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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.

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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
www.readtheticker.com/
www.readtheticker.com/Pages/Blog1.aspx

We are financial market enthusiasts using methods expressed by the Gann, Hurst
and Wyckoff with a few of our own proprietary tools. Readtheticker.com provides
online stock and index charts with commentary. We are not brokers, bankers,
financial planners, hedge fund traders or investment advisors, we are private
investors.

LEGAL DISCLAIMER: The material is presented for educational purposes
only and may contain errors or omissions and are subject to change without
notice. Readtheticker.com (or ‘RTT’) members and or associates are NOT responsible
for any actions you may take on any comments, advice,annotations or advertisement
presented in this content. This material is not presented to be a recommendation
to buy or sell any financial instrument (including but not limited to stocks,
forex, options, bonds or futures, on any exchange in the world) or as ‘investment
advice’. Readtheticker.com members may have a position in any company or security
mentioned herein.

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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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Using Trading Metrics to Get to the Next Level of Performance

 

Using Trading Metrics to Get to the Next Level of Performance

The hallmark of performance improvement is keeping score with relevant metrics.  If a baseball pitcher is working on performance, the metrics might be hits and runs allowed; number of walks given up; percentages of balls and strikes thrown; success at getting outs with right vs. left-handed hitters; etc.  Then the metrics can get more detailed.  How does performance vary with men on base vs. no men on base?  How does performance vary during early vs. middle vs. late innings?  How does performance vary when throwing breaking balls vs. fast balls?

By slicing and dicing performance data, we can gain a valuable window on strengths and weaknesses and areas to target for improvement.  Of course, the data must be collected over a sufficient time that we see meaningful trends and differences, not just random changes.  During any week, a pitcher may do better or worse in a category simply because of normal variation in performance.  It is over time that we see important distinctions emerge.

It is common for performers to have blind spots in their self assessments.  A simple example would be driving skill.  The great majority of drivers rate themselves as better than average when we know that, statistically, that can’t be the case.  If we had on-board computers calculating things like speed, braking time, closeness to other vehicles, etc., we could more accurately detect who was driving well and who wasn’t.  Indeed, the metrics would detect areas to focus upon to improve driving that the driver might not be aware of at all.

So it is with trading.  We write in journals and we assess our performance, but rarely do we take a hard look at actual performance data.  Very often, if we don’t measure it, we can’t manage–and improve–it.  Here are a few examples of traders I’ve recently worked with who have used metrics to get to the next level of performance:

*  A diligent trader measured confidence level in each trade taken based upon the evidence in favor of that trade idea.  The trader then tracked the hit rate on high confidence trades versus others.  When he saw that the high confidence trades actually had a greater likelihood of being profitable, he began sizing those larger and making more money;

*  A wise portfolio manager went back to previous trades and calculated the P/L on those trades if the entries had been made at the end of the trading day rather than when they had actually been made, during the day.  The profitability of the trades improved markedly simply by entering on an end of day basis.  When entering during the day, the trader tended to buy strength and sell weakness out of a fear of missing the move, creating poor trade location and diminished reward-to-risk.

*  A motivated trader working on becoming better at generating ideas kept track of the correlation of his P/L with his hedge fund overall, with the markets he was trading, and with hedge fund industry statistics.  Over time, he saw a reduced correlation as he traded some unique strategies and expressed views in more unique ways.

*  A concerned trader working on discipline and taking better trades calculated her hit rate on trades (percentage of winning vs. losing trades), and also compared the average size of winning vs. losing trades.  We additionally calculated forward P/L after runs of recent winning and losing trades.  All of these helped to measure whether she was becoming more selective in her trading, whether she was engaging in sound risk management, and whether she was avoiding overconfidence and underconfidence after winning and losing periods.

Almost any trading goal that we can set can be measured with the right metrics.  We may feel we’re getting nowhere or we may delude ourselves that we’re making progress, but over time the numbers will tell us where we truly stand.  Focusing on improving our metrics is a great way of improving our trading processes and not becoming overly focused on short-term P/L.

What are you working on right now and how are you measuring and recording it?

Further Reading:  Using Metrics to Discover Your Trading Psychology

Published at Fri, 03 Mar 2017 10:32:00 +0000

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The bump isn’t just Trump: What’s driving the stock rally

Photo: Richard Drew /Associated Press

The bump isn’t just Trump: What’s driving the stock rally

STAN CHOE, ASSOCIATED PRESS

NEW YORK — The stock market is hitting new heights, and yes, excitement about President Donald Trump’s policies is part of the reason for it. But it’s not the only one, analysts say.

