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The Macro View: Amigos Ride On

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By 947051 from PixabayThe Macro View: Amigos Ride On


As symbolized by the 3 Amigos, the macro backdrop is riding on to its destiny. That forward destiny is a top in stocks vs. gold (Amigo 1), a rise in long-term interest rates to potential if not probable limits (Amigo 2) and an end to the yield curve’s flattening trend (Amigo 3).

When our zany friends complete the journey, big changes are likely in the macro markets.

Let’s take a checkup on each Amigo and consider some implications as well.

Amigo 1: Stocks vs. Gold

Using the S&P 500 as an example, stocks/gold ratios are still trending up on the daily time frame.

spx/gold

The big picture allows for higher levels before this Amigo stops riding and the party crashes. Stocks vs. gold is a confidence indicator and confidence is intact and growing. In this case, confidence = mania. This is consistent with our ‘inflation trade’ theme since it is the US stock market that benefited first and most intensely from the Fed’s years of non-stop monetary fire hoses (ZIRP & QEs 1-3 with a side of Op/Twist).

spx/gold

Amigo 2: Long-term Interest Rates

Again sticking with the US for the example, 10yr and now even 30yr yields are gaining more attention out there among market analysts and media. This is 100% on track with our theme that by the time the 10yr hits 2.9% and the 30yr 3.3%, the sound of “BOND BEAR MARKET!!!!” will be deafening.

Here is the bullish 10yr yield. The daily pattern targets 2.9% and…

We have a handy cross reference by the long-term monthly chart. TNX is creeping through potential limiter #1, which is the EMA 110 (solid red line) with the EMA 140 out ahead around 2.9%. I like the target confluence by these two different time frames and views. If the 10yr is to move higher, that would come with ever increasing media noise about the new age of rising yields (and inflation).

Even the 30yr, which as been lagging, has been making a move of late and is in a bottoming pattern similar to the one that the 10yr has broken out of.

tyx

But the pattern above has not yet broken out like the 10yr and so, this is either a negative divergence or the 30 is going to play some catch up if it is going to go for its limiter at the monthly EMA 100. The question is, has Bill Gross already made a serious contrary indicator signal or is he going to be anointed the “Bond King” as the 30yr rises to the limiter? See: A Gross Signal Upcoming. His media-bellowed call was incredibly unfortunate in early 2011. Maybe this time he gets to look like a genius temporarily.

tyx

Amigo 3: The Yield Curve

The daily view of the 10yr-2yr is in a downtrend and flattening.

yield curve

The flattening goes with the macro boom that is taking place. The curve is far from inversion, but contrary to popular belief, it is under no obligation to invert before the macro turns. Then again, a downtrend is a downtrend as long as it is in force… and in force it certainly is.

yield curve

Bottom Line

Amigo 1 (Stocks vs. Gold): Stocks continue to trend upward vs. gold and this implies ongoing confidence in the boom. The last thing on players’ minds right now is playing defense. Insofar as gold has been strong, which we’d anticipated for this time frame for all the reasons (seasonal, CoT, ‘inflation trade’, etc.) belabored to this point, it’s real bull market will feature an end to the party in the risk ‘on’ stuff. Right now, it’s still party on Garth.

Amigo 2 (Long-Term Interest Rates): The rising interest rates story is gaining traction in the wider media. We have expected long-term yields to rise with the dynamic ending phase of the boom. The noise could become intense and set up a great contrary play as the 10yr and 30yr yields come to their long-term limits (if decades of uninterrupted history as a good guide) and Bill Gross – the Bond King – reclaims his throne.

Amigo 3 (10yr-2yr Yield Curve): It’s simple, it declines with a boom and it rises with a bust. We are in a boom. Risk is high and rising every week, but the trend is the trend for now.

How to play it? I am sticking to a regimen of deploying capital on opportunity, making sure to take ample profits, staying balanced (for example, currently balancing gold sector vs. broad market and favored commodity areas) and always being aware of cash levels. 

By Gary Tanashian 


Gary Tanashian

Gary Tanashian
http://www.nftrh.com

Disclaimer:http://www.nftrh.com does
not recommend that any trading or investment positions be taken based on views
expressed on this site. If you speculate or invest it is suggested that you
consult a financial advisor qualified in your area of interest.

Copyright © 2005-2017 Gary Tanashian

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Published at Fri, 19 Jan 2018 14:48:33 +0000

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Court Dismisses Lawsuit Against Chinese Cryptocurrency Exchanges

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By igorovsyannykov from PixabayCourt Dismisses Lawsuit Against Chinese Cryptocurrency Exchanges


According to CnLedger, a trusted news source within the Chinese cryptocurrency market, and local media outlets, Beijing Haidian District Court has dismissed a lawsuit filed against major cryptocurrency exchanges by a local investor.

A Chinese investor by the name of Wang accused local cryptocurrency exchanges of being responsible for the loss he had made while trading cryptocurrencies such as bitcoin. Wang claimed that he had lost $62,000 in the Chinese cryptocurrency market and filed a lawsuit against local trading platforms requesting his funds to be refunded in Chinese yuan.

Beijing Morning Post reported that Wang claimed “Bitcoin does not exist, according to Marxism it has no value and therefore the previous trades should be invalidated,” and that Wang requested the cryptocurrency exchanges which he used to trade bitcoin to cover the $62,000 loss he had made.

After careful consideration of the current state of the Chinese cryptocurrency exchange market and regulations that were in place during the time the plaintiff was trading cryptocurrencies, Beijing Haidian District Court dismissed the case, reaffirming that people have the right to freely participate in bitcoin or cryptocurrency trading at their own risk.

Emphasizing that traders must take responsibility for their investments and the risk involved in trading any asset or commodity, Beijing Haidian District Court stated, “[since] there are no laws that forbid the investment and trading of bitcoin, people have the right to freely participate in bitcoin tradings at their own risk.”

The initial ruling of Beijing Haidian District Court led cryptocurrency investors and businesses within the Chinese market to demonstrate a positive stance in regards to the regulatory roadmap of the Chinese government concerning cryptocurrencies. Although the Chinese government strictly enforced a cryptocurrency trading ban in September 2017, many investors within the Chinese market remained optimistic that the government would soon resume trading.

Many traders that moved to the Hong Kong over-the-counter (OTC) market following the cryptocurrency trading ban stated that strict regulations cannot prevent Chinese investors from trading cryptocurrencies due to offshore bank accounts. With the aforementioned bank accounts, local investors can easily migrate to other major markets such as Japan and Hong Kong to continue investing in the cryptocurrency market.

During an interview with South China Morning Post, New York University finance professor David Yermack explained that the Chinese government has banned cryptocurrency trading because local authorities see it as a threat against the country’s existing financial system. Yermack explained:

“They didn’t ban bitcoin, but banned exchanges from trading for speculative purposes. China has a long-term concern about capital flight. It has a lot to do with problems in the Chinese financial system, that they’re worried about this as a competitive threat in some way.”

This month, the Chinese government solidified its opposing stance on the cryptocurrency trading market by requesting banks to report to the People’s Bank of China (PBoC), the country’s central bank, if any sign of cryptocurrency trading is unraveled. Chinese financial authorities also asked commercial banks within its regulated finance industry to refrain from processing transactions for bank accounts primarily used for trading in the OTC cryptocurrency market.

An official document released by the PBoC translated by SCMP read:

“Every bank and branch must carry out self-inspection and rectification, starting from today. Service for cryptocurrency trading is strictly prohibited. Effective measures should be adopted to prevent payment channels from being used for cryptocurrency settlement.”

Banks should enhance their daily transaction monitoring, and the timely shut down of the payment channel once they discover any suspected trading of cryptocurrencies.

By Daniel Dalton via Crypto Insider


Crypto Insider is financed by MIK Group of Companies based in Dubai. Address: 1901 South Tower, Emirates Financial Towers, DIFC, Dubai, UAE Telephone: +971 4 388 7619 MIK is a UAE based group with UK origins that has a wide presence globally predominantly within the business consulting and financial solutions sector.

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Published at Fri, 19 Jan 2018 14:54:20 +0000

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Crypto Stocks Plummet as Currencies Sell Off

Crypto Stocks Plummet as Currencies Sell Off

By Justin Kuepper | January 17, 2018 — 5:39 PM EST

Cryptocurrencies experienced a sharp sell-off over the past couple of days following reports that China and South Korea were cracking down on trading activity. According to Bloomberg, Chinese regulators are targeting online platforms and mobile apps that offer exchange-like services. South Korean regulators also attempted to tighten control over cryptocurrency, according to The Wall Street Journal, but there has been a widespread backlash among its citizens.

The sell-off prompted many crypto-related stocks to move sharply lower over the past couple of sessions, including Riot Blockchain, Inc. (RIOT), which is trading about 20% lower over the past two days. While some crypto-related stocks are more focused on blockchain technology, the sell-off has affected all areas of the market. The positive news is that there seems to have been a modest rebound and a reduction in price declines in recent hours. (See also: Is the Cryptocurrency Bubble More Like Housing or Dotcom?)

Technical chart showing the performance of Riot Blockchain, Inc. (RIOT) stock

From a technical standpoint, Riot Blockchain stock broke down from the 50-day moving average this week to its lowest levels since late last year. The relative strength index (RSI) appears moderately oversold at 41.01, while the moving average convergence divergence (MACD) remains in a bearish downtrend dating back to late December. The overall trend remains lower, with near-term support at around $15.00 at reaction lows.

Traders should watch for a breakdown from key support levels at around $15.00 to S1 support at $12.53 or the 200-day moving average at $7.81. If the stock rebounds from these support levels, traders should see a move higher to retest the pivot point at $29.37 or trendline resistance at around $40.00. However, the bearish MACD and falling RSI readings suggest that traders should maintain a bearish bias for the time being. (For more, see: What’s Behind the Latest Cryptocurrency Price Slump?)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

Published at Wed, 17 Jan 2018 22:39:00 +0000

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How to Know If This Rally Will Continue for Two More Months

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How to Know If This Rally Will Continue for Two More Months

By: Chris Vermeulen | Mon, Jan 15, 2018


We have focused our current effort on the Transportation Index, the US Majors, and the Metals Markets.  The Transportation Index has seen an extensive rally (+19.85%) originating near November 2017.  This incredible upside move correlates with renewed US Tax policies and Economic increases that are sure to drive the US Equity market higher throughout 2018.

In theory, the Transportation Index is a measure of economic activity as related to the transportation of goods from port to distribution centers and from distribution centers to retail centers.  The recent jump in the Transportation Index foretells of strong economic activity within the US for at least the next 3 months.

One could, and likely should watch the Transportation Index for any signs of weakness or contraction which would indicate an economic slowdown about to unfold.  In order to better understand how the Transportation Index precedes the US Equity markets by 2~5 months, let’s compare the current price activity to that of 2007~08.

