Friday, Oct 16th
* Yesterday's abrupt rally as well as novel high unopen for this displace fits with the "buy weakness, sell strength" thought from yesterday's posting as well as is consistent with the thought of a marketplace that may receive got topped inwards upside momentum, but non price. It was interesting to run across that nosotros had 609 stocks brand fresh monthly highs yesterday, downwardly from the 1274 novel highs terminal Friday. Such breadth divergences tin give notice survive expected to dice on if nosotros indeed receive got made a momentum peak for this cycle. It's when nosotros run across pregnant expansion of stocks/sectors making fresh short-term lows that nosotros demand to seriously consider the market's downside.
* Meanwhile, volatility continues to survive crushed with VIX closing roughly 16, downwardly from roughly 27 belatedly inwards September. My pure volatility mensurate also hitting novel lows as well as is getting unopen to levels that are associated with subnormal upside returns. It has been challenging for traders to suit to the reduced volatility, which punishes trading on momentum as well as rewards patient, counter-trend entry execution as well as quick, tactical profit-taking.
* Influenza A virus subtype H5N1 projection I volition start out this weekend is gauging the expectable size as well as duration of moves based upon volatility regimes. My sense is that such an approach could aid making trading far to a greater extent than flexible as well as adaptive than it currently is for many traders.
Thursday, Oct 15th
* So here's my query of the day: Why practise thus many bastions of capitalism pursue alter via centralized planning? From large corporations to finance firms, capitalist enterprises increasingly rely on key planning every bit they grow. Indeed, if countries ran their economies the way many companies run their businesses, we'd sentiment them every bit communist/socialist bureaucracies hopelessly out of date. We extol "leadership" inwards corporations as well as large organizations; maybe that's how dictators retrieve of themselves inwards centrally planned economies.
* Influenza A virus subtype H5N1 adept purchase merchandise early on inwards the 24-hour interval reversed on the WalMart word as well as stocks traded off through much of the session yesterday, though they've recovered inwards overnight trading. This dorsum as well as forth is what we'd hold off if nosotros late hitting a momentum peak for the electrical flow cycle as well as immediately are engaged inwards a topping process. In that scenario, buying weakness as well as selling forcefulness makes sense. Yesterday closed with farther weakness, every bit nosotros had 348 stocks brand novel monthly highs as well as 261 register fresh monthly lows. That novel lows figure is the highest we've seen since Oct 2nd.
* The weak retail sales divulge as well as WalMart word highlights what seems to survive a changed story: instead of economical increment justifying a Fed hike, there's increasing verbalize of economical weakness as well as no hike this year. If the topping out scenario holds, thus we're seeing a cycle peak cresting below the prior peak, volatility bottom at higher levels, as well as increasing concerns of recession--all bearish on a longer fourth dimension frame. I volition dice on to monitor breadth measures to run across if this scenario is playing out.
* I've heard from multiple sources that this has been a hard trading environment, with pathetic P/L, for many traders. Per yesterday's entry, we're seeing reduced volatility inwards stocks as well as reduced volatility of volatility. In such an environment, induce fails to extend--and becomes to a greater extent than consistent inwards failing to extend. That form of reversal manner is hard for traders wanting to merchandise momentum or trend. I'm non certain many traders explicitly run on adapting to changes inwards volatility regimes. In such cases, sticking to a procedure is really a failure to adapt.
Wednesday, Oct 14th
* Per yesterday's postal service nosotros indeed saw cost consolidation inwards Tuesday's session as well as we've immediately worked off the short-term overbought conditions. According to the Index Indicators stats, at Tuesday's unopen nosotros had nether 19% of SPX stocks unopen higher upwards their three-day moving averages as well as nether 32% unopen higher upwards their five-day averages. In general, especially every bit uptrends mature, I similar to survive a buyer when the bulk of shares autumn below their short-term moving averages as well as lighten upwards when the bulk are short-term stretched as well as rolling over. My leaning is toward the purchase side if nosotros run across selling dry out upwards higher upwards the overnight cost lows.
