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Tuesday, November 30, 2010

Far east QE

Hello everybody.

Ok here we are waiting and waiting to see some action in the equity market. Looks like the nov 16 low is the line in the sand for now, and I'm expecting a more decisive move around next Monday.

If the market keeps chopping this week or start moving up slightly till Friday then Monday will see an acceleration to the upside in a new leg up (this is my preferred view).

The less probable view will witness an explosive move up this 4 coming days; in that case next Monday will mean the start of a meaningful correction. Just the inverse of the previous one.

But I don't give a lot of credit to this option due to the failure of nov 17 to be the start of some substantial correction.Particularly because that was a very clean period (astrologically speaking) to generate a move down and what really happened was that the move down got stopped in it's tracks at that time, with an inversion at that critical juncture regarding price action, so up forces weren't challenged then, and could be even harder to be challenge now. Will see.

What about the title?.
Oh, is just a way to remind me to watch facts instead of held a dogmatic worldview.

QE sometimes work.
It didn't in Japan basically because it was tepid and too late in time (protecting all the people who were in charge like a club where the important thing is that someone else got my back and I do the same for others, yes yes exactly you can think it like a club or a maffia if you are more inclined to rotund descriptions).

But in China did.
And doesn't matter if in the future the country, or even the entire world collapses, it just worked period.
I like to learn and discern cause effect among all the crap that MSM uses to mudd the waters.
I learned that the way and scope about how they implemented their strategy worked.

So regardless one personal opinions about keynesian policies that most of the time are not even followed as he prescribed (saving in good times) his ideas put in practice sometimes work.
China taught me that.

Dan

Monday, November 29, 2010

Manny Mondays: Is King Dollar Back on the "UUP"-swing?

Morning all! One ETF I've been watching (and nibbling on lately) lately is UUP, Powershares DB US Dollar Bullish Fund. After dropping as a low as 21.91 just a few weeks ago on November 4th in the face of a virtually straight up equities rally, it has bounced back and rallied quite nicely against the backdrop of the EU/IMF bailout of Ireland and looming bailouts of the other "PIIGS" nations. It has risen nearly 6% since that time, closing at 23.21 this past Friday. So what happens in the short term with UUP? Does the uptrend continue as the Euro continually weakens? If so, will the inverse link between U.S. equities and the dollar continue, meaning declining stock prices while the dollar advances and vice-versa?

Or, will we see a near-term pullback as the global currency "beggar thy neighbor" race-to-the-bottom yo-yo game continues? What's in store mid and longer term for the dollar? It's pretty obvious that a weaker dollar is what the Fed and our policy-makers are aiming for with their seemingly endless rounds of "QE", but will events outside of their control (e.g. a weakening Euro in the face of ongoing sovereign crises?) actually serve to do just the opposite? After all, many commenters here and on other blogs believe that it's largely about currencies right now (and maybe ongoing sovereign debt crises). Is this really the main event that we should be watching for clues on what the rest of the markets will ultimately do?

Here are some charts of UUP:

One-week chart

One-month chart

Three-month chart

Six-month chart

One-year chart

Saturday, November 27, 2010

Weekend Open Thread

Everyone ready for Chistmas!?

Thursday, November 25, 2010

Happy Thanksgiving


Happy Thanksgiving To All!



The Onion: Obama Outlines Moral, Philosophical Justifications for Turkey Pardon

President Obama announces plans to deliver a two-hour speech explaining his reasons for granting clemency to Cranberry, the Thanksgiving turkey.

Let's Talk Turkey



New way to cook a turkey, great photos and website for foodies.

Wednesday, November 24, 2010

Wednesday Link Fest

Gloom, Anger, Fear Spread Acroos Europe as Key Economies Teeter on the Edge of Collapse.
(DOW up 150 points in sympathy)

Anger and fear about Europe's seemingly unstoppable debt crisis coursed through the continent Wednesday. Striking workers shut down much of Portugal, Ireland proposed its deepest budget cuts in history and seething Italian and British students clashed with police over education cuts.



Tom DeLay Guilty of Money Laundering

(Culture of Corruption finally getting punished)

Jurors deliberated for 19 hours before returning guilty verdicts on charges of money laundering and conspiracy to commit money laundering in a scheme to illegally funnel corporate money to Texas candidates in 2002. He faces up to life in prison on the money laundering charge, although prosecutors haven't yet recommended a sentence.


College Costs: The Sequel
(Interesting take on college costs; now I know why college and dentistry seem so expensive)

Corporate Profits Were The Highest On Record Last Quarter
(Link winning "Let Them Eat Cake" prize of the day)

Irish Debt Crisis Forces Collapse of Government
Ireland's Political Crisis: Leaping Toward the Exit

Rogue Trader Jerome Kerviel
'I Was Merely a Small Cog in the Machine'


Signs of Swagger: Wallets Out Wall Street Dares To Celebrate
(Also, Let Them Eat Cake Award, 2nd Runner Up)

Fugitive Comverse Chief Forfeits 47 Million in Settlement
(A little jail time will make us cake eaters feel a bit happier)

North Korea's One Two Punch

Pakistan: Climate change threatens financial capital
Karachi threatened by rising seas and storms as coastal islands succumb to erosion.


Costa Rica: "For Sale," or just a scam?
An alleged Ponzi scheme reveals the Wild West world of Costa Rican real estate.

(Say it ain't so!)