Even if Trump had lost the election, many professional investors and analysts say they still would have expected stocks to rise, just perhaps not to the same degree. The Standard & Poor’s index has leapt 11.6 percent since Election Day, packing more gains into four months than it’s had in five of the last six full years. It dipped a bit Thursday, but it’s still close to its record set a day earlier.

Here’s a look at some of the factors behind the strong run for stocks:

Trump bump: The first reaction for markets to Trump’s win of the White House was confusion. Many investors had been expecting a victory for Hillary Clinton, and markets around the world tumbled on election night as the result became apparent. But they reversed course within hours. The reason: Investors are expecting the Trump White House to push through tax cuts for businesses and to loosen regulations on them.

Lower tax bills for companies should lead to an immediate rise in earnings, and stock prices tend to track profits over the long term. Easier regulations should also help businesses, the thinking goes, particularly big banks and other financials that have been under restrictions imposed following the financial crisis.

Financial stocks have been the best-performing sector by far of the 11 that make up the S&P 500 since the election. Besides the hope for looser regulations, analysts are also excited about the prospect for bigger profits given recent gains in interest rates, which will make lending money more profitable.

Improving economy: Growth has been frustratingly slow since the end of the Great Recession, but the job market is picking up steam. The unemployment rate in January was 4.8 percent, and economists see the economy as close to full employment. A report on Thursday showed that the fewest number of workers applied for unemployment benefits last week since Richard Nixon was in the White House.

Improvement was underway before Trump entered the White House, but his election has spurred things along. Optimism among small businesses, for example, spiked higher after the election and is now at its highest level since 2004, according to surveys from the National Federation of Independent Business.

Confidence also jumped for regular households following the election, and consumer confidence is at its highest level since the summer of 2001. If that translates into more purchases at stores and elsewhere, it should drive even more economic growth.

Other economies around the world are also improving, raising expectations for profits of big U.S. companies, which do a lot of their business overseas.

Investor confidence: Confidence has spread even to regular investors.

After years of hiding out in bonds and other safer investments, retail investors began creeping back into stock mutual funds and exchange-traded funds following the election. Investors plugged $20.7 billion into U.S. stock funds in November, the biggest month in nearly two years. They’ve followed that up with more purchases. That buying has helped to bid up stocks even more.

Corporate profits: Big businesses are finally earning bigger profits again.

Earnings per share for companies in the S&P 500 were nearly 6 percent higher last quarter than a year earlier, with nearly all of the companies reporting, according to S&P Global Market Intelligence. It’s a sharp turnaround from a year ago, when low oil prices and other factors were pulling down profits for S&P 500 companies. Profit growth was particularly strong for technology and financial companies. Microsoft’s earnings rose on stronger sales of business software, for example, and investment banks reported a strong quarter for their trading operations.

But just as each of these pillars has helped to lift stocks in recent months, a weakening of any one of them could remove some support. If tax cuts come later than expected, or if they end up being only minor ones, it could mean a drop for stocks.

Critics also worry that that stock prices have run up at a time when they were already looking overpriced relative to their earnings. One popular way to measure whether the stock market is expensive or not is to compare the S&P 500’s level against its earnings over the prior 10 years, adjusted for inflation. By that measure, which was popularized by Nobel-winning economist Robert Shiller, the S&P 500 is close to its most expensive level since the dot-com bubble was deflating in 2002.

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History In The Making

 

History In The Making

Ludwig van Beethoven’s Symphony No. 7 in A major, consists of four incredible movements and was composed between the years 1811 and 1812, at which time the poor man had already turned almost completely deaf. I must admit that listening to this symphony in particular often brings tears to my eyes. First as a visceral response to its unparalleled beauty and technical perfection, but even more so knowing that Beethoven never had been able to actually listen to his own creation.

The story almost seems like a cruel punishment of the Gods portrayed in ancient Greek or Roman mythology. To be handed such a divine talent or gift, but at the same time losing your own ability to enjoy it the more you actually use it. I can only imagine the mental anguish and emotional torment Beethoven was forced to endure over the course of about 20 years up until his death. He died pretty poor as most of his income was dependent on live performances (Spotify wasn’t available until about 180 years later), which obviously turns into a tough act to pull off if you’re as deaf as rock wrapped into a blanket.

