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Lessons From A Successful Independent Trader

 

Lessons From A Successful Independent Trader

Here’s a great post from Bella regarding a small independent trader, J. Park, who has grown his account to $100,000–and what that trader did to achieve his success.  Several lessons jump out from his experience:

1)  He failed many times small before finding success – We see this pattern among a surprising number of the Market Wizards that Jack Schwager interviewed.  It took experiences with failure to finally figure out what produced success.  The success came from perseverance and the ability to learn from failures.

2)  He found multiple mentors – I believe this is key.  Whether its chess, athletics, performing arts, or elite military, we find that successful performers are mentored and trained.  The presence of multiple mentors permits an integration of perspectives that eventually leads one to their own distinct approach.  Interestingly, I have known the mentors mentioned by J. Park, such as @InvestorsLive, @Modern_Rock, @kroyrunner, and @MikeBellafiore, to have mentored other successful traders.  Think of all the stars that have come from basketball coaches John Wooden and Coach K:  good mentors produce good performers.

3)  He focused on process – As he points out, we can’t control P/L; we can control our trading process:  what we trade and how we trade it.  The successful trader may be discretionary in their decision making, but will not be random.  Successful trading is rule-governed, where the rules are derived from a clear understanding of who is in the market and what they’re doing.

There is a fourth ingredient in success, and it helps explain why many successful money managers started out as active, short-term traders.  Short-term trading creates multiple learning trials.  If you are investing and holding positions for six months to a year or more, how many learning trials do you obtain over the course of a career?  The daytrader has 200+ learning trials every year–more if they are using simulation tools, engaging in review of recordings of their trades, etc.  That intensity of learning trials acts as a kind of cognitive gym, building the decision making and pattern recognition skills of the trader.   

All the learning trials in the world, however, will not lead to a cumulative result if they are pursued haphazardly.  The reason we see mentoring as a key ingredient in success across disciplines is that the right teaching guides learning trials toward optimal development.  Great athletes don’t just exercise daily; they perform the right exercises.  That is equally true for developing traders.

Further Reading:  Trading With Focus

Published at Tue, 14 Mar 2017 10:42:00 +0000

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Stocks go 104 days without 1% drop

Stocks go 104 days without 1% drop

The U.S. election may have awakened “animal spirits” on Wall Street, but the bears definitely didn’t get the wake-up call. They’ve been hibernating for an unusually-long period.

Monday marks the 104th trading day in a row without a 1% drop for both the Dow and the S&P 500. That’s the longest stretch without a significant selloff since September 1993 for the Dow and December 1995 for the S&P, according to LPL Financial.

It’s an even more impressive feat given all the question marks surrounding President Trump’s “pro-business” agenda of big tax cuts, deregulation and infrastructure spending.

Yet the S&P 500 has soared 11% since the election and the Dow has zoomed more than 2,500 points, blowing past the 20,000 and 21,000 milestones.

The bears seem to have completely disappeared. The last 1% retreat for the market occurred on October 11, nearly a month before Trump’s victory.

“The lack of volatility we have seen the past few months is truly historic,” said Ryan Detrick, senior market strategist at LPL.

missing bear poster stock

“If market history has taught us anything, it is that things do even out eventually. We fully expect more volatility later this year,” he said.

Wall Street’s remarkable period of calm this year is the polar-opposite to last year’s nerve-racking experience. By this point last year, the S&P 500 had already suffered an incredible 15 different 1% declines, including in four of the first five trading days. There were even three plunges of 2% or more as investors freaked out about crashing oil prices and China’s economic slowdown.

Of course, market optimism is very high these days. CNNMoney’s Fear & Greed Index is flashing “greed” and it even briefly tipped into “extreme greed.”

Both JPMorgan Chase(JPM) CEO Jamie Dimon and New York Fed President Bill Dudley have recently said the election has awakened “animal spirits” among investors. They were referring to a term popularized by John Maynard Keynes to describe the human urge to take positive action, even in the face of uncertainty.

Wall Street is clearly excited by Trump’s promise of big tax cuts and stronger economic growth. Bank stocks have skyrocketed on expectations of faster Federal Reserve interest rate hikes and Trump’s pledge to rip up regulation.

Even though the stock market has had some notable up days, those rallies haven’t been ferocious. In fact, Monday is the 59th trading day in a row where the S&P 500 moves less than 1% between its high point and low point. That’s the longest period without a 1% daily range on records going back to 1995, according to LPL.

Some believe that the absence of market turbulence is a sign that investors have become overly confident and aren’t adequately accounting for risks.

“Complacency is high. The wall of worry seems uncharacteristically-low. We’re due for a surprise on the downside,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.

One potential road block for market bulls is the lack of clarity on the timing and size of Trump’s stimulus plans.

The White House has promised tax cuts by August, but that timeframe could get pushed back by struggles to repeal and replace Obamacare.

“The earlier the better on tax reform,” Glenn Hubbard, the former top economist of President George W. Bush, told CNNMoney.

Sandven warned that “delayed progress toward this pro-growth agenda is likely to result in a headwind for stock prices and perhaps a catalyst for a pullback.”

The other problem is that stocks have gotten expensive. The S&P 500 was recently trading at 17.9 times projected earnings, the richest valuation since 2004, according to FactSet.

“With stocks priced to perfection, the market is due for a pullback. We’ve come a long way in a short period,” Sandven said.

–CNNMoney’s Charles Riley contributed to this report.

Published at Mon, 13 Mar 2017 20:47:58 +0000

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Good Models and Bad Models

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By jpeter2 from Pixabay

Good Models and Bad Models

By: Michael Ashton | Mon, Mar 13, 2017


I have recently begun to spend a fair amount of time explaining the difference
between a “good model” and a “bad model;” it seemed to me that this was a reasonable
topic to put on the blog.

The difference between a good model and a bad model isn’t as obvious as it
seems. Many people think that a “good model” is one that makes correct predictions,
and a “bad model” is one that makes bad predictions. But that is not the case,
and understanding why it isn’t the case is important for economists
and econometricians. Frankly, I suspect that many economists can’t articulate
the difference between a good model and a bad model…and that’s why we have
so many bad models floating around.

The definition is simple. A good model is one which makes good predictions if
high-quality inputs are given to the model
; a bad model is one in which
even the correct inputs doesn’t result in good predictions. At the limit,
a model that produces predictions that are insensitive to the quality of
the inputs – that is, whose predictions are just as accurate no matter what
the inputs are – is pure superstition.

For example, a model of the weather that depends on casting chicken bones
and rat entrails is a pretty bad model since the arrangement of such articles
is not likely to bear upon the likelihood of rain. On the other hand, a model
used to forecast the price of oil in five years as a function of the supply
and demand of oil in five years is probably an excellent model, even though
it isn’t likely to be accurate because those are difficult inputs to know.
One feature of a good model, then, is that the forecaster’s attention should
shift to the forecasting of the inputs.

This distinction is relevant to the current state of practical economics because
of the enormous difference in the quality of “Keynesian” models (such as the
expectations-augmented Phillips curve approach) and of monetarist models. The
simplest such monetarist model is shown below. It relates the GDP-adjusted
quantity of money to the level of prices.