This first chart is the current Transportation Index and shows how strong the US economic recovery is in relation to the previous year (2017).  As the US economy has continued to strengthen and open up new opportunities, the Transportation Index has related this strength by increasing by near +20% in only a few short months.  This shows us that we should continue to expect a moderate to strong bullish bias for at least the first quarter of 2018 – unless something dramatic changes in relation to economic opportunities.

Current Transportation Index Chart

In comparison, this chart (below) is the Transportation Index in 2007~08 which reacted quite differently.  The economic environment was vastly different at this time.  The US Fed had raised rates consecutively over a two year period leading up to a massive debt/credit crisis.  At the same time, the US had a Presidential Election cycle that saw massive uncertainty with regards to regulation, policies and economic opportunities.  Delinquencies as related to debt had already started to climb and the markets reacted to the economic alarms ringing from all corners of the globe.  The Transportation Index formed a classic “rollover top” formation in late 2007 and early 2008 well before the global markets really began to tank.

2007~08 Transportation Index Chart

Our analysis points to a very strong first quarter of 2018 within the US and for US Equities.  We believe the economic indicators will continue to perform well and, at least for the next 3 months, will continue to drive strong equity growth.  We do expect some volatility near the end of the first Quarter as well as continued 2~5% price volatility/rotation at times.  There will be levels of contraction in the markets that are natural and healthy for this rally.  So, be prepared for some rotation that could be deeper than what we have seen over the last 6 months.

In conclusion, equities are this point are overpriced, and overbought based on the short-term analysis. We should be entering slightly weaker time for large-cap stocks over the next couple weeks before it goes much higher. Because we are still in a full out bull market, Dips Should Be Bought and we will notify members of a new trade once we get another one of these setups.

By Chris Vermeulan


Chris Vermeulen

Chris Vermeulen
President of AlgoTrades Systems
www.TheGoldAndOilGuy.com

10126 Hwy 126 East, RR#2
Collingwood, ON, L9Y 3Z1

Chris Vermeulen

Chris Vermeulen, founder of AlgoTrades Systems., is an internationally recognized
market technical analyst and trader. Involved in the markets since 1997.

Chris’ mission is to help his clients boost their investment performance while
reducing market exposure and portfolio volatility.

Chris is also the founder of TheGoldAndOilGuy.com, a financial education and
investment newsletter service. Chris is responsible for market research and
trade alerts for of its newsletter publication.

Through years of research, trading and helping thousands of individual investors
around the world. He designed an automated algorithmic trading system for the
S&P 500 index which solves his client’s biggest problem related to investing
in the stock market: the ability to profit in both a rising and falling market.

AlgoTrades’ automated trading systems allows
individuals to investing using either exchange traded funds or the ES mini
futures contracts. It is supported by many leading brokerage firms including:

– Interactive Brokers
– Trade MONSTER
– MB Trading
– OEC OpenECry
– The Fox Group
– Dorman Trading
– Vision Financial

He is the author of the popular book “Technical
Trading Mastery – 7 Steps To Win With Logic
.” He has also been featured
on the cover of AmalgaTrader Magazine, Futures Magazine, Gold-Eagle, Safe
Haven,The Street, Kitco, Financial Sense, Dick Davis Investment Digest and
dozens of other financial websites. His list of personal and professional
relationships approaches 25,000, people with whom he connects and shares
is market insight with out of his passion for trading.

Chris is a graduate of Seneca College where he specialized in business operations
management.

Chris enjoys boating, kiteboarding, mountain biking, fishing and has his ultralight
pilots license. He resides in the Toronto area with his wife Kristen and two
children.

Copyright © 2008-2017 Chris Vermeulen

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Published at Mon, 15 Jan 2018 14:28:39 +0000

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Gold Miners’ Status Updated

Gold Miners’ Status Updated

By: Gary Tanashian | Mon, Jan 15, 2018


After a positive year-end with the expected precious metals rally we noted on Dec. 31, in NFTRH 480:

“With HUI dwelling just under the 195 resistance parameter, a pullback can come at any time. But there are enough other factors still in line to expect a resumed rally after any grind at resistance comes into play.”

and then on Jan. 7, in NFTRH 481:

“What HUI actually did was immediately push up into the 195-200 resistance zone, become overbought and hang around there all week in consolidation. Here is the noisy daily chart once again. Let’s focus on how the most recent RSI oversold condition in December did indeed spring a tradable rally. As chartists saw the October/November shelf of support break down and then the July lows breached the call was ‘BEARISH!’ far and wide. Shorts were taken on the say so of people who know how to look laterally and see one thing lower than the other thing.

hui

Yes, that is a swipe at charting in a vacuum. There were other things in play like sentiment, seasonals and a rapidly improving Commitments of Traders. The other thing we had going for us was a backlog of experience. Simply as a human (as opposed to a chart reader) I’d seen trap door washout whipsaws in this sector all too often. In 1st half December, the bottom was in.

While my gut says there is more rally to come, we are at the ‘bounce’ target of 195-200 and traders who do not care about scouting new bull markets or the like, should have taken profits in that zone. I simply took a few profits, but hold positions still. Huey could test the SMA 200 (black) and fill the gap (blue shaded oval above) and possibly test the green dashed support line before another leg up if another leg up is coming.”

We have been on this rally since chartists far and wide sounded the alarm on the false breakdown and whipsaw that cleaned out the sector in mid-December. See December 15’s Amid Bad Fundamentals Gold Sector Rally May Have Begun.

The plan had been for a pullback to shake the tree and that is exactly what we got, to the noted green dashed support line. While suggesting pure traders take profits at the initial target (195-200) I had done only very minor profit taking before the pullback and as noted in the Trade Log, was buying during and just after the hit of the dashed support line.

Of course, HUI is just a rough guide. The individual stocks I’ve bought and those reviewed in NFTRH have presented their own opportunities in their own ways. Anyway, HUI makes a good – if blunt – guide for the sector. Here is the above daily chart updated. Today confirms the view that the sector would have another leg up in January.

hui

Let’s look at the longer-term ‘perspective’ views that we have kept at the forefront in NFTRH.

The monthly chart has for 1.5 years now been instructing that the chop and grind after the summer of 2016 is a consolidation to the impulsive leg up in the first half of that year. Everybody got aboard back then and it happened with too much force and momentum… and it happened amid badly deteriorating fundamentals! This flag or right side inverted shoulder had a job to do and that was to kill everybody’s spirits. But through the endless drudgery we have noted all along the way in NFTRH that it appears to be a bullish consolidation.

hui

Another prospective big picture is of the HUI/Gold ratio. We have been watching this pattern form since the initial rally blew out in mid-2016 as well. Can you imagine the bludgeoning over eager and/or committed gold bugs have taken, and the frustration of overly skittish ones who got flushed in December? Meanwhile, nominal HUI and its ratio to gold simply lumber on. Markets move slower than our hyper kinetic brains and they don’t care what we think we know on any given daily or weekly basis (aided by the media’s hysterical inputs, no less).

hui/gold ratio

Ah, but all of the above are just charts. The whole reason we did not get shaken out of the rally is because there are other short-term factors involved. Those were seasonal, sentiment and CoT related. As for the most important aspect, the macro fundamentals, a quick look at some gold ratio charts in my list tells me that things are improving there. But due to the big macro party the improvement is not yet substantial. We’ll update the sector view in NFTRH 482 along with quality miners and explorers.

For now, the precious metals are rising with the ‘inflation trade’. When the hysterics fade and inflation traders are one day sent to walk the plank then it will be time for the real distinct bull market in the PMs, probably after a flush of some degree with said inflation trade.* There is a rhythm in play and the majority will not dance to it.

Meanwhile, Garth Gary parties on with the rest of ’em.

By Gary Tanashian


Gary Tanashian

Gary Tanashian
http://www.nftrh.com

Disclaimer:http://www.nftrh.com does
not recommend that any trading or investment positions be taken based on views
expressed on this site. If you speculate or invest it is suggested that you
consult a financial advisor qualified in your area of interest.

Copyright © 2005-2017 Gary Tanashian

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

Published at Mon, 15 Jan 2018 14:31:12 +0000

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One Easy Way to Enhance Your Market Vision

 

One Easy Way to Enhance Your Market Vision

I’ve spent some time this morning reviewing websites and Twitter feeds that are market related.  There are some really good things out there, and there are some really bad ones.

The broadest generalization I can make is that the awful sites are ego based.  They focus on the calls made by the guru, the services offered by the expert, etc.  Generally there are one or two pet ideas that are offered as the solution to trading and, of course, the writer just happens to be the go-to person for those key skills.

The valuable sites are truly idea based.  They don’t just make market calls; they illustrate reasoning that goes behind the views.  A good word for these sites is that they are evidence-based.  They educate and illuminate.  They are not primarily pitching the writer.

Consider the Market Anthropology site.  You don’t have to go too far into your reading to find interesting perspectives on interest rates and the big moves in a few asset classes.

Or how about Jeff Miller’s Dash of Insight site, with well-documented perspectives on market sentiment and changes in economic conditions?

Take a look at Chris Ciovacco’s site and its insights on market valuation and taking an evidence-based approach to charts and market views.

Note that these are not the most trafficked Twitter feeds and trading sites.  The most trafficked restaurants are fast-food joints, not gourmet eateries; shopping mall retailers, not designer boutiques.  Those who seek quality are generally not part of the traffic jams.

Which sets up a great way to enhance your market vision!

Find Market Anthropology, Jeff Miller, and Chris Ciovacco (or your favorite source of ideas) on Twitter or StockTwits and then look up their followers.  See who follows quality people who are relevant to your trading–and you’re likely to discover quality people relevant to your trading!  The chances are good that, in tapping into the networks of people you respect and admire, you’ll discover others who are worthy–and who can feel your head.

Imagine adding just two fresh sources a week from the networks of people you respect.  Over the course of a year, you will have greatly enhanced your vision.  Building the right network online is a great way of cultivating a rich cognitive network–and that’s a great way of finding the creative ideas that go beyond consensus views.

.

Published at Sun, 14 Jan 2018 15:18:00 +0000

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Value Trap

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Value Trap

What is a ‘Value Trap’

A value trap is a stock that appears to be cheap because the stock has been trading at low valuation metrics such as multiples of earnings, cash flow or book value for an extended time period. Such a stock attracts investors who are looking for a bargain because they seem inexpensive relative to historical valuation multiples of the stock or relative to the prevailing overall market multiple. The trap springs when investors buy into the company at low prices and the stock continues to languish or drop further.

