a higher house or below its Bollinger Bands. (Raw information from Stock Charts). As the nautical chart below shows, nosotros convey reversed the blueprint of internet weakness from 2015 together with early on 2016 together with convey been persistently inwards a higher house the naught line of piece of job inwards recent days. Bottom line, I'm non seeing the sort of deterioration that would ordinarily precede a major marketplace reversal.
* H5N1 spell dorsum I mentioned the shares outstanding inwards the SPY ETF every bit a useful thought approximate together with noted that it had been flashing bearish sentiment, fifty-fifty afterwards the liftoff from the Feb lows. Sure enough, history repeated together with nosotros continued higher. Now we're seeing an expansion inwards shares outstanding (net bullish sentiment). In the by that has led to subnormal returns for SPY.
Friday, February 8, 2019
Info!! The Iii P's Of First-Class Merchandise Execution
1) Planned - Do y'all bring entry in addition to instruct out criteria mapped out inward advance, then that y'all know precisely your adventure in addition to wages at the fourth dimension y'all instruct into a position? Too oftentimes traders fool themselves into thinking they bring a experience for markets in addition to only instruct into in addition to instruct out when it feels right. That agency that they are entering when the marketplace is going their way in addition to exiting when it's going against them. In a depression volatility market, that leads to getting chopped up. If you're looking for a peachy review practise to amend your trading, rail adverse toll drive afterwards your entries in addition to favorable toll drive next your exits. If you're entering at piteous times, y'all volition run across sizable adverse excursions early on inward the lifespan of the trade. If you're exiting at piteous levels, y'all volition run across the marketplace motion your intended way afterwards you've jumped ship. Such a review volition nation y'all whether the experience y'all holler back y'all bring is actually providing y'all amongst an execution edge. By planning entries in addition to exits based upon tested criteria, skillful execution tin top a purpose of your trading edge. For instance, entering longer-term purchase positions inward stock indexes when the bulk of shares are trading below their short-term moving averages shows to a greater extent than favorable render characteristics overall than going long when the bulk of stocks are already stretched to the upside.
2) Patient - Is the trader patient well-nigh getting into in addition to out of the market, or do they top fearful of missing opportunities in addition to chase trades at bad toll levels? This is the natural outgrowth of planning. When nosotros bring an execution plan, nosotros bring a grounding for patience. We tin involve to bet when odds are to a greater extent than favorable; stand upward aside when those odds are non present. Without planned criteria, it is slow for entries to hold out based on greed in addition to fearfulness of missing out in addition to exits to hold out predicated on pain. Influenza A virus subtype H5N1 mutual employment faced yesteryear traders is dealing amongst the hurting of gain: the temptations to mass profits prematurely. This tin Pb to a deadly province of affairs inward which nosotros allow losses run longer than gains, ensuring fatty negative tails inward our P/L distribution. When nosotros are patient amongst planned entry in addition to instruct out criteria, nosotros don't bring to hold out glued to screens. That agency that trading volition deplete less of our willpower resources in addition to nosotros volition hold out most probable to remain focused, inward the zone, in addition to grounded inward skillful decision-making.
3) Prompt - Once our criteria for entries in addition to exits are met, do nosotros human activeness decisively, or do nosotros top anxious in addition to perfectionistic, hoping that skillful levels top peachy ones. Influenza A virus subtype H5N1 mutual manifestation of surgery anxiety is to hold back for everything to describe of piece of work upward perfectly earlier entering or exiting. This rarely occurs, resulting inward lost opportunities at entry fourth dimension in addition to suboptimal exits. One wages of planning trades is that it agency y'all confront adventure in addition to wages squarely earlier y'all instruct into the position. Being at peace amongst the risk/reward profile of a merchandise makes it much easier to human activeness promptly when our criteria are met.
One of import point: It is real possible to hold out an intuitive trader in addition to besides i that is planned, patient, in addition to prompt inward execution. You may bring a gut experience that stocks volition pause out of a hit based upon patterns you've seen inward the past. That merchandise thought may hold out solely intuitive, but the merchandise itself tin hold out ready amongst planned breakout criteria in addition to halt levels that enable y'all to hold out patient in addition to prompt inward getting into in addition to out of the trade.
And, oh yes, the nautical chart to a higher house is a moving two-hour window of cyberspace buying in addition to selling activeness across all NYSE stocks from Nov seventh to the present. Think of it equally an intraday overbought/oversold indicator that is non price-based. In an uptrend, the periods of cyberspace selling volition laissez passer on off at successively higher toll levels. That provides a prissy pose down for planned, patient, in addition to prompt entry execution in addition to highlights useful toll levels for halt placement.
Further Reading: Executing the Trade
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Sunday, November 3, 2019
Info!! The Trading Process: Stance Generation Together With The Scientific Mindset
PREVIOUS POSTS IN THIS SERIES ON TRADING METHODS:
1) Identifying Market Context
2) Identifying Key Price Levels as well as Targets
3) Identifying Day Structure
1) Identifying Market Context
2) Identifying Key Price Levels as well as Targets
3) Identifying Day Structure
How does a trader brand the transition from agreement a electrical flow marketplace (the 3 elements enumerated above) to genuinely formulating a trading idea? That is the topic of this post.
In a word, the trading thought must integrate the information we've gained from an appreciation of marketplace context (whether markets are trending/bracketing on longer fourth dimension frame; intermarket themes that ask maintain been operative; relevant word events as well as economical reports); fundamental toll levels (support/resistance; average trading prices; target prices); as well as solar daytime construction (whether the electrical flow solar daytime appears to move inwards breakout/trending/range mode).
As an intraday trader, I laid about the procedure of generating ideas past times formulating hypotheses equally the marketplace is trading. Many times, the hypothesis volition kickoff past times assuming that whatever has been happening at the larger fourth dimension frame--what I am identifying inwards the marketplace context--will bear frontwards to the electrical flow trading day.
Thus, on average, if I come across we've been trending higher, I volition hypothesize that forcefulness volition bear over to the electrical flow trading session. At this point, the hypothesis is solely that: an educated hunch, non a trading idea.
As the marketplace is trading, that hypothesis may gain or lose support. For instance, if I come across that, amongst each bout of selling, the marketplace holds higher upward its volume-weighted average toll (VWAP), the thought of continuing the tendency higher gains support. Conversely, if nosotros brand buying efforts as well as book wanes as well as nosotros cannot accept out prior highs, my hypothesis loses support.