Monday, November 22, 2010

Again

Hello everybody,


Sorry yesterday was rushing to finish what I promised past week (to post posible outcomes in a group of stocks) that Rock brought to everybody's attention.

There are mistakes, god dammit! yes for each one of the 21 charts I have to check an extra 4 to 6 charts to be sure that they respond historically giving me an "edge".

So after 90-120 charts the past 9 days my eyes started seeing funny things.

So no SLV, I meant Schlumberger SLB.

I didn't include EMC, I have a few errors so here I go again.Apologize for the misstatements.
And remember that this is for general trend that goes up otherwise the effects got diminished or altered beyond recognition.




XOM Among the best of the pack. If keeps grinding up now will last at leat to the second week of February. Posible correction Jan16-29.

If doesn't move much now I would watch Jan 16- 29 as correction time or at least sideways and the chance to make a bottom there and pick up momentun really big for a while, in this second scenario will be a multi months starting in February 2011.

MA Another with first class potential.If it drop will be little now. If it drops more should be till around Jan 21 and snapp back.September 2010 saw her bottom for a long while. Mid 2011 could be excellent for her.

TDW First days of July 2010 made the low for the year.Could keep going up now indeed but I'll pay attention to the first two weeks of December because there's risk to repeat the same impulsiveness observed in July so watch out.
After that is probably moving very steadily in a measure up movement till at least mid february 2011.

EMC Is going to drop. Maybe not right now (it can keep going up with the trend) but I would be carefull. Around Dec 8 is the first weak spot and/or March-April 2011.
It should see a sizable drop or start chopping even though the trend goes up and when the trend stops she should correct 25%-30%. (Percentage numbers doesn't come with Astrology I mentioned them to offer a picture of what I would expect).

PLCE This is good probably will outperform the trend in case it goes up but nothing spectacular.
But a very good one.


PVG There are reasons to believe that this could have a very huge run up right now, like end of Nov early Dec. Can correct a little more but not for long.Keep an eye on any strong movement because can keep going and going. If I'm right by March can display an important 3-4 months leg up in a chart.

HTS During the second week of December can finally resolve the choppiness.
It very much depends what the trend do at that time. There are good things but all in all honestly I don't like it too much. Will see.

URBN This is a very good one could jump more then start consolidating something but will resume to the upside; good for a long term (couple years) of course with ups and downs but is very good.

SLB I don't like this too much (to the upside) till mid 2011 to clear several things and at that point the trend could not be helping much.Even though can have it's moment late Feb mid March 2011 after that not too impresive.

BJ I don't see it going anywhere for months. Will see how wrong I am LOL.
Probably reach a top for a while and will start correcting-chopping.

DRQ It got chances to keep going up.Sure, but I will be terrorized if I had to be long around Christmas (26 really) and Feb 16. Of course is going to come down sometime and the first two dates are what I mentioned above, if it survives should be a good profit but man that's risky.

VAR Probably will have a correction in 5 or 6 days.Will see. And by Feb 17-18 should find a bottom.
Second option is keep going up and black out by Feb 17-18 but I prefer a lot more the first scenario.

BKE It got a huge drop ending in August and recovered. Probably will keep going up. Be carefull right now for 4-5 days could reverse violently and if keeps going late January first week of Feb could see a big top.

MEE Starting Dec 03 2010, this is bad. Kind of like Oh my God, that's bad! That kind of bad.
Probably can muster up something but at the earliest will be March. Anyways is bad, really bad.

MW Nothing to write home about could follow the trend but in Apr-May can be a different story.

DFS For the next 3 months doesn't look with a lot of upside.

DKS A trend follower. Anyway is going to have it's explosions but they are going to be quieter and quieter after April 2011.

KLAC Is going to be range bound for several months.So long and short long and short could be one strategy.

NTAP Could keep going till Jan 11-13 or (if the market goes down) by January 20 and or March 13 could be good times for a move up but I don't see too much potential to the upside at that point.

RL Starting the new year could have a big drop I would be very careful around Jan 5. I doubt that it'll go up much.

MIPPS It had a nice run up probably can keep going one more month then probably will start some long consolidation. Will see.

I'm done.

Dan

Manny Mondays: Return of the Irish Famine....For Jobs?

So much for the "low/no corporate taxes or regulations" (and "free markets") meme as the cure-all in that magical imaginary paradise where everyone, including the global elites and their handmaidens, are honest and altruistic, and things are certainly nothing gamed or fraudulent for the benefit of a few. Ireland is merely the latest domino to fall in the aftermath of the global credit bubble, and it's citizens now must be "austeritized" to save large European banks and large banker bonuses. And silly me, I didn't realize that Ireland also had the CRA and Fannie/Freddie as the main cause in distorting the housing market over there as well. Oh, they didn't have those two things? Nevermind. But I digress.

Now that an IMF/EU bailout of Ireland appears imiment, another crisis is heating up in Ireland, namely the mass exodus of people fleeing the country in search of jobs. This article in the NY Times about thousands of people fleeing Ireland in search of jobs caught my eye over the weekend.

Here are a couple of key excerpts from the article:

Experts say about 65,000 people left Ireland last year, and some estimate that the number may be more like 120,000 this year. At first, most of those leaving were immigrants returning home to Central Europe. But increasingly, the experts say, it is the Irish themselves who are heading out — unsure that they will ever come home.