I sometimes wonder if the knowledge of his future fame would have offered him much solace. Knowing the mentality of the Germans quite well as I sprung from that same gene pool I can assure you that we are quite a narcissistic bunch underneath the cold exterior. So my hunch would be that it would probably offered him at least some comfort. What impresses me the most however is that his torment did not detract him from his mission to do what he was born to do and he continued writing two more symphonies of which the 9th is the one he most definitely never heard a single tone.

Now think about that next time when you’re having a tough day or when you find yourself blaming others or your circumstances for not being able to pursue your dreams. Beethoven was a giant and unfortunately they don’t make them like this anymore.

2017-03-02_spoos_update

Now what inspired this intro was the concept of perfection, to which LVB’s 7th symphony is without doubt a timeless example. When it comes to trading of course we sometimes refer to charts or campaigns in an emotional fashion, but rarely do they entail the concept of perfection and beauty. But if I look at our entry three weeks ago and consider the ensuing rally then I cannot help but feel awe and joy. For one we were able to jump on board and that’s on us, we should be proud. But this rally stands on its own in that it is almost historical in its relentless propagation.

If someone would ask me to point toward one of the best campaigns in my life then this one would probably be among the top three. I remember riding gold and crude a year or two ago but although those rallies were impressive I believe they are thwarted by this one. Could we be looking at perfection here? A rally that future traders will point toward and say – “heck grandpa/grandma, I wish I had been around to jump on that one.” And you’ll say “well, as a matter of fact…”

Anyway, this campaign is now bordering the ridiculous and I’m now advancing my stop to below the 2380 mark. There’s really nothing left to be said here – technically we are in uncharted territory and it’ll end when it will end. We don’t ask questions and ride it until that moment arrives.

2017-03-02_silver_update

Silver hasn’t gone anywhere and my trailing stop remains where it is. Could we be painting a little pennant here? If so then we’re in good shape but we could fall prey to a fake out spike lower. I’m comfortable trailing where I’m at however.

2017-03-02_gold_setup

Gold has lost much of its luster in the past few days but I think we’ve got a possible long candidate here again once the short term panel paints something resembling a spike low preferably followed by a retest. I very much like the context on the daily panel. Although gold has been pounded lately I think this may be the big shake out before a jump higher. We’ve accumulated a ton of support context here just a few handles away and the potential for a continuation of the current daily trend is pretty good.

2017-03-03_events

Yellen is scheduled to deliver a speech tomorrow and perhaps that’s why equities are in a rush to paint a bit more green before she says something stupid. I for one won’t add any more exposure until then. Ms. Market has been good to me/us and there’s no reason to test my luck.
Published at Thu, 02 Mar 2017 14:26:07 +0000

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Yelp Inc. Buys Nowait in $40 Million Deal

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Yelp Inc. Buys Nowait in $40 Million Deal

By Tim Brugger | March 2, 2017 — 1:42 PM EST

Offering what it bills as “the industry’s leading waitlist system and seating tool,” Pittsburgh-based Nowait is now fully owned by its one-time partner and investor, Yelp (NYSE: YELP). Yelp’s connection with Nowait began in August 2016 with an $8 million investment. By October, Yelp had integrated Nowait into its industry-leading app, where it quickly became “a valuable addition to our overall restaurant offerings.”

Yelp added that the $40 million all-cash deal for the remaining stake in privately held Nowait closed on Feb. 28. At the end of last quarter Yelp had approximately $480 million in cash, equivalents, and short-term securities on its balance sheet.

Nowait began in Pittsburgh, a city notorious for restaurants that don’t take reservations, and was an instant hit locally. Today, it has arrangements with an estimated 4,000 casual dining restaurants in the U.S. and Canada. Participating restaurants are able to share seating availability with mobile users in real time. Prospective customers can then “get in line” for a table remotely via the app.

Yelp co-founder and CEO Jeremy Stoppelman said of the deal, “With this acquisition, we’ll make even bigger strides in the restaurant industry by allowing Yelp users to more quickly move from search and discovery to transacting at a local business.”

Nowait’s focus on consumers in search of casual dining is due to the segment’s popularity. According to Statista, 54% of U.S. diners eat in a casual establishment at least once monthly, three times more than patronize fine-dining restaurants.


10 stocks we like better than Yelp
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Yelp wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of February 6, 2017

Tim Brugger has no position in any stocks mentioned

Published at Thu, 02 Mar 2017 18:42:02 +0000

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This Indicator Points to a Top-Heavy Stock Market

 

This Indicator Points to a Top-Heavy Stock Market

The S&P 500 index reached new highs following President Trump’s speech to Congress that promised increased infrastructure spending, lower corporate taxes, and less red tape for the financial industry. At the same time, billionaire investor Warren Buffett suggested that stocks are comparatively cheap based on where interest rates are in an interview with CNBC, and FactSet’s Earnings Insights showed two-thirds of S&P 500 companies beating Q4’16 estimates.