BREAKING DOWN ‘Value Trap’

Successful in prior years with rising profits and a healthy share price, a company can fall into a situation where it is unable to generate revenue and profit growth due to shifts in competitive dynamics, lack of new products or services, rising production and operating costs, or ineffective management. For the investor who is used to seeing a certain valuation of the stock, a seemingly “cheap” price becomes interesting. However, it becomes a value trap to the investor if no material improvements are made in the company’s competitive stance, its ability to innovate, its ability to contain costs, and management by the executives.

As with any investment decision, thorough research and evaluation is recommended before investing in any company that appears cheap on the basis of conventional valuation metrics.

Is it a Value Trap?

An industrial company whose stock has been trading at 10x earnings for the past six months, compared to its trailing 5-year average of 15x.

A media company whose valuation has ranged from 6x-8x EV/EBITDA for the past 12 months, compared to its trailing 10-year average of 12x.

A European bank whose valuation has been below 0.75x price-to-book for the past two years, compared to a 8-year average of 1.20x.

Published at Sun, 14 Jan 2018 06:53:00 +0000

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When Your Passion Becomes Your Poison

 

A while back, I asked the question:  Does your trading psychology have a dark side?
 
It’s an important question.  So many times, it’s not our weaknesses that trip us up, but the misdirection of our strengths.
 
Consider the motivated, eager, passionate trader.  He becomes so pumped up that he pounces on the first “setup” or idea to come his way, only to lose meaningful money minutes and hinder his subsequent efforts.  That very passion has become his poison.  Enthusiasm, taken to an extreme and not directed, breeds impulsivity and overtrading.
 
The risk prudent trader can become risk averse.
 
The active trader can become overactive and distracted.
 
The competitive trader can become frustrated and unfocused.
 
The creative trader can flit from one idea to another, one system to another, never developing expertise.
 
The disciplined trader can become rigid and unable to adapt to a change in the market.
 
In all these cases, strengths can become vulnerabilities.
 
This helps explain why so many common approaches to trading psychology don’t work.  When we try to reduce or eliminate our problems, we find it difficult to stick to those efforts because those problems spring from our strengths!  We naturally gravitate toward what we do well and what speaks to us, so it’s not surprising that we find ourselves repeating problems despite advice to the contrary.
 
So how do we use our strengths and ensure we don’t abuse them?  The key principle to keep in mind is that we best channel our strengths by cultivating their opposing, balancing qualities–and then integrating the two.  The more we draw upon a single strength, the more we need to develop a balancing strength.  A good example would be the aggressive trader.  He or she reaches a new level of development by blending patience with aggression.  The blending of the balancing strength–patience–with the original strength creates a new, higher-level capacity.  The potentially crazed warrior becomes a self-controlled, lethal sniper.
 
Yet another example of using a balancing quality to channel a strength would be for the introverted, analytical researcher to develop a social network and identify when positioning runs counter to tested models.  The blending of the research focus and the ability to read sentiment creates an entirely new opportunity set, where it becomes possible to take advantage of situations where the crowd leans the wrong way.
 
Notice in these examples, by cultivating a balancing strength and integrating it with a strength and passion we already possess, we create something new.  We create opportunity.  Strengths only have a dark side when they are overutilized and unbalanced.  Cultivating balancing strengths can literally take our game–personally and professionally–to new levels.
 
.

Published at Fri, 12 Jan 2018 11:41:00 +0000

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Bets on U.S. inflation heat up in bond market

Bets on U.S. inflation heat up in bond market

NEW YORK (Reuters) – More investors are favoring U.S. bonds that profit from a pickup in inflation as the global economy gathers momentum with oil and other basic commodity prices recently hitting multi-year highs.

As a result, market forces in key economies and efforts by their policymakers might finally be aligning to lift inflation to 2 percent, a level the Federal Reserve and its counterparts in the euro zone and Japan desire but have failed to see for years, analysts and investors said.

If U.S. inflation hits that elusive level, Treasury Inflation Protected Securities could score solid gains in 2018, producing higher returns than regular U.S. government bonds.

“There’s global synchronized economic growth. Inflation is heading upward,” said Com Crocker, senior inflation analyst at New Century Advisors based in Chevy Chase, Maryland.

That upbeat view spurred $465.50 million of cash into funds that focus on TIPS in the week ended Jan. 3, bringing their total assets to an all-time peak of $67.39 billion, according to Lipper, a Thomson Reuters mutual fund research unit.

Last week’s net inflows into TIPS mutual and exchange-traded funds were the most in 10 months.

In the United States, inflation could be on the cusp of breaking higher, with passage of the biggest overhaul of the U.S. tax code in 30 years in December supporting bets of at least a near-term boost to business investment and hiring.

Adding to that are expectations of further weakness in the dollar, just off its worst annual performance since 2003, which would make foreign-made goods more expensive in the United States.

Meanwhile in the euro zone, signs of regional inflation gathering momentum has stoked speculation the European Central Bank might not renew its stimulative 2.55 trillion euro bond purchase program when it expires in September.

And in Japan the central bank scaled back its bond purchases on Tuesday on signs of improving domestic growth, sparking a global bond market selloff on fears the Bank of Japan may pare back stimulus later this year.

These factors augur the case to owning TIPS, but the lack of U.S. wage acceleration despite the lowest jobless rate in 17 years has curbed a wholehearted embrace of the $1.3 trillion sector.

“There’s no pressure from wages,” said Fred Marki, portfolio manager at Western Asset Management Co. in Pasadena, California. “It’s not enough to create excess demand with rising inflation.”

BOND MARKET SELLOFF

Another reason against loading up on TIPS is the global selloff in bonds so far in 2018, which intensified on Wednesday following a Bloomberg report that China might slow or stop its purchases of U.S. Treasuries in a review of its foreign exchange holdings.

China is the biggest foreign holder of U.S. government debt, with holdings totaling $1.19 trillion as of October.

Still some investors are betting on more gains in TIPS as the yield gap between 10-year TIPS and regular 10-year Treasuries broke 2 percent last week for first time since March. It reached 2.05 percent on Wednesday.

This measure of investors’ inflation expectations in the next decade has risen steadily from 1.66 percent last June amid surges in the price of oil and other commodities.

On Wednesday, U.S. crude futures reached a three-year peak above $63 a barrel on tightening supply, while zinc hit a decade-plus high on Tuesday

TIPS’ APPEAL

While more investors see TIPS as an inflation hedge, with an improving economic backdrop some analysts see stocks, corporate bonds and other riskier investments producing higher returns than TIPS.

“We are thinking of adding a bit of TIPS. It’s not a bad place for fixed income investors, but a better place to beat inflation would be equities,” said Andrew Richman, director of fixed income with SunTrust Advisory Services in Jupiter, Florida.

In 2017, TIPS produced a 3.0 percent total return, a tad better than 2.3 percent for standard Treasuries. Both trailed Wall Street’s record run with the S&P 500 racking up a 19.4 percent increase, the strongest since 2013.

Much of TIPS’ gains stemmed from rising inflation expectations. TIPS yields or “real” yields, have held in a tight range since late September.

The 10-year TIPS yield was last at 0.55 percent on Wednesday, up over 3 basis points on the day.

DIFFERENT THIS TIME?

Since 2012, U.S. inflation has tended to pick up at the start of the year only to fade due primarily to a seasonal decline in oil prices.

The year-over-year increase on the Fed’s preferred inflation gauge, the core rate of personal consumption expenditure, has not topped 2 percent since February 2012. It was running at 1.5 percent in November.

The Consumer Price Index, which measures a broader basket of goods and services, ran at 2.2 percent on a year-over-year basis in November.

TIPS principal and interest payments are adjusted against the CPI.

The Labor Department will release its December CPI report at 8:30 a.m. (1330 GMT) on Friday. Analysts polled by Reuters forecast the CPI likely rose 0.2 percent in December for a year-over-year increase of 2.1 percent.

Even if CPI grows modestly, it would be enough to entice investors.

“TIPS look attractive as a form of insurance,” Western Asset’s Marki said. “The demand for TIPS will remain.”

Reporting by Richard Leong; Editing by Daniel Bases and Chizu Nomiyama

Published at Wed, 10 Jan 2018 18:18:57 +0000

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Top Ten Crypto Exchanges For Traders

Top Ten Crypto Exchanges For Traders

by THE MOLE

This is the third installment of an ongoing educational series that will cover the nuts and bolds behind crypto currencies as well as the skills and knowledge required in trading this new asset class successfully over the long term.

In our previous installment we covered a comprehensive list of requirements and concerns aimed at pre-qualifying any crypto exchange prior to opening an account. All that information may be a bit overwhelming so today we’ll be going through a list of the most popular exchanges out there and compile a summary report for each of them.

Now let’s remember that, as traders, our requirements are slightly different from that of a person who occasionally buys crypto currency for ideological or curiosity reasons and then holds them (HODL in crypto lingo) for an extended amount of time. For example while a lax KYC policy may appear to be a major plus to someone bent on stashing or transporting some coins anonymously, it is a negative for us in that we want to make damn sure that all exchange participants have been fully vetted and are prepared to cover the other side of our trades.

Another key requirement I touched upon last time was data and API access, which not only will allow us to take advantage of proper technical and quantitative analysis, but further down the line will also enable us to design automated crypto trading systems. To that end any exchanges that merely permit access via proprietary web based means are effectively disqualified. With all that said, let’s dive right in:

Top 10 Crypto Exchanges

I took this snapshot over at bitcoinity but had to shift around a bunch of rows as they list some exchanges based on currencies, which in this context we don’t care about as most exchanges support Dollar based accounts. Which means that some of the trading volumes are incomplete, so head over to bitcoinity to get full story and full stats.

The data/API information listed in the summary reports below relates to the ability to access remote services via a trading platform such as NinjaTrader, Multicharts, TradeStation, etc. or APIs like ccxt and others. You will find that all of the exchanged listed offer at minimum API access (e.g. the ability to submit orders, list your open campaigns, manage your trading account, etc.) which for me was a base requirement for inclusion in our top ten list.

As you are probably aware everything in the crypto universe moves at near light speed, so if you catch this post a few weeks after publishing many of the details below may be obsolete or may have changed. Without further ado:

Bitfinex

With almost 2 million BTC traded each day Bitfinex clearly stands as the top dog of crypto exchanges right now. It’s a great exchange and thus it’s most unfortunate that U.S. citizens practically have been shown the door starting in August of last year (2017). Yes, you can thank burdensome FATCA regulations for that.

BitFinex offers three main functions – it is a pure bitcoin to fiat exchange, a margin trading exchange and a liquidity provider. The platform offers a number of features available that expand the financial positions you can take – for example the ability to short Bitcoin via margin trading.

The exchange also offers a set of other cryptos apart from bitcoin such as Litecoin and Ethereum. Deposits and withdrawals take place via the standard bank transfer means with fees of 0.1% and a minimum of $20. Bitcoin and Litecoin are free.