Among those leaving are the country's so-called "best & brightest", which could hollow out the country of its citizens that are most capable of helping to turn things around, thereby further contributing to a vicious downward cycle.

And there are risks, too, that Ireland’s best and brightest — the very people who could help turn things around — are leaving.

Edwina Shanahan, the marketing manager of Visafirst, a company that helps emigrants settle abroad, said there might be some truth to this. “A lot of the countries giving visas are quite choosy,” she said. “You need to be highly qualified and have recent job experience to get into Australia. They are getting the best among us.”


History is apparently rhyming in Ireland, as this jobs "famine" and subsequent human exodus is eerily reminiscent of other time periods of hardship there:

Ireland experienced its sharpest population drop during the 19th-century potato famine when the population dropped sharply from 6.5 million. More than a million people emigrated, and another million died. But there have been other waves of emigration during economic downturns in the 1930s, the 1950s and the 1980s.

Read the whole article here:


The Hunt for Jobs Sends the Irish Abroad, Again


So who's next in the "Save the Banker Bonuses & Elites at all Costs to Humanity" Global Welfare Program, otherwise known as the "Collective Sheeple Austeritization Congo Line?" Portugal? Spain? Italy? And when is it our turn to "suck it up" (hat tip: Charlie Munger, 'ole Uncle Warren's partner) here in the United States?

In the meantime, this bailout announcement is likely good for another 2% pop in the markets this week, as bankers everywhere celebrate by buying stocks and commodities. We should just have one of these sovereign bailout announcements along with a major IPO every week. The DOW will be at 36K in no time, thus fulfilling that markets and economics sage Kevin Hassert's ill-fated prediction (until now) from back in the late 1990's.

Saturday, November 20, 2010

Weekend Open Thread - What's on your mind?

Thanksgiving Week Housekeeping

Thanksgiving week posting schedule:

Monday, Tuesday, Wednesday - normal schedule

Thorsday - Open Thread

Friday - Open Thread

Weekend - Open Thread

We will post an extra thread if there are too many comments, but I expect it will be slow for the long weekend.

I will be on vacation from tomorrow until the Monday, November 29th. I might check in if I have an opportunity.

Have a great week and Thanksgiving!

Thursday, November 18, 2010

Unemployment Discrimination

Short and sweet for what should be a more interesting trading day than yesterday.

I heard this piece on NPR on my way in this morning and couldn't believe my ears. Companies not wanting to hire people unless they already have a job? I suppose that does make a sort of sense, people who have been unemployed may not have the freshest skills and may not have been the top performers in the first place.

Is there much hope for the long term unemployed at this point? If not, what should we, as a society, do about it? There are many people out there today, who very strongly believe that the long term unemployed should be left to their own and kicked off the government teat. What does that say about our society?

Job Seekers Find Bias Against The Unemployed

Wednesday, November 17, 2010

The Anatomy of a Trade

Here’s a trade I put on the other day. I thought it might be useful for you to see someone else’s thought process.

First, the best herds were identified by using relative strength to the S&P. I used an analysis of the sector ETFs that most closely resemble the sectors as defined by TD Ameritrade. The relative strength of Coals and Retail were among the best. On the retail end, BKE was one of the stocks with the best performance during a sector pullback. It was therefore selected as having best relative strength. It should be understood that looking at these stocks for performance involves looking over the last 4 weeks. IMHO, looking at last January has little to do with the here and now, so I don’t care what these candidates have done Year-to-date. It’s kind of like a salary review: “Yeah, but what did you do for me yesterday?”.

We want to enter the trade, but we must realize buying BKE is a very high risk trade. Why? The daily chart stochastics are oversold, and the daily chart looks like it is starting to roll over. Therefore the daily trend is likely lower. Here’s the daily chart:

Chart 1


But we wanted to enter the trade because of the structural reasoning of QE2, and the structural reasoning that we are entering the Christmas season, where retail typically outperforms. (BTW, on the chart, the little spikes below the price action candlesticks indicates the volume. Remember that for the following charts. The name gets covered up by that grey window.)


So we waited until we had a pullback on the 60 minute chart. This pullback resulted in a higher low. We entered at that point. If we did not have a higher low, we would not have entered. We made a buy of 200 shares at 34.05. The stochs are below 20, the momentum and ultimate oscillator have started to rise. See the 60 minute chart, and make sure you understand “higher low” and “pullback”. Why did I choose 200 shares? Look at the “bar point range” on the daily chart, and you will see that in a day, the peak range is about $1, so that means I would lose as much as $200 in a trade that went completely wrong. This is within my risk appetite.



The initial buy of 200 shares happened at 34.05. Actually, this is our third higher low, the first one was on 11/03 at a price of $30. Can you pick out the second higher low?


If we don’t get a higher high, that is above 35, we get out. We watch the stochastics, and when they turn south, we look at the price. If it’s lower than 35, we’re out.

We are approaching the end of the day. What do we do? We look at the volume during the last 15 minutes. If the volume is increasing and the price is increasing we will stay in overnight. If the volume is decreasing or disappearing, or if the price action is falling, we will exit overnight and re-enter tomorrow morning. Volume action is the tell; and in my experience the volume action is often continued after hours. Here’s the last 2 minute chart, look at it and tell me what you see:


Do you see the higher lows on each candle, and the increase in volume from 15:36? That shows commitment to the price action. It is a good indicator that there will be follow through Monday morning. We’ll see.