Despite these positive developments, the CME Group’s FedWatch points to a 68.6% chance of a March interest rate hike and FactSet’s data shows that two-thirds of companies issued negative earnings guidance for Q1’17. The combination of rising interest rates and slower earnings growth could force valuations to move lower, especially with the index’s price-earnings ratio standing at 26.9x – significantly higher than its 14.65x mean.

Technical indicators seem to confirm that equity valuations have become frothy and a downturn could be a possibility over the coming weeks. In particular, more than 400 S&P 500 components are trading above their 200-day moving average, which is the highest level in at least a year. The last time these levels were reached in early-2015 and late-2015, equities moved significantly lower to more rational price points from a technical perspective.

The S&P 500 index’s relative strength index (RSI) of 81.86 is a further sign of an overextended market with 70.0 being the upper bound for the indicator. However, the moving average convergence-divergence (MACD) remains in a bullish uptrend dating back to early-February. The key levels to watch at this point are R1 resistance at 2,399.57 and R2 resistance at 2,435.50, which could prove to be near-term resistance to the rally.

Traders and investors may want to take a conservative approach to the market after the recent rally given both fundamental and technical factors pointing to overbought conditions.
Published at Wed, 01 Mar 2017 20:11:00 +0000

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Finding Star Trades When the Market Seems Dark

 

Finding Star Trades When the Market Seems Dark

Thanks to Bella at SMB for the posts on key takeaways and inspirations from my recent seminar at Traders Expo.  I think Bella has gotten it right:  those are key points worth taking away.  I strongly recommend reviewing his posts.

I’d like to underscore the point about first understanding the regime we’re trading in and only then figuring out which setups are associated with positive expected returns.  Here is a recent post on the topic.  

If the regime has not changed, the patterns that have shown up recently should replay themselves in the immediate future.  The recent regime has told us loudly and clearly to buy dips.  That regime will eventually change, but it is not helpful to try to front run that change when there is no current evidence that the regime has shifted.

The astronomer does not fret that the sky is dark.  That permits a gaze at the stars.

This has been a totally neglected topic within technical analysis and trading psychology.

 

 

Published at Wed, 01 Mar 2017 10:41:00 +0000

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Domino’s Streak of Strong Sales Growth Continues

by Riedelmeier from Pixabay

Domino’s Streak of Strong Sales Growth Continues

By Daniel B. Kline | February 28, 2017 — 12:01 PM EST

Clearly, the Noid has been defeated.

Domino’s (NYSE: DPZ) continues to deliver results that defy the market conditions dragging down sales in much of the restaurant industry. The company posted comparable-store sales gains in both the United States and globally in the fourth quarter, its 23rd straight quarter of domestic same-store growth and its 92nd quarter in a row growing internationally.

And it’s not just that the company managed to add to its same-store sales totals: The numbers have been impressive. Domestic same-store sales climbed 12.2% year over year in Q4, and they jumped 10.5% for the full year. The chain’s international locations had 4.3% growth in Q4 and a 6.3% gain for the year.

“I’m extremely proud of our franchisees and operators worldwide, including those who contributed toward back-to-back years of double digit sales growth in the U.S.,” said CEO J. Patrick Doyle in the Q4 earnings release. “While these unprecedented results speak for themselves, I am most pleased with the passion and energy we demonstrated throughout 2016 in meeting the challenge of sustained success. The momentum and alignment within our system has never been stronger.”

A look at Domino’s numbers

In addition to growing same-store sales, Domino’s also improved its earnings per share. The company delivered Q4 EPS of $1.48, up 25.4% over the prior-year quarter. Full-year EPS came in at $4.30, up 23.9% over 2015. Revenue also climbed 10.6% year-over-year, despite the previous year’s quarter being a week longer.

Domino’s also provided indications that its expansion across the world is unlikely to slow down anytime soon. The company reported “record global net store growth of 1,281 stores in 2016, comprised of 171 net new domestic stores and 1,110 net new stores internationally.”

What’s next?

This is a clear case of “if it’s not broke, don’t fix it.” Going forward, however, Domino’s will tweak its formula. The company will continue to modernize the look of some of its stores, and it has been a steady innovator when it comes to ordering technology.