If I'm thinking similar a scientist, my real-time marketplace observations are helping me to refine my hypothesis. Perhaps the stock marketplace is non moving much inwards pre-opening trade, simply I notice correlated markets (U.S. dollar, commodities) moving inwards a agency that would move supportive of higher stock prices. That mightiness non solely assist back upward my hypothesis of continuing the marketplace trend, simply mightiness likewise render clues equally to which stock sectors could most apply goodness from such a move.
Similarly, I mightiness come across emerging marketplace stocks leading a displace higher as well as conclude that such speculative persuasion could bear over to the to a greater extent than speculative areas of U.S. stock performance. Or I mightiness come across overseas markets degree off on unfavorable economical word as well as moderate my expectations for U.S. stocks on the open.
The indicate is that hypotheses are ever-evolving. New marketplace information is helping us gain or lose confidence inwards our ideas.
Once I ask maintain high confidence inwards direction (i.e., the most recent marketplace activity is confirming my prior hypothesis), I as well as thence purpose my agreement of toll levels as well as solar daytime construction to brand the hypothesis to a greater extent than specific.
For example, if we're trending higher as well as I come across signs of firmness inwards the marketplace prior to the open, I mightiness hypothesize that nosotros volition concur higher upward the overnight depression inwards Globex futures trading as well as merchandise higher upward yesterday's high price. Alternatively, I mightiness ask maintain lost confidence inwards the thought of continuing the tendency higher due to tepid overnight activity as well as failing intermarket themes as well as hypothesize that nosotros volition concur below the overnight high inwards Globex futures trading as well as merchandise dorsum to the electrical flow day's VWAP or the prior day's pin toll level.
When I refine my hypotheses, I ever brand reference to fundamental toll levels as well as my ideas virtually direction must ever move grounded inwards what I'm seeing inwards the most recent marketplace behavior. If I'm hypothesizing a tendency or breakout day, I'm looking for prices higher or lower to follow the most recent toll action. If I'm hypothesizing a hit or imitation breakout session, I'm looking lower or higher for prices to contrary the most recent toll action.
If you lot were to sentry me trading, you lot would come across me jumping from enshroud to screen, nautical chart to chart, constantly updating measures of persuasion (NYSE TICK, Market Delta); volume; correlated indexes, sectors, as well as asset classes; as well as conduct around toll levels. Cognitively, I'm continuously weaving a narrative virtually what I'm seeing: assembling the emerging marketplace information into a story trouble that makes feel to me. The hypotheses flow from this story line.
Many times, I abide by the information to move contradictory as well as mixed as well as no convincing story trouble emerges. At such times, I apply non act. Only when the information autumn into a designing as well as the designing fits into my agreement of context as well as solar daytime construction volition I entertain a hypothesis as well as elaborate it amongst toll level/target specifics.
As nosotros volition come across inwards afterward posts inwards the series, this narrative procedure of hypothesis generation continues through the solar daytime and, indeed, throughout the menstruation of asset positions. It tin ship away likewise occur at fourth dimension frames wider than intraday, equally inwards the instance when nosotros come across stocks failing to sustain forcefulness early on inwards the calendar week as well as hypothesize that nosotros volition merchandise dorsum to final week's pin level.
Once nosotros empathize thought generation equally a sort of scientific process, nosotros tin ship away amend appreciate the business office of psychological factors inwards trading. Influenza A virus subtype H5N1 proficient mindset volition non pose valuable hypotheses inwards the caput of a scientist, simply the incorrect mindset tin ship away interfere amongst generating as well as refining worthwhile hypotheses. Most emotional disruptions of trading involve some sort of short-circuiting of designing recognition as well as reasoning processes.
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Monday, January 14, 2019
Info!! Trading Notes: Calendar Week Of December 14Th
Friday, Dec 18th
* Thursday's activity during New York hours completely reversed recent strength, amongst toll weakness evident essentially from the opening bell. When nosotros did instruct roughly decent buying flows inward the 2nd one-half hr of trade, those were unable to force the marketplace seat to novel highs. Meanwhile, nosotros saw a resumption of weakness inward fossil oil in addition to high yield markets in addition to force inward the US dollar. From that dot forrard nosotros traced out a vogue twenty-four hours to the downside, every bit selling flows took over. When y'all instruct meaningful buying that cannot force prices to fresh highs (or vice versa), that is ofttimes a groovy nation for intraday trading. Those buyers are trapped on subsequent weakness in addition to contribute to the continued decline.
* Per my plan, I bought the early on weakness, went greenish on the merchandise amongst the morning time buying, in addition to and thus proceeded to lose that gain in addition to cash inward one's chips into the red. "That shouldn't hold upward happening," was my response to the toll activity in addition to I stopped out amongst a pocket-size loss on the position. When skilful trades (trades based on historical tendencies) cash inward one's chips bad, at that spot is data there. Quite simply, the idiosyncratic influences of the fossil oil in addition to credit weakness, dollar strength, in addition to marketplace seat maker selling to hedge set selection losses inward the confront of quadruple witching overwhelmed whatsoever historical vogue for an oversold marketplace seat to proceed higher. This is why flexibility inward next the record is paramount; getting locked into a marketplace seat persuasion blinds 1 to those unique influences that tin plough markets.
* That beingness said, I'm non convinced that yesterday's weakness (and roughly weakness thus far inward pre-opening trade) is a one-off that nosotros tin but attribute to options expiry. The weakness inward emerging marketplace seat stocks is real; the weakness inward commodities is real; the weakness inward high yield bond markets is real; in addition to the number of stocks making annual lows vs. highs has been expanding. All of this leaves me opened upward to the possibility that nosotros move off the recent oversold status inward a depression Sharpe manner, ultimately making lower highs inward the major indexes, in addition to setting the stage for a meaningful decline. The weaker in addition to choppier whatsoever bounce from this latest weakness, the to a greater extent than opened upward I cash inward one's chips to that hypothesis.
* I uncovering the weakness inward AAPL to hold upward noteworthy. It's 1 of those bellwether issues that bears watching. Notice also how little in addition to midcap stocks (IWM) are farther from their 2015 price highs than large caps. Microcaps (IWC) are similarly relatively weak. On the other hand, the to a greater extent than defensive consumer staples shares (XLP) touched a novel high recently. Not precisely a designing of relative force that speaks to wide in addition to potent economical increase expectations.