Well, we saw. This Monday morning, the S&P opened higher, around .39. And BKE is on the rise, the 15 minute relative strength is higher than the S&P, and it’s relative strength curve is positive, meaning it’s getting stronger.

Ok what now? Do we add? No. We look for a cycle of stochastics on the 60 minute chart and add if we see a higher low. See on the 60 minute chart how the stochastics are below the 20% line? When we go up to the 80% line, presumably the stock will have risen in price, and when it returns to the 20% line again, we will look for a price above the 33.90 price, the price we were at at 13:30 which was the inflection point.

Where do we set our stop? At the 33.90 point? No. Looking at the chart, where do you see price support? It’s not at the 33.90 point. There’s no volume commitment there whatsoever. So this is likely a false support point. We do have some volume at the 33.70 point on 11/09 at 13:30. That too is near an inflection point where the stocs started to turn around. So maybe we set our stop at just a little below, at 33.63. Always set your stop at an odd point because it’s interesting how turn-arounds happen at even points, like ¾ of a dollar.

Now our risk is defined. We stand to lose (34.05 – 33.63) * 200 or $84. Plus trading fees.

Suppose we get a higher low, or never get the stochastics to drop below the 20 line. Where do we add?

This depends on your risk appetite and how much money you have. I intend to add at the end of the day if BKE is higher and the market is higher. I intend to wait for the stochs to pull back to the 20% point if the market closes lower but BKE is still higher. So we’ll have to wait and see.

Some traders shift to the 15 minute or 10 minute chart to plot their adds. Then they might add on a higher low on that chart, and adjust their stops. They have greater risk appetites than I.

What’s the next point we look for? If the price goes over 35.07 on this 60 minute chart cycle, we have a higher high, and the 3LB will show no turnaround. That means we’ve had a successful entry on this stock and the 3LB is still showing a positive trend.

Well, here’s the chart:

Chart 4


The stochastics are back up at the top 80%, and we don’t have a higher high. We’re out without adding. Sell Price: 34.58.

On this trade, we made (34.58 – 34.05) * 200 – 22 = $84. So we didn’t lose money, but it looks like the supposition we started with that we are likely to see a correction on BKE is correct: no higher high means to stay in the trade is too risky. Let’s see where we would have been had we stayed in:

Chart 5

Because we never got the higher high above 35, the momentum of the uptrend was broken. We stood to lose money on the trade. Getting out was the right choice.

So when a trade does not do as you expect, get out of it. Any loss should be tiny and what you can afford. If the trade does not obey the rules, get out of it. See the big spike? That means somebody with a big wallet is playing, and they’re using your money while you were in the trade. The way a big spike works with such low volume trades is interesting: somebody can see where market orders are set, and knows how to use this knowledge with small buys at the right price points. Spike, and he's out. Usually, that is the stock operator, and he needs work done on his Ferrari.

If I had stayed in, and saw the spike happen this morning, I guarantee I would be out of that trade. I will never again chase or hold on to a spike. More often than not, you’ll end up a loser. See what happened when the market caught up to this spike? But I’ve got my Burger King money on this one, I’ll go get a double whopper maybe tomorrow.

Tuesday, November 16, 2010

D- Day

Well, we are here right at a particular juncture in time that is very important according to what I'm trying to learn about equity markets.

The development of the past week reminds me when I was talking to someone in December 2008 and the situation about the markets was common chatter erverywhere and I mentioned very very casually that by end of March probably things could start going upwards.As you know, spring coming...

Of course he didn't have a clue about what my reasons were, if any.He seems to have had a good memory because almost one year later I met him in a social gathering and he clearly reminded me that previous conversation, I didn't have anything to add so everything ended there.

But what I remember not mentioning to him in the original conversation was my tentative time for an end of the uptrend or a correction; was after the first week of June 2009.

I didn't mention it as to not make evident in what kind of stuff I was into, but specifically because I was struggling to determine if really was going to happen.

My first "ideas" about what the market can do came in May 2008 when I was readying to dip a toe in the markets, what I saw scare the hell out of me.

It wasn't precise, it took several months to start crashing but the information in thre rough was there, only that I couldn't tell when.So when was going to happen was the challenge.

March 29-April 5 2009 was my first target about timming, I was off by almost a month.So nothing to right home about.

The June 09 blip was the first time that I get close, but I didn't realize until several weeks after the fact watching and watching the s&p chart that I was really close.To me it was another failure because it wasn't any meaningfull correction.

But studying more cases I realize that is more common than I expected first and came to the realization that this is really a clash among Titans, forces pulling in every direction so the June correction was there even though I didn't see it, only that it neutralized itself in almost it's entirety.

The first law of thermodynamics says that energy can be transformed from one form to another but not destroyed.Something with negative value changing to positive and viceversa without living too much of a trace is the image that I got out of it.

Astrology helps me to see IF it happens, when that probably would be, But doesn't guaranteed me the movement percentagewise just the rudiments of timming, in other words if it's going to happen when that will be, but not how much.

So that shit is what happened in june 09 something that loomed large ended being almost nothing.
Yes you know where I'm going, the correction is here, but it doesn't means that is going to be fireworks.


The clash started yesterday and the last skirmishes are going to be Thursday night early Friday.

Is it going to correct? Maybe,but by the look of things downward forces are not getting strengh as of now, there's not impulsiveness.

Is it going to crash? No, no way(from my limited and fallible knowledge).