M2/GDP and GDP Deflator 1913-2013

This chart does not incorporate changes in money velocity (which show up as
deviations between the two lines), and yet you can see the quality of the model:
if you had known in 1948 the size of the economy in 2008, and the quantity
of M2 money there would be in 2008, then you would have had a very accurate
prediction of the cumulative rate of inflation over that 60-year period. We
can improve further on this model by noting that velocity is not random, but
rather is causally related to interest rates. And so we can state the following:
if we had known in 2007 that the Fed was going to vastly expand its balance
sheet, causing money supply to grow at nearly a 10% rate y/y in mid-2009, but
at the same time 5-year interest rates would be forced from 5% to 1.2% in late
2010
, then we would have forecast inflation to decline sharply over that
period. The chart below shows a forecast of the GDP deflator, based on a simple
model of money velocity that was calibrated on 1977-1997 (so that this is all
out-of-sample).

GDP Deflator, 4q Average 2006-2016

That’s a good model. Now, even solid monetarists didn’t forecast that inflation
would fall as far as it did – but that’s not a failure of the model but a failure
of imagination. In 2007, no one suspected that 5-year interest rates would
be scraping 1% before long!

Contrariwise, the E-A-Phillips Curve model has a truly disastrous forecasting
history. I wrote an article
in 2012
in which I highlighted Goldman Sachs’ massive miss from such a
model, and their attempts to resuscitate it. In that article, I quoted these
ivory tower economists as saying:

“Economic principles suggest that core inflation is driven by two main factors.
First, actual inflation depends on inflation expectations, which might have
both a forward-looking and a backward-looking component. Second, inflation
depends on the extent of slack (or spare capacity) in the economy. This is
most intuitive in the labor market: high unemployment means that many workers
are looking for jobs, which in turn tends to weigh on wages and prices. This
relationship between inflation, expectations of inflation and slack is called
the “Phillips curve.”

You may recognize these two “main factors” as being the two that were
thoroughly debunked
by the five economists earlier this month, but the
article I wrote is worth re-reading because it describes how the economists
re-calibrated. Note that the economists were not changing the model inputs,
or saying that the forecasted inputs were wrong. The problem was that even
with the right inputs, they got the wrong output…and that meant in their
minds that the model should be recalibrated.

Core CPI Inflation, Actual versus Predicted

But that’s the wrong conclusion. It isn’t that a good model gave bad projections;
in this case the model is a bad model. Even having the actual data –
knowing that the economy had massive slack and there had been sharp declines
in inflation expectations – the model completely missed the upturn in inflation
that actually happened because that outcome was inconsistent with the model.

It is probably unfair of me to continue to beat on this topic, because the
question has been settled. However, I suspect that many economists will continue
to resist the conclusion, and will continue to rely on bad, and indeed discredited,
models. And that takes the “bad model” issue one step deeper. If the production
of bad predictions even given good inputs means the model is bad, then perhaps
relying on bad models when better ones are available means the economist is
bad?


P.S. Don’t forget to buy my book! What’s
Wrong with Money: The Biggest Bubble of All
. Thanks!

You can follow me @inflation_guy!

Enduring Investments is a registered investment adviser that
specializes in solving inflation-related problems. Fill out the contact form
at http://www.EnduringInvestments.com/contact and
we will send you our latest Quarterly Inflation Outlook. And if you make sure
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form, we will also send you a copy of Michael Ashton’s book “Maestro, My Ass!”


Michael Ashton

Michael Ashton, CFA
E-Piphany

Michael Ashton

Michael Ashton is Managing Principal at Enduring
Investments LLC
, a specialty consulting and investment management boutique
that offers focused inflation-market expertise. He may be contacted through
that site. He is on Twitter at @inflation_guy

Prior to founding Enduring Investments, Mr. Ashton worked as a trader, strategist,
and salesman during a 20-year Wall Street career that included tours of duty
at Deutsche Bank, Bankers Trust, Barclays Capital, and J.P. Morgan.

Since 2003 he has played an integral role in developing the U.S. inflation
derivatives markets and is widely viewed as a premier subject matter expert
on inflation products and inflation trading. While at Barclays, he traded
the first interbank U.S. CPI swaps. He was primarily responsible for the creation
of the CPI Futures contract that the Chicago Mercantile Exchange listed in
February 2004 and was the lead market maker for that contract. Mr. Ashton
has written extensively about the use of inflation-indexed products for hedging
real exposures, including papers and book chapters on “Inflation and Commodities,” “The
Real-Feel Inflation Rate,” “Hedging Post-Retirement Medical Liabilities,” and “Liability-Driven
Investment For Individuals.” He frequently speaks in front of professional
and retail audiences, both large and small. He runs the Inflation-Indexed
Investing Association
.

For many years, Mr. Ashton has written frequent market commentary, sometimes
for client distribution and more recently for wider public dissemination.
Mr. Ashton received a Bachelor of Arts degree in Economics from Trinity University
in 1990 and was awarded his CFA charter in 2001.

Copyright © 2010-2017 Michael Ashton

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Published at Mon, 13 Mar 2017 09:09:58 +0000

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CVS Antes Up Again in Its Fight to End Tobacco Use

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CVS Antes Up Again in Its Fight to End Tobacco Use

By Daniel B. Kline | March 13, 2017 — 1:05 PM EDT

CVS Health (NYSE: CVS) made headlines in 2014 when it took the then-shocking step of eliminating all tobacco products from its stores.

At the time, CEO Larry Merlo called the move “simply the right thing to do for the good of our customers and our company,” adding that “the sale of tobacco products is inconsistent with our purpose – helping people on their path to better health.” Those were bold statements, and CVS not only went through with getting rid of tobacco, it has aggressively funded anti-smoking efforts.

Now, more than two years after tobacco was last sold in its stores, the company says it plans to fund $10 million in new and expanded programs as part of an effort to create the first tobacco-free generation. The money will support the second year of “Be The First,” CVS’ five year, $50 million commitment to getting young people to stop (or never start) smoking.

“Tobacco continues to be the leading cause of preventable disease and death in the United States, yet 2,100 youth and young adults still become daily cigarette smokers,” said CVS Chief Medical Officer Troyen Brennan in a press release. “CVS Health recognizes that by bringing together experts in the public health community and aggressively implementing strategies to reduce tobacco use, we have the opportunity to deliver the first tobacco-free generation.”

What is CVS doing?

The chain not only sacrificed sales when it dropped tobacco, it has also made a real commitment to ending smoking, specifically among young people. Be the First offers “anti-smoking education, tobacco-control advocacy, and healthy behavior programming,” according to the company. The program, which was launched in March 2016, targets the 3 million elementary school children in the U.S. who “without early tobacco education, may become future tobacco users” as well as adult smokers who may expose children to tobacco use. The program has reached nearly 5 million young people, and it has helped 20 colleges and universities work toward becoming 100% smoke-and tobacco-free.

