Historically, What Is the Character of a Market Bottom

by admin on January 10, 2019
in Essays/Reports/Articles

The market plunged into its December low. The S&P fell 450 points in 3 weeks, and the number of stocks trading above their 20, 50, and 200-day moving averages hit levels not seen since the Financial Crisis.

Now the market is moving straight up – call it a V bottom. The S&P has recaptured almost 250 of those lost points.

This has Wall Street wondering: Is that it? Is a bottom in place? Does the market need to go back down and test the low, or can it just keep moving higher from here?

Let’s go back in time and look at previous bottoms and see if there is a trend, see if a certain bottom formation is more prevalent than others.

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2018 – The Year the Quants Got Destroyed

The market moved up 3 of 4 days last week, and despite the one big down day, the weekly candle closed with a solid gain and near its high.

This is the first time since late October the S&P has posted back-to-back up weeks. If the mini move up continues a few more days, quants will be out in full force arguing the positive end of one year and good start to the next year has bullish implications for the entire year.

Some argue the Santa Claus rally (last 5 days of a year and first 2 days of next year) is predictive.

Others say the January Effect (first week of January? first two weeks of January? entire month of January?) is a better predictor of what’s in store for the year.

But how much trust should be put into quant studies, given 2018 was the year the quants got destroyed?

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Business, Poker & Trading

by admin on November 15, 2018
in Essays/Reports/Articles

Tony Hsieh, CEO of Zappos.com, wrote a book titled: Everything I Know About Business I Learned From Poker. Here are some of his notes in bullet-point form with my own trading-related comments thrown in. … Read more..

Bollinger Bands – Everything You Need to Know

by admin on November 13, 2018
in Essays/Reports/Articles

Bollinger Bands, developed and trademarked by John Bollinger, are bands placed above and below a moving average. They are based on standard deviation, which is a measure of volatility, so when volatility increases, the bands widen to accommodate the price action, and when volatility dampens, the bands narrow.

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LB Weekly (Oct 28)

by admin on October 28, 2018
in Essays/Reports/Articles

The market tanked again last week. Like the previous week, there was an attempt to rally off oversold levels, but the attempt was quickly squashed. The selling we’ve gotten is much worse than anything we’ve seen in several years – much worse than February. In fact this is the single worst month following an all-time high in history. Read more..

Housing Stocks Warn a Top is Forming

by admin on October 22, 2018
in Essays/Reports/Articles

Per Sam Stovall, formerly of S&P Capital IQ, every recession since 1960 has been preceded by y/y double-digit decline in housing starts. The average is -25%. The smallest (-10%) occurred ahead of the shallowest economic contraction while the biggest (-37%) occurred before deepest recession.

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CCI – Everything You Need to Know

Commodity Channel Index, or CCI, is a momentum oscillator that relates the current price to an average price over a given period of time. So the indicator will be high when prices are far above the average and low when prices are far below the average.

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Pot Stocks – an update

Cryptocurrencies have passed the baton to pot stocks. They’ve been the hot group, in terms of percentage gains. There’s a lot of risk in the group – many of the companies will not survive – but the winners will post monster gains over the next few years.

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Stochastic – Everything You Need to Know

by admin on September 26, 2018
in Essays/Reports/Articles

Stochastic Oscillator is a momentum oscillator that shows where an entity has closed relative to its high-low range over a given number of periods. Signals are given via signal line crossovers, crosses from oversold or overbought territory, crosses of the center line and divergences. It’s especially useful identifying low risk areas to buy within an uptrend and short within a downtrend.

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MACD – Everything You Need to Know

by admin on September 18, 2018
in Essays/Reports/Articles

Moving Average Convergence/Divergence, or MACD, is a momentum indicator that compares the difference between two moving averages with a third moving average. Signals are offered via signal line crosses, centerline crosses, divergences and a couple other patterns discussed below.

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