IT’S ALL ABOUT THE VOLUME
If you are confused as to why you don't see a "Trade Update" on the site despite IPCM hitting the long side trigger...it's listed under rule #2 here. If the volume isn't there, I very simply walk away from the trade. I have found that, generally speaking, a lack of volume opens the stock up to retracements, fakeouts, whipsaws...call them what you want. Volume is what creates the momentum to get stocks out of their respective congestion areas. As for NFLX, I am not putting that on until the final hour of trading Monday. It is an earnings play. Only for those who like to drive fast and take chances. I will do these once in a great while, when I feel the odds are heavily in favor that I will be right. I think this is one of those circumstances for the reasons I outlined in this...
TOP 3 MOST POPULAR POSTS FROM THIS PAST WEEK
1. BUBBLE WATCH: SILVER 2. 11 P.M. THOUGHTS 3. VOLUME SPIKES GALORE IN SILVER...
TOP 3 MOST POPULAR POSTS FROM THIS PAST WEEK
1. IT'S A MATTER OF RESPECT 2. COULD THIS POTENTIALLY BE THE MOST LUCRATIVE WAY TO PLAY NATURAL GAS? 3. A REVIEW OF A LONG-TERM HOLDING AND A SHORT-TERM TRADE
TOP 3 MOST POPULAR POSTS FROM THIS PAST WEEK
1. DON'T PULL IN YOUR BULL HORNS QUITE YET 2. A SLOW MARCH TOWARD DOOM FOR RIMM 3. MY 6 GOLDEN RULES FOR TRADING
TOP 3 MOST POPULAR POSTS FROM THIS PAST WEEK
1. 3 REASONS TO BE SHORT-TERM BULLISH 2. THE GUN: YOKU AND N ARE LOOKING RIPE FOR TOMORROW 3. PSTR: WHAT NEXT?
A DISSECTION OF THE 4 PHASES IN A CORRECTION OR BEAR MARKET CYCLE
Almost exactly one month ago, I described the 4 phases of a bull market cycle. My reason for writing the article was to warn market participants of the impending disaster that tends to strike right around the time a certain class of investor (termed "phase 4" investors) becomes involved in the financial markets. Since the time that article was written the QQQQ is down over 7% and the SPY is down 5%. I mentioned 3 stocks in the article that invariably tend to attract the euphoric "phase 4" class of investor. All of the 3 names are down significantly over the past month, with FNSR suffering the worst out of the trio with a 50% (no, not a typo) decline over the past month. Given the types of declines we have seen in many of the phase 4 names, the astute investor has to be wondering if the market has done a terrifically expedient job of rinsing the excessive optimism out of the market? It's a valid question that deserves to be explored. Just as a bull market has 4 phases, a bear market or correction cycle will have various phases that tend to frighten different types of investors. By watching the types of investments that are being liquidated by these investors during the various stages of a bear market or correction, one can make somewhat accurate judgments as to whether unwarranted pessimism has created an opportunity for the market to create a sustainable bottom from which a rally may develop. Judging the phases of a bear market or correction cycle is remarkably more difficult than judging the phases of a bull market cycle. I believe this is due to the fact that fear causes more emotional reactions in human beings than does greed. The more emotional a move in the market becomes, the more difficult it becomes to predict and the more chance it has to overshoot any reasonable technical targets. The loss of ones hard earned dollars seems to inflict greater emotional reactions than the greed driven ecstasy of making enough money to buy a new Jaguar. Make sure to keep this in mind as we discuss the various phases of a bear market or correction cycle. Phase 1 (beginning of bear market or correction cycle) -- Investors ignore even the most obvious signs that the market is turning around. Sentiment surveys, put/call ratios, COT reports, negative divergences, the appearance of phase 4 bullish investors. Every warning sign is ignored. Investors are eager to buy the dip in their favorite stocks, as they feel that the market is set to turn back up. The most speculative companies...
TOP 3 MOST POPULAR POSTS FROM THIS PAST WEEK
1. RESEARCH REPORT - NEW POSITION - 7 PAGES 2. 3 CHARTS FROM A WEEKLY PERSPECTIVE 3. THE LAST BASTION OF HOPE FOR THE NASDAQ IS BREACHED
DO YOU SUCK OR ARE YOU AWESOME?
