Capitalogix

Why Cloud Computing Irks Larry Ellison, But Benefits You.

The network is becoming the computer.

Here is a short video that puts "Cloud Computing" in perspective.  In it, Ellison jokes that someone decided to change the word "Internet" to "Cloud" because it was a lot easier than innovation.

Microsoft is spending a lot of time and money to make sure it does better gaining an early lead and monetizing this type of "Internet" service.  Their cloud computing platform is called Azure.

Amazon also has a cloud offering worth a look. 

Why Should You Care?

Basically, you can “rent” a current version Windows Server for as little as 12 cents per hour, and only pay for the hours you need it each month. That’s $12 bucks to use 100 servers for an hour. You also pay for data transfer and storage, but that is negligible. The nice thing is that you can fire up an army of servers to run a batch process ... then stop paying when they complete their work.

You can get access even cheaper under a program where you bid on unused capacity within the cloud at any given time (Spot pricing). 

I still have reservations about using cloud computing for many daily business applications. However, for “crunch on demand” processes ... this model makes much more sense that investing in piles of hardware that all too soon becomes obsolete.

Most of the data from this post comes from Tim McDonald, the president of Infassure, a technology consulting and out-sourcing company in the Dallas area.  They've been a big help to us on this, and many other matters.

Review of Alphatrends' Book on Technical Analysis Using Multiple Time Frames

This is one of the few books that I recommend to traders regardless of their expertise. There's something valuable in here for novice traders, and perhaps even more for experienced traders.

The book was written by Brian Shannon. He is a professional trader; and he has developed quite a following on Twitter under the name "AlphaTrends".

Over the years, I've read many books about trading, the markets, and psychology. This book is a very nice combination of those topics, with some common sense thrown in for good measure.

What is in the Book?

The book starts by explaining some basic technical analysis concepts, like trends, moving averages, and support & resistance levels.  Next, Shannon explores some of the common volume and market patterns (dealing with what to expect, and why it happens that way).

He also talks about the four stages of a stock's economic cycle. Whether you call it expansion, peak, decline, and recovery ... or ... accumulation, mark-up, distribution, and decline ... these four stages show-up repeatedly, in different stocks and on different time frames. Recognizing these cycles, and what they mean, is a good step forward in understanding the markets and which techniques are most likely to work in a particular market condition.

The Disciplined Trader.

Along the way, he also does a nice job pointing out some of the nuances of trading, from risk management to exit strategies.  This is a book that balances opportunity with defense and discipline. 

I appreciate that the book focuses on the risk management side of trading, and doesn't pretend that there are magic indicators or trading systems. He stresses that risk management and position sizing are more important than what you choose to trade.

More Than Patterns: The Entry and Exit Matter Too.

Shannon states that his edge is based on observing the market clearly and objectively, then implementing trades based on what the market dictates. He teaches to initiate a trade only when you have a perceived edge and the price action confirms your theories.

He warns that the most difficult job on Wall Street is picking tops and bottoms.  There are lots of lower risk ways to trade.  For example, while trend following is one of the techniques he advocates, he explains how using multiple time frames helps you identify trend alignment, which you can then use to help place trades during situations where you have a better edge.

Common Sense Insights About the Markets Isn't as Common You Might Hope.

As Shannon describes the different patterns, he does a nice job of providing charts and narrative to explain what's happening, what some buyers might be thinking, and why he takes (or avoids) trades at different points in time.

He cautions that the market is not always rational and "reasons" are often revealed only after price has moved.

I like that reading this book feels like you're having a conversation with someone who really knows what they're talking about.  And as you get further through the conversation, you realize that you're making progress, learning new things, making new distinctions, and putting things together in a way you hadn't thought of before.

This book doesn't talk down to readers; yet, it doesn't try to dazzle them either. It's well-written, balanced, and full of practical ideas and insights.

Bottom Line, it's certainly worth reading.

In addition, click the picture below to watch a recent video he did about what's happening in the market.  It is a nice example of his trading style.

Other Resources:

• Here is a link to the website for his book.
• Here is a link to his StockTwits blog.
• Here is a link to a collection of charts he posts.
• Here is a link to a video he did for the CBOE this month.
• Here is a link to a video about his experience and techniques.

Here are the iPhone Business Apps I Use Most

This week I'm listing the iPhone business and productivity apps that I find worth using. Click here to explore last week's list of the fun stuff.

At first I wanted to create a list of the coolest iPhone apps. However, cool doesn't necessarily mean useful. Instead, this is a list of the applications that I use most. I limited myself to the top two applications per category.

For more information about these applications, click the links to go to the developer's site.  Even if you don't have an iPhone, check-out the links to see what is available.  I am amazed at how much of my computing and basic research are now done on my phone (as opposed to laptop or desktop computers).