“In the year since we introduced Be The First, we’ve seen very good progress, but we know there is much more to be done in schools, on college campuses and in our communities,” said CVS Health Foundation President Eileen Howard Boone. “We’re pleased to sustain this momentum by expanding partnerships with best-in-class organizations and identifying new partners that will bring the expertise needed to move us one step closer to the first tobacco-free generation.”

This is about more than business

Dropping tobacco was not a purely altruistic decision for CVS. Selling cigarettes clashed with the image it was trying to create as a company that cares about people’s health, and getting out of the business of profiting from a product that causes disease was good public relations.

Still, CVS could have simply done that. It didn’t have to take up ending smoking among young people as a cause, nor did it have to put up $50 million to do it. However, in this is a case, doing the right thing is also the correct thing for the business. The positive public relations will be worth far more to the company than the money it’s spending.

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Published at Mon, 13 Mar 2017 17:05:02 +0000

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Growing Your Trading By Integrating Quantitative and Discretionary Processes

 

A developing trader makes progress by mimicking a mentor, an experienced and successful trader.  That developing trader becomes an experienced and successful trader by finding multiple mentors and integrating the wisdom and best practices of each.  If you look at training programs from medicine to the military, you’ll find strong mentors and multiple mentors.  We acquire skills and we integrate them: that generates expertise. 

A distinct trend in recent years is using multiple mentors to integrate quantitative approaches to trading with discretionary ones.  A simple example occurred at a firm where I worked, where several of us developed a predictive model for trend days in the stock market.  We examined days that qualified as trend days and days that did not and built a simple model based upon such variables as volume and breadth.  The output from that model was then shared with traders, who integrated the results into their own trading.  So, for example, a trader might focus on stocks most likely to benefit from the trend by looking at volatility, relative strength, etc.  A different trader might use the model output to extend the holding time on a trade that had already hit its first target.

Yet another example of integration would be using historical studies of market tendencies to frame trade ideas.  Some of those studies can be found via Quantifiable Edges and from Paststat and from InvesiQuant.  Still more quant resources can be found via the excellent Quantocracy resource.  Market regimes can change and what happened in history may not be mirrored in the near future, but knowing tendencies from well-constructed studies can tell you what markets *usually* do in a given set of circumstances.  Some of the best discretionary trading comes from occasions when markets fail to do what they “should” be doing, as that tells us that idiosyncratic factors and flows are dominating trade.  

The ability to integrate new information and styles into our trading is what keeps us learning, developing, and adapting to changing markets.  It’s when we don’t integrate that we stagnate.  The most consistent finding I’ve made as a trading coach is that the best traders find multiple ways to win.  Those traders can be successful in multiple market regimes.

Further Reading:  Identifying Trend Days in the Market

Published at Mon, 13 Mar 2017 10:44:00 +0000

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Learning To Read Part 2 – The end of the trend, that was your friend, until it bends

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By Maklay62 from Pixabay

Learning To Read Part 2 – The end of the trend, that was your friend, until it bends

by SCOTTMARCH 11, 2017

The textbooks would have us believe that markets are smooth and orderly. We have a nice downtrend and then when it ends we have a nice uptrend. In theory all we have to do is wait for the right time, buy, profit.

uptrend-downtrend

 

Reality is messy and choppy, and most of the time we are unsure if the old trend is in play, if we have transitioned into a trading range, or are trying to reverse. Each new bar of price action gives us critical information, until we can rule out each of these options. Eventually we get betting odds, and we bet.

Today I’d like to explore the tell tale signs that a new move has the potential to become a trend, and not just a counter trend rally. Then we will look at the signs a trend is ending, accelerating, reversing or transitioning into a trading range. You can use these principles

  • For discretionary trading
  • To get better exits on your systematic trades
  • To identify objective conditions in a trade with open profit where you would want to tighten your stop
  • To identify objective risk/reward points for system building
  • To stop you being a sucker and betting on trend reversal when it’s not going to happen
  • To identify those rare points where you want to be “all in” on trend reversal
  • How, exactly, to trade those “lottery ticket in your pocket” type trades where you get a good entry, for example AAPL in 2003, and you want to ride it all the way to the beach. For those times when banking 10R would be embarrassingly bad.

As we go more advanced with the tape reading you will see repeatable and identifiable conditions which become some of the highest probability outcomes in trading.

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Published at Sat, 11 Mar 2017 20:11:09 +0000

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Schedule for Week of Mar 12, 2017

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By SideHustleCoach from Pixabay

Schedule for Week of Mar 12, 2017

by Bill McBride on 3/11/2017 08:11:00 AM

The key economic reports this week are Retail Sales, Housing Starts, and the Consumer Price Index (CPI).

For manufacturing, February industrial production, and the March New York, and Philly Fed manufacturing surveys, will be released this week.

The FOMC meets on Tuesday and Wednesday, and the FOMC is expected to raise rates at this meeting.

—– Monday, Mar 13th —–

10:00 AM ET: The Fed will release the monthly Labor Market Conditions Index (LMCI).10:00 AM: Regional and State Employment and Unemployment (Monthly) for January 2017

—– Tuesday, Mar 14th—–

6:00 AM ET: NFIB Small Business Optimism Index for February.8:30 AM: The Producer Price Index for February from the BLS. The consensus is for 0.1% increase in PPI, and a 0.2% increase in core PPI.

—– Wednesday, Mar 15th —–

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.Retail Sales8:30 AM ET: Retail sales for February will be released.  The consensus is for 0.2% increase in retail sales in February.

This graph shows retail sales since 1992 through January 2017.

8:30 AM: The Consumer Price Index for February from the BLS. The consensus is for 0.1% increase in CPI, and a 0.2% increase in core CPI.

8:30 AM ET: The New York Fed Empire State manufacturing survey for March. The consensus is for a reading of 15.7, down from 18.7.

10:00 AM: The March NAHB homebuilder survey. The consensus is for a reading of  66, up from 65 in February. Any number above 50 indicates that more builders view sales conditions as good than poor.

10:00 AM: Manufacturing and Trade: Inventories and Sales (business inventories) report for January.  The consensus is for a 0.3% increase in inventories.

2:00 PM: FOMC Meeting Announcement. The FOMC is expected to increase the Fed Funds rate 25 bps at this meeting.

2:00 PM: FOMC Forecasts This will include the Federal Open Market Committee (FOMC) participants’ projections of the appropriate target federal funds rate along with the quarterly economic projections.

2:30 PM: Fed Chair Janet Yellen holds a press briefing following the FOMC announcement.

—– Thursday, Mar 16th —–

Total Housing Starts and Single Family Housing Starts8:30 AM: Housing Starts for February.The consensus is for 1.266 million, up from the January rate of 1.246 million.

8:30 AM ET: The initial weekly unemployment claims report will be released.  The consensus is for 242 thousand initial claims, down from 243 thousand the previous week.

8:30 AM: the Philly Fed manufacturing survey for March. The consensus is for a reading of 32.5, down from 43.3.

Job Openings and Labor Turnover Survey10:00 AM: Job Openings and Labor Turnover Survey for January from the BLS.

This graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Jobs openings were mostly unchanged in December at 5.501 million compared to 5.505 million in November.

The number of job openings (yellow) were up 4% year-over-year, and Quits were down 3% year-over-year.