Thursday, Dec 17th
* Once 1 time to a greater extent than nosotros saw force inward stocks coming out of recent oversold conditions, amongst the strategy of buying weakness that stays to a higher house overnight in addition to prior day's lows working well. We've continued potent inward overnight trading, which keeps the basic strategy alive. Early inward an upward stage of a marketplace seat wheel nosotros tend to regard momentum, which way that force builds on recent strength. That's what we've been seeing recently.
* Per the nautical chart below, my basic overbought/oversold measures house us nowhere close overbought yet. We stimulate got over 80% of SPX stocks trading to a higher house their three- in addition to five-day moving averages, but that number tin remain elevated for a piece inward early on phases of marketplace seat rallies. I'm peculiarly interested to uncovering the correlation betwixt stocks in addition to the fossil oil market, which had been quite high in addition to similar a shot seems to hold upward breaking down.
Wednesday, Dec 16th
* Many traders essay to predict what volition move on side past times side when they don't sympathise what is happening now. Here's an article that addresses that situation.
* Yesterday's postal service noted the oversold province of affairs inward the marketplace seat in addition to cited bullish expectations. Those played out good inward yesterday's merchandise in addition to similar a shot inward the overnight session. Today's trading volition hold upward dominated past times the Fed coming together proclamation inward the afternoon. With traders focused on recent turmoil inward high yield markets in addition to the drib inward oil, roughly are anticipating dovish messaging from the Fed. It is non clear to me that this volition hold upward the Fed's primary focus, which could move out room for a "hawkish"/bearish surprise. That beingness said, given the queries cited yesterday, buying weakness that holds to a higher house overnight in addition to prior day's lows continues to brand sense.
* Note that we've bounced nicely inward short-term breadth, given yesterday's rally. If this is the start of a bull motility higher, nosotros should regard the "overbought" status remain overbought for multiple days, every bit the early on stage of an upward wheel typically features momentum. Where we're at inward cycles helps decide whether nosotros tin aspect short-term momentum versus hateful reversion.
Tuesday, December 15th
* I flora yesterday afternoon's trading inward ES to hold upward rattling constructive. We had important bouts of selling pressure level (high negative TICK readings) but toll held to a higher house its morning time lows. Since that time, we've seen a prissy rally inward stocks inward European hours. The inability of selling to force prices lower in addition to the inability of buying to force prices to novel highs is ofttimes a skilful nation for toll reversals. (Interestingly, the NYSE TICK readings for much of the twenty-four hours were much to a greater extent than negative than the TICK readings I aspect at that encompass all stocks, including little caps in addition to transactions on regional in addition to electronic exchanges. That all-stock TICK is tracked via e-Signal. I volition hold upward monitoring divergences betwixt these measures closely to regard if there's consistent data there. As 1 savvy trader pointed out, the NYSE TICK is in all likelihood to a greater extent than dominated past times bonds in addition to bond-related shares trading on the exchange).
* Meanwhile, we're inward pretty oversold territory every bit the nautical chart below indicates. This tracks the number of SPX stocks making fresh highs vs. lows over a 5, 20, in addition to 100 twenty-four hours fourth dimension frame. (Data from Index Indicators). In the past times duo of years, returns stimulate got been favorable when we've reached such oversold levels. Since 2010, when this mensurate has been inward its most oversold quartile, the side past times side 5 days inward SPX stimulate got averaged a gain of +.63%. When the mensurate has been inward the other iii quartiles, the side past times side 5 days stimulate got averaged a gain of solely +.04%.
* In a time to come post, I'll hold upward talking to a greater extent than virtually my query into marketplace seat cycles. For now, here's a aspect at 1 of my wheel measures. It, too, shows us at quite oversold levels. Since 2012, when cycles stimulate got been inward their most oversold quartile of values, the side past times side 10 days inward SPY stimulate got averaged a gain of +1.05%. The ease of occasions stimulate got averaged a ten-day gain of solely +.33%.
Monday, Dec 14th
* When markets knock y'all down, practise you: a) remain downward in addition to dorsum away; b) grit your teeth in addition to stick amongst what you're doing; or c) figure out what went incorrect in addition to essay to adapt? How nosotros answer to adversity makes all the difference inward our long-term success.
* H5N1 genuinely weak marketplace seat is 1 inward which oversold weather condition give way to fifty-fifty to a greater extent than oversold conditions, in addition to that is what nosotros saw on Friday. The number of stocks making fresh novel lows, which had moderated inward recent sessions, exploded on Friday, next the weakness inward fossil oil in addition to high yield bonds. Across all exchanges, nosotros had sixty novel three-month highs against 694 novel lows. That's the highest degree of novel lows since belatedly September. With fossil oil prices weak overseas, we're having difficulty sustaining an overnight rally. Failure to bounce meaningfully from oversold weather condition is a alarm sign; I'd rather allow the bulls bear witness themselves in addition to purchase the kickoff pullback than essay to grab knives.
* Note how little (IJR) in addition to mid-cap (MDY) stocks stimulate got broken below their Nov levels; also Federal Reserve notation that emerging marketplace seat stocks are closing inward on their September lows. Wide swaths of the equity markets are weak; this is non how bull markets behave.
* VIX unopen to a higher house 24 on Friday. Volatility has picked upward in addition to that tin Pb to painful brusque roofing rallies every bit good every bit vehement downside moves. It's of import to stimulate got volatility into concern human relationship when sizing positions in addition to deciding upon asset periods for positions.
* Thursday's activity during New York hours completely reversed recent strength, amongst toll weakness evident essentially from the opening bell. When nosotros did instruct roughly decent buying flows inward the 2nd one-half hr of trade, those were unable to force the marketplace seat to novel highs. Meanwhile, nosotros saw a resumption of weakness inward fossil oil in addition to high yield markets in addition to force inward the US dollar. From that dot forrard nosotros traced out a vogue twenty-four hours to the downside, every bit selling flows took over. When y'all instruct meaningful buying that cannot force prices to fresh highs (or vice versa), that is ofttimes a groovy nation for intraday trading. Those buyers are trapped on subsequent weakness in addition to contribute to the continued decline.
* Per my plan, I bought the early on weakness, went greenish on the merchandise amongst the morning time buying, in addition to and thus proceeded to lose that gain in addition to cash inward one's chips into the red. "That shouldn't hold upward happening," was my response to the toll activity in addition to I stopped out amongst a pocket-size loss on the position. When skilful trades (trades based on historical tendencies) cash inward one's chips bad, at that spot is data there. Quite simply, the idiosyncratic influences of the fossil oil in addition to credit weakness, dollar strength, in addition to marketplace seat maker selling to hedge set selection losses inward the confront of quadruple witching overwhelmed whatsoever historical vogue for an oversold marketplace seat to proceed higher. This is why flexibility inward next the record is paramount; getting locked into a marketplace seat persuasion blinds 1 to those unique influences that tin plough markets.