Unfortunately Bitfinex was hacked on the 3rd of August 2016 and around 120,000 BTC were stolen. However BitFinex takes security seriously and have since moved from a hot wallet cold wallet set up to segregating customer funds where each user has access to their own wallet which they can review on the blockchain.

  • Location: British Virgin Islands
  • Accepting U.S. Clients: NO
  • Offering:
    • Currencies: NEO, BAT, USD, BCH, GNT, ETP, EOS, ETC, FUN, ETH, SAN, QTUM, BTG, DAT, SPK, MNA, RRT, IOTA, ZRX, DASH, TNB, XRP, XMR, EUR, ZEC, YYW, OMG, AVT, QSH, EDO, LTC, SNT, BTC
    • Crosses: AVT/BTC, AVT/ETH, AVT/USD, BAT/BTC, BAT/ETH, BAT/USD, BCH/BTC, BCH/ETH, BCH/USD, BTC/EUR, BTC/USD, BTG/BTC, BTG/USD, DASH/BTC, DASH/USD, DAT/BTC, DAT/ETH, DAT/USD, EDO/BTC, EDO/ETH, EDO/USD, EOS/BTC, EOS/ETH, EOS/USD, ETC/BTC, ETC/USD, ETH/BTC, ETH/USD, ETP/BTC, ETP/ETH, ETP/USD, FUN/BTC, FUN/ETH, FUN/USD, GNT/BTC, GNT/ETH, GNT/USD, IOTA/BTC, IOTA/ETH, IOTA/EUR, IOTA/USD, LTC/BTC, LTC/USD, MNA/BTC, MNA/ETH, MNA/USD, NEO/BTC, NEO/ETH, NEO/USD, OMG/BTC, OMG/ETH, OMG/USD, QSH/BTC, QSH/ETH, QSH/USD, QTUM/BTC, QTUM/ETH, QTUM/USD, RRT/BTC, RRT/USD, SAN/BTC, SAN/ETH, SAN/USD, SNT/BTC, SNT/ETH, SNT/USD, SPK/BTC, SPK/ETH, SPK/USD, TNB/BTC, TNB/ETH, TNB/USD, XMR/BTC, XMR/USD, XRP/BTC, XRP/USD, YYW/BTC, YYW/ETH, YYW/USD, ZEC/BTC, ZEC/USD, ZRX/BTC, ZRX/ETH, ZRX/USD
  • Data/API:
    • Tick data: YES
      OHLCV data: YES
    • API access: YES
  • Pros:
    • Geared towards traders.
    • Very low fees even for low volume buyers; 0.1% for market makers and 0.2% for market takers.
    • One of the best ways to buy large amounts of bitcoins.
    • Allows lending of fiat or bitcoin to margin traders at interest (but this is risky in light of the hack).
    • Very deep liquidity promotes a price close to fair market rate.
    • Supports several altcoins.
  • Cons:
    • Was recently hacked and has yet to fully compensate all users for their loss
    • Single payment option

 Coinbase/GDAX

Coinbase has extremely good security practices coupled with insurance on deposits. Including that they also have raised over 100 million USD in funding providing them with a solid capital foundation. Over 97% of funds are kept offline in cold storage USB’s or paper wallets. There is two factor authentication on all accounts aswell as other procedures such as SQL injection filters to halt heartbleed bug attacks – they are on top of their game.

Fees for trading were set to zero for a period but now the standard model of paying to take liquidity out of the orderbook is set to 0.25%. Coinbase’s exchange, GDAX, is one of the largest Bitcoin exchanges in the United States. Users can fund their accounts via bank transfer, SEPA, or bank wire. GDAX offers good prices and low fees, but their confusing user interface may initially prove difficult to navigate.

  • Location: United States
  • Accepting U.S. Clients: YES
  • Offering:
    • Currencies: USD, BCH, BTC, LTC, GBP, ETH, EUR
    • Crosses: BCH/USD, BTC/EUR, BTC/GBP, BTC/USD, ETH/BTC, ETH/EUR, ETH/USD, LTC/BTC, LTC/EUR, LTC/USD
  • Data/API:
    • Tick data: NO
      OHLCV data: YES
    • API access: YES
  • Pros:
    • Some of the lowest fees available for US and EU customers
    • Possible to buy bitcoins for 0% fees at GDAX
    • Decent data download speed.
  • Cons:
    • User interface is confusing for first time buyers.
    • Small number of crypto currencies offered.
    • No tick data via API access.
    • Sending bitcoins directly from GDAX to any legally-questionable site may result in closure of your account. Not sure that’s really a con but keep it in mind.
    • Deposits have to be made through your Coinbase account.

 Bitstamp

Bitstamp is one of the most popular fiat to Bitcoin exchanges. Tracing its beginnings to the first generation of exchanges, Bitstamp provides their customers with an easy to use, secure and reliable service since 2011.

Bitstamp is the first major bitcoin exchange to introduce and incorporate the industry’s best security practices such as MultiSig technology for its hot-wallet, a fully insured cold-storage where over 98% customer BTC are kept off-line in secure vaults, in addition, a number of security features are available to its customers such as two-factor authentication and confirmation emails for enhanced account security.

The exchange allows you to execute instant orders at the best bid or ask price as well as place limit orders, stop loss, and trailing stop orders. Business and individuals from all over the world can buy and sell bitcoins 24/7 through API or the Tradeview trading interface.

By using Bitstamp’s mobile phone apps, available for both iOS and Android, its customers can trade bitcoins on the fly easily. If you look for a secure and reliable exchange with good liquidity, and a robust infrastructure, then Bitstamp is your exchange of choice.

  • Location: United Kingdom
  • Accepting U.S. Clients: YES
  • Offering:
    • Currencies: USD, BCH, LTC, BTC, ETH, XRP, EUR
    • Crosses: BCH/BTC, BCH/EUR, BCH/USD, BTC/EUR, BTC/USD, ETH/BTC, ETH/EUR, ETH/USD, EUR/USD, LTC/BTC, LTC/EUR, LTC/USD, XRP/BTC, XRP/EUR, XRP/USD
  • Data/API:
    • Tick data: NO
      OHLCV data: NO
    • API access: YES
  • Pros:
    • Geared towards traders
    • One of the longest-running Bitcoin exchanges
    • Very low 0.25% fee, falling to 0.1% with sufficient trading volume
    • Good range of deposit and withdrawal options
    • Deep liquidity promotes a price close to fair market rate
    • Offers wide range of altcoins
  • Cons:
    • Has been hacked before, users should not store funds on the exchange for any period of time.
    • High 8% fee on small credit card purchases, falling to 5% with sufficient trading volume.
    • No tick and no OHLCV data offered at this point.

 bitFlyer

bitFlyer is the leading Japanese exchange in trade volume. It allows users to exchange Bitcoin for JPY and to trade with margin. The exchange allows users send and receive Bitcoins in just 1 second, storing said BTC using next generation encryption by DigiCert.

  • Location: Japan
  • Accepting U.S. Clients: NO
  • Offering:
    • Currencies: JPY, ETH, BCH, BTC
    • Crosses: BCH/BTC, BTC/JPY, ETH/BTC, ETH/JPY
  • Data/API:
    • Tick data: NO
      OHLCV data: NO
    • API access: YES
  • Pros:
    • Deep liquidity ensures prices near the fair market rate
    • Extremely low fees; 0.15% at most, lower for more trading volume
    • Fairly private for small trades; only a phone number or Facebook account required for 250,000 JPY monthly limit
    • High or no limits for fully-verified or VIP traders
  • Cons:
    • Privacy measures are allegedly low – uncertain if that is something that is being worked on.
    • Support only available from 9 AM to 7 PM during weekdays
    • Limited payment options
    • Exchange can be hard to use for new Bitcoin users; it’s geared towards traders
    • No tick and no OHLCV data offered at this point.

 Kraken

Kraken is a top European based exchange and offers a variety of fiat to bitcoin pairs such as JPY, EUR, GBP and USD. Volume is decent especially on the JPY BTC pair after MT Gox’s collaps – with Kraken assuming the mantle in that region. The exchange also has a smattering if popular crypto to crypto pairs including litecoin and dogecoin.

Another feature, but only for the brave is margin trading, with Kraken offering the ability to leverage your account balance on specific trading pairs. Although not for most this does give you cash more punch in the markets – but beware of margin calls draining your balance if the markets go against your trade.

Security is very high with their two factor authentication and PGP/GPG encryption. Fees vary depending on the volume – for main trading pairs this is between 0.1-0.35% – however for other less common crypto pairs the range can be as low as 0.05% or as high as 0.75%. There are also 0% fees for traders offering liquidity.

Withdrawals and deposits are variable depending on the method – although in general all fees are 0.19% with a $20 minimum. For JPY there is a minimum deposit of 5000 Yen and no transaction fee for deposit – but 20 Yen to withdraw.

  • Location: United States
  • Accepting U.S. Clients: YES
  • Offering:
    • Currencies: XLM, USD, BCH, REP, EOS, ETC, GBP, ETH, GNO, CAD, XDG, DAO, FEE, ICN, ZEC, MLN, KRW, DASH, XVN, USDT, XRP, XMR, EUR, LTC, JPY, NMC, BTC
    • Crosses: BCH/BTC, BCH/EUR, BCH/USD, BTC/CAD, BTC/EUR, BTC/GBP, BTC/JPY, BTC/USD, DASH/BTC, DASH/EUR, DASH/USD, EOS/BTC, EOS/ETH, ETC/BTC, ETC/ETH, ETC/EUR, ETC/USD, ETH/BTC, ETH/CAD, ETH/EUR, ETH/GBP, ETH/JPY, ETH/USD, ETHCAD.d, ETHEUR.d, ETHGBP.d, ETHJPY.d, ETHUSD.d, ETHXBT.d, GNO/BTC, GNO/ETH, ICN/BTC, ICN/ETH, LTC/BTC, LTC/EUR, LTC/USD, MLN/BTC, MLN/ETH, REP/BTC, REP/ETH, REP/EUR, USDT/USD, XBTCAD.d, XBTEUR.d, XBTGBP.d, XBTJPY.d, XBTUSD.d, XDG/BTC, XLM/BTC, XLM/EUR, XMR/BTC, XMR/EUR, XMR/USD, XRP/BTC, XRP/EUR, XRP/USD, ZEC/BTC, ZEC/EUR, ZEC/USD
  • Data/API:
    • Tick data: YES
      OHLCV data: YES
    • API access: YES
  • Pros:
    • Well-financed exchange
    • Very low 0.25% taker fee, falling to 0.1% with sufficient trading volume
    • Very low maker fee, falling to 0% with sufficient trading volume
    • Deep liquidity for large volume buyers in European markets ensures a price close to fair market rate
    • Highly-rated for security
    • Publishes proof of reserve audits
  • Cons:
    • There is currently a controversy involving Kraken and alleged wash trading of Tether on its exchange. I don’t want to delve deeper into this here but if you are concerned you should research this on your own time.