There’s nothing that suggest that an end is coming to either of Domino’s same-store sales streaks in the current quarter. Customers globally seem to have an ever-increasing desire for really convenient, mediocre pizza that this chain has been stunningly good at filling.

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Daniel Kline has no position in any stocks mentioned.
Published at Tue, 28 Feb 2017 17:01:02 +0000

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A New Low Volatility ETF Soars

{pixabay|100|campaign}A New Low Volatility ETF Soars

A New Low Volatility ETF Soars

By Todd Shriber | February 28, 2017 — 12:12 PM EST

Low volatility exchange traded funds (ETFs) were the talk of the ETF universe for a significant portion of 2016, but judging by recent outflows from some of these funds, investors currently are not overly enthusiastic on the low volatility factor.

Enthusiasm or not, some low volatility ETFs continue delivering solid returns and that includes some of the newer members of the group, such as the Fidelity Low Volatility Factor ETF (FDLO). FDLO debuted in September as part of a broader group of smart beta offerings from Fidelity, so the ETF is not old, but it was one of about 120 to ascend to record highs on Monday.

FDLO tracks the Fidelity U.S. Low Volatility Factor Index, “which is designed to reflect the performance of stocks of large and mid-capitalization U.S. companies with lower volatility than the broader market,” according to Fidelity.

A deeper look at FDLO reveals this is not what many are used to when it comes to low volatility ETFs, but that is not a bad thing. For example, FDLO’s largest sector weight is an almost 21.4% allocation to the technology sector, making FDLO the only U.S.-focused ETF dedicated to the low volatility factor that features technology as its largest sector weight.

Said another way, investors are unlikely to find rival low volatility ETFs that feature Microsoft Corp. (MSFT) and Alphabet Inc. (GOOGL) as the top two holdings, as is the case with FDLO.

Standard operating procedure for many low volatility ETFs is to feature overweight exposure to the utilities and consumer staples sectors, and maybe healthcare, too. FDLO’s 13.2% healthcare weight is nearly inline with the S&P 500, but the ETF’s 3.1% utilities weight is low compared to competing volatility-fighting equity funds.

While FDLO has its perks, including the availability of trading the ETF without a commission charge on the Fidelity platform, this is still a low volatility fund. What that means is that investors should be prepared for some lagging when the broad market is sailing higher. For example, FDLO is up 8.4% since inception, a performance that lags the S&P 500 by about 200 basis points.

FDLO charges 0.29% per year, which is inexpensive relative to other smart beta strategies, but nearly double the 0.15% annual fee on the rival iShares Edge MSCI Min Vol USA ETF (USMV).
Published at Tue, 28 Feb 2017 17:12:00 +0000

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Silver – Pausing Before Another Leg Higher

by tookapic from Pixabay

Silver – Pausing Before Another Leg Higher

By: MIG Bank | Tue, Feb 28, 2017

Silver has finally exited an area where bearish pressures seem important. The precious metal is way into a bullish momentum. Hourly support can be located at 17.75 (14/02/2017 low) then 16.63 (27/01/2017 low). Expected to reach 19.00 in the medium-term.

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

Daily Technical Report

 

 

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Published at Tue, 28 Feb 2017 06:43:42 +0000

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A Powerful Technique for Changing Your Trading Psychology

 

A Powerful Technique for Changing Your Trading Psychology

In the last post, we took a look at four patterns that commonly show up when traders experience emotional challenges to their trading.  The underlying drivers of these patterns are frustration (over losses or missed trades), distorted thinking (overly optimistic/pessimistic following wins/losses), and anxiety (over possibilities of losing money or failing to make money).  Once those triggers are activated and we become frustrated, overconfident, negative, or fearful, it’s easy for those states to color our views of markets and our next decisions and actions.

So how can we prevent cognitive and emotional triggers from sabotaging our trading?

My favorite approach addresses prevention rather than care:  not allowing state shifts to shift our trading processes.

The approach begins with acceptance.  We are not going to eliminate frustration, uncertainty, or mood swings.  Trading operates in an environment of uncertainty and risk.  That will elicit unwanted thoughts and emotions at times.  It’s OK to be human and to have human feelings.  It’s going to happen.

Once we accept that these patterns will crop up, we can then actively anticipate them.  Instead of putting them out of our minds, we want to make them our focus.