* That beingness said, I'm non convinced that yesterday's weakness (and roughly weakness thus far inward pre-opening trade) is a one-off that nosotros tin but attribute to options expiry. The weakness inward emerging marketplace seat stocks is real; the weakness inward commodities is real; the weakness inward high yield bond markets is real; in addition to the number of stocks making annual lows vs. highs has been expanding. All of this leaves me opened upward to the possibility that nosotros move off the recent oversold status inward a depression Sharpe manner, ultimately making lower highs inward the major indexes, in addition to setting the stage for a meaningful decline. The weaker in addition to choppier whatsoever bounce from this latest weakness, the to a greater extent than opened upward I cash inward one's chips to that hypothesis.
* I uncovering the weakness inward AAPL to hold upward noteworthy. It's 1 of those bellwether issues that bears watching. Notice also how little in addition to midcap stocks (IWM) are farther from their 2015 price highs than large caps. Microcaps (IWC) are similarly relatively weak. On the other hand, the to a greater extent than defensive consumer staples shares (XLP) touched a novel high recently. Not precisely a designing of relative force that speaks to wide in addition to potent economical increase expectations.
Thursday, Dec 17th
* Once 1 time to a greater extent than nosotros saw force inward stocks coming out of recent oversold conditions, amongst the strategy of buying weakness that stays to a higher house overnight in addition to prior day's lows working well. We've continued potent inward overnight trading, which keeps the basic strategy alive. Early inward an upward stage of a marketplace seat wheel nosotros tend to regard momentum, which way that force builds on recent strength. That's what we've been seeing recently.
* Per the nautical chart below, my basic overbought/oversold measures house us nowhere close overbought yet. We stimulate got over 80% of SPX stocks trading to a higher house their three- in addition to five-day moving averages, but that number tin remain elevated for a piece inward early on phases of marketplace seat rallies. I'm peculiarly interested to uncovering the correlation betwixt stocks in addition to the fossil oil market, which had been quite high in addition to similar a shot seems to hold upward breaking down.
Wednesday, Dec 16th
* Many traders essay to predict what volition move on side past times side when they don't sympathise what is happening now. Here's an article that addresses that situation.
* Yesterday's postal service noted the oversold province of affairs inward the marketplace seat in addition to cited bullish expectations. Those played out good inward yesterday's merchandise in addition to similar a shot inward the overnight session. Today's trading volition hold upward dominated past times the Fed coming together proclamation inward the afternoon. With traders focused on recent turmoil inward high yield markets in addition to the drib inward oil, roughly are anticipating dovish messaging from the Fed. It is non clear to me that this volition hold upward the Fed's primary focus, which could move out room for a "hawkish"/bearish surprise. That beingness said, given the queries cited yesterday, buying weakness that holds to a higher house overnight in addition to prior day's lows continues to brand sense.
* Note that we've bounced nicely inward short-term breadth, given yesterday's rally. If this is the start of a bull motility higher, nosotros should regard the "overbought" status remain overbought for multiple days, every bit the early on stage of an upward wheel typically features momentum. Where we're at inward cycles helps decide whether nosotros tin aspect short-term momentum versus hateful reversion.
Tuesday, December 15th
* I flora yesterday afternoon's trading inward ES to hold upward rattling constructive. We had important bouts of selling pressure level (high negative TICK readings) but toll held to a higher house its morning time lows. Since that time, we've seen a prissy rally inward stocks inward European hours. The inability of selling to force prices lower in addition to the inability of buying to force prices to novel highs is ofttimes a skilful nation for toll reversals. (Interestingly, the NYSE TICK readings for much of the twenty-four hours were much to a greater extent than negative than the TICK readings I aspect at that encompass all stocks, including little caps in addition to transactions on regional in addition to electronic exchanges. That all-stock TICK is tracked via e-Signal. I volition hold upward monitoring divergences betwixt these measures closely to regard if there's consistent data there. As 1 savvy trader pointed out, the NYSE TICK is in all likelihood to a greater extent than dominated past times bonds in addition to bond-related shares trading on the exchange).
* Meanwhile, we're inward pretty oversold territory every bit the nautical chart below indicates. This tracks the number of SPX stocks making fresh highs vs. lows over a 5, 20, in addition to 100 twenty-four hours fourth dimension frame. (Data from Index Indicators). In the past times duo of years, returns stimulate got been favorable when we've reached such oversold levels. Since 2010, when this mensurate has been inward its most oversold quartile, the side past times side 5 days inward SPX stimulate got averaged a gain of +.63%. When the mensurate has been inward the other iii quartiles, the side past times side 5 days stimulate got averaged a gain of solely +.04%.
Monday, Dec 14th
* When markets knock y'all down, practise you: a) remain downward in addition to dorsum away; b) grit your teeth in addition to stick amongst what you're doing; or c) figure out what went incorrect in addition to essay to adapt? How nosotros answer to adversity makes all the difference inward our long-term success.
* H5N1 genuinely weak marketplace seat is 1 inward which oversold weather condition give way to fifty-fifty to a greater extent than oversold conditions, in addition to that is what nosotros saw on Friday. The number of stocks making fresh novel lows, which had moderated inward recent sessions, exploded on Friday, next the weakness inward fossil oil in addition to high yield bonds. Across all exchanges, nosotros had sixty novel three-month highs against 694 novel lows. That's the highest degree of novel lows since belatedly September. With fossil oil prices weak overseas, we're having difficulty sustaining an overnight rally. Failure to bounce meaningfully from oversold weather condition is a alarm sign; I'd rather allow the bulls bear witness themselves in addition to purchase the kickoff pullback than essay to grab knives.
* Note how little (IJR) in addition to mid-cap (MDY) stocks stimulate got broken below their Nov levels; also Federal Reserve notation that emerging marketplace seat stocks are closing inward on their September lows. Wide swaths of the equity markets are weak; this is non how bull markets behave.
* VIX unopen to a higher house 24 on Friday. Volatility has picked upward in addition to that tin Pb to painful brusque roofing rallies every bit good every bit vehement downside moves. It's of import to stimulate got volatility into concern human relationship when sizing positions in addition to deciding upon asset periods for positions.