CEX.io is a trustworthy website to buy/sell BTC and ETH. The interface is sleek, new, and user-friendly. They have taken care of security, and the support is pretty good – which isn’t exactly common in the cryptocurrency industry.

The option to buy Bitcoin using your credit & debit card is one of their most used features, even after the 7% fee. Since they support many countries CEX.io is an option for users from countries where it’s not so easy to buy Bitcoin.

  • Locations: United Kingdom, Russia, Russia
  • Accepting U.S. Clients: CEX.io does NOT support the following US states: Alabama, Alaska, Arizona, Arkansas, Colorado, Florida, Georgia, Guam, Idaho, Iowa, Kansas, Louisiana, Maryland, Michigan, Mississippi, Nebraska, New Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oregon, Tennessee, Texas, U.S. Virgin Islands, Vermont, Virginia, Washington.
  • Offering:
    • Currencies: ZEC, USD, BCH, BTC, GHS, RUB, DASH, BTG, GBP, ETH, XRP, EUR
    • Crosses: BCH/BTC, BCH/EUR, BCH/GBP, BCH/USD, BTC/EUR, BTC/GBP, BTC/RUB, BTC/USD, BTG/BTC, BTG/EUR, BTG/USD, DASH/BTC, DASH/EUR, DASH/GBP, DASH/USD, ETH/BTC, ETH/EUR, ETH/GBP, ETH/USD, GHS/BTC, XRP/BTC, XRP/EUR, XRP/USD, ZEC/BTC, ZEC/EUR, ZEC/GBP, ZEC/USD
  • Data/API:
    • Tick data: YES
      OHLCV data: YES
    • API access: YES
  • Pros:
    • Trustworthy and focused on security.
    • Good number of currencies and crosses.
  • Cons:
    • Excludes a large number of U.S. states.

itBit is a global Bitcoin exchange licensed with the New York State Department of Financial Services that offers cryptocurrency trading services including the over-the-counter (OTC) service. The company was launched in November of 2013, and its headquarters is in New York. They have an international office in Singapore and offer free deposits and withdrawals in Singapore dollars.

The exchange has emerged in the moment when everyone thought that Coinbase is getting ahead of the US-based exchange pack. But Chad Cascarilla, the co-founder, and CEO of itBit, raised impressive $25 million investment and announced itBit would be regulated as a bank in New York. This regulation meant itBit would be able to offer exchange services in the US, surpassing its main US competitor, Coinbase, which offers its services in 33 US states.

  • Locations: United States
  • Accepting U.S. Clients: Supports customers around the globe in most countries. Texas is the only U.S. state not supported.
  • Offering:
    • Currencies: USD, SGD, BTC, EUR
    • Crosses: BTC/EUR, BTC/SGD, BTC/USD
  • Data/API:
    • Tick data: YES
      OHLCV data: YES
    • API access: YES
  • Pros:
    • Licensed with the NY state department, thus it is regulated in the United States.
    • Operates global OTC trading desk.
    • Well funded.
  • Cons:
    • Does not accepts clients from Texas.
    • Limited number of currencies and crosses.

HitBTC seems to have a solid user interface making it pretty easy to buy Bitcoins. The platform seems to be very “newbie oriented” and puts an emphasis on security. Although HitBTC gained considerable traction over the past year since it’s launch, much like iGot it still hasn’t managed to reach the “big leagues” of Bitcoin exchange (i.e. Coinbase, Circle, Bitstamp etc.)

Each critical action (login/withdraw) in HitBTC can be protected by 2FA (2 Factor Authentication). You can also see a list of IPs that accessed your account so you’ll be able to monitor any suspicious activity. Finally, HitBTC tells you what is your security level (i.e. weak, strong etc.) which prompts you to safeguard your account better.

  • Locations: Hong Kong, China
  • Accepting U.S. Clients: Hard to find out without signing up – I believe NO.
  • Offering:
    • Currencies: QAU, LIFE, TIX, B2X, EXN, CCT, BOS, DRT, EOS, ORME, BCH, OAX, DCN, PRG, WTT, SAN, PRO, STRAT, FYP, HPC, HSR, MANA, WTC, AIR, IXT, PRS, PAY, DCT, MYB, XAUR, ATL, SPF, LEND, NXT, CSNO, WRC, CTX, MRV, HAC, ELM, BitClave, BNT, DASH, KBR, NXC, BTCA, IND, BQX, EDG, VIB, SNC, SNGLS, SNM, MAID, SNT, PQT, TAAS, EBET, 8BT, LAT, PPT, KICK, ATS, CRS, YOYOW, STAR, EMC, NGC, SISA, EVX, GUP, WMGO, FUN, MIPS, TRST, ETH, BET, SCL, AMM, NEBL, TKN, BUS, AMB, LSK, DENT, TKR, BMT, QVT, AMP, AE, MNE, UGT, PRE, CPAY, NTO, ENJ, VOISE, DRPU, USDT, TRX, DSH, DLT, NEO, XRP, EBTC, OPT, LRC, BKB, AVT, DOGE, TBT, EBTCOLD, ITS, ANT, BTG, PTOY, ZAP, BTC, TIME, BTM, STORM, ECAT, STEEM, BCN, KMD, ATB, SUB, CTR, DIM, REP, ATM, SMS, BCC, ETC, GAME, COSS, SUR, XUC, NET, POLL, DOV, LUN, DGB, PIX, DGD, SBTC, QTUM, DDF, XVG, ODN, UET, FCN, ICOS, FRD, CLD, NDC, RVT, XTZ, ADX, ELE, LTC, DNT, MCAP, 1ST, VEN, MSP, AEON, XMR, ZEC, PLU, OMG, PLR, HVN, XEM, ETP, EDO, RLC, CDT, SBD, WAVES, SC, HDG, CDX, WINGS, LOC, BAS, EMGO, BTX, SWFTC, ZSC, CVC, ERO, DATA, QCN, PPC, ECH, TGT, LA, VIBE, CL, FYN, ETBS, SWT, PLBT, DBIX, CND, RKC, POE, XDNCO, TNT, IGNIS, ICO, ICN, BMC, GVT, HGT, CNX, ZRX, STU, MTH, ICX, ZRC, UTT, SKIN, GNO, STX, SMART, MCO, ART, DICE, OTN, CFI, PING, OTX, ARDR, VERI, XDN, FUEL, INDI, ARN
    • Crosses: Almost everything under the sun given the supported currencies  – too long to list here.
  • Data/API:
    • Tick data: YES
      OHLCV data: NO
    • API access: YES
  • Pros:
    • Wide variety of currencies.
    • Good user interface.
  • Cons:
    • Support very slow to respond (if at all).
    • Negative online reputation
    • Only supports tick data for some strange reason.

Mercado Bitcoin

Mercado Bitcoin is the largest Bitcoin exchange in Brazil and South America. Without verifying, you can buy bitcoin using cash deposits. After verification, you can also fund your account with online bank transfers, which incur no deposit fee. Mercado Bitcoin offers some of the best liquidity in Brazil, meaning you should get the fair market price when buying bitcoins.

  • Locations: Hong Kong, China
  • Accepting U.S. Clients: Hard to find out without actually signing up – I believe NO.
  • Offering:
    • Currencies: LTC, BRL, BCH, BTC
    • Crosses: BCH/BRL, BTC/BRL, LTC/BRL
  • Data/API:
    • Tick data: NO
      OHLCV data: NO
    • API access: YES
  • Pros:
    • Deep liquidity promotes a price close to fair market rate
    • Very popular with over 100,000 clients
  • Cons:
    • Not private since identity verification is required to exceed daily limits or use bank transfers.
    • Very limited number of currencies and crosses.
    • No tick and no OHLCV data

 Gemini

Gemini is the first U.S. exchange licensed for bitcoin and ether trading. And while several other exchanges fled New York regulation, Gemini embraced it. Today, they are a regulated trust company by the New York State Department of Financial Services, which will give them a significant advantage as U.S. regulators start to crack down on exchanges in the coming years. Overall, Gemini is easy to use, provides good customer support and fair fees. They currently offer a super limited variety of trading pairs but there’s decent liquidity for those pairs. Gemini delivers on their promise of security, liquidity, and trust.

  • Locations: United States
  • Accepting U.S. Clients: While Gemini is available in most US states, you should check Gemini’s areas of operations page.
  • Offering:
    • Currencies: ETH, USD, BTC
    • Crosses: BTC/USD, ETH/BTC, ETH/USD
  • Data/API:
    • Tick data: NO
      OHLCV data: NO
    • API access: YES
  • Pros:
    • Licensed U.S. Exchange
    • FDIC Insured
    • High security.
  • Cons:
    • Very limited number of currencies and crosses.
    • No tick and no OHLCV data

Published at Wed, 10 Jan 2018 14:53:03 +0000

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Micron Stock Could Enter Intermediate Correction

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Micron Stock Could Enter Intermediate Correction

By Alan Farley | January 10, 2018 — 9:13 AM EST

Micron Technology, Inc. (MU) shares more than doubled in price last year, but recent technical weakness could signal an intermediate correction that traps the momentum crowd. That decline will face a major reality check in the mid-$30s, with a breakdown opening the door to much steeper downside. Given potential headwinds, it makes sense for shareholders to review positions, tighten stops and take other measures to protect hard-earned profits.

The uptrend has not tested the rising 200-day exponential moving average (EMA) since August 2016, highlighting one-sided price action that may now have run its course. In addition, the PHLX Semiconductor Index (SOX) finally reached resistance at the 2000 bubble high in November 2017, signaling a potential climax that could end the sector’s dramatic uptrend.  Micron stalled at the same time due to correlation that may have greater power over 2018 price action than technicals or fundamentals. (See also: SOX Semiconductor Index at 17-Year Resistance.)

The memory chip giant has a long history of grinding through massive boom-bust cycles that wipe out several years of profits in relatively short time frames. For example, the 13-month decline that began in December 2014 posted losses in excess of 35 points while retracing more than 80% of the 2012 into 2014 uptrend. A similar pullback from the current uptrend would yield a decline into the mid-teens.

MU Long-Term Chart (1995 – 2018)

A long-term uptrend stalled in the upper $40s in 1995, yielding a pullback that found support in the single digits in 1996. The stock turned higher in 1998, breaking out at the start of the new millennium in sympathy with the internet bubble infecting world markets. That buying impulse stalled a few months later in the mid-$90s, giving way to a brutal sell-off that cut through the 1996 low and dropped the stock to a nine-year low at $6.60 in 2003.