Once we’re in that state of acceptance, we want to make use of a straightforward, but powerful stress management routine.  We listen to peaceful, relaxing music; close our eyes; slow and deepen our breathing; and sit very still while slowing down and focusing on the music.  We use the breathing to bring our body’s level of arousal down, and we use the close listening to the music to intensify our cognitive focus.  Through this routine, we keep ourselves out of the “flight or fight” mode of stress and into a mode of peaceful alertness.

The stress management routine requires some practice, so we want to repeat the exercise a few times a day for several days to become good at reaching that peaceful alert state.  With practice, we can focus ourselves and get ourselves out of fight or flight mode on demand.

Then, once we’ve become good at the stress management, we do the exercise with the music and deep breathing, but now we add imagery.  We imagine the challenging market situations that normally trigger our frustration, distorted thinking, anxiety, etc.  In other words, while we’re playing the music and breathing slowly, we’re vividly walking ourselves through situations where we miss a trade, lose money, go into drawdown, trade poorly, etc.  While you’re imagining those situations, you want to actually imagine and *feel* those emotional responses that have sabotaged your trading in the past:  you want to feel the fear or greed or frustration.

But you’re now experiencing those emotions while you are in control, focused and relaxed.  You keep focusing on those situations and emotions until you can stay in your calm, focused zone.  

This is an exercise you’ll want to do every day before the start of trading and perhaps also during midday breaks.  The repetition allows you to actively face emotional challenges while staying in control.  Through repeated experience, we reprogram our negative patterns of thought and emotion.  We experience them, but they no longer define or control us. 

Once we’ve achieved a level of acceptance and self-control, we then add a final component to our imagery work:  we vividly imagine the problem scenarios and our negative emotional and cognitive reactions to those, but now we also vividly walk ourselves through how we would like to deal with those reactions.  So, for example, we might imagine missing a trade and feeling frustration and thinking how stupid we are and then visualize ourselves stepping back from the screen temporarily, doing some deep breathing, and coaching ourselves in a more constructive mode, telling ourselves that it’s OK to miss something, that opportunities will continue to arise, that the important thing is to stay focused for future opportunity, etc.

All of this mental rehearsal is also done while we’re breathing deeply and slowly and listening to the relaxing music while seated in a still position.  So through repeated mental rehearsal, we’re imagining situations that upset us–and we’re practicing ways of thinking and behaving to handle those situations constructively.

The repeated mental rehearsal builds new habit patterns for us.  As we build those new habits, we can then experience frustrating and discouraging situations in our trading, take a few deep breaths, and engage in the constructive self-talk and actions that we’ve been rehearsing.  The visualization exercises act as practice, so that we are more prepared to sustain control during actual trading.

Over time, this accomplishes prevention.  We still experience losses, we still have frustrating experiences, we still feel giddy at times, but now we have a set of tools for staying calm, staying focused, and staying in control by responding to these challenges in the ways we’ve practiced.  Once we accept that emotional and cognitive overreactions will occur, it becomes easier to anticipate them and deal with them effectively.

Further Reading:  Performance Anxiety in Trading as a Cause of Discipline Lapse

For those looking to go into greater depth into related topics, The Daily Trading Coach book contains a cookbook of psychological techniques for traders.  The Trading Psychology 2.0 book contains strategies for enhancing positive emotional experiences as a way to buffer trading stresses.
.

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Published at Tue, 28 Feb 2017 12:08:00 +0000

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Fidelity slashes fees on stock and ETF trades to $4.95

A sign marks a Fidelity Investments office in Boston, Massachusetts, U.S. September 21, 2016. REUTERS/Brian Snyder/File Photo

Fidelity slashes fees on stock and ETF trades to $4.95

Fidelity Investments said on Tuesday it cut the price on trades for stocks and exchange-traded funds by 38 percent for retail brokerage clients.

Boston-based Fidelity’s price reduction to $4.95 from the previous commission of $7.95 a trade, will likely put pressure on the rest of the U.S. brokerage industry. Fidelity’s price offers a discount of more than 50 percent when compared with some rivals.

“It puts the flag up that Fidelity is the value player in investing,” said Ram Subramaniam, president of Fidelity’s retail brokerage business.

Discount brokers TD Ameritrade Holding Corp and E*Trade Financial Corp each charge $9.99 per trade and Charles Schwab Corp charges $6.95.

Fidelity said it also reduced option pricing to $0.65 per contract, down from $0.75. Fidelity’s online brokerage business has 17.9 million accounts and $1.7 trillion in total client assets.

