Reasons or Factors or correlation or causation or whatever???

So again we find the talking heads coming in droves. Reminds me of the song from talking head (the band, not the pundits of wall street).

Henry Blodget is giving us

Three basic reasons:

  •         Stocks are still very expensive
  •         Corporate profit margins are at record highs
  •         The Fed is now tightening

Now yours truly traveltrading will give you one singular reason

1) Japan economic index dropped 2.5 percent which effects its exporting capacity and the chief harm is done to Germany which is one of the biggest trading partners and hence we find EU indexes and Asian indexes following the US indices and hence we can see further correction.

I just made it up.

Who cares what the reasons are for our style of trading. We have only one thing to look at, and that is price. If the price is going up we buy, if it going down we sell (trend following, counter intuitive).

Happy trading

 

Back to the bascis

Hi all

Since this a blog dedicated to travelers and teachers who like to make some extra buck trading, I would like to again give you a framework of expectation from this blog, the basic philosophy, and the method of trading.

I love all to visit this blog, but I particularly want you to make money knowledgeably so that you can help out your friends (In science terms – a replicable model), and also a model that can be easily taught and easily implemented.

I have heard a veteran trader say this : You pick any rule : say I will buy when it’s a full moon, and then sell in 15 days. It will make you money as long as you follow that simple rule over consistently over long period of time.

Alas, the market remains irrational as long as we remain solvent.

Since we don’t have that uninterrupted supply of money we want to first manage risk.

Today i want to just write about the philosophy of trading

Two rules (from that guy, you know who) : 1) Don’t lose money 2) Don’t forget rule number 1.

“The price is the true north star”

as a teacher or traveler – time is the most important premium we pay. So we have to make our system and keep it KISS.

Nothing else matters except one and only one thing in this system : Price

If the price is going up you buy and if it is going down you sell

Happy Trading

Keep an eye open for CELG

The market marched up today. the distribution days are 7 for s&p and 5 for NASDAQ (a distribution day is when there is high volume selling, higher the count greater the chance that the market would get into correction).

The Delta MSI is also bullish. It measures the position of ~3,600 stocks relative to an intermediate-term moving average crossover (MAC) point. When greater than 50% of the stocks followed are above this MAC point, the market is bullish and equities are attractive. When the indicator is below 50%, risk is elevated and stock exposures should be reduced.

Current Sentiment Last Week 2 Weeks Ago 3 Weeks Ago
BULLISH 68.2% 69.2% 66.3%

Now Lets look at Celgene Corporation (CELG)

Key characteristics : This is NOT the top 50 stock (it was in June of 2013). But it is has just yesterday popped from a base, and has made a new high.

Any financial entity making new highs continue to make new highs, like wise a financial entity making new lows will continue to make new lows.

Its Earnings per Share rating is 98 (top 2%). It is in medical sector – Sector rank 6. and Industry group rank of 39.

celg

happy trading

 

 

 

A wonderful and simple ETF strategy- 125% return more than S&P

I am a great fan of simplicity. Not just as a philosophical concept, but also in terms of stoic practicality. Growing up I used to admire elegant mathematical proofs. I came across Gödel’s first incompleteness theorem in an issue of time magazine in 1999. The proof of it was so beautiful that i was completely smitten by it, but now i don’t seem to remember it.

Like wise, as posted before, what about an ETF strategy that would give you 125% more than S&P!!

It has just one indicator: Whenever the Market is in Uptrend invest 100% of the funds you have set aside, if the uptrend is under pressure invest 50%, if the market is in correction invest 0%.

How is the market doing today : you can get it from IBD (subscription required), Or i will be talking about here.

Market is in uptrend if there have been 3 or less high volume selling days in the last 25 trading sessions.

Market is under pressure if there are 3-6 days of high volume selling.

Market is in correction if in any one session the market lost 1.5% in heavy trading or 7 or more days of high volume selling in the last 25 trading sessions.

ETFStrategyChart_11313

Now in other posts i will elaborate on how to make 250% or more in market returns.

Happy Trading

Signal Vs Noise

A very Sound advice from Jim Wyckoff, quite long time ago, but still valid

Trading buzzwords “patience” and “discipline” again come to mind when a market is pausing in a narrow-range, choppy and non-trending condition. This condition of the market is also called “market noise.” The majority of the time, most markets are in non-trending or choppy modes. Thus, if a trader does not have a good plan to deal with this type of market condition odds are very low that any trading success will ever be achieved.

Most trading professionals recommend that position traders ignore the day-to-day market noise, and instead focus on the bigger-picture perspective of the market. This can be accomplished in several ways. Examining longer-term price charts (weekly and monthly) is a good way to obtain that important bigger-picture perspective of a market and its trend.

Here’s another simple, yet effective way to help you filter out day-to-day price “noise” in a market you are trading: Set major support and resistance benchmarks on the shorter-term chart (usually a daily chart for position traders). These major price benchmarks can be weekly or monthly highs and lows, or spike highs and lows, or major psychological price levels (such as $15.00 in soybeans, or $7.00 in corn, or $1,700.00 in gold, or $95.00 in crude oil).

It’s a better idea to set these price benchmarks before you execute a trade and are in the heat of battle. Once you have established and duly noted these important shorter-term price benchmarks, then if prices do move above or below one of your benchmarks, that is a solid clue the price move is NOT just market “noise” and a bigger price trend is likely developing.

 

Sometimes if prices do move above or below major shorter-term price benchmarks, that is also considered a price “breakout” from a congestion area on the chart. This also suggests a stronger price move is possible in the direction of the price breakout.

Some traders may prudently ask, “Should I set my protective buy or sell stops near these major shorter-term price benchmarks?” That depends on the individual trader and how much capital he or she wants to risk on any given trade. For me, the major price benchmarks that I set for guideposts on any market are usually too far away from the price at which I’m filled (my market entry). In other words, I like to set protective stops at tighter levels than where my major price benchmarks are located.

Any time a trader can implement a strategy to better define or determine a market’s trend, or that will help the trader keep a better perspective on the market during the heat of trading that market, odds will be higher for trading success.

That’s it for now. Next time, we’ll focus on another topic on your road to trading success.