Stock Market Info

• Bloomberg
• AOL Daily Finance

Business News

• WSJ
• Y! Finance

General News

• NYTimes
• NPR News

Reference

• Wikipanion
• Dial Zero

To-Do Lists

• Jott
• Toodledo

Calculators

• FastFigures
• Tip

Conversions

• Currency
• Units

Ideas

• Creative Whack Pack
• iChoose
  

Travel

• TripIt
• GasBuddy

That's it for now.  Let me know if I forgot your favorite or you found something worth sharing.

Making Room for New Ideas

How many things that you think you "know" are out-dated or simply not true?  Ignorance isn't always the problem; this video shows that pre-conceived notions pose quite a challenge.

In this Ted Talk, called "Let My Dataset Change Your Mindset", watch as Hans Rosling uses fascinating data-bubble software to burst myths about the developing world, and how the world has developed.

Very interesting for the content ... and the analysis techniques.

For Additional Information.

• Here is the direct link.
• Here is a link to his blog.
• And here is a link to a different Ted Talk Rosling did in 2006.
• Here is a link to commentary about the presentation.

Augmenting Reality

Sometimes new technology seems like science fiction. Other times, science fiction introduces us to new technology.

I remember watching Minority Report and having a sense that I was watching a future closer than it seemed. There's a scene where Tom Cruise is walking through a shopping area and each time he passes a store there is a personalized ad; and in other scenes there is a "Terminator-Like" text that overlays the physically real world. That is called "Augmented Reality". 

Well, your phone may not be as cool as that, yet; however it's getting there pretty quickly.

The next picture doesn't look like much; but it's using the iPhone's built-in camera and GPS unit to recognize highly rated restaurants in real time. The application doing this is Yelp. This feature is currently hidden by default; but you can turn it on by shaking your phone vigorously, until the "Monocle" feature activates.

Soon, I imagine this will be enhanced further with a discount coupons and the ability to place orders before you walk in the door. Nonetheless, it's an example of what's coming.

Where Else Will This Be Useful?

Imagine what this could do to the real-estate industry (as price per square foot, tax rates, etc. overlay the properties as you drive by). Or, imagine traders looking at a chart displaying the most relevant indicators, patterns, setups, and triggers for the company or market they are analyzing.  It gives a whole new meaning to real-time business intelligence.

Using Time and Price to Trade the Markets

It is good to get a fresh perspective on the markets.

I spent some time with Carolyn Boroden this week. I've been following her work for the past six or seven years. She has an interesting trading style, using Fibonacci retracements and extensions as well as market symmetry.  Here is some of what she shared.

Carolyn measures various market swings, and projects likely areas of support and resistance based on where these retracement and extension levels overlap most frequently. By taking readings from various swings sizes, she is effectively incorporating multiple time frames and trading styles in her analysis.

She is a frequent speaker at industry events, and she has a website and live trading room where she provides market commentary.

Here is an example of her work on a daily chart of the Gold Market. 

 
Here's what she says about that chart.  Click here to watch a video she made of the analysis.

The low in this chart was made at the confluence of a .618 retracement, 1.618 extensions and two 100% price projections  (Alternate price projections  or APP's on chart)   Now we are at a decision on the way up....to fail or not to fail....If this area of resistance is cleared...the initial upside target for gold is at the 986 area....If we fail at the listed resistance...it's a low risk sale...

Also, click this link to watch a recent video she did explaining where she saw support and resistance off the March lows.

Further Info:

• Here is a link to her website: Fibonacci Queen.
• Here is a link to her book: Fibonacci Trading: How to Master the Time and Price Advantage.
• Here is a link to a video she did about Fibonacci Clusters.
• Click Here To Follow Carolyn on Twitter.

A Trend-Following Book Worth Reading

People often ask me which trading books I'd recommend. I've read a lot of books about trading; and though some of them are good, only a handful stand out.

Michael Covel wrote a couple of the trading books I consider worth reading. The first is called "Trend Following", and the second is called "The Complete TurtleTrader".

Many books are little more than marketing for their author or an attempt to sell a "magic bullet" to less experienced traders. In contrast, both of Covel's books are simple enough that a novice would gain valuable information from them; yet there's enough content and nuance that experienced traders also will benefit from the books.

I've always loved Jack Schwager's "Market Wizard" book series. Covel's books are different than these because they deal with a narrower subject ... more deeply.  Yet they are similar in terms of the value-added content they provide and how accessible they are; and that's high praise from me.