(Reporting By Tim McLaughlin; Editing by Andrew Hay)

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A Cognitive View of Trading Psychology

A Cognitive View of Trading Psychology

A common view, held among traders and coaches of traders, is that emotional factors account for the difference between trading success and trading failure.  Some hold that emotions should be controlled, held in check, and made secondary to the discipline of rules.  Others hold that emotions should be accepted and experienced in a mindful way and, when possible, used as information.  In either case, the goal is to ensure that decision making is achieved through a proper trading process and not driven by the emotional experiences and impulses of the moment.

I believe this emotive view of trading performance is incorrect and, in fact, is not plausibly asserted in any other performance domain.  No one, for example, would contend that the path to reaching grandmaster status in chess is a function of successfully dealing with one’s feelings.  Emotional self-control, while necessary for exemplary performance, is hardly sufficient.  Very often, emotional loss of control is the result of poor performance and not its primary cause.

Consider an algorithmic trading system that has been overfit, using many predictors over a lookback period to anticipate future price behavior.  Such an overfit system has negative expected returns, but hardly because emotional factors have interfered with its performance.  Rather, it is generalizing from improperly derived rules, assuming that the future will rigidly replicate the past.

My years of working with traders as a performance psychologist have led me to the view that success in financial markets is more a function of cognitive strengths than emotional/personality ones.  Moreover, my experience has suggested that these cognitive strengths are domain specific, rather than domain general.  That is, the skilled trader develops ways of thinking about markets that are unique and distinctive to financial markets and doesn’t simply develop general reasoning skills that would lead to success across fields of performance.

An analogy would be the performance of a physician.  The skilled physician picks up on symptoms, takes a good history and physical, decides upon tests to conduct, assembles the findings into one or more plausible diagnoses, conducts more tests to differentiate among the diagnostic possibilities if necessary, and eventually finds treatment options based upon the preferred diagnosis.  All during this time, the skilled physician is maintaining a good rapport with the patient and engaging the patient in a supportive way, encouraging the patient to be as forthcoming with information as possible.

Should the physician get the diagnosis and treatment wrong, we would not immediately assume that emotional factors got in the way of a successful outcome.  Rather, we would look for breakdowns in the physician’s reasoning and decision-making process.  This process is domain specific in that it is not used by professionals in other performance-related fields.  The reasoning process of the chess grandmaster does not resemble that of the physician and neither resembles the reasoning of a successful daytrader.

(Notice in the case of the physician that more than one reasoning skill may be at work simultaneously.  The judgments involved in sensitively engaging the patient and maintaining rapport are different from those used to navigate a decision tree for diagnosis.  For a successful trader, the reasoning used to identify a worthy investment could be quite different from the reasoning used to determine when to make that investment.  The skill needed to accurately diagnose a tumor is different from the surgical skill needed to remove it.)

When trading firms *have* shown interest in cognitive factors when recruiting traders, they often have looked for general competencies rather than ones specific to the trading domain.  Thus, for example, they might have candidates perform a general reasoning test or they might look for good grades on a college transcript.  When I was teaching full-time at the medical school in Syracuse, I was surprised by the fact that grades in college *did* predict medical school grades–but only in the first two years of classroom-based medical education.  College grades and even grades in basic science courses in the initial years of medical school were not meaningful predictors of clinical performance with patients.  Knowing how to study for tests did not correlate highly with knowing how to engage patients, navigate decision trees of diagnosis and treatment, and implement actual procedures.

The domain specificity of the cognitive processes that contribute to successful trading performance helps to explain one observation that has always struck me.  Traders trained in classroom-like settings (or left to their own devices to learn trading through reading books and watching screens) rarely achieve success.  I consistently observe the highest hit rate on trader development in situations where the new trader directly observes the experienced trader and models the behavior of that more senior professional.  In other words, trading is not learned through general learning mechanisms (classrooms, study), but through very specific observation and modeling.

It is not coincidence that medical education starts in the classroom to gain basic knowledge of physiology, biochemistry, and pathology but then quickly moves to the clinics and hospital floors to allow for shadowing and direct observation of practicing physicians.  You learn to treat a patient by watching competent physicians treat patients and by modeling their decision-making processes and domain specific skills.  No amount of reading or self-study could help a student become a successful psychiatrist or gynecological surgeon.

The domain specificity of trading skill also helps explain why very intelligent people often don’t make for very successful traders.  Other traders I’ve known who are quite successful in markets are notably weak in their performance in other areas of life (as parents and spouses, for example, or in the conduct of their own personal finances).  Several trading firms have been known to look for potential trading stars by recruiting successful poker and video game players.  They are hypothesizing that the skills specific to those performance domains are generalizable to trading.  That focus on domain specificity is one of the rare pieces of recognition that it takes more than emotional discipline and awareness to succeed in trading.

