Thoughts about the markets, automated trading algorithms, artificial intelligence, and lots of other stuff
I found this strangely compelling and fun to watch.
Been there, want to go there, hadn't even heard of there … I've flown over 4 million miles, and enjoyed realizing I haven't even scratched the surface, yet.
Why watch a video of a guy doing his happy dance in various places around the world? See for yourself.
Here is a link to several of his videos and a link to his website.
I found this strangely compelling and fun to watch.
Been there, want to go there, hadn't even heard of there … I've flown over 4 million miles, and enjoyed realizing I haven't even scratched the surface, yet.
Why watch a video of a guy doing his happy dance in various places around the world? See for yourself.
Here is a link to several of his videos and a link to his website.
As expected, the Markets have hit some resistance and are losing momentum.
It will be interesting to see whether people view this as an investment opportunity … or the beginning of the next leg down.
The "new rally" offensive sectors are now under-performing. In particular, Consumer Discretionary and Technology sectors are showing weakness. In contrast, the defensive sectors are outperforming … with Healthcare, Utilities, and Consumer Staples showing relative strength. Energy
is also outperforming the broader market.
Even though this change is
relatively new, it does show a change in risk appetite. Investors and
traders are turning more cautious on the market overall.
Here is a chart showing where the NYSE finds itself.
Are Small Investors Paying Attention?
Marty Chenard's StockTiming site often highlights interesting trading ideas and statistics. The chart below is from his site, and shows how large investors and small investors reacted differently to market conditions earlier this week.
The chart shows the volume of Advancing and/or Declining shares for the New York Stock
Exchange, the NASDAQ, the American Stock Exchange, and the Over The
Counter Bulletin Board. (OTC stocks are generally unlisted stocks
which trade on the Over the Counter Bulletin Board (OTCBB) or on the
pink sheets.)
It is easy to see that larger investors were taking profits … while smaller investors were still buying.
That would be significant if it continues.
Business Posts Moving the Markets that I Found Interesting This Week:
Lighter Ideas and Fun Links that I Found Interesting This Week
As expected, the Markets have hit some resistance and are losing momentum.
It will be interesting to see whether people view this as an investment opportunity … or the beginning of the next leg down.
The "new rally" offensive sectors are now under-performing. In particular, Consumer Discretionary and Technology sectors are showing weakness. In contrast, the defensive sectors are outperforming … with Healthcare, Utilities, and Consumer Staples showing relative strength. Energy
is also outperforming the broader market.
Even though this change is
relatively new, it does show a change in risk appetite. Investors and
traders are turning more cautious on the market overall.
Here is a chart showing where the NYSE finds itself.
Are Small Investors Paying Attention?
Marty Chenard's StockTiming site often highlights interesting trading ideas and statistics. The chart below is from his site, and shows how large investors and small investors reacted differently to market conditions earlier this week.
The chart shows the volume of Advancing and/or Declining shares for the New York Stock
Exchange, the NASDAQ, the American Stock Exchange, and the Over The
Counter Bulletin Board. (OTC stocks are generally unlisted stocks
which trade on the Over the Counter Bulletin Board (OTCBB) or on the
pink sheets.)
It is easy to see that larger investors were taking profits … while smaller investors were still buying.
That would be significant if it continues.
Business Posts Moving the Markets that I Found Interesting This Week:
Lighter Ideas and Fun Links that I Found Interesting This Week
I use Google without thinking. It is a habit or a reflex. That is about to change; at least for some types of information.
They call it a "Computational Knowledge Engine" – but my tests tell me it does a lot more than what that means to me. For example, here is a comparison of Accenture and IBM.
Here is a link to a brief demo. Take a look … I bet you shake your head and smile. Progress is a beautiful thing.
It does a lot more than calculate how many days you've been alive, amortize a mortgage, or tell you the flying time from Dallas to Paris. Apparently the folks at Wolfram have a sense of humor too. Here are some example searches that demonstrate that:
Here is a summary of some more of the hidden tidbits from Mashable.
Strangely, it doesn't know what a "computational knowledge engine" is … I guess that makes it more human. It is easier to know lots of stuff than to be self-aware.
I use Google without thinking. It is a habit or a reflex. That is about to change; at least for some types of information.
They call it a "Computational Knowledge Engine" – but my tests tell me it does a lot more than what that means to me. For example, here is a comparison of Accenture and IBM.
Here is a link to a brief demo. Take a look … I bet you shake your head and smile. Progress is a beautiful thing.
It does a lot more than calculate how many days you've been alive, amortize a mortgage, or tell you the flying time from Dallas to Paris. Apparently the folks at Wolfram have a sense of humor too. Here are some example searches that demonstrate that:
Here is a summary of some more of the hidden tidbits from Mashable.
Strangely, it doesn't know what a "computational knowledge engine" is … I guess that makes it more human. It is easier to know lots of stuff than to be self-aware.
The market has been tenaciously bullish recently. Apparently it's working, because I hear an increasing amount of people optimistic about the markets.
I'm glad that our trading is based on mechanical models, because recently mechanical models have worked quite well.
Personally, though, I'm feeling a lot more cautious. The markets seem pathologically bullish; and I am looking for a pull-back.
What concerns me is that we haven't seen the back and forth … two steps forward, then one step back, rhythm that I've come to trust. Instead I sense something artificial and likely to break down. For example, since this rally began in early March, there have only been four days with negative reversals greater than 1%.
Can The Economies Of This Many Countries All Get Fixed At The Same Time?
Moreover, a quick glance around the globe shows remarkably similar bullish performance in many markets.
To get a closer look for yourself, here is a link to the charts.
Other Signs That We're Approaching Over-Extended.
I'm starting to see the Smart Money lighten up their bets at the same time I'm seeing retail investors starting to get back into the game; and the VIX is at a low not seen since last September. It feels like we are getting close to the type of confidence spread that often immediately precedes a major turning point. It is the point where the market is making higher highs, while smart traders are becoming more risk-averse. This negative divergence often perceives market pullbacks.
Again, in my opinion, a pullback from this level is expected and perhaps even healthy. What I'm looking for is to see a healthy correction and then, hopefully, organic buying from the Smart Money.
Elliott Wave Pattern.
I was talking to a friend of mine who successfully trades using Elliott Wave as a framework for understanding the market. And I thought this might be an interesting time to re-visit this technique.
The premise is that the market doesn't affect sentiment. Rather, it is the other way around; collective sentiment affects the market. And that while markets change, human nature doesn't … consequently, predictable patterns play out over and over again.
While I now look at Elliott Wave more as a way of understanding what the market has done (rather than a great predictor of what it will do next), I do believe it is helpful in getting a sense of the next likely swing.
Here is a chart that shows the basic sequence and an example of the sentiment causing the move.
The next chart shows that a similar sequence often happens in both directions.
All this reminded me that I have a piece of software called the Advanced GET, which uses a pretty clever algorithm for identifying some of the simpler Gann and Elliott Wave trading patterns. So I dusted-it-off, fired-it-up, and started playing around.
Looking at a weekly chart of the NASDAQ, it's very easy to envision
a five wave sequence as follows.
Note that the wave five target
is beneath the recent lows. And that the wave four pullback takes us back to the top of the channel … and seems to have textbook Elliott Wave size,
slope, and timing.
Again, I don't trade
the Elliott Wave. Yet it fascinates me, and is something
that I do pay attention to as a framework. Add to all this that the daily chart of the NASDAQ shows
that price is stalled at its 200 day moving average, and I'm certainly going to be wary of a pull-back here.
Business Posts Moving the Markets that I Found Interesting This Week:
Lighter Ideas and Fun Links that I Found Interesting This Week
The market has been tenaciously bullish recently. Apparently it's working, because I hear an increasing amount of people optimistic about the markets.
I'm glad that our trading is based on mechanical models, because recently mechanical models have worked quite well.
Personally, though, I'm feeling a lot more cautious. The markets seem pathologically bullish; and I am looking for a pull-back.
What concerns me is that we haven't seen the back and forth … two steps forward, then one step back, rhythm that I've come to trust. Instead I sense something artificial and likely to break down. For example, since this rally began in early March, there have only been four days with negative reversals greater than 1%.
Can The Economies Of This Many Countries All Get Fixed At The Same Time?
Moreover, a quick glance around the globe shows remarkably similar bullish performance in many markets.
To get a closer look for yourself, here is a link to the charts.
Other Signs That We're Approaching Over-Extended.
I'm starting to see the Smart Money lighten up their bets at the same time I'm seeing retail investors starting to get back into the game; and the VIX is at a low not seen since last September. It feels like we are getting close to the type of confidence spread that often immediately precedes a major turning point. It is the point where the market is making higher highs, while smart traders are becoming more risk-averse. This negative divergence often perceives market pullbacks.
Again, in my opinion, a pullback from this level is expected and perhaps even healthy. What I'm looking for is to see a healthy correction and then, hopefully, organic buying from the Smart Money.
Elliott Wave Pattern.
I was talking to a friend of mine who successfully trades using Elliott Wave as a framework for understanding the market. And I thought this might be an interesting time to re-visit this technique.
The premise is that the market doesn't affect sentiment. Rather, it is the other way around; collective sentiment affects the market. And that while markets change, human nature doesn't … consequently, predictable patterns play out over and over again.
While I now look at Elliott Wave more as a way of understanding what the market has done (rather than a great predictor of what it will do next), I do believe it is helpful in getting a sense of the next likely swing.
Here is a chart that shows the basic sequence and an example of the sentiment causing the move.
The next chart shows that a similar sequence often happens in both directions.
All this reminded me that I have a piece of software called the Advanced GET, which uses a pretty clever algorithm for identifying some of the simpler Gann and Elliott Wave trading patterns. So I dusted-it-off, fired-it-up, and started playing around.
Looking at a weekly chart of the NASDAQ, it's very easy to envision
a five wave sequence as follows.
Note that the wave five target
is beneath the recent lows. And that the wave four pullback takes us back to the top of the channel … and seems to have textbook Elliott Wave size,
slope, and timing.
Again, I don't trade
the Elliott Wave. Yet it fascinates me, and is something
that I do pay attention to as a framework. Add to all this that the daily chart of the NASDAQ shows
that price is stalled at its 200 day moving average, and I'm certainly going to be wary of a pull-back here.
Business Posts Moving the Markets that I Found Interesting This Week:
Lighter Ideas and Fun Links that I Found Interesting This Week
To those of you with young children, here is a peek into your future.
After years of hard work and your best efforts (OK, mostly your best efforts) … I predict that your adorable bundles of joy will someday wish they could send you this card.
So, take a moment to think about your Mom … and remember that she was very young when she did those things to you …
… and what you make them mean is up to you.
To those of you with young children, here is a peek into your future.
After years of hard work and your best efforts (OK, mostly your best efforts) … I predict that your adorable bundles of joy will someday wish they could send you this card.
So, take a moment to think about your Mom … and remember that she was very young when she did those things to you …
… and what you make them mean is up to you.