—– Friday, Mar 17th —–

Industrial Production9:15 AM: The Fed will release Industrial Production and Capacity Utilization for February.This graph shows industrial production since 1967.

The consensus is for a 0.2% increase in Industrial Production, and for Capacity Utilization to increase to 75.4%.

10:00 AM: University of Michigan’s Consumer sentiment index (preliminary for March). The consensus is for a reading of 97.0, up from 96.3 in February.

Published at Sat, 11 Mar 2017 13:11:00 +0000

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Exercising Our Brains for Trading Success

 

Exercising Our Brains for Trading Success

I’m increasingly convinced that cognitive factors, and not just personality ones, differentiate the best traders from the rest.  It’s not surprising that my recent post on a cognitive view of trading psychology has been the most widely read TraderFeed post in many months.  Trading psychology has long focused on emotions as the most important focus in trading performance.  The cognitive view says that it is how we process information that enables us to see patterns, understand relationships, and quickly act upon them.  Personality and emotional factors can certainly impact our information processing, but all the self-help techniques in the world won’t help us if we’re not wired for the kinds of trading we undertake.

Can we train the brain for trading success?  In other words, is it possible to systematically exercise and build those functions that enable us to perceive signals in noisy environments?

I believe the answer is yes, and I will go one step further by proposing that an important element that differentiates successful traders from less successful ones is the quality of their screen time when they are following markets.  The successful traders actively exercise the cognitive functions relevant to their trading while they are preparing for the day, while they are tracking markets, and while they are trading.  Their routines act as a kind of mind gym, building such functions as the capacity for focus, speed of pattern recognition, and the ability to translate perception into action.  The successful trader’s daily routine is an excellent cognitive workout.

The less successful trader might look at the very same markets and patterns, but gets a shitty workout.  Their focus is often divided among online chatting, watching markets, taking breaks, speaking with traders, and reviewing their P/L.  They never engage in any single cognitive activity for long enough–or with enough intensity–to get a proper workout.  As a result, the less successful trader does not develop cognitively in the way that the successful trader does.  The successful trader becomes a better information processor simply because they are spending more time–and especially more quality time–in the activities that build perception, concentration, and decision-making.

I’m currently evaluating a brain exercise system called brainHQ, which has been supported by a range of published research.  That research suggests that regular exercise of brain functions can improve our processing speed, memory, attention span, and more.  I find it quite possible that programs for training traders will increasingly turn to brain fitness tools as a way of helping developing traders become more cognitively fit for trading.  How many aspiring athletes would star on the field if they never utilized tools to develop their strength and aerobic conditioning?  How many traders can we expect to find success if they’re not actively exercising their brains for the right kind of decision-making?

Further Reading:  Training Our Brains For Trading Success

Published at Fri, 10 Mar 2017 11:23:00 +0000

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Trading With Peace of Mind

 

Looking backward at what we did right or wrong and looking forward at what could go right or wrong: both are distractions that keep us from being fully focused on what markets are doing here and now.  To be focused in the here and now, we have to achieve a degree of peace internally.  That means placing both past and future into a perspective that does not color our perception of the present.  It’s when we’re overconfident or underconfident, excited or frustrated, that we’re performance focused and no longer fully market focused.

So how do we learn to keep ourselves centered in the present?  It turns out that three short-term approaches to psychotherapy are particularly helpful as sources of change techniques for those seeking peak performance.  Those approaches are behavioral methods, cognitive methods, and solution-focused methods.  On March 23rd at 4:30 PM EST, I will be offering a webinar for the folks at Futures.io that walks traders through how to use these research-tested techniques in real time to deal with such issues as regret, fear, and frustration.

I recently met with a developing trader at SMB who has achieved a startling degree of success thus far in 2017.  He trades actively every day, so he has enough trades under his belt in the year to demonstrate that his success is more than random luck.  What he’s done that has worked well is:

*  Learn from an accomplished mentor on the trading desk;
*  Keep score on his trading and quickly figure out what he is doing right and wrong so that he can make constant improvements;
*  Work, work, work on his mindset so that he is as clear-headed and receptive to market patterns as possible.

It is through the use of meditation and other methods–as preparation and in real time–that he has accomplished the work on his mindset so that he can be fully focused on the learning.  A major step forward has been the internalization of constructive self-talk.  If he misses a trade or if he takes a loss, he speaks to himself the way a coach would speak to him.  His internal voice moves him forward; it doesn’t keep him chained to the past or caught up in the future.

All of us have that constructive internal voice.  We demonstrate that in the close family relationships, friendships, and romantic relationships that we’ve developed.  Once we can speak to ourselves in ways that we would speak to those we care about, we place past and future in perspective and free ourselves to be fully focused on the present.  In most cases, it’s not a matter of learning new skills.  It’s a matter of learning to apply the skills that we already have.

Hope to see you at the webinar!

Further Reading:  A Powerful Technique for Changing Your Trading Psychology

Published at Thu, 09 Mar 2017 11:17:00 +0000

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Does it Still Pay to Invest in Gold?

 

Does it Still Pay to Invest in Gold?

By Emanuel Balarie | Updated March 9, 2017 — 6:00 AM EST

From gold exchange-traded funds (ETFs) to gold stocks to buying physical gold, investors now have several different options when it comes to investing in the royal metal. But what exactly is the purpose of gold? And why should investors even bother investing in the gold market? Indeed, these two questions have divided gold investors for the last several decades. One school of thought argues that gold is simply a barbaric relic that no longer holds the monitory qualities of the past. In a modern economic environment, where paper currency is the money of choice, gold’s only benefit is the fact that it is a material that is used in jewelry.

On the other end of the spectrum is a school of thought that asserts gold is an asset with various intrinsic qualities that make it unique and necessary for investors to hold in their portfolios. In this article, we will focus on the purpose of gold in the modern era, why it still belongs in investors’ portfolios and the different ways that a person can invest in the gold market.

A Brief History of Gold

In order to fully understand the purpose of gold, one must look back at the start of the gold market. While gold’s history began in 3000 B.C, when the ancient Egyptians started forming jewelry, it wasn’t until 560 B.C. that gold started to act as a currency. At that time, merchants wanted to create a standardized and easily transferable form of money that would simplify trade. Because gold jewelry was already widely accepted and recognized throughout various corners of the earth, the creation of a gold coin stamped with a seal seemed to be the answer.

Following the advent of gold as money, gold’s importance continued to grow. History has examples of gold’s influence in various empires, like the Greek and Roman empires. Great Britain developed its own metals-based currency in 1066. The British pound (symbolizing a pound of sterling silver), shillings and pence were all based on the amount of gold (or silver) that it represented. Eventually, gold symbolized wealth throughout Europe, Asia, Africa and the Americas.

The United States government continued on with this gold tradition by establishing a bimetallic standard in 1792. The bimetallic standard simply stated that every monetary unit in the United States had to be backed by either gold or silver. For example, one U.S. dollar was the equivalent of 24.75 grains of gold. In other words, the coins that were used as money simply represented the gold (or silver) that was presently deposited at the bank.