The most probable outcome?

That it corrects 2 or 3 percent more,(if fails to pick up steam in the next 24 hours) and the correction that I imagined two months ago gets vaporized without causing too much of a disruption in Bernanke plans.

If I short I would be very alert just to avoid getting crushed.

Rock by Saturday I will have several of the stocks info and I will post it in the comments section.

Good luck everybody.


Dan



Monday, November 15, 2010

Manny Mondays: Is The Top Finally In? Or is it Buy the Dip Time?

Good morning all! I was out of town all weekend and trying to get caught up on everything, so I will be brief today. Last week's market action brought some interesting developments. On the heels of the QE2 announcement and the election results we had our first down week in the market, which broke a string of five consecutive up weeks and new market highs for the year. This past week the S&P was down nearly 2%.

After going virtually straight up since early September, where do the markets go from here? Is it buy the "dip" time (a baby one at that) or do we continue to drift lower from here into year-end? Or is a major correction looming? Call me crazy, but the one year charts look a bit "frothy" (hat tip Greenie) or "toppy" to me. Take a look.

S&P One Year Chart

So how do we end the year? Will Santa make a his annual appearance in the markets so fund managers can pretty up their annual client statements, or will there be coal in the bulls' stockings for the holidays?

Saturday, November 13, 2010

Weekend Open Thread

I have always loved the merger of old and new in music, and have am fascinated with the ability of technology to find ever more creative ways of taking what's old and making it new again.

Below are a few videos that I would say are at the cutting edge of music and video production today. Pogo is the name of the artist and he has a particular interest in Disney Animation. Please also note, that both Disney and Pixar have given their nod of approval to these.

Wishery


Upular - My Personal Favorite


Expialidocious

Friday, November 12, 2010

Education of this trader, and his tools




The History of a Rock.

This is my first post. I have no experience posting on the internet, my writing has been limited to research reports, development status, scope of work. My background is not wordsmithing, my background is developing things and making them work.

You have used products I have designed, or for which I have led the design team. With that background, and my technical career drawing to (what I thought at the time) was a close, I figured I wanted something to do in my free time other than cruise around the country bothering my kids. Goodness knows, they wouldn't want that. So I dug out my Samuelson, reread that, reread "Techniques of Financial Analysis", read numerous trading books including Alan Farley's "The Master Swing Trader", and went to work.

I immediately lost a lot of money.

When your prototype doesn't work, you generate what we call a Make-From. That is, you take the basic design, modify what doesn't work, and make a few more and test them. I read more books on day trading, patterns, read "trading Rules that Work by Jankovsky, set up my list of rules, and went back to work.

I lost a lot of money. But it took longer. I saw my basic failures were trying to identify bottoms and tops, overlooking the effect of the overall market on individual stocks, and leaving trades far too early. So my trading rules evolved. And evolved.

Then I joined Philsgang. He taught me patience, and the importance of relative strength of an individual stock. I followed him for 4 months without making a trade, then I followed his example. Over the next 6 months, I broke even. Actually, I lost $5000 because I donated that to Phil's charity, Boggy Creek Camp, after my 6 months of breaking even.

Then I bought one of Phil's tools, the X1. It helped me identify support and resistance points. I started to make money. Then I realized that support and resistance were not just inflections of pricepoints, but a combination of things including volume, fundamental and structural factors. Which I had read in Samuelson, but never understood. Until now. I left Philsgang, (but continued to support the charity, more on that later). I started to make more money. Basically I could make a reasonable living at this, so I tried to quit my day job. I was prevented from doing this. So now, just like it was when I was in school, I'm working 2 jobs. Full circle, I guess.

Also, about this time, TDAmeritrade released a trading tool called StrategyDesk. It was similar to the trading tool software Phil uses from his broker, but much more complex and complete. I believe strongly in getting a good trading tool, or set of tools.

I started to get better at identifying support and resistance. I still followed Phil's concepts of starting a position slow, setting a loss point I decided I could afford, and adding as the trade went my way, but just staying home on the trade if it violated what I thought was support.

Then I joined Minyanville (through TDAmeritrade). They taught me that there's a psychological factor, as well as the technical, fundamental, and structural components. And they taught me that depending on the trade environment, the factors have different weights.

Then I joined Traders Anonymous, and they taught me a lot more about the psychological factors, and AmenRa taught me about the 3LB.

Now, armed with the capability of doing appropriate research, my prototypes usually are successful on the first release. I gave up identifying the tops and bottoms, but look for trends, with the help of the 3LB, the structural, fundamental, technical and psychological aspects of making a trade. I am making good profits, and only lose money when I don't pay attention and let my emotions get in the way. This year, I did real well on BIDU, and donated my maximum to St. Jude's, the other Philsgang charity. That donation was made in the name of AmenRa and Rock.

I would like to encourage guys like Thor to invest the time now to learn this stuff, practice it, with small or tiny investments, because later on in life when a new career is needed, this is pretty good. You can take a day off anytime. You can put up a new prototype. You can try something new, every day. It's a wonderful life. If I had to do only my day job, that would surely drive me crazy. Or crazier.
That said, I just wanted to list my set of tools, and how I use them.

0. I have a desktop computer, which has a hardened Windows 2000 OS, 3 Samsung 21" monitors, and a fully synchronized backup notebook running proprietary software and acts as a full mirror. I have one feed on another 19" monitor that has Bloomberg. So I can watch Betty. At around 11PM here, they put on Charlie Rose, so I use the notebook to get the bloomberg.com/tv feed for an hour.