There's a certain freedom that comes along with not caring. I'm not talking about not caring in a self-destructive sense, where you end up on a street corner with a crack pipe and a $20 hooker. I'm talking about having a sense of detachment from the results of whatever you're doing. There is some real freedom in that frame of mind. I have a difficult time caring for any one business or venture for more than a certain period of time. I become quickly bored as soon as I see that I am successful or even have the chance to be successful. And it's not just my own ventures. I've worked for a couple different Wall Street firms. In the first year at both firms, I was either going to be heading up a new division or being promoted to higher position. In both cases, I ended up becoming disinterested after achieving some level of success. I started an internet advisory service (I guess you can call it that, the word blog hadn't been invented in the late 90's) that became pretty successful. At its peak I had a few hundred members paying anywhere from $60 - $200 per month. The website is here thanks to waybackmachine.org (if any of you know me from this site, holla at me). It was a cool experience that probably could have become a lot cooler if I hadn't become bored with it. There wasn't much competition back then. It's not like the jungle of charts, opinions and blogs that are available on the internet today. I was getting pats on the back from traders around Wall Street. They were my members. They really appreciated me and what I was trying to do with the site. Lots of people did well. I would get "thank you" emails all the time. One guy wrote me to thank me for allowing him to start a business of his own due to his trading profits. That felt good. It didn't make a difference...I still ended up bored. And then there was my hedge fund. I made my hedge fund into the #1 ranked macro hedge fund in the country as of the beginning of 2004. Right after achieving that ranking and being showered with praise, cash and investors fighting for a position within the fund, I suffered two down years in a row that made me hate my life. Even my hedge fund (my supposed life long dream) became burdensome to me after a period of time. The pressure of having investors breathing down your neck. Having personal relationships with a lot of them and wanting...
THE 3 IMPORTANT BENEFITS OF A CORE VERSUS PERIPHERY STRATEGY
As any of you who have been reading this blog for longer than a fortnight know, I am an advocate of having a core strategy that allows you stay in peace, while giving you the maximum potential for profit possible. For some of you that strategy may involve trading 40 times a day, taking multiple ticks out of the market. For others it may be a consistent method of investing in stocks that exhibit a certain price pattern. And for the chosen few, perhaps it's actively trading the markets while high on prescription drugs with a variety of costume clad woman keeping you company (true story - don't ask for details). Whatever the strategy may be, once a core strategy is established then and only then are the advantages of a periphery strategy felt. A sound periphery strategy (definition: a strategy you don't rely on for your primary investment gains, but instead rely on to compliment the performance of your core strategy) will allow you to bring in that spinach and macaroni money, while your core strategy is what you rely on for the steak and potatoes. A sound core strategy paired with a sound periphery strategy should accomplish the following: 1. A solid core strategy will make your periphery strategy that much better due to the fact that you don't *need* the periphery strategy to make your dough. Therefore, you can allow trades that your periphery strategy generates to come to you. There is no rush or need to force a trade. You are, therefore, empowered to only take the best risk/reward opportunities. That is unless you are a mouth breathing, compulsive button pusher. In which case, no strategy will be of benefit. 2. A periphery strategy will allow your core strategy the extra cushion it needs when it goes through its inevitable drawdown periods. As much as we all think we have that one system that is immune to drawdowns, it is inevitable that you, me and the next guy will suffer as a result of one. The magic of a good periphery system is that it allows you to absorb the drawdown by whittling down the pressure, at least somewhat. This will allow you to keep your mind in balance, which is essential when you are getting bombarded, while holding your head and praying that you don't end up going the way of Willy Lump Lump. 3. Psychological comfort. Knowing that have two methods of taking cash out of the market, gives you that much more confidence. Important note here: don't fool yourself into thinking you have two methods that compliment each other well and allow...
SO, WHERE DID YOU GET YOUR DEGREE IN CURVE FITTING?
This article also published on thestreet.com and fidelity.com Wall Street is the world's greatest venue for deception of the monetary variety. A wealth transfer mechanism that is perfectly shrouded behind fancy degrees, expensive suits and men who coach little league teams on the weekends. The talents, you're told, come in all shapes and sizes. There are those who can rip through a companies books and figure out exactly where the stock should be priced. There are those who are able to look at bond spreads and figure out where the economy will be in the years to come. There are those who can read the tape so well that they rarely have a losing week. The truth of the matter, contrary to what the general public believes, is that Wall Street is largely a talentless fraternity of overpaid men who are nothing more than masters of curve fitting. They look the role, they have documentation (degrees) to support their part in the role and they speak the role with abundant confidence. What is lost on 99% of people is that it's all hollow...an act...a drama, played out for the investing population so that they can keep feeding the machine. Those massively intellectual decisions that fund managers and analysts make on a daily basis are rarely anywhere near what you are led to believe. The truth of the matter is that Wall Street is dominated by curve fitters. What do curve fitters do? They fit their research around momentum driven moves in the markets. Trends, if you will. They rarely discover unique ideas. They rarely make moves at the beginning of trends. What they do, instead, is take a momentum driven move or steady uptrend in the market and tailor fit a set of data around the price move. Read it again, they take momentum driven price moves and tailor fit a set of data around the price move. Trend-followers that curve fit data in order to intellectualize their decision beyond "it's going up and I want to be a part of it", that's what Wall Street is. You can't have that guy in a $2,000 suit, a degree from Wharton and a pound of hair gel telling a group of high net worth foreign investors that I am buying this stock because it has a lot of momentum and the trend is up. You have to act out the drama for them. As a Wall Streeter, you have to play the part, the lingo, the look...you must make these people feel as if they are sitting courtside at a seminal event in financial history. You must give them such...