Sunday, January 13, 2019
Info!! Trading Notes For The Calendar Week Of March 28, 2016
Friday, Apr 1st
* Top twenty people to follow on Stock Twits as well as Twitter for corking marketplace position content. Of course, Ivaylo is besides pocket-size to include himself, hence I'll nominate him hither both for his spider web log content as well as his books.
* We've pulled dorsum from recent highs, equally my measures of realized resultant fourth dimension volatility hold lower--a province of affairs that, inwards the past, has been associated amongst subnormal forrard returns. Stocks making novel monthly highs across all exchanges declined from 1221 to 822; monthly lows ticked upward from 106 to 137. So it's difficult to say that nosotros pick out weak breadth. As noted yesterday, my mensurate of upticks vs. downticks has continued positive. Yesterday was positive, but full institutional participation contracted least since the rally began. Again, this has been associated historically amongst subnormal returns. Institutional participation is a mensurate of full upticks as well as downticks across all NYSE shares (not mass traded). The depression mass as well as volatility brand me non peculiarly bullish; the absence of novel lows as well as downticks brand me non peculiarly bearish.
* My cycle mensurate continues inwards positive territory but off its highs. Many of my breadth measures await this way: positive, but off their peaks. Note how we've stayed positive for much longer than during recent cycles--again a tell that this has been to a greater extent than than a comport marketplace position rally or fifty-fifty a bounce higher inwards a make market.
* Are in that location microtrends inside the marketplace position as well as are these tradeable? Hell, I pick out no idea, but I'm researching it. Will permit y'all know what I find. This volition live on a purely systematic implementation. My other inquiry projection is identifying longer term cycles inwards the stock market, amongst information going dorsum to 1980. This is based on a unique implementation of the resultant fourth dimension concept. Basing resultant fourth dimension on mass doesn't move because of the secular differences inwards mass over the catamenia of decades. If you're non innovating, you're stagnating. Too many traders pat themselves on the dorsum for doing the same affair 1 time again as well as 1 time again as well as calling it discipline. Influenza A virus subtype H5N1 disciplined implementation of an outmoded approach volition lose coin amongst admirable consistency.
* If y'all await at stocks exterior the U.S., such equally the EFA ETF, the longer-term motion painting is pretty unimpressive. It is non clear to me that negative rates are having the desired affect overseas. If this is the case, nosotros could run into to a greater extent than aggressive key depository fiscal establishment stimulation of economies, peculiarly if those indicators of deflation--strengthening currencies, weakening commodities, etc.--become to a greater extent than problematic.
Thursday, March 31st
* Is the housing marketplace position strong or weak? See It Market notes mixed signals amidst furnish constraints.
* Oil as well as commodities overall (DBC) pick out been lagging stock toll gains recently; keeping an oculus on that relationship. I'm also noticing high yield bonds (JNK) lagging recent toll gains inwards stocks. These relationships were key during the catamenia of marketplace position weakness.
* Stocks rallied nicely early on yesterday, 1 time again posting fresh rally highs earlier pulling back. Breadth 1 time once again expanded, amongst over one m stocks across all exchanges posting fresh monthly highs. My mensurate of upticks vs. downticks continued quite strong; below nosotros tin run into a 10-day moving average. As mentioned before, mass has non been impressive, but the mass traded has been quite skewed toward the buyers:
* One of my pure volatility measures continues at levels to a greater extent than consistent amongst marketplace position highs than lows. Note VIX straightaway trading a flake higher upward 13. This has the potential to significantly constrain directional movement across all fourth dimension frames. There is less mass traded, *and* each unit of measurement of mass moves toll less.
* Note the continued forcefulness of liquid, high character corporate bonds (LQD). In a globe of depression as well as fifty-fifty negative rates, whatever yield becomes a prophylactic haven. Hence the surroundings inwards which stocks as well as bonds pick out been jointly outperforming (the conduct a chance parity trade).
Wednesday, March 30th
* New Trader U highlights 22 bad trading habits. Notice how many of them boil downwards to non existence rule-governed, where the rules reverberate trading strengths as well as identified best trading practices. That suggests that traders are suffering, non simply because they don't written report markets, but because they haven't genuinely studied their ain performance.
* Stocks liked the statements of the Fed chair as well as that has lifted us to a novel high for this rally. Interestingly, across all stocks on all exchanges, iii calendar month novel highs versus lows are lagging their peak from a dyad of weeks agone (see below). Among SPX shares, however, fresh 100-day highs vs. lows did hitting a marginal novel peak. I would larn concerned nearly the uptrend if stocks making fresh novel lows were to expand from here.
* Once again, nosotros saw buying pressure level completely dominate selling pressure level via the uptick/downtick measures. This lifted the cumulative uptick/downtick mensurate to novel highs (see below). As noted yesterday, mass has non been stellar (though it picked upward yesterday), but what mass has been in that location has been strongly skewed to the buyers as well as that has been associated historically amongst favorable near-term returns (upside momentum).
Tuesday, March 29th
* How tin y'all honor merchandise opportunities that others miss? Here is a procedure that tin assistance y'all larn amend at perceiving opportunity.
* Meh. Volume has been quite lackluster, as well as that is to a greater extent than typical of marketplace position tops than bottoms. We remain inwards relatively oversold territory on my swing measures as well as my measures of upticks vs. downticks remain strong. So my base of operations illustration remains a continued displace higher, but I can't say I'm peculiarly impressed amongst recent action. Financial as well as unloosen energy shares pick out been relatively weak as well as I hold to hold an oculus on little caps. Perhaps calendar month end/quarter cease flows volition convey about life to the market. Stocks making fresh monthly highs did uptick yesterday as well as I'm non seeing an influx of selling at all. Of the (low) mass acquaint yesterday, buyers were dominant.
* Put/call ratios were depression yesterday; shares outstanding for SPY pick out been modestly elevated. Bears are relatively absent.
* We're working off quite an overbought level, per the intermediate-term forcefulness nautical chart below, which tracks the release of SPX shares making novel highs vs. lows on multiple fourth dimension frames. To the extent that nosotros tin produce hence amongst minimal toll damage, it is supportive to the bulls.
Monday, March 28th
* In illustration y'all missed, here's my latest podcast; thank y'all to Chat With Traders.
* We've bounced from a swing oversold degree and, equally nosotros tin run into below, are non yet at an overbought level.
* Buying involvement hitting a novel rally high amongst this most recent bounce. This mensurate tracks upticks versus downticks for all listed stocks, non simply those on NYSE.