But this gold standard did not last forever. During the 1900s, there were several key events that eventually led to the transition of gold out of the monetary system. In 1913, the Federal Reserve was created and started issuing promissory notes (the present day version of our paper money) that guaranteed the notes could be redeemed in gold on demand. The Gold Reserve Act of 1934 gave the U.S. government title to all the gold coins in circulation and put an end to the minting of any new gold coins. In short, this act began establishing the idea that gold or gold coins were no longer necessary in serving as money. The United States abandoned the gold standard in 1971 when the U.S. currency ceased to be backed by gold.

The Importance of Gold In the Modern Economy

Given the fact that gold no longer backs the U.S. dollar (or other worldwide currencies for that matter) why is it still important today? The simple answer is that while gold is no longer in the forefront of everyday transactions, it is still important in the global economy. To validate this point, one need only to look as far as the reserve balance sheets of central banks and other financial organizations, such as the International Monetary Fund. Presently, these organizations are responsible for holding approximately one-fifth of the world’s supply of above-ground gold. In addition, several central banks have focused their efforts on adding to their present gold reserves.

Gold Preserves Wealth

The reasons for gold’s importance in the modern economy centers on the fact that it has successfully preserved wealth throughout thousands of generations. The same, however, cannot be said about paper-denominated currencies. To put things into perspective, consider the following example.

Gold, Cash and Inflation
In the early 1970s, one ounce of gold equaled $35. Let’s say that at that time, you had a choice of either holding an ounce of gold or simply keeping the $35. Both would buy you the same things at that, like a brand new business suit, for example. If you had an ounce of gold today and converted it for today’s prices, it would still be enough to buy a brand new suit. The same, however, could not be said for the $35. In short, you would have lost a substantial amount of your wealth if you decided to hold the $35 and you would have preserved it if you decided to hold on to the one ounce of gold because the value of gold has increased, while the value of a dollar has been eroded by inflation.

Gold as a Hedge Against a Declining U.S. Dollar and Rising Inflation

The idea that gold preserves wealth is even more important in an economic environment where investors are faced with a declining U.S. dollar and rising inflation (due to rising commodity prices). Historically, gold has served as a hedge against both of these scenarios. With rising inflation, gold typically appreciates. When investors realize that their money is losing value, they will start positioning their investments in a hard asset that has traditionally maintained its value. The 1970s present a prime example of rising gold prices in the midst of rising inflation.

The reason gold benefits from a declining U.S. dollar is because gold is priced in U.S. dollars globally. There are two reasons for this relationship. First, investors who are looking at buying gold (like central banks) must sell their U.S. dollars to make this transaction. This ultimately drives the U.S. dollar lower as global investors seek to diversify out of the dollar. The second reason has to do with the fact that a weakening dollar makes gold cheaper for investors who hold other currencies. This results in greater demand from investors who hold currencies that have appreciated relative to the U.S. dollar.

Gold as a Safe Haven

Whether it is the tensions in the Middle East, Africa or elsewhere, it is becoming increasingly obvious that political and economic uncertainty is another reality of our modern economic environment. For this reason, investors typically look at gold as a safe haven during times of political and economic uncertainty. Why is this? Well, history is full of collapsing empires, political coups, and the collapse of currencies. During such times, investors who held onto gold were able to successfully protect their wealth and, in some cases, even use gold to escape from all of the turmoil. Consequently, whenever there are news events that hint at some type of uncertainty, investors will often buy gold as a safe haven.

Gold as a Diversifying Investment

The sum of all the above reasons to own gold is that gold is a diversifying investment. Regardless of whether you are worried about inflation, a declining U.S. dollar, or even protecting your wealth, it is clear that gold has historically served as an investment that can add a diversifying component to your portfolio. At the end of the day, if your focus is simply diversification, gold is not correlated to stocks, bonds and real estate.

Different Ways of Owning Gold

One of the main differences between investing in gold several hundred years ago and investing in gold today is that there are many more options to participating in the intrinsic qualities that gold offers. Today, investors can invest in gold by buying:

  • Gold Futures
  • Gold Coins
  • Gold Companies
  • Gold ETFs
  • Gold Mutual Funds
  • Gold Bullion
  • Gold jewelry

The Bottom Line

There are advantages to every investment. If you are more concerned with holding the physical gold, buying shares in a gold mining company might not be the answer. Instead, you might want to consider investing in gold coins, gold bullion, or jewelry. If your primary interest is in using leverage to profit from rising gold prices, the futures market might be your answer
Published at Thu, 09 Mar 2017 11:00:00 +0000

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Fresh evidence women are better investors than men

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State Street: Why we commissioned the Wall St. 'Fearless Girl'
State Street: Why we commissioned the Wall St. ‘Fearless Girl’

  @byHeatherLong

Have you seen the statue of the “fearless girl” facing the Wall Street bull?

State Street Global Advisors put up the statue to mark International Women’s Day and it’s getting a lot of attention.

Here’s one more reason to sit up and take notice: Women are better investors than men, according to a growing body of evidence.

The big investment firm Fidelity says that female investors outperformed males last year by 0.3%. In fact, Fidelity found that females outdid men in the past decade.

Data from Openfolio, an investment tracking app, also found the same trend. Women have topped men every year for the past three years since Openfolio began tracking results.

“Women are doing better than men and with a lot less risk,” says Kathy Murphy, president of personal investing at Fidelity.

Men have a bad tendency to buy and sell stocks too often. Very few people have mastered the art of timing the market. So too much trading eats into the guys’ returns.

2017: The year of ‘financial feminism’

Terrance Odean, a professor at Berkeley’s Haas School of Business, who has spent his career studying investor trends, found that men traded 45% more than women in the 1990s. He blamed it on male overconfidence.

Women, in contrast, tend to be “buy and hold” investors. It’s exactly the advice famous money gurus like Warren Buffett and Jack Bogle give people: Put your money into cheap index funds and then don’t touch it for years — or decades.

“Women have long-term goals, and they stick with the plan,” says Murphy. They focus on saving and investing for retirement or a kid’s college fund, not on outsmarting the market.

But here’s where women still mess up: They tend to be great savers, but they are often fearful of the stock market. They lack confidence about investing, despite a growing body of evidence that women are gifted at it.

Former Wall Street power woman Sallie Krawcheck is on a mission to empower women to be financially savvy. She’s declared 2017 the “year of financial feminism.”

“We women will not be fully equal with men until we are financially equal with men,” Krawcheck told CNN’s Maggie Lake at the New York Stock Exchange. Krawcheck recently launched Ellevest, a financial firm geared entirely toward women. Ellevest’s tagline is “Invest like a woman, because money is power.”

Why women can’t rely on men to handle money

Nearly 90% of women are going to have to take sole control over their finances at some point in their lives, notes Kate Warne an investment strategist at Edward Jones. Women are getting married later, divorcing more and frequently outliving their spouses. They can’t rely on men to handle the money.

“Whether you’re afraid or not, investing is something you need to learn how to do,” says Warne.

She started reading investment advice books after college when she landed her first job. She realized she liked it so much, she changed careers and became an investment adviser.

Women don’t beat men by a huge amount — Openfolio found women outperformed men by about 0.2% last year — but that’s still a “win,” and can really add up over time if women keep their money in the market for decades.

