Friday Potpouri

Thor called my attention to this fascinating article at Prag Cap:

Revisiting the Mysterious Buyer

"Back in 2009 I wrote a story about some odd occurrences in the market. Anyone who keeps a pretty close eye on the market can remember the period during QE1 (see here for the correlation between POMO and equities). After the summer rally of 2009 volume fell off a cliff. But the rally powered higher. And much of it came from enormous institutional trades that were placed during quiet periods of the trading day. It was not unusual to see the futures surge 0.25% on no news on randomly huge volume. Now, this might not seem unusual to the casual reader, but the orders were odd in that there was an usual sense of urgency from these institutions. They were not just placing orders. They were placing orders beyond the ask price in what appeared like an intentional attempt to move the market rather than obtain the best price."

Another overnight observation was also noted by Dr. Brett Steenbarger:

Why the Markets Seem to go No Where

"Recently, on my research blog, I investigated trading patterns involving movements in the first hour of the day, the midday hours, and the last hour of the day. While I found a few patterns worthy of note, my eventual conclusion was that the statistical edges in intraday patterns were far less promising than the ones I had obtained over swing timeframes of 3-5 days. I notice, too, that the Trading Markets PowerRatings exploit edges over a five-day period. I don't think that's accidental. Having run literally hundreds of historical analyses, I have yet to find a recent intraday pattern that provides an edge comparable to the swing timeframe patterns I'm noticing."

More insights from Dr. Brett, one of the best sites on the internet:

Core Ideas in Trading Psychology

"The key idea is that, as a trader, you want to think about markets like a scientist. You make observations, you formulate theories about what is happening in markets, you express those theories as hypotheses, and you test those hypotheses with specific trades that you place. Over time, your trading experience either validates your market understanding or contradicts it, supporting or leading to modification of your basic theories."

How Market Internals Helped You To Avoid March 1 Gap Flap Trap

“How can you know in advance/in real time whether a breakout is real or a trap?”


In Ten Years Will Egypt Look Like Poland or Pakistan?

"The battle for Libya is stealing the headlines, and for good reason. But economic prospects for the Middle East turn on the direction Egypt takes.

A decade from now, will Egypt look more like Poland, an Eastern European post-communism success, or more like Pakistan, an economically dysfunctional breeding ground for terrorists?

The Middle East sorely needs a success story. As Latin America prospers and growth in sub-Saharan Africa picks up, the Middle East and North Africa stand out as economic disappointments, especially for their huge cohorts of unemployed youth."

Looking forward to my vacation, see everyone in a week!