It underperformed badly through the mid-decade bull market, stalling in the upper teens in 2004 and failing to break out above that level in a 2006 test. The subsequent decline intensified through the 2008 economic collapse, with the stock finally ending the vicious nine-year downtrend at a 16-year low in March 2009. It took more than four years for the subsequent recovery wave to complete a round trip into the 2006 high.

A breakout into 2014 made limited progress, stalling in the mid-$30s and rolling over in a selling wave that cut through support in 2015. The single digits came into play once again in early 2016, highlighting the vicious boom-bust cycle, with a powerful trend advance off that level mounting the 2014 high in September 2017. The rally ended near $50 in November, right at the 50% retracement of the 2000 into 2009 downtrend. (For more, see: Micron’s Sell-Off Presents an Opportunity: MKM.)

MU Short-Term Chart (2012 – 2018)

A pullback into December 2017 ended at the .382 Fibonacci rally retracement level, giving way to an A-B-C pattern that posted a six-week high earlier this month. A trendline marks pattern support at $41.50, with a breakdown likely to trigger a swift decline into the mid-$30s. In turn, that selling impulse would generate the first test of 200-day EMA support in the past 17 months. That level also marks support at the 2014 high, significantly raising the stakes for Micron bulls.

On-balance volume (OBV) tracked price action into the 2014 peak, while heavy distribution into 2016 held high in the multi-year range. The indicator broke out with price in the second half of 2017, peaking in November and dropping into a test of support at the prior high. It bounced but has now reversed off the November peak and could test support once again. This distributive action dovetails with a monthly stochastics sell cycle, raising the odds that bears will take control into the second quarter. (See also: Micron Surges, Street Ups Price Target 13%.)

The Bottom Line

Micron Technology stock reversed after the PHLX Semiconductor Index reached heavy resistance at the 2000 bubble high, and Micron shares could enter an intermediate correction that tests support in the mid-$30s. A breakdown through that level could generate much stronger downside, given the stock’s boom-bust cyclical tendencies. (For additional reading, check out: 2018 Will Be Mixed for Chipmakers: Morgan Stanley.)

Published at Wed, 10 Jan 2018 14:13:00 +0000

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Crypto Currencies – Introduction

Crypto Currencies – Introduction

by THE MOLE

This is the first installment of an ongoing educational series that will cover the basics of crypto currencies as well as a multitude of challenges involved and the knowledge required in trading this new asset class successfully over the long term.

When it comes to bitcoin and crypto currencies in general there are three groups of people on earth right now. Group A: The ones who got in early, are deeply immersed and involved in the crypto movement (due to either ideological reasons or just plain old greed), have managed to bank quite a bit of coin, and are now running like hell just to keep up. This group is in small part comprised of the nerdy pencil protector types (and I say that as a compliment) and other early visionaries who are prolific in the space and continue to actively spearhead various crypto related projects.

You may see some of them post pertinent tutorials and recurring articles to promote or defend their respective slice of the crypto universe. As such you can expect them to be deeply vested in several crypto currencies either via personal investment (e.g. coin purchase and through an ICOs) or just good old fashioned sweat equity, which means they represent the hearts and minds behind the movement and of course the technology.

However a much larger portion of group A is comprised of the types of people who simply have a knack for sniffing out the next big thing. They may actually bank on crypto turning into a bubble and many are driven by the greater fool mentality. We are talking speculators like us, gambler types, and anyone who just can’t say no to a good old fashioned get rich quick scheme. Although difficult to quantify I would estimate they represent over 90% of group A. And bless their souls, because without their greed fueled support the entire crypto space most likely would have wobbled and imploded ignominiously in late 2016 when a $66 Million hack of Bitfinex was only the latest in a series of crypto disasters that managed to wipe out the assets of literally tens of thousands of early investors. But just like after the notorious Mt. Gox incident in 2014 (with nearly half a billion Dollars stolen) everyone just dusted themselves off and continued to press on.

Group B: Those are the ones who blissfully slept through the early adopter phase but then suddenly watched crypto valuations explode, first in 2013 (I’m looking at you China!) and then again throughout 2017. Not wanting to be left out they are now running like hell just to catch up. Although being late to the party they know a good thing when they see it and frankly couldn’t care less about the underlying ideology or vision of a global financial future that may have driven many of the early supporters. Most of them ended up buying into Bitcoin or one of the major Altcoins sometime after June 2017, either after a dip, if they were somewhat clever, or near the top in December 2017 whilst panicking to be left out (I actually know a few). The latter are in fact the weak hands who will be first to soil themselves and head to the hills during the next significant sell off. Which is where we come in but more on that later in this series.

Incredibly financial institutions are on the trailing end of this group, with a few exceptions of course (e.g. Peter Thiel or Fred Wilson over at AVC). After initially dismissing crypto currencies for years on end many firms hastily scrambled to embrace all things crypto when it became clear that the proverbial bus had long left the station. It’s the last money in with the Cboe and CME futures just having come online in December. However the deep pockets of institutional firms, as always, will end up fueling the next phase of the great bubble, which in my mind has already begun.

Last and unfortunately least there’s Group C: The vast majority of people out there who remain blissfully unaware that a global currency revolution is taking place. They are either confused by it all, simply don’t care, or are convinced that crypto currencies are destined to fail. This article’s aim is to help guide the perspectives of the confused, but will not attempt to convince the latter two. In the words of Heidi Klum: You are either in, or you are out.

Trading Versus Investing

Now when it comes to investing into Bitcoin (BTC) specifically you better be already in group A or one of the early dip buyers in group B. Because getting long any financial asset that has increased by over 2,000% in a single year would be considered suicidal even amongst the most stone cold and experienced professional traders I’ve ever had the pleasure of meeting in my life. And without doubt the period between 2017 through 2019 will one day be referred to as the great crypto bubble, and things will most likely get a lot wilder from here, even thwarting the irrational exuberance and excesses preceding the 2008 financial crisis. So let’s be crystal clear about what we are all getting ourselves into here.

So if you’re mainly interested in investing and not trading crypto currencies then you are better off waiting for a massive dip (which will invariably present itself sooner or later) or get in early with some of the up and coming altcoins which are still valued in pennies or perhaps single digits. From a pure trading perspective everything with liquidity is fair game as long as you are able to detach yourself from the daily noise and drama of the crypto universe. We’ll cover the proper mental mindset for trading crypto currencies in a separate installment which will derive in some parts from what I posted a few years back about maintaining a strict information diet.

There are actually over a thousand crypto currencies in circulation at the time of this writing and the list continues to grow, therefore market selection will be a recurring task unlike in forex where you’re usually best off to stick with the top five food groups: EUR/USD, AUD/USD, USD/JPY, GBP/USD, and AUD/CAD. Although trading crypto has a lot more in common with trading forex some the basic lessons learned trading stocks are somewhat applicable here. For one when selecting cryptos for trading purposes we’ll put a lot of focus on liquidity/volume and market capitalization. Which obviously is less of a concern when it comes to investing in one of the nascent altcoins that may have potential to eventually make it into the top ten. However never forget that crypto currencies are the ultimate momentum play, to quote Ryan Selkis the founder of CoinDesk.

No Nerdy Stuff

The one thing I will not be covering here are the underlying technical aspects of bitcoin, e.g. the inner workings of the blockchain, and various pertinent concepts like cryptographic hashes, digital signatures, merkle trees, etc. First up I would probably bore you to tears and secondly these days you actually have to try hard to avoid the onslaught of great tutorials and youtube videos already circulating online. Google may not be your friend but shall prove to be useful. If you are technically inclined I would however recommend that you go right to the source to where it all started and read Satoshi Nakamoto’s white paper over at bitcoin.org. It’s well written and with the exception of a few dicey paragraphs should be appreciated by a non-technical audience.

Initial Coin Offerings

The second topic we won’t be covering here either are ICOs for the simple reason that the right time to pick up a few tokens was back in 2015 and 2016 when nobody in their right mind would poke them with a ten foot pole. Genius and outlier investments are always recognized in hindsight – and clearly ICOs are no exception. There’s a lot of hot money sloshing around right now eager to drop into the next BTC or ETH but in the foreseeable future large gains post ICO will most likely be restricted to insiders. The right time to think about ICOs again will be when everyone else declares them as dead and a failed experiment.

Top 10 Crypto Currencies

Now, having set the stage let’s introduce the top ten crypto currencies in circulation at this time and provide a bit of background on each of them. Although we are technical traders and thus don’t really care about fundamentals we still need to understand what makes each currency tick under the hood.

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Further Running

You may have noticed that we haven’t covered a good number of crypto currencies which are either currently receiving a lot of media attention or are the favorites of some of most prolific crypto insiders, e.g. we hear a lot about Monero (XMR) or Zcash (ZEC) right now. From an investing perspective those two may be attractive candidates after a significant shake out but from a pure trading perspective they are currently only small blips on the horizon based on market capitalization and daily trading volume.

Next time we’ll be covering various crypto exchanges and the challenges involved in opening an account and becoming a participant in the Wild Westworld of crypto trading.

Published at Thu, 04 Jan 2018 18:24:57 +0000

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Some hedge funds deliver double-digit gains for 2017

 

Some hedge funds deliver double-digit gains for 2017

BOSTON (Reuters) – A handful of hedge funds ended 2017 with double digit returns, their investors said, at a time the $3 trillion industry took in fresh money and posted its best returns in years, industry data show.

Activist hedge fund Marcato Capital Management, which waged proxy fights at Buffalo Wild Wings and Deckers Outdoor Corp. last year, ended 2017 with a 25.6 percent gain at its flagship fund while its smaller Encore portfolio climbed 22.6 percent.

Atlantic Investment Management, which focuses on bets that inexpensive stocks will appreciate in value, posted a 16.4 percent gain in its Cambrian Global Fund.

Both firms beat the industry average with industry tracking firm Hedge Fund Research reporting that the average hedge fund gained 7.6 percent through the end of November.

Stock oriented funds posted a 12 percent gain through November. December numbers have not been released as many hedge funds are still tabulating their performance for the year, but so far the industry is on track to post its best returns since 2013, the Hedge Fund Research data show.

Similarly Renaissance Technologies, staffed by nearly eight dozen scientists with doctorates in physics, math and other fields, posted a 15 percent gain in its Renaissance Institutional Equities fund, the firm’s oldest portfolio available to outsiders.

Brahman Capital posted a 12 percent gain in its hedge fund while a portfolio that makes only long bets that securities will rise climbed 22 percent.

Activist hedge fund Engaged Capital, which pushed for changes at tea maker Hain Celestial Group rental company Rent-A-Center last year, posted a 10.7 percent gain.