Published at Wed, 08 Mar 2017 20:45:37 +0000

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Pimco revamps BOND ETF, changing fund’s name and managers

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By Trevor Hunnicutt and Jennifer Ablan| NEW YORK

Pacific Investment Management Co (Pimco) is replacing the full slate of managers on its Total Return Active Exchange-Traded Fund (BOND.P) and changing its name, a spokeswoman for the fund management company said on Wednesday, the latest transformation for what was once the largest actively managed ETF.

The fund’s new name will be the Pimco Active Bond ETF. Managers Scott Mather, Mark Kiesel and Mihir Worah are being replaced by David Braun, Jerome Schneider and Daniel Hyman.

The ETF’s ticker, BOND, will remain, a Pimco spokeswoman said.

Once run by Pimco co-founder Bill Gross, the ETF’s assets have fallen to $2 billion from $5.2 billion at its 2013 peak.

The new managers bring “the right mix of expertise and experience in an evolving ETF investing environment where clients are seeking more income,” at a time of low rates and low returns, the spokeswoman said in an emailed statement.

The ETF will change its stated goals, including adopting new rules that allow fund managers to build more exposure to high-yield junk bonds and have more flexibility on how much interest rate risk they will take on. Investors expect U.S. interest rates to rise.

The changes are expected to take effect by May 8, pending regulatory approvals.

The Pimco Total Return Active ETF was an actively managed intermediate-term ETF intended to mimic the strategy of Pimco’s flagship mutual fund, the Pimco Total Return Fund, which was also run by Gross.

BOND first began losing assets in September 2014 after the U.S. Securities and Exchange Commission said it was looking into whether Pimco inflated returns of the fund, then managed by Gross. That same month, Gross abruptly left Pimco in a messy split. He now works for Janus Capital Group Inc (JNS.N)

Pimco agreed in December to pay $20 million to settle charges it misled investors about the fund’s performance. The company did not admit or deny the findings, and said at the time that it has enhanced its policies.

Pimco, which managed nearly $1.47 trillion on Dec 31 and is based in Newport Beach, Calif., is a unit of German insurer Allianz SE (ALVG.DE).

“While BOND was a strong asset gatherer in early days, it has shed assets,” facing competition from funds managed by Fidelity Investments and DoubleLine Capital LP’s Jeffrey Gundlach, said Todd Rosenbluth, director of ETF and mutual-fund research at S&P Global Market Intelligence.

“While investors will likely wait to see what changes in the exposures, the move could restart asset growth.”

Schneider currently manages Pimco’s largest ETF, the Pimco Enhanced Short Maturity Active ETF (MINT.P), and runs the company’s short-term and funding desk.

Mather, Kiesel and Worah will continue to manage the Pimco’s flagship mutual fund, the Pimco Total Return Fund, which was once the world’s largest bond fund at a peak of $292.9 billion in assets.

The Total Return Fund now oversees assets under management of $74 billion as of the end of February, despite solid performance over the last 12 months.

(Reporting by Trevor Hunnicutt and Jennifer Ablan; Editing by Frances Kerry and David Gregorio)
Published at Wed, 08 Mar 2017 19:42:36 +0000

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The Challenge of Changing Market Regimes

 

The Challenge of Changing Market Regimes

In the post on when technical analysis works and when it doesn’t, I proposed that markets move in and out of periods of stability.  During stable periods, we have relative uniform participation in the market and those participants are doing relatively uniform things in terms of buying and selling.  A technical analysis indicator that “works” during such a stable period will tend to continue working as long as that uniformity continues.  Once we see a different level of participation (volume) in the market and/or once the distribution of buying and selling among participants shifts, then new patterns emerge.  The technical patterns that had been reliable no longer are such going forward.

This alternation of stability and change occurs at all time frames for markets.  It is a major reason why trading is so difficult, and why it is more difficult than many other performance domains.  The football field does not occasionally change its dimensions; nor do the rules of football shift part way into a game.  The equivalent of those things happens daily in financial markets.

The ability to rapidly detect and adapt to regime shifts is a characteristic we see among successful traders and money managers.  This is as much a cognitive set of skills as a set of personality strengths.

Above we see SPY going back to the start of 2015 (blue line).  The red line is a cycle measure derived from the proportion of stocks trading above various moving averages.  It acts as an overbought/oversold measure.  Note the change in the distribution of the cycle measure from early 2016 forward.  It was at that time that we saw a corrective period end and a bull market leg begin.  The market still cycles (we are in a corrective phase currently), but the dimensions of those cycles are greatly different in an uptrend than in a flat/corrective market.

A major challenge for daytraders is that markets will change regimes during the trading day, with greatest participation early and late in the day and different levels of buying and selling at those times.  This is also true for portfolio managers, many of whom develop fundamentally-based ideas that are meant to play out over periods of time in which markets are likely to change their patterns.  The trader who displays “good timing” is one that is sensitive to regime shifts.  If we think of technical indicators more as barometers than as crystal balls, they can be helpful in sensitizing us to the emergence of new regimes.

Further Reading:  Finding Good Trades

Published at Wed, 08 Mar 2017 10:23:00 +0000

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Dick’s Sporting Goods Dropping Unpopular Brands

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By tpsdave from PixabayDick’s Sporting Goods Dropping Unpopular Brands

Dick’s Sporting Goods (NYSE: CMG) is one of the last chains standing in a niche that has been devastated by the rise of e-commerce.

Its nearest competitor, Sports Authority, went out of business last year, and even that hasn’t made the company’s path to success any smoother. In its continuing effort to remain competitive, the largest remaining sporting-goods chain has evaluated its merchandise, and it has reached an interesting decision.

Dick’s has decided to drop up to 20% of its vendors, Fox Business reported. CEO Edward Stack said pairing down its vendor list will “deliver a more refined offering for our customers” and enable Dick’s stores to “stay ahead of consumer trends.”

He made the remarks during a call with analysts March 7 to discuss the chain’s fourth-quarter results. Stack also said that none of the company’s 10 largest vendors would be cut, and noted that the products supplied by some vendors will be replaced by private-label brands to increase profitability.

Dick’s has been doing well

While the company is making changes, it’s worth noting that Dick’s had a solid Q4. Income came in below Dick’s own forecasts at $0.81 a share ($1.15 to $1.27 a share was the range expected). That number, however, was dragged down by $0.51 per share due to charges relating to the change in merchandising strategy noted above.

Sales, however, were up nearly 11% for the quarter and same-store sales increased by 5%.

“We are very pleased with our strong fourth quarter results…driven by strong comp sales and gross margin expansion. We realized meaningful market share gains and saw growth across each of our three primary categories of hardlines, apparel and footwear,” said Stack in the earnings release. “In 2016, we capitalized on opportunities in the marketplace, and further solidified our leadership position by enhancing the shopping experience in our stores, building brand equity and successfully relaunching our eCommerce business on our own web platform.”

What’s next?

The chain has obviously learned the lesson from Sports Authority’s collapse that it never pays to be complacent, even when things seem to be going well. Cutting vendors and making major inventory changes is never easy, but Dick’s clearly has a willingness to make tough choices.