* The 1 wing inwards the ointment that I run into is the depression mass as well as volatility, which are associated historically amongst subnormal forrard returns over an intermediate-term horizon. My mensurate of cumulative upticking as well as downticking is non yet at such a depression request that would advise pathetic near-term returns. As a rule, bull moves decease amongst an absence of buyers. It's something I'm monitoring daily.
* Top twenty people to follow on Stock Twits as well as Twitter for corking marketplace position content. Of course, Ivaylo is besides pocket-size to include himself, hence I'll nominate him hither both for his spider web log content as well as his books.
* We've pulled dorsum from recent highs, equally my measures of realized resultant fourth dimension volatility hold lower--a province of affairs that, inwards the past, has been associated amongst subnormal forrard returns. Stocks making novel monthly highs across all exchanges declined from 1221 to 822; monthly lows ticked upward from 106 to 137. So it's difficult to say that nosotros pick out weak breadth. As noted yesterday, my mensurate of upticks vs. downticks has continued positive. Yesterday was positive, but full institutional participation contracted least since the rally began. Again, this has been associated historically amongst subnormal returns. Institutional participation is a mensurate of full upticks as well as downticks across all NYSE shares (not mass traded). The depression mass as well as volatility brand me non peculiarly bullish; the absence of novel lows as well as downticks brand me non peculiarly bearish.
* My cycle mensurate continues inwards positive territory but off its highs. Many of my breadth measures await this way: positive, but off their peaks. Note how we've stayed positive for much longer than during recent cycles--again a tell that this has been to a greater extent than than a comport marketplace position rally or fifty-fifty a bounce higher inwards a make market.
* Are in that location microtrends inside the marketplace position as well as are these tradeable? Hell, I pick out no idea, but I'm researching it. Will permit y'all know what I find. This volition live on a purely systematic implementation. My other inquiry projection is identifying longer term cycles inwards the stock market, amongst information going dorsum to 1980. This is based on a unique implementation of the resultant fourth dimension concept. Basing resultant fourth dimension on mass doesn't move because of the secular differences inwards mass over the catamenia of decades. If you're non innovating, you're stagnating. Too many traders pat themselves on the dorsum for doing the same affair 1 time again as well as 1 time again as well as calling it discipline. Influenza A virus subtype H5N1 disciplined implementation of an outmoded approach volition lose coin amongst admirable consistency.
* If y'all await at stocks exterior the U.S., such equally the EFA ETF, the longer-term motion painting is pretty unimpressive. It is non clear to me that negative rates are having the desired affect overseas. If this is the case, nosotros could run into to a greater extent than aggressive key depository fiscal establishment stimulation of economies, peculiarly if those indicators of deflation--strengthening currencies, weakening commodities, etc.--become to a greater extent than problematic.
Thursday, March 31st
* Is the housing marketplace position strong or weak? See It Market notes mixed signals amidst furnish constraints.
* Oil as well as commodities overall (DBC) pick out been lagging stock toll gains recently; keeping an oculus on that relationship. I'm also noticing high yield bonds (JNK) lagging recent toll gains inwards stocks. These relationships were key during the catamenia of marketplace position weakness.
* Stocks rallied nicely early on yesterday, 1 time again posting fresh rally highs earlier pulling back. Breadth 1 time once again expanded, amongst over one m stocks across all exchanges posting fresh monthly highs. My mensurate of upticks vs. downticks continued quite strong; below nosotros tin run into a 10-day moving average. As mentioned before, mass has non been impressive, but the mass traded has been quite skewed toward the buyers:
* One of my pure volatility measures continues at levels to a greater extent than consistent amongst marketplace position highs than lows. Note VIX straightaway trading a flake higher upward 13. This has the potential to significantly constrain directional movement across all fourth dimension frames. There is less mass traded, *and* each unit of measurement of mass moves toll less.
* Note the continued forcefulness of liquid, high character corporate bonds (LQD). In a globe of depression as well as fifty-fifty negative rates, whatever yield becomes a prophylactic haven. Hence the surroundings inwards which stocks as well as bonds pick out been jointly outperforming (the conduct a chance parity trade).
Wednesday, March 30th
* New Trader U highlights 22 bad trading habits. Notice how many of them boil downwards to non existence rule-governed, where the rules reverberate trading strengths as well as identified best trading practices. That suggests that traders are suffering, non simply because they don't written report markets, but because they haven't genuinely studied their ain performance.
* Stocks liked the statements of the Fed chair as well as that has lifted us to a novel high for this rally. Interestingly, across all stocks on all exchanges, iii calendar month novel highs versus lows are lagging their peak from a dyad of weeks agone (see below). Among SPX shares, however, fresh 100-day highs vs. lows did hitting a marginal novel peak. I would larn concerned nearly the uptrend if stocks making fresh novel lows were to expand from here.
* Once again, nosotros saw buying pressure level completely dominate selling pressure level via the uptick/downtick measures. This lifted the cumulative uptick/downtick mensurate to novel highs (see below). As noted yesterday, mass has non been stellar (though it picked upward yesterday), but what mass has been in that location has been strongly skewed to the buyers as well as that has been associated historically amongst favorable near-term returns (upside momentum).
Tuesday, March 29th
* How tin y'all honor merchandise opportunities that others miss? Here is a procedure that tin assistance y'all larn amend at perceiving opportunity.
* Meh. Volume has been quite lackluster, as well as that is to a greater extent than typical of marketplace position tops than bottoms. We remain inwards relatively oversold territory on my swing measures as well as my measures of upticks vs. downticks remain strong. So my base of operations illustration remains a continued displace higher, but I can't say I'm peculiarly impressed amongst recent action. Financial as well as unloosen energy shares pick out been relatively weak as well as I hold to hold an oculus on little caps. Perhaps calendar month end/quarter cease flows volition convey about life to the market. Stocks making fresh monthly highs did uptick yesterday as well as I'm non seeing an influx of selling at all. Of the (low) mass acquaint yesterday, buyers were dominant.
* Put/call ratios were depression yesterday; shares outstanding for SPY pick out been modestly elevated. Bears are relatively absent.
* We're working off quite an overbought level, per the intermediate-term forcefulness nautical chart below, which tracks the release of SPX shares making novel highs vs. lows on multiple fourth dimension frames. To the extent that nosotros tin produce hence amongst minimal toll damage, it is supportive to the bulls.
Monday, March 28th
* In illustration y'all missed, here's my latest podcast; thank y'all to Chat With Traders.
* We've bounced from a swing oversold degree and, equally nosotros tin run into below, are non yet at an overbought level.