All of us have two eyes, but many of us have different views.  It’s what happens cognitively–in our information processing–that determines how perceptions become expressed as views.  Traders truly interested in developing themselves as professionals need to do what aspiring chess masters and physicians do:  learn from the masters.

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Schedule for Week of Feb 26, 2017

Schedule for Week of Feb 26, 2017

by Bill McBride on 2/25/2017 09:31:00 AM

The key economic report this week is the second estimate of Q4 GDP.

Other key indicators include the February ISM manufacturing and non-manufacturing indexes, February auto sales, and the Case-Shiller house price index.

—– Monday, Feb 27th —–

8:30 AM: Durable Goods Orders for January from the Census Bureau. The consensus is for a 1.8% increase in durable goods orders.

10:00 AM: Pending Home Sales Index for January. The consensus is for a 1.1% increase in the index.

10:30 AM: Dallas Fed Survey of Manufacturing Activity for February.

—– Tuesday, Feb 28th—–

8:30 AM: Gross Domestic Product, 4th quarter 2016 (second estimate). The consensus is that real GDP increased 2.1% annualized in Q4, up from advance estimate of 1.9%..
 

Case-Shiller House Prices Indices

9:00 AM ET: S&P/Case-Shiller House Price Index for December. Although this is the December report, it is really a 3 month average of October, November and December prices.

This graph shows the nominal seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the November 2016 report (the Composite 20 was started in January 2000).

The consensus is for a 5.4% year-over-year increase in the Comp 20 index for December.

9:45 AM: Chicago Purchasing Managers Index for February. The consensus is for a reading of 52.9, up from 54.6 in December.

—– Wednesday, Mar 1st —–

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

 

Vehicle Sales

All day: Light vehicle sales for February. The consensus is for light vehicle sales to decrease to 17.7 million SAAR in January, from 18.4 million in  December (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the January sales rate.

8:30 AM: Personal Income and Outlays for January. The consensus is for a 0.3% increase in personal income, and for a 0.3% increase in personal spending. And for the Core PCE price index to increase 0.2%.
 

ISM PMI

10:00 AM: ISM Manufacturing Index for February. The consensus is for the ISM to be at 56.1, up from 54.7 in December.

Here is a long term graph of the ISM manufacturing index.

The ISM manufacturing index indicated expansion at 56.0% in January. The employment index was at 56.1%, and the new orders index was at 60.4%.

10:00 AM: Construction Spending for January. The consensus is for a 0.2% increase in construction spending.

2:00 PM: the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.

—– Thursday, Mar 2nd —–

8:30 AM ET: The initial weekly unemployment claims report will be released.  The consensus is for 240 thousand initial claims, up from 239 thousand the previous week.

—– Friday, Mar 3rd —–

10:00 AM: the ISM non-Manufacturing Index for February. The consensus is for index to increase to 57.2 from 57.1 in December.

2:00 PM: Speech by Fed Chair Janet Yellen, Economic Outlook, At the Executives Club of Chicago, Chicago, Ill.

Read more at http://www.calculatedriskblog.com/2017/02/schedule-for-week-of-feb-26-2017.html#FjcF0wcPDOUQcKuT.99

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Finding Opportunity in Difficult Market Conditions

Finding Opportunity in Difficult Market Conditions

In my recent Forbes article, I reflect upon traders that I see making money in these low volatility market conditions and identify four strategies that they are employing.  In each case, they look at markets in a different way to detect meaningful movement in seemingly choppy, difficult market conditions.

What the article doesn’t highlight is that the great majority of those traders had to go through challenging P/L periods to get to the point of embracing the strategies that have proven helpful.  They stayed on the dance floor long enough to find opportunity.  Many times, inspiration came from seeing what other traders were doing that was making money.  That inspiration led them to try new things in small ways, build familiarity with a new way of viewing and trading markets, and then build out those strategies.

In my most recent trading, I have been focusing on identifying stable market regimes–periods in which who is in the market and what they are doing has been relatively constant–and then identifying winning trading patterns specific to those regimes.  When I detect the current day’s trading to fit within that regime, I wait for those winning patterns to emerge.  Those define opportunity for that particular market.  Another market may yield a very different pattern of opportunity and still others may yield none at all.

Note how different this is compared to expecting one particular “setup” to work across all market conditions.  It opens the door to opportunity in a new way.

If markets are always changing, traders must always innovate.

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