Covel has an engaging writing style. He keeps things interesting by telling stories rather than simply providing a mechanical "how-to" textbook.  You get enough narrative and detail about accomplished traders to give you a sense of their personality, thought process, and some of the key ideas and distinctions that help make them successful. In addition, he backs-up his research with lots of data, charts, and links to additional information.  This makes it easy for you to continue on your own.

What is In the Trend Following Book?

The "Trend Following" book:

1. explains the basics of trend following;
2. introduces you to the some of the great trend following traders;
3. explains the positives and negatives of the technique from a performance standpoint;
4. shows how trend followers did during big events, crashes, and panics;
5. and the later part of book focuses on the human-nature side of trading, decision-making and building trading systems.

I like how Covel segments his books logically, and in bite-size chunks.  That means I can pick it up and read something without feeling compelled to start at the beginning and read all of it at once.

For example, I just opened Trend Following (to page 253) and saw "Five Questions for a Trading System". In this section he lays-out things to consider when evaluating a system.  Examples include how the system determines which market (and how much exposure) to trade, as well as what constitutes entry and exit triggers? Then, in addition to explaining the basics, there are examples and quotes from other traders about the topic.  And he extends the discussion to include emotional issues like how much money you intend to make, the level of time and effort you intend to invest, and the strengths and weakness you bring into the equation.  Bottom-line, he goes out of his way to give you a thorough understanding ... while getting his points across in an easy-to-understand, informative, and interesting ways.

I found myself referring to both of these books several times in the past several months. If you're looking for something to read (or for some new ideas about trading and money management) I recommend you check out these books.

Other Links:

• Here is a link to Covel's Blog.
• Here is a link to Covel's Videos on YouTube.
• Here is a link to his TrendFollowing website.
• Here is a link to his new movie, Broke.

Wolfram's Alpha Knowledge Engine

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:

• Where Are You?
• How much wood could a woodchuck chuck if a woodchuck could chuck wood?
• What’s the speed of an unladen swallow?
• How many roads must a man walk down before you can call him a man?

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.

Capitalogix Commentary 04/17/09

Stocks continued their advance this week.  The U.S. Markets moved higher for the sixth week in a row. Yet, it was just the seventh positive week for those indices in 2009. 

It is worth noting that the bulk of earnings begin to hit this week. We'll see if people continue to buy into bad news. I'm watching for a change in sentiment.

Long-Term Market Reminder: We have been in a bear market.  So, until proven otherwise, basic trend-following theory implies that the higher probability trades will be on the short side.  That means selling rallies until the bear market ends.

I sense a renewed interest in the market recently by retail investors. For example, just this week I had conversations with several people telling me that they regret not buying Apple and Goldman Sachs while they were down.  I tend to hear this type of conversation at tops.  Here is Goldman's chart.

It is also worth noting that there are reports that Goldman's Q1 Profit was non-recurring and a result of AIG unwinds. Add that to the fact that there we have seen poor bank earnings so far. Yet, it seems that the market sees a much higher likelihood of future financial solvency than it did just two months ago.  Still, this is a sector I'm watching for signs of weakness.  The next chart will explain why.

Here is an interesting chart related to banks from Crossing Wall Street. It could be titled "The Earthquake That's Shaking Our Markets".  It shows recent volatility of Banking Index.

Finally, I thought this was funny. Our peaceful pacifist president has become Obama The Pirate Killer.  Yeah, I know, the SEALs did it ... But I like the chart anyway.

Business Posts Moving the Markets that I Found Interesting This Week:

• Earnings Are Horrible - And Why It May Not Matter. (Traders Narrative)
• Shiller Says Depression Lurks Unless There’s More Stimulus. (Bloomberg)
• Poorly understood facts about Employment Numbers. (A Dash of Insight)
• Ten principles for a Black Swan-proof world. (Financial Times)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Bullish Signs On The Wall of Worry. (A Dash of Insight)
• How High is Too High? (InvestorWalk)
• Things We Can Be Sure Of and Hopeful Because Of.(Financial Philosopher)
• People Need to Play More - It is important to Society. (LiveScience)
• More Posts with Lighter Ideas and Fun Links.

Another Type of Image Toy - Deep Zoom

The new Deep Zoom technology in Microsoft's Silverlight is pretty cool.  The smooth in-place zooming and panning that Deep Zoom allows is a true advancement and raises the bar on image viewing. High resolution images need to be prepared for use with Deep Zoom to control the zooming experience.

Here is an example.

Also, here are three links worth exploring about Deep Zoom:

• This is a Deep Zoom site of Hard Rock Café Memorabilia (Hard Rock)
• This is a Barack Obama supporter site using Deep Zoom (Obama)
• And finally, here is a demo of a web site designed for Deep Zoom (Vertigo)

If you want a little more background on this, here is a post about why this technology is new and different.