These moves will cause some short-term pain, but in the long run should pay off. The retailer needs to constantly evaluate its operations and adjust as the market changes if it wants to maintain its leadership position in the market.

10 stocks we like better than Chipotle Mexican Grill
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Daniel Kline has no position in any stocks mentioned.
Published at Tue, 07 Mar 2017 20:42:02 +0000

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Investor Group Lobbies for Indexes to Exclude Snap

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Investor Group Lobbies for Indexes to Exclude Snap

By Eric Volkman | March 6, 2017 — 5:55 PM EST

Last week’s IPO of hot messaging-app purveyor Snap (NYSE: SNAP) was a runaway success for many investors. Others, however, are not happy about how it was effected, and are taking their grievance to the owners of the most influential stock indexes.

The Council of Institutional Investors (CII), a group that represents a number of investment funds and other active stock buyers, is lobbying S&P Global (NYSE: SPGI) unit S&P Dow Jones Indices and MSCI (NYSE: MSCI) to exclude Snap from their indexes.

These investors are uncomfortable with the fact that the Snap stock distributed in the IPO carries no voting rights for their shareholders. This prevents those investors from influencing matters such as the company’s strategic direction, and its executive compensation packages.

Last month, CII sent Snap a letter requesting that the company reconsider its plan to sell only non-voting shares. In response, Snap Chairman Michael Lynton quoted his company’s S-1 IPO registration form saying that such a structure, “which prolongs our ability to remain a founder-led company, will maximize our ability to create stockholder value.”

In an interview with Reuters, CII Deputy Director Amy Borrus said of Snap, “They’re tapping public markets but giving public shareholders no say.”

“What we would like to see at the least is for the indexes to exclude new no-vote companies,” Borrus said in the interview.

Meetings with both companies have been set for later this week. S&P runs the S&P 500, arguably the most influential large-cap stock index on the U.S. market. MSCI operates a host of popular indexes that track the world’s debt and equity markets.

10 stocks we like better than MSCI
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Eric Volkman has no position in any stocks mentioned.
Published at Mon, 06 Mar 2017 22:55:02 +0000

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Netflix, Facebook and other techs remain red hot

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Tech firms take travel ban opposition to court
Tech firms take travel ban opposition to court

Maybe it’s despite Trump, or because of Trump — after all, he is also promising to stimulate the economy with tax cuts, more government spending on infrastructure and fewer regulations — many big tech stocks are on fire this year.

The so-called FANG stocks of tech, Facebook, Amazon, Netflix and Google, have all soared in 2017.

Facebook(FB, Tech30) is up nearly 20%. Amazon(AMZN, Tech30) has gained 12%. Netflix(NFLX, Tech30) is up 14%. And Google parent company Alphabet(GOOGL, Tech30) is up 7%.

And don’t forget Apple(AAPL, Tech30). It’s the best performer in the Dow this year, rising 20%. Fellow Dow component Cisco(CSCO, Tech30) is up more than 13% too.

All six stocks are part of the Nasdaq, which has gained 8% and has outperformed the Dow and S&P 500.

The solid performance of these companies has helped push the Nasdaq to within spitting distance of topping the 6,000 mark for the first time ever.

Related: These 10 stocks dominate the market

How long will it take for the Nasdaq to get to 6,000? That probably will depend on earnings. Most tech companies reported solid results for the fourth quarter and have issued good guidance for the first quarter and 2017.

While many investors are obsessed with news from Washington (and what’s popping up on Trump’s Twitter accounts) these tech giants should keep doing well regardless of the political landscape since they are leaders in their respective industries.

“There are some meaningful fundamental drivers in the market right now,” said David Jilek, chief investment strategist at Gateway Investment Advisers. “It’s not just the Trump rally.”

Just look at Netflix, for example. The stock rose Monday after UBS analyst Doug Mitchelson upgraded it to a buy.

He boosted his subscriber targets for the company — and said that even though Trump’s new FCC chair may eliminate Net neutrality rules that now help Netflix, he’s not overly concerned that regulatory changes will hurt Netflix or other techs too severely.

There’s also the fact that other Trump policies — particularly tax reform — could boost tech stocks substantially.

If Apple, Microsoft(MSFT, Tech30), Google, Oracle(ORCL, Tech30), Cisco and other large techs with a lot of cash overseas are allowed to bring the cash back, or repatriate it, at a lower tax rate, they may invest more in R&D, buy back stock, boost dividends or acquire more companies.

And at the end of the day, as long as investor sentiment about Trump remains strong — CNNMoney’s Fear & Greed Index continues to show signs of Greed in the market — then big tech stocks and other blue chips should continue to lead.

“This is still the most hated bull market ever but we’re not seeing any signs of that trend turning,” said Scott Colyer, CEO & chief investment officer of Advisors Asset Management.

Published at Mon, 06 Mar 2017 19:06:16 +0000

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‘Green’ funds flush with new cash, challenges as Trump era dawns

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By David Randall| NEW YORK

Environmentally conscious investors are using their pocketbooks to protest President Donald Trump’s plans to slash environmental regulations, fueling a rally in funds that only invest in companies that meet progressive criteria for sustainability.

From the start of November to the end of January, investors poured $1.8 billion into actively managed equities funds in the “socially responsible” category, according to Lipper data. In the same period, there was a net outflow of $133 billion from funds that do not have environmental or social mandates.

Trump was elected president on Nov. 8.

Investors worried that Trump’s policies may imperil causes they believe in are hoping an influx of flows will help keep companies alive.

“If clients see the federal government withdrawing from a space they think is important, they may actually be more active in wanting to enforce their views through the dollars allocated,” said Vincent Reinhart, chief economist at Standish Mellon Asset Management.

The inflows are a boon for fund managers but also a challenge, requiring them to find companies whose share prices have a chance to climb despite less favorable federal policies.

For instance, shares of solar energy companies took a beating after the election, sliding 11 percent by year end on concerns the future of U.S. tax credits under a Trump administration, though they have recovered somewhat since then.

Still, cautious fund managers from Fidelity, New Alternatives, Calvert Investments and others are scrutinizing water technology and wind power shares, which should benefit from new federal infrastructure spending and a push by states such as California toward more renewable power generation.

Managers say water technology stocks should see an uptick from Trump’s campaign promise to spend $1 trillion on repairing and improving the country’s infrastructure. Wind stocks are attractive as that energy source is proving more cost-effective in growing areas of the country like California, which plans to get half its energy from renewable sources by 2030.

“If you look at where the policy is changing the fastest, it’s at the state level, and we see places like California continuing on that trend regardless of what is happening on the federal level,” said Kevin Walenta, who manages the Fidelity Select Environment and Alternative Energy portfolio. He has been adding to his positions in Spanish wind energy company Iberdrola SA (IBE.MC) and US-based water and plumbing company Comfort Systems USA Inc (FIX.N).

BETTING ON STATE POLICIES

Trump has not yet called for ending tax credits for solar and other renewable energy, though he has expressed doubt about the role of solar energy, bemoaned the loss of coal-mining jobs and blamed wind turbines for ruining picturesque landscapes.