* Below is an interesting nautical chart that looks at the volatility of the pure volatility measure that I track, with the nautical chart going dorsum to August 17th. Notice how the volatility of volatility spiked during the August reject as well as has since returned nigh levels seen prior to the market's drop. Vol of vol tells us something virtually the stability of cost action, which inwards plow tells us something virtually the participation of marketplace makers. If a marketplace is dominated past times marketplace makers, nosotros oscillate betwixt bid as well as offering as well as bulk cannot displace cost a keen deal. If marketplace makers push clitoris dorsum as well as the gild bulk becomes to a greater extent than sparse, a given unit of measurement of bulk tin give notice deport on cost much to a greater extent than greatly. Interestingly, when vol of vol is inwards its highest quartile since belatedly 2013, the side past times side 4 days inwards the ES futures average a gain of +.34%. When vol of vol is inwards its lowest quartile, the side past times side 4 days average a loss of -.05%. As marketplace cycles mature, nosotros tend to run across a crushing of vol but also of vol of vol. I believe we're seeing a maturation of the acquaint marketplace cycle; if that's the case, nosotros should start out to run across breadth divergences on farther strength. Yesterday's weakness alongside minor caps mightiness survive the starting fourth dimension of that pattern.
Tuesday, Oct 13th
* Last week's punchy postal service on why nosotros merchandise emotionally seems to receive got struck a chord. The hits on the postal service receive got been virtually 4x average as well as it's already dice 1 of the arrive at 10 posts inwards terms of hits. One reader took law-breaking to the linguistic communication as well as style of the post, as well as I understand with that view. One of the things I've learned every bit both psychologist as well as bring upwards is that how you lot deliver a message has every bit much deport on every bit the message itself. But business office of that deport on is saving the punchy style for the most of import messages.
* We had a irksome vacation merchandise yesterday, with rangebound action. One mensurate that helped my trading yesterday was looking at the extremes inwards the NYSE TICK. (I typically expression at one- as well as five-minute readings during the day). If nosotros don't receive got many positive or negative extremes, it agency that institutions but are non active inwards the market. It takes large, handbasket executions to acquire TICK higher upwards +800 or below -800. If you lot don't acquire those extremes early on inwards the morning, you lot tin give notice anticipate a irksome 24-hour interval as well as oftentimes a rangy one.
* As my intermediate term forcefulness nautical chart below shows, nosotros dice on to survive stretched to the upside. This mensurate is a five-day moving average of 5, 20, as well as 100-day highs vs. lows alongside SPX stocks. (Raw information from Index Indicators). In a rigid cycle, this volition arrive at out ahead of price. I noted yesterday that I wasn't thrilled with risk/reward as well as indeed we've pulled dorsum inwards overnight trade. I would non survive surprised to run across farther consolidation near-term, but am non expecting an outright deport move.
Monday, Oct 12th
* The weekend article on "flourishing" is, inwards my view, 1 of the most of import topics inwards psychology broadly as well as trading psychology specifically. By as well as large, traders practise a decent task of keeping themselves out of damaging, negative states of heed as well as body. They don't necessarily brand special efforts to hold themselves inwards optimal states. As a result, nosotros never genuinely sense how good nosotros could perform across many areas of life, including trading.
* This past times week's entries receive got focused on rigid marketplace breadth as well as the favorable implications of high buying strength. That has led to buy-the-dips trading as well as has done good to this point. Breadth continued rigid on Fri with 1274 novel monthly highs, the highest figure inwards a week. (Raw information from the Barchart site). We to a greater extent than oftentimes than non run across pregnant corrections afterward a catamenia of waning breadth. That exactly hasn't been occurring to this point.
* That existence said, I'm non enamored of the risk/reward right here. As the nautical chart below depicts, nosotros receive got come upwards downwardly quite a flake on the Pure Volatility mensurate (volatility per unit of measurement of bulk inwards the ES futures), as well as that has historically led to subnormal returns. We're also stretched to the upside on many of my indicators, which inwards the past times has occurred nigh momentum peaks (not necessarily cost peaks). The put/call ratios receive got come upwards down; all that leads me to believe nosotros could acquire some consolidation early on inwards the week.
* Should nosotros acquire some pullback this week, my leaning would survive to resume the buying strategy. Good short-term pullbacks would survive ones inwards which a bulk of shares unopen below their 3 as well as five-day moving averages as well as where nosotros run across to a greater extent than stocks give sell signals vs. purchase signals on the technical measures I follow, such every bit Bollinger Bands, Parabolic/SAR, as well as CCI. The past times few days we've seen many to a greater extent than purchase signals than sells on those measures, but the divulge of purchase signals tailed off on Friday.