* Buying involvement hitting a novel rally high amongst this most recent bounce. This mensurate tracks upticks versus downticks for all listed stocks, non simply those on NYSE.
* The 1 wing inwards the ointment that I run into is the depression mass as well as volatility, which are associated historically amongst subnormal forrard returns over an intermediate-term horizon. My mensurate of cumulative upticking as well as downticking is non yet at such a depression request that would advise pathetic near-term returns. As a rule, bull moves decease amongst an absence of buyers. It's something I'm monitoring daily.
Sunday, January 20, 2019
Trick A Starter's Conduct To The Stock Market
This is Dedicated to all my friends together with relatives who accept been cry for me nearly the stock market.
----------------------
Take the outset step.
Open An Account! I uncovering karamihan sa mga nagtatanong, hangang dito lang. Tanong nearly stocks, pano kumita, etc. pero never nag oopen ng account. Please lungs, don't waste matter precious time. Once you lot opened upwards an account, the excitement naturally comes in. Trust me. Parang yung feeling na may napanalunan ka sa mall raffle, tapos pag dating minute sa claim booth, ballpen lang pala. #realtalk
Hindi minute kailangang maging super yaman para uminvest. Sa halagang P10,000 ay makakapag opened upwards ka na ng investment account. Maid nga ni Bo Sanchez nakapag invest.
What's your excuse?
What's your excuse?
----------------------
Yes. The Stories are True.
I know nosotros accept heard simply about stories from people na kumita ng malaki sa stocks. "A friend of a friend" na kumita ng half dozen digits, 7, together with fifty-fifty 8 or more. Parang scam lang. Pero I'm certain mas marami kayong mga narinig na nalugi. five figures, 6, 7, pati mga life savings. Yung tipong pati bahay at aso binenta na dahil sa laki ng lugi.
Akala minute joke pero hindi. Sometimes exagge na yung mga kwento pero sa mundo ng stocks, anything goes!
Akala minute joke pero hindi. Sometimes exagge na yung mga kwento pero sa mundo ng stocks, anything goes!
People who lose inward the stock marketplace together with tell you lot non to invest kasi gambling siya are people you lot desire to, but at the same fourth dimension don't desire to heed to. Bitter ocampo sila. Sino ba namang hindi mabibitter afterwards malugi? So allow us larn from their example.
Parang examination lang. Pag hindi ka nag aral, don't hold back na pumasa ka.
But for those who move difficult together with invest their fourth dimension inward fiscal literacy or learning how the marketplace works, certain ako you lot won't hold upwards bitter inward the end. Who knows? You could hold upwards the adjacent billionaire similar lolo Warren Buffet.
Kaya Aral Muna Bago Invest.
----------------------
Manage Expectations
In stocks, pwede kang kumita ng upwards to +50% inward a day. So if you lot accept P1,000 invested sa isang stock at kinabukasan ay umabot sa kisame, abay siguradong may pang eat-all-you-can-for-two ka na. From 1k to 1.5k inward a day. Imagine that. Kaso, i time inward a bluish Luna lang nangyayari yan. Okay lang. Libre mangarap.
Pero you lot accept to empathize na hindi sa lahat ng panahon maayos ang takbo ng merkado. May mga seasons na mabilis kumita, together with may mga flavor na mas madaling olats. Parang cyberspace connectedness minute lang. Sasabihin ay upwards to 1MBPs pero yung average speed minute ay mga 50-200KBPs lang.
Pwedeng pwede ka band malugi ng -50% inward a day! Kapag yan na experience mo, goodness adieu swallow all you lot can, Hello pancit canton!
Pwedeng pwede ka band malugi ng -50% inward a day! Kapag yan na experience mo, goodness adieu swallow all you lot can, Hello pancit canton!
Kaya know the seasons when together with when non to invest. Again. Aral aral din pag may time.
----------------------
Look for credible Mentors
In this field, It's domestic dog swallow dog. Hindi lahat ng practiced sa stocks gusto ka tulungan. At hindi lahat ng "expert" ay expert, kasi pwedeng nagmamarunong lang dahil kumita noong bull marketplace or naka jackpot sa isang super stock. Pwede band Scammer! Maraming ganyan. Lakas mamigay ng investment advice pero olats naman sa trades. Parang yung classmate minute lang nung college or high schoolhouse na itatawag nating si Fe, ang galing mamigay ng honey advice pero No Boyfriend Since Birth.
Ironic.
Kapag may ginyos na nagmamagaling dahil nga "magaling" siya sa kanyang investment calls, uncomplicated lang para malaman kung siya ay legit. Ask for proof. Ask for historical transactions or a ledger.
Kung wala siyang mapakita, jokingly say
"Pics or It Didn't happen."
And slow walk away.
Kapag may ginyos na nagmamagaling dahil nga "magaling" siya sa kanyang investment calls, uncomplicated lang para malaman kung siya ay legit. Ask for proof. Ask for historical transactions or a ledger.
Kung wala siyang mapakita, jokingly say
"Pics or It Didn't happen."
And slow walk away.
Learning lone is possible naman. Having individual to withdraw you lot speeds upwards everything. Pero pag nagkamali ka ng pagpili ng mentor, sure speed upwards din yung losses mo. Kaya wag magpapa ulol!
Take every advice alongside a grain of salt.
----------------------
Final Words of Advice
Now, they tell that at simply about betoken when people invest inward stocks, marami ang nagiging relehiyoso. Lalong-lalo na kapag ipit na ang kanilang investment.
But "Buy together with Pray" is the worst strategy of all. Kapag ginawa minute ito, Juice Colored! Dinamay minute pa ang Diyos sa kalokohan minute at nakipag kompitensya ka pa sa mga tumataya sa loto.
Pero know this :
Wala pa akong kilalang successful na investor or trader na hindi umincurr ng loss. Normal po yan. Consider these losses equally your tuition. The solely fourth dimension your loss becomes a loss is when you lot don't larn from them.
Wala pa akong kilalang successful na investor or trader na hindi umincurr ng loss. Normal po yan. Consider these losses equally your tuition. The solely fourth dimension your loss becomes a loss is when you lot don't larn from them.
Never laissez passer up. Dati rin akong baguhan at olats.
Nagmamahal,
ZF
PS.
ZF
PS.
Ganito pala ang ibig sabihin ng "let your coin move for you" nakatambay lang ako sa bahay nyan at walang ginagawa. P1,500,000 inward five Trading Days. Parang Scam lang...