1. TD Ameritrade provides a wealth of tools. I use StrategyDesk which provides almost realtime access to the tape. I have about 30 "Level 1" tables each of which covers sectors of the market in which I have some interest. For example there's one for metals, coals, reits, retail, oils, solar, staples, tellys, homies, transports, healthcare, drugs, financial services, big banks, local banks, eats, bonds, technology, software, semis etc. I can look at the sector ETF (which are hard to find, by the way), and under that, all the stocks I'm interested in that fall into that sector. It's a good tool. It has lots of capabilities I don't use. I also have 3 charts set up. I keep one daily, one weekly, and one daily that has my most important "quick" technical analysis factors: volume, stochastics, momentum, and the "ultimate Oscillator". TD Ameritrade publishes the math for each of their tools, or you can ask them and they will give it to you, and I
have been through the math for these, so I understand what they are telling me. On one of the charts, you will see "relative strength". I intend to develop a post around relative strength, a concept that Philsgang introduced me to, at some future time.

2. I use TD Ameritrade's on-line screeners to find things like fundamentals, or PE ratios, or stock movements. Those screeners run really fast. The StrategyDesk can screen too, but that's very very slow.

3. Every close, I run a screener that identifies all stocks that got traded over 1/4 Billion. I keep that list, and watch the action. Basically, my theory here is that I'm pretty sure when a fund decides to move big money, they have to get sign-off by their management, and each move is considered very closely. So I'm interested to watch those big moves, and what happens.

4. I use http://Stockcharts.com to give me the 3LB charts, and some ticker charts that TDA doesn't have like "percent of stocks above their 50 day moving average" etc.

5. I use Yahoo Finance (http://finance.yahoo.com) to give me quick access to the balance-sheet information I need, found under "key statistics". I use TD Ameritrade when I need to access the full balance sheet. They keep historical ones, as well.

6. I use Minyanville and Traders Anonoymous for psychological input and tips.

7. I use my list of bookmarks to read articles from places like ZeroHedge, SharkInvesting, Mish's Global, The Big Picture, the Chicago FED, and lately the NY Fed. I find the government sites very useful, as they establish structural limitations on and directions to the market.

(OK, here goes!)

Thursday, November 11, 2010

California Finally Gets A Break


While many folks are bemoaning the Red Tide that swept across America last week. The Sierra's seemed to have prevented the tidal wave from reaching all the way to the Pacific Ocean.

On the contrary, there were many positive aspects of last weeks elections that may eventually help California to move beyond it's political and economic malaise.

The article listed here first was not part of the election, but should, nevertheless, be considered a step in the right direction when it comes to getting our financial house in order.

The first piece of good news from last weeks election was the passage of Proposition 25 which does away with the hated 2/3rd majority for any budget to be passed in the State of California. This should enable budgets to be done sooner as a simple majority is all that will be needed to pass a budget in the state. Note that this is for the passage of a budget only, raising taxes still requires a 2/3rd majority for passage.

Riding on the coat tails of Prop 25 was Prop 26 which forbids legislatures from re-classifying what was once considered a tax (vehicle registration for instance) into a fee in order to bi-pass the state law that required a 2/3rd majority for any tax increase.

Last, was the passage of Proposition 20 which takes congressional redistricting out of the hands of politicians. New rules require an independent board of citizens who will draw the new lines for the election of 2012. Much of the extreme partisanship and gridlock in California has been blamed on politicians who are being elected in very safe districts which can often put the more extreme members of each political party into office. The idea behind the passage of Prop 20 is that the new citizens board will draw more competitive districts which will force politicians to govern from the center so as to appeal to as many people as possible to get elected.

All in all, as depressing as last weeks election was to many on the left of the political spectrum, California, at least in my opinion, has at a few good changes coming down the pike.

Wednesday, November 10, 2010

China ratings agency downgrades U.S. after Fed move


China ratings agency downgrades U.S. after Fed move

(Reuters) - A Chinese credit ratings agency downgraded the United States' sovereign credit rating on Tuesday, citing the Federal Reserve's controversial move last week to pump more dollars into the U.S. economy.

As Beijing and Washington locked horns on economic policy ahead of a Group of 20 leaders summit this week, the Dagong Global Credit Rating Co. Ltd cut the U.S. local and foreign currency long-term sovereign credit rating to A-plus from AA.

The ratings agency, which warned it might cut the U.S. ratings further, said its move reflected the United States' "deteriorating debt repayment capability and drastic decline of the government's intention of debt repayment."


China and Germany slam U.S. policy before G20 summit

Fed Global Backlash Grows

Tuesday, November 9, 2010

QE2

Hello everybody

I was writing and becoming philosofical about the gilded era and pendulums and I run into this article about QE2 and their myths according to the author.

Regardless mi opinion I prefer to post his point of view, is an interesting take particularly about shaping expectations which is the crucial part in my perspective regarding economy and more clearly in financial markets.

