Sometimes simple indicators are better. Trend lines are easy to follow and often meaningful.
Below is a weekly chart of the S&P 500 Index showing the recent break of an up-trend in place since 2009. If price stays beneath this level, it will likely be tough for Bulls.
In addition to the trend line break, there is a negative divergence (where recent price highs happened with lower momentum). Technicians often take this to be sign of weakness.
You know the economy is tough when a company like Hostess
Brands, the maker Twinkies and Wonder Bread, announces plans to close its plants and fire 18,000 employees as it moves to
liquidate.
Did you know the top tax bracket in the U.S. was once 94% … ?
With 2013 marking the 100th anniversary of income tax as we know it, here isa look at what both the average Joe and the average CEO have been paying throughout the years.
The Occupy Wall Street movement claimed to speak for the bottom 99% of the population by income, which includes pretty much everyone who makes less than $500,000 a year.
The calculator, below, shows where your income ranks in the wide range of the 99% … or the 1%.
An annual household income above $506,000 puts you in the top 1%, while you need to make less than $2,500 a year to be in the bottom 1%.
Many traders expected a sell-off after the election. We got that, and now the market is pretty oversold. So, is it time to jump back in … or should you pay attention to signs that we are still in a "Risk-Off" trading environment?
Traders know it is tough to call a meaningful 'Market Top' because you have to be right about both price and time. Adding to the difficulty is that humans seem to be wired to focus on what they missed, so it doesn't take much to trigger buying behavior.
With that said, sometimes it makes sense to pay attention to warning signs. In this post, we'll look at a technical warning pattern some traders call "the four horsemen of the apocalypse". As you probably guessed, it involves four components.
Why are they called the four horsemen? Because when you see all four of these rise at the same time, the underlying message is ominous.
Under normal circumstances, these market symbols are not correlated. In other words, the "horsemen" generally do not ride in the same direction. For example, when gold is going up, the dollar and USTs are normally going down, or vice versa.
When they all rise together, however, it indicates an extreme correlation of "risk-off" and diminished risk appetite across the board.
Here is a composite of all four charts. The yellow highlit areas show the coordinated move higher.
According to Mercenary Trader, U.S. Treasuries rise via their designation as the ultimate deep liquidity safe haven instrument.
Gold rises as the "alternative currency" not subject to a printing press — the safe haven for those who fear U.S. Treasuries are booby-trapped.
The Dollar rises as US investor capital is repatriated from emerging markets (and foreign investor capital flows into bonds).
And the VIX rises as equity risk assets are being shunned …
Why is this happening now?
One possibility is rising concern over the "fiscal cliff," and the likelihood of partisan deadlock, as the threat of automatic tax hikes loom (via the expiration of time limited reductions). Some believe that the heavy selling we are seeing, especially in market bellwethers like Apple (AAPL), is at least partially the result of capital gains lock-in prior to a higher taxation period.
Regardless, it seems the safe move is to position for the worst and hope for the best.
Here is a clip of Jimmy Fallon and Christina Aguilera using office supplies and used them as instruments to perform Christina's "Your Body."
Here is the "Instrument" list:
stapler, iPhone keypad, coffee pots with pencil drumsticks, roll of sticky tape, water cooler jug, tissue box & elastic band guitar, spiral notebook (a.k.a. the "tear snare"), keyboard washboard, paper clip shaker, and scissors.
With two days to go, Obama's odds of winning re-election have reached 85%, their highest level, according to the Five Thirty Eight forecast.
Prediction market, Intrade, also has the President maintaining a solid lead, with a 65% chance of winning.
The difference between the national polls and these results, is that the
national polls focus on the popular vote, whereas Nate Silver's Five
Thirty Eight forecast focuses on state-by-state polls aimed at
determining the winner of the electoral college and, with it, the
Presidency. Nate Silver's model also averages hundreds of polls.
Nonetheless, it is a close race, and what you see depends on where you look … Some polls still seem favorable for Romney (especially on Fox).
But, as election day approaches, and we continue to get bombarded by both sides, remember to take it with a grain of sand and a smile while you remember they are just doing their job.
Mark Twain said it many years ago: "Don't ever let the facts spoil a good story."
Doing the same things, the same ways, has predictable results. Sometimes it is important to do things differently.
Here is a photo of me at the National Society of Black Engineers' Professional Development Conference, where I had the opportunity to present and participate in several panel discussions.
I'm neither black, nor an engineer, and they aren't traders; so why would they ask me to present… and why would I say yes?
Value is often added at the edges. Likewise, good things often happen when you travel outside your comfort or habit zone.
I gained a lot from the experience. For example, I had a discussion with the nuclear physicist who talked about how they use computer simulations to model the effects of a nuclear explosion. That gave me great ideas about how to measure the effect of a particular trading system or algorithm on a market.
Luck does favor the prepared. That conversation could just as easily have been me simply saying 'hello,' shaking hands, and moving on to the next person. To some extent, the ability to take advantage of opportunities comes from the intent to find them.
Is Luck Something That You Can Maximize, Or Would You Consider It Random?
It's possible that luck is both random and something you can maximize.
Here is an example. Many people consider the stock market to be random. Nonetheless, there
are groups of people who consistently beat the market and trade
profitably. How is that possible?
To explain, let's examine the
decision to purchase Apple Computer stock. Regardless of whether that
decision was based on gut instinct, fundamental analysis,
or a technical chart pattern … whether price moves up or down the
moment after that purchase is for the most part random.
However, if you
make 10,000 trades over time, then your ability to make and keep money is about how you manage risk and opportunity. At that point, your
system is not necessarily random. Consequently, it is something that you can
improve.
Transform Results By Getting Un-Stuck.
Improvement means getting better and different results. And, as you already know, it doesn't make sense to continue to do the same thing, yet to expect different results. So, a key skill is learning to recognize when things are "stuck" in rut.
The trouble with many "ruts" is that you don't know you're in one, while you're in one. Consequently, it often takes a different perspective to become aware of new possibilities, opportunities, or best next steps.
Implications.
The interesting thing that this implies is that those opportunities were always there … they just weren't there for you in your current state of awareness.
Similarly, recognize that many of the processes that we rely-on limit our "luck" or opportunities precisely because they limit our choices. When this is done consciously it can be helpful. However, when it's an unconscious act, it can be dangerous.
In general, you can categorize many tools as either being multipliers or diminishers. Neither one is good or bad in and of itself. The trick is to recognize that you have a choice, and that not choosing is still a choice.