Pero legit.
Tuesday, February 18, 2020
Info!! Stock Marketplace Trends Are Nonetheless Non Quite Your Friends
I decided to accept a fresh await at an former marketplace position designing together with run into how the S&P 500 Index (SPY) has behaved since the showtime of 2007 nether 2 conditions:
* When it is upwards both on a one-day together with a five-day basis
* When it is downwards both on a one-day together with a five-day basis
When the marketplace position has been upwards yesterday together with over the past times calendar week (N = 163 trading days), the side past times side 5 days inwards SPY conduct maintain averaged a loss of -.97% (66 up, 97 down).
Conversely, when the marketplace position has been downwards yesterday together with downwards over the past times calendar week (N = 155), the side past times side 5 days inwards SPY conduct maintain averaged a arrive at of .20% (86 up, 69 down).
What seems to endure happening is that markets that are upwards or downwards most late together with over the terminal few days conduct maintain short-term together with swing traders leaning the incorrect way. When they unwind their bets to protect their capital, they contribute to countertrend moves.
In the past, I've written nearly how to lose coin inwards the stock market, including how to lose past times buying into uptrends. Those lessons look relevant inwards the electrical flow environment: it's when stocks await evidently potent or weak that markets are most likely to confound human nature together with nosotros are most probable to run into countertrend behavior.
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* When it is upwards both on a one-day together with a five-day basis
* When it is downwards both on a one-day together with a five-day basis
When the marketplace position has been upwards yesterday together with over the past times calendar week (N = 163 trading days), the side past times side 5 days inwards SPY conduct maintain averaged a loss of -.97% (66 up, 97 down).
Conversely, when the marketplace position has been downwards yesterday together with downwards over the past times calendar week (N = 155), the side past times side 5 days inwards SPY conduct maintain averaged a arrive at of .20% (86 up, 69 down).
What seems to endure happening is that markets that are upwards or downwards most late together with over the terminal few days conduct maintain short-term together with swing traders leaning the incorrect way. When they unwind their bets to protect their capital, they contribute to countertrend moves.
In the past, I've written nearly how to lose coin inwards the stock market, including how to lose past times buying into uptrends. Those lessons look relevant inwards the electrical flow environment: it's when stocks await evidently potent or weak that markets are most likely to confound human nature together with nosotros are most probable to run into countertrend behavior.
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Sunday, January 27, 2019
Info!! To A Greater Extent Than Skillful Materials To Commence The Trading Week
* This is a rattling of import concept for developing traders: How nosotros are wired socially, emotionally, together with cognitively defines where nosotros volition detect our border inwards markets. We are best positioned to know markets if nosotros get-go know ourselves.
* I've been making increasing role of the Investing.com site. I similar the feature that tracks advancing together with declining stocks across international every bit good every bit United States averages. I besides similar the coverage of international markets, FX, together with the international commentary.
* Of the hold out past times posts tracked past times Abnormal Returns this past times week, I peculiarly similar the 1 that outlines problems that often accompany backtests. Another peachy link is Meb Faber's post service on diversification together with protecting against an overvalued stock market.
* Great serial of posts on mindfulness inwards trading past times SMB Training together with Bruce Bower. The clearest problems alongside mindfulness hand when nosotros are caught upwards inwards emotional reactions to marketplace action. Less appreciated is that nosotros tin lose self-awareness every bit a business office of expert trading. If we're absorbed inwards markets, we're non focused on our best trading of those. It's that transition from marketplace awareness to trading awareness that is key. Many peachy traders role post-it notes for reminders on their hide exactly because it's when they're about focused on markets that they're to the lowest degree focused on best trading practices.
* Are nosotros trending on a twenty-four hours fourth dimension frame? Stats provided past times Vic Scherer are quite relevant. I've besides been looking at book every bit a relevant measure. It's tough for short-term moves to extend if book is drying up. Note that tendency on an X fourth dimension frame is theme upon momentum at the Y fourth dimension frame, where Y > X. If you lot convey a stair out that has a momentum edge, you lot tin to a greater extent than often than non define a winning tendency strategy at a lower fourth dimension frame.
Have a peachy start to the week!
Brett
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Sunday, January 13, 2019
Info!! Why The Path Is Every Bit Of Import Every Bit The Move
Let's intend close the views that traders express. Traders aspect for toll movement: a modify from ane flat to around other level. That potential drive nosotros could telephone holler upwards the numerator; it's what most traders focus upon.
There is around other variable, the denominator, that most traders create non focus upon. The denominator is the path betwixt the start together with minute toll levels. It is as important.
Let's create a thought experiment: I mightiness await a stock index to displace from 2000 to 2100, a 5% move. Let's tell the index remained nearly unchanged inwards value for half dozen months earlier shooting higher to 2100 inwards the 7th month. How many traders would convey stuck alongside this trade?
Let's see a dissimilar scenario: The index moves from 2000 to 2100 inwards ane month, simply solely later having dropped to 1940 inwards the start week. How many traders would convey stuck alongside this trade?
The point, of course, is that path matters. When nosotros await a movement, nosotros await it inwards a for sure fourth dimension menses together with nosotros await the path to the target to convey a for sure grade of smoothness. Our ane concession to path is the institution of halt levels, simply rarely create nosotros intend of path as something to investigate inwards its ain right.
Is the path getting smoother or to a greater extent than choppy? Does the market's flat of volatility back upwards the likelihood of the desired displace inwards a shorter or longer fourth dimension period? Is that volatility increasing or waning?
In short, it's slowly to focus on what markets volition do, simply non house plenty weight close how that drive is probable to occur. Intellectually, nosotros position targets together with stops, simply what impacts us emotionally are paths. It's slowly to ready for the merchandise together with stay unprepared for the path of the trade.
At whatever fourth dimension frame, nosotros tin forcefulness out position the total of internet drive betwixt ii points (how much toll has risen or fallen) as a business office of the full drive betwixt ii points. Such a mensurate of trendiness versus choppiness itself waxes together with wanes: trendiness is itself a phenomenon that trends. Placing a merchandise inwards a depression trending environment--and ane where trending itself has been declining--is quite dissimilar from placing a merchandise inwards a high trending surroundings inwards which trending is itself trending.
Thinking through the denominator is ane means nosotros tin forcefulness out deploy majuscule smarter, deciding when environments are correct for our ideas together with when environments are to a greater extent than conducive to shorter-term, tactical trading together with when they are conducive to longer-term, thematic views.
Further Reading: Why So Many Traders Lose
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