Hedge funds are private and generally guard their performance numbers closely. Representatives for the firms declined to comment.

The gains suggest better times in the hedge fund industry after investors spent years complaining about low returns and high fees. Investors even added $2.9 billion in new money to the industry in the first three quarters of 2017 after having pulled out $70 billion in 2016, data from Hedge Fund Research show.

Some firms even celebrated single-digit gains, signaling a rebound after a difficult 2016 or early 2017. Greenlight Capital, run by David Einhorn, ended the year with a 2 percent gain while Folger Hill, run by former SAC chief operating officer Sol Kumin, ended the year with a 2.6 percent gain in its U.S. fund and a 3.6 percent gain in its Asia fund.

Reporting by Svea Herbst-Bayliss; Editing by Susan Thomas

Published at Thu, 04 Jan 2018 19:43:04 +0000

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Intel Decline Could Mark Buying Opportunity

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Intel Decline Could Mark Buying Opportunity

By Alan Farley | January 8, 2018 — 9:22 AM EST

The Spectre and Meltdown chip bugs have captured the tech world’s attention, dropping Dow component Intel Corporation (INTC) into three-month support in the low $40s. The massive scope of the security flaws make product recalls a near impossibility, but software fixes are already being distributed, and the chipmaker is unlikely to depart from its bullish trajectory in the coming weeks, offering a potential buying opportunity.

The bugs are not company specific, also affecting Advanced Micro Devices, Inc. (AMD) and ARM Holdings, co-owned by SoftBank Group Corp. (SFTBF) and Vision Fund. Highly liquid Intel stock has offered a convenient target for short sellers and predatory algorithms, but at least so far, the decline has generated little or no technical damage. Even so, dip buyers may wish to wait for a down leg that fills the Oct. 27 gap between $41.50 and $43.50 before jumping on board. (See also: AMD Stock: Dip Buyers Locked and Loaded.)

INTC Long-Term Chart (1991 – 2018)

A multi-year uptrend exploded to the upside in 1992, splitting four times while lifting the stock more than 70 points into the 2000 all-time high in the mid-$70s. It plunged when the internet bubble burst, dumping more than 80% into the low teens in the fourth quarter of 2002. A bounce into 2003 stalled just below the .382 Fibonacci bear market retracement level, printing the highest high for the next 11 years.

Two lower highs into 2007 sharply underperformed the broad tech universe through the mid-decade bull market, setting the stage for a deep slide during the 2008 economic collapse. The nine-year downtrend finally end at $12.05 in March 2009, while the subsequent recovery wave stalled near $30 in 2012. Two years of quiet sideways action yielded a 2014 breakout that generated substantial buying power into December 2014, stalling just three points above the 2003 high.

A three-year cup and handle pattern generated a 16-year breakout in the fourth quarter of 2017, lifting the stock to a 17-year high at $47.64 in mid-December. That lofty level marks the 50% retracement of the post-millennial downtrend, with tougher harmonic resistance sitting just above $50 at the .618 retracement level. Meanwhile, the monthly stochastics oscillator has just reached the overbought  level but is showing no signs of crossing over into a new sell cycle. (For more, see: The Top 4 Intel Shareholders.)

INTC Short-Term Chart (2015 – 2018)

Sideways action into the 2017 breakout carved a 13-point depth that now targets a measured move into the .618 retracement level near $51. More importantly, sell-offs into the upper $30s should offer historic buying opportunities due to the multi-decade breakout. Meanwhile, two-month price action has drawn the outline of a five-point rectangle pattern just above the unfilled post-earnings gap. That hole could act as a magnetic target until it gets filled with a decline to $42.50.

The stock bounced at the 50-day exponential moving average (EMA) last week, with that intermediate support level narrowly aligned at the bottom of the rectangle. A bounce up to range resistance could generate quick profits, but a trade entry following a gap fill will offer more advantageous reward:risk. Market players taking exposure at that level will need to watch price action at the range breakdown, with a buying surge setting off bullish signals while a reversal would raise the odds for a test at breakout support in the upper $30s.

On-balance volume (OBV) has outperformed price action since last decade’s bear market, posting new highs in 2013 and 2014. A distribution wave ended in the first quarter of 2016, generating healthy buying pressure that has matched constructive price action. The indicator posted a new high in December and turned lower following the bug disclosure, dropping to a two-month low that has held well above the October breakout level. (See also: Intel Will Take More Risks, Says CEO in Internal Memo.)

The Bottom Line

Intel sold off on high volume following reports of a worldwide security flaw but has paused at two-month support at the top of a two-point unfilled gap. The bottom of the gap could offer a buying opportunity, ahead of a strong bounce that reaches the lower $50s. (For additional reading, check out: Intel CEO’s Stock Dump Under Scrutiny.)

Published at Mon, 08 Jan 2018 14:22:00 +0000

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How to Get the Most From Your Trading Practice

 

How to Get the Most From Your Trading Practice

An excellent post from NewTraderU and written by Colibri Trader explains how 10,000 hours of practice typically goes into the creation of expertise.  As the post makes clear, there is a world of difference between repeated experience and practice.  Practice, in the sense of deliberate practice, means that we actively reflect on our experience, examine where we’ve fallen short, and then institute efforts at improvement.  The trader who trades for a month and merely jots notes in a journal is repeating one day of trading 22 times over.  The trader who makes daily efforts at improvement, using trading results as feedback to guide future efforts, compounds learning 22 times over.

This is how expertise is created.  We learn with each practice session, feed that information to the next practice session, and continually make incremental improvements.  If we simply target our one biggest mistake each day and figure out why it occurred and how we can prevent the occurrence going forward, we turn trading into a series of performance drills.  Practice can make perfect when we perfect the process of practicing.

One of the reasons the report card has become a major tool in trader development is that it anchors the process of deliberate practice.  When we grade ourselves on aspects of trading that matter, we create a framework for reflecting on performance and systematically pursuing improvement.  When we share the report card within a community of traders, the practice of others provides lessons for us.

In the spirit of my recent New Year’s goal of using the blog to highlight the good work being done in the trading community, allow me to add one thought to the post from Steve and Colibri.

The worst, as well as the best, trading is the result of practice.

When we trade poorly and then go over and over and over our mistakes, blame ourselves for them, become frustrated with them, talk incessantly about them, and vent about them in our journals, we are engaging in a kind of reverse deliberate practice.  Just as reviewing our trading constructively can aid our development, reviewing our trading destructively actively builds and reinforces our worst habits.  

This reverse practice effect explains many downward trading spirals.  We ultimately live out the image of ourselves that is reinforced in our thoughts, feelings, and actions.  Everything we do–from how we talk to ourselves to what we read to who we associate with–is a mirror, reflecting an image of ourselves.  Successful people create positive, constructive mirrors and thereby internalize that positivity and constructive attitude.  Unsuccessful people often practice just as hard as the successful ones, but with all the wrong mirrors.  

Take a look at your trading practice.  Reflect on how you end up feeling after a day or week of trading.  You’re most likely practicing something.  Are you practicing the right things, and is your practice the kind of practice that will make perfect?

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Published at Sat, 06 Jan 2018 13:01:00 +0000

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Top And Bottom Performing Stocks For Week #2

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Top And Bottom Performing Stocks For Week #2

by THE MOLE

It’s Sunday so let’s review the performance of last week’s historical top and bottom stock symbols in the S&P 500. As you may recall these symbols are the result of parsing a database containing over 50 years worth of statistical performance data. The idea is to extract the prospective top ten winners and losers of the coming week purely based on historical statistics. The result is then sorted by liquidity and any symbol that is scheduled to report earnings or pass ex-dividend is being excluded.

HOW TO TRADE ALONG

Although being no guarantor of success, the long and short candidates posted here each week are intended to perform along their respective historical bias. One way of trading along would be to simply create a small one-week portfolio by buying the long candidates and selling the short candidates on Monday morning shortly after the open. There are no official stops or targets and all transactions are reversed Friday afternoon right before the bell.

For anyone who wants to keep track I have created a new WP category that allows you to pull all pertinent posts up to date. Eventually I’ll be putting together a summary spreadsheet once we have accumulated sufficient stats.

RESULTS FOR WEEK # 1

Long Profits: F=5.68, AMD=15.56, XRX=2.61, AAPL=3.41, MSFT=3.1, MU=11.38, C=1.34, HST=0.05, NE=11.95, KGC=3.01

Long Profits Total: 58.09

Short Profits: PG=0.7, AGN=-5.32, MCD=-1.12, SYY=-1.19, CL=0.04, EOG=-3.95, FLO=1.5, GIS=-1.06, SONC=-2.0, CHD=0.2

Short Profits Total: -12.2

Combined Profits Total: 45.89

TOTAL RESULTS

I’ve finally produced a spreadsheet in my Google drive which shows us the entire P&L stats including adjusted totals, cumulative, and drawdowns. You can open it in your browser by clicking here.

Published at Sun, 07 Jan 2018 18:16:00 +0000

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Bitcoin Could Easily Hit $50,000 in 2018: Bogart

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Bitcoin Could Easily Hit $50,000 in 2018: Bogart

By Shoshanna Delventhal | January 4, 2018 — 4:31 PM EST

As bitcoin starts off 2018 continuing its volatile run with a dip below $15,000, one of the markets biggest bulls says that a $50,000 future for the cryptocurrency is highly probable.

Spencer Bogart, a partner with Blockchain Capital, said in an interview on CNBC that he expects digital currency to continue to perform as long as both retail and institutional investors dive in and stay put. (See also: Merrill Lynch Stopped Approving New Orders for Bitcoin Investment Trust in December.)

Focusing on the institutional side of the equation, Bogart indicated that “institutional ownership is still effectively zero percent, so there is a lot of room for upward movement here … The drawbridges for institutional pools of capital have just been lowered.” The bitcoin bull highlighted new derivative products, suggesting that institutional investors that want to play in the market will wait on the sidelines until they see this first round of products function, later evolving and maturing to “become a deep market.”

Looking to Millennials

Referencing a survey conducted by Harris Poll for Blockchain Capital, Bogart noted that while less than 2% of people in the U.S. own bitcoin, 19% say they are likely to buy it in the next five years. That would represent a 10-fold increase in adoption. Further, he emphasized that 32% of Millennials say they are likely to buy bitcoin in the next five years, suggesting that younger cohorts are often better indicators of future technology trends over older demographics. (See also: Avoid Bitcoin ‘Like the Plague’: Charlie Munger.)

Bogart concluded that he believes value will grow for cryptocurrencies like bitcoin, ethereum and litecoin as well as the blockchain businesses built on top of these networks. “The Ripples of the world, the Coinbases of the world, are worth a significant amount of capital right now,” said Bogart.

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns cryptocurrency.