Instead of considering mathematics the way to get the deepest understanding I'm inclined to trust more (if possible) to what part human behavior (emotions) play in the financial picture.

http://wallstcheatsheet.com/breaking-news/economy/mythbusting-taking-on-the-three-biggest-cliches-about-qe2.html

Regarding the equity markets I'm just waiting to see what happens, if any, around nov 17.
I didn't change anything for the time being but if it fails to break 1230 by next Monday-Tuesday I'll be out until it resolves.
Trade safe
Dan

Monday, November 8, 2010

Manny Mondays: OK, So What Now? Open Thread

Morning all! With the QE2 (or really QE-infinity) news "in the bank", the elections behind us, employment numbers that seem to be back on the upswing, and markets that simply refuse to go down in any significant way, what now for both the markets and economy over the next few months and into '11?

Is everything now all peachy keen with Helicopter Ben dumping endless greenbacks on Wall Street combined with slowly improving jobs and economics numbers? Is the mantra "buy all risky assets and commodities or be priced out forever?" Or do we have some clouds looming on the horizon? What could possibly go wrong now? Here's one thing that looms, potential political gridlock. Or is that a good thing for the markets and economy? I say in normal times gridlock might be a good thing, but in these times where solutions are required for several problems that ail this country, this is potentially not a positive thing. I'm guessing if the O man holds true to form, he'll cave and do most of the compromising on just about everything in order to avoid total gridlock and a reprisal of the mid '90's when the GOP forced a temporary government shut down.

Eric Cantor Opposes Compromise On Extending Bush Tax Cuts, Says Government Shutdown Will Be Obama's Fault

What's on your minds today, folks?

Thursday, November 4, 2010

Happy Birthday Thor!

Where from Here?



Here we are again, and the psychologically important April highs. We've had quite the election and the economy is now clearly slowing down. Things feel a bit stale to me, yet here we are, with a new even <i>more</i> business friendly congress coming in January, and a pledge by our friend Ben Bernanke, to pump another 600 Billion dollars into our economy.

So, my question to you all this morning is - Where do the markets go, from here.

Let's hear it!

Wednesday, November 3, 2010

Will The Second Mouse Get The Cheese?


It looks like the second mouse indeed got the cheese.




Reaction to the Republican take over of the House has been muted. Let's see how that plays out today. All eyes are on SPY 120 and SP-500 1200.

Cotton Clothing Price Tags to Rise

Synthetic linings. Smaller buttons. Less Italian fabric. And yes, even more polyester. Unusually high cotton prices have apparel makers scrambling to keep down costs, but consumers be warned: cotton clothing will be getting more expensive.

Record Cotton Prices ‘Endanger’ China Textile Makers, CFLP Says

Allow sugar, cotton exports, says Pawar



A new cop on Wall Street?

Eric Schneiderman "Sheriff of Wall Street"

NEW YORK (AP) -- A Democratic state senator who vowed to protect the interests of everyday New Yorkers beat a Republican prosecutor Tuesday in the race to be New York's next attorney general.

Maybe Schneiderman will follow in the foot steps of the now disgraced Spitzer:

As attorney general, Spitzer prosecuted cases relating to corporate white collar crime, securities fraud, internet fraud and environmental protection. He most notably pursued cases against companies involved in computer chip price fixing, investment bank stock price inflation, predatory lending practices by mortgage lenders, fraud at American International Group, and the 2003 mutual fund scandal. He also sued Richard Grasso, the former chairman of the New York Stock Exchange, claiming he had failed to fully inform the board of directors of his deferred compensation package, which exceeded $140 million.

Tuesday, November 2, 2010

Dewey Beats Truman



From the wiki:

The paper's erroneous headline became notorious after a jubilant Truman was photographed holding a copy of the paper during a stop at St. Louis Union Station while returning by train from his home in Independence, Missouri to Washington, D.C.[1] Truman's joy was no doubt increased by the gaffe from the staunchly conservative Republican Chicago Tribune, which had once referred to Truman as a "nincompoop". In a retrospective article over half a century later about the newspaper's most famous and most embarrassing headline, the Tribune wrote that Truman "had as low an opinion of the Tribune as it did of him."[2]

On election night, this earlier press deadline required the first post-election issue of the Tribune to go to press before even the East coast states had reported many results from the polling places. The paper relied on its veteran Washington correspondent and political analyst Arthur Sears Henning who had accurately predicted the winner in four out of five presidential contests in the past 20 years. Conventional wisdom,[3] supported by polls, was almost unanimous that a Dewey presidency was "inevitable", and that the New York governor would win the election handily. The first (one-star) edition of the Tribune therefore went to press with the banner headline "DEWEY DEFEATS TRUMAN".[1]

The story by Tribune correspondent Henning[4] also reported Republican control of the House of Representatives and Senate that would work with President-elect Dewey. Henning wrote that "Dewey and Warren won a sweeping victory in the presidential election yesterday. The early returns showed the Republican ticket leading Truman and Barkley pretty consistently in the western and southern states" and added that "indications were that the complete returns would disclose that Dewey won the presidency by an overwhelming majority of the electoral vote."[5]

As returns began to indicate a close race later in the evening, Henning continued to stick to his prediction, and thousands of papers continued to roll off the presses with the banner headline predicting a Dewey victory. Even after the paper's lead story was rewritten to emphasize local races and to indicate the narrowness of Dewey's lead in the national race, the same banner headline was left on the front page. Only late in the evening, after press dispatches cast doubt upon the certainty of Dewey's victory did the Tribune change the headline to "DEMOCRATS MAKE SWEEP OF STATE OFFICES" for the later two-star edition. However, some 150,000 copies of the paper had already been published with the erroneous headline before the gaffe was corrected.