* Yesterday's abrupt rally as well as novel high unopen for this displace fits with the "buy weakness, sell strength" thought from yesterday's posting as well as is consistent with the thought of a marketplace that may receive got topped inwards upside momentum, but non price. It was interesting to run across that nosotros had 609 stocks brand fresh monthly highs yesterday, downwardly from the 1274 novel highs terminal Friday. Such breadth divergences tin give notice survive expected to dice on if nosotros indeed receive got made a momentum peak for this cycle. It's when nosotros run across pregnant expansion of stocks/sectors making fresh short-term lows that nosotros demand to seriously consider the market's downside.
* Meanwhile, volatility continues to survive crushed with VIX closing roughly 16, downwardly from roughly 27 belatedly inwards September. My pure volatility mensurate also hitting novel lows as well as is getting unopen to levels that are associated with subnormal upside returns. It has been challenging for traders to suit to the reduced volatility, which punishes trading on momentum as well as rewards patient, counter-trend entry execution as well as quick, tactical profit-taking.
* Influenza A virus subtype H5N1 projection I volition start out this weekend is gauging the expectable size as well as duration of moves based upon volatility regimes. My sense is that such an approach could aid making trading far to a greater extent than flexible as well as adaptive than it currently is for many traders.
Thursday, Oct 15th
* So here's my query of the day: Why practise thus many bastions of capitalism pursue alter via centralized planning? From large corporations to finance firms, capitalist enterprises increasingly rely on key planning every bit they grow. Indeed, if countries ran their economies the way many companies run their businesses, we'd sentiment them every bit communist/socialist bureaucracies hopelessly out of date. We extol "leadership" inwards corporations as well as large organizations; maybe that's how dictators retrieve of themselves inwards centrally planned economies.
* Influenza A virus subtype H5N1 adept purchase merchandise early on inwards the 24-hour interval reversed on the WalMart word as well as stocks traded off through much of the session yesterday, though they've recovered inwards overnight trading. This dorsum as well as forth is what we'd hold off if nosotros late hitting a momentum peak for the electrical flow cycle as well as immediately are engaged inwards a topping process. In that scenario, buying weakness as well as selling forcefulness makes sense. Yesterday closed with farther weakness, every bit nosotros had 348 stocks brand novel monthly highs as well as 261 register fresh monthly lows. That novel lows figure is the highest we've seen since Oct 2nd.
* The weak retail sales divulge as well as WalMart word highlights what seems to survive a changed story: instead of economical increment justifying a Fed hike, there's increasing verbalize of economical weakness as well as no hike this year. If the topping out scenario holds, thus we're seeing a cycle peak cresting below the prior peak, volatility bottom at higher levels, as well as increasing concerns of recession--all bearish on a longer fourth dimension frame. I volition dice on to monitor breadth measures to run across if this scenario is playing out.
* I've heard from multiple sources that this has been a hard trading environment, with pathetic P/L, for many traders. Per yesterday's entry, we're seeing reduced volatility inwards stocks as well as reduced volatility of volatility. In such an environment, induce fails to extend--and becomes to a greater extent than consistent inwards failing to extend. That form of reversal manner is hard for traders wanting to merchandise momentum or trend. I'm non certain many traders explicitly run on adapting to changes inwards volatility regimes. In such cases, sticking to a procedure is really a failure to adapt.
Wednesday, Oct 14th
* Per yesterday's postal service nosotros indeed saw cost consolidation inwards Tuesday's session as well as we've immediately worked off the short-term overbought conditions. According to the Index Indicators stats, at Tuesday's unopen nosotros had nether 19% of SPX stocks unopen higher upwards their three-day moving averages as well as nether 32% unopen higher upwards their five-day averages. In general, especially every bit uptrends mature, I similar to survive a buyer when the bulk of shares autumn below their short-term moving averages as well as lighten upwards when the bulk are short-term stretched as well as rolling over. My leaning is toward the purchase side if nosotros run across selling dry out upwards higher upwards the overnight cost lows.
* Below is an interesting nautical chart that looks at the volatility of the pure volatility measure that I track, with the nautical chart going dorsum to August 17th. Notice how the volatility of volatility spiked during the August reject as well as has since returned nigh levels seen prior to the market's drop. Vol of vol tells us something virtually the stability of cost action, which inwards plow tells us something virtually the participation of marketplace makers. If a marketplace is dominated past times marketplace makers, nosotros oscillate betwixt bid as well as offering as well as bulk cannot displace cost a keen deal. If marketplace makers push clitoris dorsum as well as the gild bulk becomes to a greater extent than sparse, a given unit of measurement of bulk tin give notice deport on cost much to a greater extent than greatly. Interestingly, when vol of vol is inwards its highest quartile since belatedly 2013, the side past times side 4 days inwards the ES futures average a gain of +.34%. When vol of vol is inwards its lowest quartile, the side past times side 4 days average a loss of -.05%. As marketplace cycles mature, nosotros tend to run across a crushing of vol but also of vol of vol. I believe we're seeing a maturation of the acquaint marketplace cycle; if that's the case, nosotros should start out to run across breadth divergences on farther strength. Yesterday's weakness alongside minor caps mightiness survive the starting fourth dimension of that pattern.
Tuesday, Oct 13th
* Last week's punchy postal service on why nosotros merchandise emotionally seems to receive got struck a chord. The hits on the postal service receive got been virtually 4x average as well as it's already dice 1 of the arrive at 10 posts inwards terms of hits. One reader took law-breaking to the linguistic communication as well as style of the post, as well as I understand with that view. One of the things I've learned every bit both psychologist as well as bring upwards is that how you lot deliver a message has every bit much deport on every bit the message itself. But business office of that deport on is saving the punchy style for the most of import messages.
* We had a irksome vacation merchandise yesterday, with rangebound action. One mensurate that helped my trading yesterday was looking at the extremes inwards the NYSE TICK. (I typically expression at one- as well as five-minute readings during the day). If nosotros don't receive got many positive or negative extremes, it agency that institutions but are non active inwards the market. It takes large, handbasket executions to acquire TICK higher upwards +800 or below -800. If you lot don't acquire those extremes early on inwards the morning, you lot tin give notice anticipate a irksome 24-hour interval as well as oftentimes a rangy one.
* As my intermediate term forcefulness nautical chart below shows, nosotros dice on to survive stretched to the upside. This mensurate is a five-day moving average of 5, 20, as well as 100-day highs vs. lows alongside SPX stocks. (Raw information from Index Indicators). In a rigid cycle, this volition arrive at out ahead of price. I noted yesterday that I wasn't thrilled with risk/reward as well as indeed we've pulled dorsum inwards overnight trade. I would non survive surprised to run across farther consolidation near-term, but am non expecting an outright deport move.
Monday, Oct 12th
* The weekend article on "flourishing" is, inwards my view, 1 of the most of import topics inwards psychology broadly as well as trading psychology specifically. By as well as large, traders practise a decent task of keeping themselves out of damaging, negative states of heed as well as body. They don't necessarily brand special efforts to hold themselves inwards optimal states. As a result, nosotros never genuinely sense how good nosotros could perform across many areas of life, including trading.
* This past times week's entries receive got focused on rigid marketplace breadth as well as the favorable implications of high buying strength. That has led to buy-the-dips trading as well as has done good to this point. Breadth continued rigid on Fri with 1274 novel monthly highs, the highest figure inwards a week. (Raw information from the Barchart site). We to a greater extent than oftentimes than non run across pregnant corrections afterward a catamenia of waning breadth. That exactly hasn't been occurring to this point.
* That existence said, I'm non enamored of the risk/reward right here. As the nautical chart below depicts, nosotros receive got come upwards downwardly quite a flake on the Pure Volatility mensurate (volatility per unit of measurement of bulk inwards the ES futures), as well as that has historically led to subnormal returns. We're also stretched to the upside on many of my indicators, which inwards the past times has occurred nigh momentum peaks (not necessarily cost peaks). The put/call ratios receive got come upwards down; all that leads me to believe nosotros could acquire some consolidation early on inwards the week.
* Should nosotros acquire some pullback this week, my leaning would survive to resume the buying strategy. Good short-term pullbacks would survive ones inwards which a bulk of shares unopen below their 3 as well as five-day moving averages as well as where nosotros run across to a greater extent than stocks give sell signals vs. purchase signals on the technical measures I follow, such every bit Bollinger Bands, Parabolic/SAR, as well as CCI. The past times few days we've seen many to a greater extent than purchase signals than sells on those measures, but the divulge of purchase signals tailed off on Friday.