Published at Thu, 04 Jan 2018 21:31:00 +0000

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2018 First Impressions

2018 First Impressions

by THE MOLE

Welcome back! I hope some of you enjoyed a quiet and relaxing time away from charts and the never ending drama of our financial markets. I wish I was that lucky but as almost every year I somehow find myself stuck catching up on a myriad of chores, reading assignments, and various project related tasks. That’s right, the action (and the screaming) never stops down here at the evil lair. Now I was actually planning on ripping the lid off a major new initiative I have planned for you guys but I’m running a bit behind so let’s just take a gander at some of our key markets.

Which actually can be summed up by this chart – the U.S. Dollar (shown here are the futures), and it’s heading for a world of hurt. That formation on the monthly panel is looking extremely troubling and unless we are seeing buying interest here and that soon we will most likely see a drop to the 90 mark. Should that psychologically important support zone fail then it’ll launch a sell off of biblical proportion.

In some ways this is already happening actually, and the ongoing goldrush into crypto currencies is just one symptom of the overall disease (i.e. a systematic destruction of the greenback largely fueled by a decade of quantitative easing). Without doubt 2017 will be remembered as the year in which crypto currencies transitioned from the early adopter phase to early mainstream. And I have little doubt that 2018 is going to be the year in which consolidation in the number of markets, standardization on the exchange and trading front, and yes regulations by governments and international bodies will establish crypto as a force to be reckoned with. Currency markets will never be the same and despite all the growing pains it will most definitely for the better. More on that in the near future.

Over in the dinosaur forex pit the EUR/USD is looking bullish as heck right now and if I had any common sense I would double my subscription fees post haste. It’s in a clear break out pattern right now and a target of 1.26 by Eastern is in the cards.

One more freebie but there’s quite a bit more looming below the fold (so sign up now). The USD/JPY is still hemming and hawing, but a if it can hold its 25-day SMA I think we’re off to the races here. I would love to get a more thorough retest as to justify a long term long for a ride into 118.

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Published at Tue, 02 Jan 2018 14:39:31 +0000

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What Does The Analyst Who Called For The 2016-2017 Market Rally Say About 2018?

What Does The Analyst Who Called For The 2016-2017 Market Rally Say About 2018?

By: Avi Gilburt | Wed, Jan 3, 2018


As Ecclesiastes notes, “There is nothing new under the sun.” This, too, applies to the stock market.

The average investor trap is the same throughout whatever period you wish to review. Markets become overexuberant, see a correction, sentiment resets, and markets rally on to their next phase of overexuberance. It is really that simple. Yet, we overcomplicate matters by relying on economics and fundamentals, which have proven to be relatively useless at major market turning points.

Whatever occurred in the prior year is often not going to be instructive as to what will occur in the upcoming year, and that is what you do when you rely on fundamentals and economics to linearly forecast 2018. Life is not linear, and neither is the stock market.

Also, many of the old market adages I hear year after year will not help you in 2018 either. Remember the old market saying that as January goes, so goes the rest of the year? How did that turn out in 2016? Even in 2017, January was a sideways month, yet the market went on to major gains. How did sell in May and go away work for you in 2017? Well, don’t say I did not warn you at the time.  This is what I wrote on Seeking Alpha:

Sentiment Speaks: If You Sell In May, Be Prepared To Buy Back What You Sell

Markets are really quite simple if you take a broad perspective approach. Society generally progresses through history, so we should expect that our financial markets would follow society’s general path of progression. However, there are periods of time of regression which make us forget that we are generally on a path of progression. This is why I continually try to point out that those who are able to rise above all the noise presented to you on a daily basis will likely do much better than the average investor.

During the last two years, we have heard a significant amount of bearish “noise.” There were a myriad of reasons presented as to why this market was going to imminently collapse, and I have listed them for you many times in the past. I guess someone forgot to tell Mr. Market. Yet, market participants continue to pour over old economic data or news events in wasted efforts to glean the next stock market directional cue. And, if the last two years has not taught you this lesson, then nothing likely will. Sometimes, it is hard to recognize that we wear blinders, as they become too comfortable to take them off. In fact, the story of the stock market is not much different than the movie The Matrix. But, I digress.

So, let’s look back at 2016-2017, and then consider how we see 2018 within that context.

While I was strongly bullish the SPX as we came into 2017, as we certainly had much higher to achieve before we struck the long-term targets we set years ago for this degree of wave structure, the SPX has surpassed our targets during the last few months of the year by approximately 4%.

Whereas we were looking for a rally from the 1800 region to as high as the 2611 region, which would have provided a 45% gain, the market actually provided closer to a 49% gain from the lows struck in 2016. While I certainly wish we were able to be perfect, unfortunately, there is no such thing as perfection when dealing with non-linear systems such as the stock market.

Yet, if I told you two years ago that I would be confident about a 45% rally in the stock market over the coming two years, but I may miss the last 4-5% of the market move, I think you would be quite happy with analysis that guided you confidently for 90% of that market move. And, when you consider that we caught that last 9% move in the IWM, well, I think we did quite well for 2016-2017 when most seemed to be looking down.

As for looking to the future, please recognize that by no means are we looking for the end of the bull market which began in 2009. Rather, we are now within wave (3) of the 5th wave of the larger degree 3rd wave within a 5-wave Elliott structure off the 2009 lows (as you can see on the monthly SPX chart).

And, as I have tried to relate this to baseball terms, it is akin to being in the 6th inning of a baseball game. We likely still have several years to go before we complete this bull market run off the 2009 lows, and we will not likely see the 7th inning stretch until 2019, after we complete all of wave 3.

Since we use Elliott Wave analysis to “count” how mass sentiment moves through bullish and bearish periods of progression and regression, our perspective is that we are completing a wave (3) in the equity markets, which often ushers in a wave (4), as long as the number 4 comes after the number 3. And, since our numeric system has not changed since I learned it as a child, I am going to expect that we will see wave (4) in 2018.

But, as I have noted in prior weekend analysis to my members, the market may continue to levitate until March. You see, some indices have potentially completed their respective wave (3), such as the IWM, but others suggest that we still need a smaller degree 4th and 5th wave before all of wave (3) completes, such as the XLF.

This would mean that we can see a pullback into early 2018 in all indices, with some counting as a smaller degree 4th wave (XLF), whereas others would be an (A) wave of their wave (4) already (IWM). Moreover, this would make the expected rally into the March time frame a 5th wave in some indices (XLF), whereas it may be a lagging b-wave in others (IWM). Ultimately, it seems to suggest that the bigger pullback we want to see in a wave (4) may not occur until the late Spring or early Summer.

As I have noted many times before, the drop I expect in 2018 will likely be considered the end of the bull market by many, so I still suggest you ignore the noise in 2018. Our analysis suggests that it will likely be another buying opportunity for the next phase of the rally which will likely be targeting the 2800-3000 region next. In fact, if we are able to complete the full structure I have outlined on my monthly chart, we will not likely complete this bull market off the 2009 lows until the early 2020’s. So, if you are going to dust off your bear suit for 2018, please make sure to recognize that it will only be for a short-term engagement.

I would like to take this opportunity to wish everyone a happy, healthy and prosperous new year to you and your families.

By Avi Gilburt, ElliotWaveTrader.net


Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.

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Published at Wed, 03 Jan 2018 10:39:30 +0000

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Bargain Bin: ETFs for value hunters

 

Bargain Bin: ETFs for value hunters

NEW YORK (Reuters) – Think of the stock market right now as a high-school cafeteria. The most popular kids in school are growth investors, high-fiving and riding a multi-year bull run.

Meanwhile, the geeky kids off to the side, eating lunch by themselves, are the value investors.

But those geeks often end up on top as adults. So even in this growth-oriented economy, you would be wise to have a value component to your portfolio.

For a double bargain, look to value-driven exchange-traded funds, which not only offer rock-bottom management fees but in some cases have been matching or even exceeding the broader market in gains.

“Given how strong a bull market we have had, there will be an inevitable rotation to value,” said Todd Rosenbluth, director of ETF and mutual fund research at independent advisory firm CFRA. “In fact, value has already showing signs of improvement.”

Take the Deep Value ETF from TWM funds. As the name implies, the fund contains in its top 10 holdings the stocks of a number of firms that have been battered, most notably in retail, including Macy’s Inc, Target Corp, Kohls Corp and Gap Inc.

Also represented in the Deep Value fund are some long-in-the-tooth tech firms like Seagate Technology PLC and Xerox Corp, and pharma play Gilead Sciences Inc. The result is an average price-earnings ratio of around 13, well below the S&P 500’s collective P/E which is now over 25.

Those beaten-up names might make investors a little queasy, especially since this ETF is so concentrated with just 20 stocks. But you cannot argue with the performance: It boasts one-year returns of 23.1 percent, matching the S&P 500, to add to 2016’s 24.8 percent.

Other value ETFs have been picking up bargains, while the rest of the universe obsesses over growth. Another standout is Guggenheim Investments’ S&P Pure Value ETF. It sifts through the S&P 500, eliminates all growth stocks and the so-called “muddle in the middle,” and comes up with 114 pure value plays.

Among its top holdings is telecom provider CenturyLink Inc, Warren Buffett’s Berkshire Hathaway Inc, agriculture play Archer Daniels Midland Co and General Motors Co.

The one-year performance is 17.2 percent, with five-year gains at 16 percent annually – not bad for a supposedly out-of-favor strategy. “Since we’ve been in a market where growth has outperformed, many investors are now looking at value’s relative appeal,” said William Belden, Guggenheim’s director of ETF development. “And over time, a value tilt tends to outperform its growth peers.”

The $890-million fund also boasts an affordable expense ratio of .35 percent. In the fund’s rebalancing in December financial and utilities were trimmed back, thanks to their recent runups, while consumer discretionary stocks were boosted.

A word of caution for value-minded investors: Such deep-value and pure-value screens tend to make holdings more limited, and therefore more volatile, than broader market indices.

Investors wary of concentrated bets should perhaps look to a larger, steadier ship like Vanguard’s Value Index Fund. This fund, five-star-rated by Chicago-based research shop Morningstar, contains 329 total stocks and annualized returns of 15.2 percent over five years.

Its biggest holdings are familiar blue-chippers like Microsoft Corp, Johnson & Johnson, JP Morgan Chase & Co and Exxon Mobil Corp. Perhaps best of all for value-conscious investors, its expense ratio is a microscopic 0.06 percent.

Part of the appeal of value ETFs is that when the next downturn comes, high-flying growth stocks will likely get pounded more than reliable blue chips. Value stocks traditionally provide more downside protection, in part due to their dividend payouts which provide a share-price floor and attract income investors.

Editing by Beth Pinsker and Cynthia Osterman

Published at Wed, 03 Jan 2018 19:53:13 +0000

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