Ahead of the election, power companies had already started to pivot away from solar and invest more in wind, with companies including Southern Co (SO.N), NextEra Energy Inc (NEE.N) and Xcel Energy Inc (XEL.N) announcing plans to expand wind-generating capabilities at a time when technology has helped lower its cost.

Wind power costs average between $32 and $62 per megawatt hour before subsidies, compared with an average between $49 and $61 per megawatt hour for utility-scale solar arrays without subsidies, according to a December 2016 report from Lazard. Coal power, which Trump has pledged to revive, costs between $60 and $143 per megawatt hour, the report notes.

With that cost structure, along with the potential increase in jobs from building and maintaining wind turbines, even solidly Republican states should continue to invest in renewables, said Murray Rosenblith, co-portfolio manager of the New Alternatives Fund (NALFX.O).

Rosenblith has been adding to his positions in wind companies Vestas Wind Systems (VWS.CO) and Gamesa Corporacion Tecnologica SA (GAM.MC), both of whose shares are up 10 percent or more since the start of the year.

“These are growing industries in states that are bringing back jobs,” he said. “Even if Trump wants to pull tax credits back as a political gesture he’s not going to find a lot of support in the party at large.”

(Reporting by David Randall, Ross Kerber and Nichola Groom; Editing by Jennifer Ablan and David Gregorio)
Published at Fri, 03 Mar 2017 20:00:58 +0000

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Silver Smash Down, our View

 

Silver Smash Down, our View

By: readtheticker | Sat, Mar 4, 2017


Yikes!

Believe it or not the big boys of the trading world (market makers, specialists,
hedge funds, etc) prefer to accumulate on the down swing, cause if they tried
it on the up swing, they would be buying against themselves, and if no down
swing is present, create one and forcing the weak hands to sell!

More from RTT
Tv

If you are a fan of the BBC, this is scene from ‘Only Fools and Horses’ at
the poker table sums up the stock market game very well. Bluffing, trickery,
cheating and the winner takes all if you are not caught! ha!!

Investing Quote…

“When I couldn’t play according to my system, which was based on study
and experience, I went in and gambled. I hoped to win, instead of knowing
that I ought to win on form.”
~ Jesse Livermore

“To me, the ‘tape’ is the final arbiter of any investment decision. I have
a cardinal rule: Never fight the tape!”
~ Martin Zweig

“Investing should be more like watching paint dry or watching grass grow.
If you want excitement, take $800 and go to Las Vegas.”
~ Nobel Laureate
for Economics Paul Samuelson

“It’s not what you own that will send you bust but what you owe.” ~
Anon

“A market is the combined behavior of thousands of people responding to
information, misinformation and whim.”
~ Kenneth Chang


readtheticker

readtheticker
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and Wyckoff with a few of our own proprietary tools. Readtheticker.com provides
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financial planners, hedge fund traders or investment advisors, we are private
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Published at Sat, 04 Mar 2017 17:27:31 +0000

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The Real Way to Develop Trading Expertise

 

The Real Way to Develop Trading Expertise

When developing traders want to improve their learning of markets, one of the first strategies they turn to is keeping a journal.  They write down what they did right and wrong, and they might make note of goals for the next trading day or week.  That is all well and good, especially when today’s observations translate into tomorrow’s goals and tomorrow’s goals frame the next day’s concrete plan of action.  But is this kind of journaling sufficient to supercharge a trader’s learning curve?

I think not.

Think about the developing basketball player.  He or she does not simply play in a game, shower up, and then write observations and goals in a journal.  If that were the extent of preparation, fans could hardly expect to see improvement from game to game.  Rather, the player spends considerable time with the coach reviewing the game in detail, with a focus on game film.  The player uses the film to watch his or her performance and observe improvements that need to be made.  Then, in practice sessions, those desired improvements become the focus of both the player’s and the coach’s attention.

In other words, the basketball player does not wait until the next game to make needed improvements and work on goals.  The player is working on those areas during multiple practice sessions so that the improvements have already been made by the time the next game begins.

That is what supercharges learning.

Above you can see one of the products of my current performance experiment.  It’s a single screen that captures the information that is most crucial to my decision making:  volume (participation in the market); buying/selling activity (upticks/downticks); and key price levels at which participation and buying/selling are occurring.  Watching the evolution of these variables during the day is key to finding points at which buying/selling expand/dry up, points that provide good risk/reward for short-term trades.

But where the experiment begins is after the session close.  That’s when I return to the chart and advance it bar by bar and review my thought processes as the day progresses.  That slow motion review allows me to observe what I missed during the day session and replay it and replay it until it is cemented in my mind.  The review also enables me to pick up on setups that recur during stable market regimes.  This is a way of building a trader’s cognitive development, sharpening the trader’s perception, and finding opportunities in different market conditions, all of which are every bit as important as working on our emotions. 

Look at the greats in any sport.  They spend much more time practicing and honing their craft than actually performing.  There’s a lesson in that.

Further Reading:  Patterns of Efficiency in the Market 

Published at Sat, 04 Mar 2017 12:49:00 +0000

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More Downside Potential in the Gold Stocks

by Stevebidmead from Pixabay

 

More Downside Potential in the Gold Stocks

By: Jordan Roy-Byrne | Fri, Mar 3, 2017


While we expected the gold stocks to correct and test GDX $22 and GDXJ $35,
we did not expect it to happen so quickly. It literally took only three days!
Gold stocks rebounded on Friday and managed to close the week above those key
levels. While gold stocks could bounce or consolidate for a few days, we would
advise patience as lower levels could be tested as spring begins.

The weekly candle charts of GDX and GDXJ are shown below along with their
80-week moving average. For the entire week, GDX and GDXJ declined 8% and nearly
12% respectively. Although miners recovered Friday, the weekly candles signal
the kind of selling pressure that do not exactly mark “higher lows” within
an uptrend. In other words, while miners could recover for a few days or even
a week or two, I would expect lower levels to be tested. That essentially includes
the 80-week moving averages and the December lows.

VanEck Vectors Gold Miners ETF and Junior Gold Miners ETF Weekly Charts

In order to get a sense for the strong support levels, I use a daily line
chart which helps to smooth out the volatility. The miners essentially have
two points of strong support. The first is a wide area that includes $20-$21
for GDX as well as $31-$32 for GDXJ. That target area includes the 400-day
moving average for both GDX and GDXJ. If that target area fails to hold for
a few days or even a week then look for strong support at the December lows.

VanEck Vectors Gold Miners ETF and Junior Gold Miners ETF Daily Charts

In short, the next quality buying opportunity figures to be at a retest of
the 400-day moving average or perhaps a retest of the December lows. A weekly
close above GDX $25 and GDXJ $40 would invalidate our cautious view. We expect
the next several months could be a grind as the sector oscillates between support
and resistance. It’s hard to do but the way to play that is to buy weakness
and avoid chasing strength.


For professional guidance in riding this new bull market, consider
learning more about our premium
service
including our current favorite junior miners.


Jordan Roy-Byrne

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Published at Fri, 03 Mar 2017 15:03:20 +0000

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