As it turned out, Truman won the electoral vote by a 303-189 majority over Dewey and Dixiecrat candidate Strom Thurmond, though a swing of just a few thousand votes in Ohio, Illinois, and California would have produced a Dewey victory. Instead of a Republican sweep of the White House and both houses of Congress, the Democrats held the Presidency and regained control of both the House and the Senate.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Wishful thinking that the media would be as wrong in 2010 as they were in 1948.

Financial mythology

This weekend I was commenting about the importance to develop a trading system to rely on.
It very much has to do with the urban legends surrounding us in the market.
We are ill equipped to deal with it if for reliable information we have to count on MSM.The confusion and variety of opinions just make it difficult to follow some kind of information.

Try to follow some iconfigures in the investment world, assuming that we can get reliable info.I think that the best in that case, will be to just pay attention to only one of them.

Different opinions out of five or six and we get lost.We start thinking who and when is going to fail in their views, and how fast really is reversing his/her strategy and we can end up with even more uncertainty.

Mark Hulbert made an article checking newsletters that he follows (several decades now) and started looking for editors who got the 2000's and 2007 crashes and 2009 melt up, and he got not even one.

Pretty sobbering and one of the reasons why I don't think that following news (at least closely) is too much of a help for me.

I'm thinking about the foreclosure mess few days ago and it's effect on the equity market.Almost nothing.

Treasury creating bonds and the FED buying it, huh?.Sounds like incestuos, like something really out of whack.
Mark to make believe.Banks getting money to just speculate like regular traders but against their clients.
Government giving incentives to send jobs oveseas, bond vigilantes that will protect the soundness of the government books castigating increasing deficits... what happen to them?

There's a lot of myths out there and to keep my head leveled I just consider most of it a farce.
That's why I try to stay away as much as I can from regular news, they don't inspire very much.

Regarding the equity market the trend looks too mechanical, not impulsive but stayed solid anyway.

I mentioned already that a pull back by nov 17 (i'll be alert couple days before and after too) is very possible.

Could be considered a reversal tomorrow, who knows, to me looks too neat.There's lots of people waiting for tomorrow probably because we all remember Sen. Scott Brown and what happened afterwards.Twice in a row, maybe not.

From an astrological point of view I keep thinking (or seeing) nov 17 like a important day if a reversal is going to occur.In that case we can get a 6% 8% down.But hardly before, if I'm not mistaken.

Of course a drop could happen anytime but to me if happens now should be shallower and short lived.
In my mind nothing change since Jan 2010 when I post my first comment ever on a blog when we make some kind of tournament about what was going to happen in the equity market in 2010.

If that view remains valid now is the time of blowing up the Lehman price levels.Will see.

Thank you

Monday, November 1, 2010

Update on the SPY



SPY broke the short trend line on the upside but the higher prices were rejected. Once again we crossed the 118.00 line, and bounced off the lower trend line.

Election day tomorrow!

Midterm Manny Mondays: So Who Wins on Tuesday & What are the Ramifications (if any) on the Market and Economy?

I realize that most of us want to stay away from political discussions on this board, but I don't think we can ignore this week's mid-term elections and the potential effects the outcome of them might have on our markets and economy (and country) going forward. The bottom line is it seems that from a perception standpoint, there are a lot of market players waiting to see how the elections will play out before determining how to position themselves. Trading and what little is left of true "investing" is all about playing what many of us think the Fed and government will do to keep this thing aloft.

So, what I'd like to do is have a little fun with this and run an informal poll on how each of us think the elections will shake out and the potential effects on things after Tuesday's results are in.

Nate Silver over at his political elections forecasting blog at the NY Times is calling for some very significant gains by the GOP in both the House, where he has them taking over the majority by a wide, and Senate, where he has them coming very close. Take a look:

Five Thirty Eight, Nate Silver's Political Calculus

First of all, what do you think the final tally will be on Tuesday after all the results are in? And, second, what effects, if any will they have the markets and economy in the short and long term? If the GOP takes over at least the House, will the plug be pulled on Bernanke's QE-4-eva strategy? If so, will the plug also be pulled on our markets and the remains of our sluggish economic recovery? Or, as some people tend to believe, would the GOP retaking at least the House, be good for the markets, if not the economy, because it will hamper their ability get anything done at all over the next two years, thereby freezing everything in place for the president and his agenda? Or will something completely different and entirely unexpected happen?

I'll go first:

House:
GOP - 224
DEM - 211

Senate - DEM - 53
GOP - 47

I say that if the GOP does indeed at least retake the House, the market in the short term sells the news, coinciding with the Fed's announcement of more QE, but that drop will probably be bought again, taking us to new year highs (a little "Santa Rally", if you will), and causing more pain for those bears and bulls alike who aren't very nimble in their approach. Longer term, I see the market then selling off in a big way in Q1 or Q2 in 2011, in the face of slowing economic activity, a continually slowing housing market (and declining prices), not to mention the ongoing foreclosure fiasco with a very unclear end game that could well cause yet another banking crisis, and our political leaders' inability to do more to continually support asset prices. As a result, any remaining confidence that the recovery is real will likely start to erode in a big way, leading to some interesting political wrangling by both parties, while an aghast, and increasingly frustrated populace looks on.

What say ye?

On a lighter note, for your football peeps, here are a few pics from our journey to Lambeau Field last Sunday: