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Join David Stendahl, portfolio manager at Capitalogix, at the Traders Expo in Dallas Texas June 6 – 8.
David will be talking about effective way to build diversified futures portfolios. Click here for more information.
I'll be there too. Let me know if you're going ... looking forward to seeing you at the Expo.
Here are some of the posts that caught my eye. Hope you find something interesting.
It's almost summer.
So, the winter hibernation period is officially over.
However, I noticed a disturbing trend (at least for me). Here's a picture showing how my weight has fluctuated for the past year. I wonder why?
The chart is interesting for a couple of reasons. The first is that the data is plotted automatically using a Withings scale. It's wireless, and once you set it up, all you have to do is stand on the scale, and it does the rest for you. It also links to various fitness tracking sites (like Fitbit). It is very convenient.
The Big Bull Market in My Ass.
Everything appeared to be going well until November. At that point, the trend changed and my weight began climbing a wall of worry.
Until Jen and I took a trip to Asia last November, we had been going to the gym, running in the park, and using a personal trainer. The chart tells the rest of the story.
Did I gain weight because I stopped going to Delano (the personal trainer)? ... was it because I stopped running? ... or was it Seasonal Affect Disorder ("SAD")? Nope, the only thing "sad" is how few of my skinny pants still fit.
This chart is somewhat like a market chart. It's easy to attribute causes to something that was really only coincident. Going to Asia didn't cause my laziness. My time off from personal training was a symptom rather than the cause.
Ultimately, it doesn't really matter why something happened, what matters is what you choose to do now.
Hmm ... sounds like the first lesson of trend trading. Click here for more.
One of the ways to measure the mood of the stock market is to see what sector rotations are taking place beneath the surface.
This chart shows that sector rotations over the past month reflect a market mood that is turning more defensive.
John Murphy explains:
The four sector lines are plotted "relative" to the S&P 500 which is the flat black line. In other words, the four sector lines are relative strength ratios that measure their performance "relative" to the S&P 500.
The blue line shows the Technology SPDR (XLK) leading the market higher since the beginning of the year. Technology leadership is a good thing for the market. The XLK:SPX ratio has started to drop during April, however, which shows short-term loss of that leadership. In fact, technology was this week's weakest sector.
The other three lines show the relative performance of the three defensive sectors which are consumer staples (pink line), healthcare (green line), and utilities (red line).
Those three sectors underperformed the S&P 500 since December as the market rallied. Notice, however, that those three relative strength ratios have turned up over the last month. In fact, utilities, healthcare, and staples were this week's three strongest sectors.
That's normally a sign that investors are turning more defensive and are protecting themselves from a possible market correction.
Meanwhile, Q1 Earnings Season got off to a good start as companies continue to surprise with strong revenue and earnings.
via Bespoke.
Ignore the man behind the curtain ...
Here are some of the posts that caught my eye. Hope you find something interesting.
I visited my son in Washington DC this week.
He works for company called LivingSocial, which is a fast-growing and innovative tech startup. If it doesn't immediately ring a bell ... they compete with Groupon in the daily deals space.
As an entrepreneur, it was interesting to get a sense of the scope (they do a lot more than daily deals), scale (5,000 employess in just three years), and pace of the company like this.
LivingSocial raised enough money (at a $6 billion valuation) that, even though they lost over $500 million on operations last year, they are on pace for their targets - including an initial public offering in the near future.
As I watched the swarms of people huddling, white-boarding, and doing what they do ... It occured to me that what once seemed like chaos is re-organizing at a higher level of order. Teams are relying more on project management; key performance indicators are well known and well tracked; and they are moving to a matrix organization management to get things done.
All-in-all, it was impressive. Moreover, they are keeping the "prize" in plain sight. Here's a picture of Ben and me in front of a LivingSocial motivational mural titled "Intergalactic Winning".
It's next to a world map that shows the markets in which they've gone live, and it's a reminder that cool things happen when you focus relentlessly on big goals and an even bigger future.
Hopefully you've had a chance to watch the video about Caine's Arcade. If not, here it is.
What's it about? Well, a 9-year-old boy, Caine Monroy, built an elaborate cardboard arcade inside his dad's used auto parts store. And while the arcade is about fun, there's no doubt that it is serious business for Caine. Of course, it is about more than that.
It is inspiring, heart-warming ... and worth a few minutes of your time.
Help Caine's Scholarship Fund:
Caine's Arcade Online:
What an Interesting week we just had. Facebook is buying Instagram for $1 billion; AOL struck a $1 billion deal to provide hundreds of patents to Microsoft; Sony is cutting 10,000 jobs after its worst fiscal year ever; and “The Lion King” has passed “The Phantom of the Opera” as the highest-grossing Broadway musical ever.
On the other hand, the Markets suffered the toughest week they've had this year.
Here is a chart of the S&P 500 Index. With price flirting with the 50-day moving average and testing the support of the Index's recent up-trend ... perhaps this is a likely bounce point.
Also, notice the relative strength indicator at the bottom of the chart. As noted by the green arrows, an RSI reversal higher from the highlit zone has been a good indicator that the broader market will likely move higher as well.
On the other hand, a failure to move higher here could feed the "Sell in May and Go Away" crowd. What do you think?
Let's start with a cartoon about Reverse Psychology.
Here are some of the posts that caught my eye. Hope you find something interesting.
Michael Covel's Trend Commandments
Michael Covel was the keynote speaker at this year's Market Technicians Association Annual Symposium.
Covel has made a name for himself as a chronicler of the Turtle Trading experiment and an outspoken proponent of trend following. Here is a photo of him and me at the Symposium.
Truth be told, I often sit through presentations at a trading conference feeling skeptical, and looking for an idea that rings true or at least seems worth investigating further.
This was much better than that.
Covel claims that market profit is about the right mentoring and practice, not genetic gifts, inborn talents, or Asperger's memory brilliance. You simply need a winning philosophy and strategy, backed by proven positive results that you can execute.
Unlike some industry experts who hint at elusive secrets, Covel's unabashedly open about what he believes works and the things that he's learned from winning traders. He also sprinkles in wisdom from the ages, like this quote from the ancient Greek trend follower, Epictetus.
The audience at an MTA event is filled with an impressive group of people ... you'll meet portfolio managers, strategists, analysts, quants, and traders who rely on technical analysis. Talk of oscillators, histograms and regression testing fills the air. So, it was refreshing to hear Covel challenge the room. Covel loves to poke technicians who talk about quant trading; he claims that systematic trend following is the only quant strategy that actually works.
He said that what he does is real technical analysis because despite what anyone else thinks, he's skeptical that any of the complex strategies being discussed consistently beats the technique he's talking about. The proof, he says, is in the evidence. In this case, it's the detailed trading records of dozens of systematic trend traders who have produced consistent results that dramatically outperform the markets, year-in-and-year-out for decades.
Simple Is Often Better.
If you asked someone who builds trading systems to describe a trading system, they'd probably focus on inputs and technique (e.g., what indicators does it use; is it a momentum strategy; does it seek to profit from artbitrage, reversion to the mean; does it use a simple crossover technique?). In contrast, Covel starts with a proverb:
Going a little deeper, Covel says a system should confidently deal with these questions.
However, he cautions that trend following starts with knowing when to do nothing. If the market is screaming like a spoiled brat ... Step to the side. That’s your first play. Cash is a legitimate position.
Learning More.
Covel is an engaging speaker and writer. In addition to the keynote, I had an opportunity to sit down with him and have a real conversation. I'm happy to say that he has a terrific grasp on trading, traders, and an interesting perspective on what works.
As a result of our conversation, I bought a copy. Since I had already read several of his other books, including Trend Following and The Complete Turtle Trader, I didn't expect much new information. However, just as he promised, this book has a different tone and is chock-full of insights and tradable ideas.
If your're curious, here's my post on his earlier books.
Covel offers an interesting collection of Podcasts. Click here to check them out.
Sounds good.
Posted at 01:19 PM in Books, Ideas, Market Commentary, Trading, Trading Tools | Permalink | Comments (0) | TrackBack (0)
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