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Quotable Quotes from William Eckhardt (Mechanical Trend-Following Systems Trading)

I was reading more about William Eckhardt (or the Turtles trading experiment fame with Richard Dennis). Eckhardt launched his own commodity trading advisor (CTA), Eckhardt Trading Company, in 1991, which has produced a compound annual return of 17.35% over 20 years and earned 21.09% in 2010. There are some updated statistics on this website, which … Continue reading

Repeating the Same Mistakes in Trading? Here’s a Solution

Came across a great article here by Brett Steenbarger titled ‘A Self-Help Crash Course for Traders’. The article applies a discipline called ‘brief therapy’ to address the issue of why traders can’t seem to control themselves and make the same mistakes over and over again. It has quite a number of good points. Here’s a … Continue reading

Market Timing Using Market Breadth Indicators

I just want to share some of the market breadth indicators that I monitor for my own trading. The links to these indicators can be found under the Market Check section of the links on the front page of my blog. % of Stocks Above Their 50-Day Moving Average I look at the corresponding ones … Continue reading

Market Timing Using The Coppock Curve Indicator

One of the many indicators used for market timing is the Coppock Curve. You can get that from StockCharts.com and FreeStockCharts.com. The StockCharts.com school has a good article about the Coppock curve here. I would just add my own observations about using the indicator. Construction 10-period Weighted Moving Average of (14-period Rate of Change + … Continue reading

Relationship Between Copper Prices and the Stock Market

There has been quite a number of articles (one, two, three) recently showing a strong correlation between copper price and the stock market, and how the decoupling since May 2012 where copper has been in a consolidation range versus the continued stock market uptrend, is a leading indicator that the market was due to head … Continue reading

Do Pivot Points Work?

There are a number of ways to calculate daily pivots (those R1, S1, R2, S2, etc.). For example, if you go here, you can see Classic, Woodie, Camarilla, and DeMark pivots. These pivots have fixed formulas, typically based on the open, high, low, close of the prior day. Since they are based on rigid mathematical … Continue reading

Kyle Bass’ Views on Japan and the Beauty of Convex Bets

I viewed Kyle Bass’ presentation at the Strategic Investment Conference 2013 on his Japan thesis (link here).  He has quite a number of similar posts on Japan on his blog, and has publicly shared his views since 2012. Part of his thesis has played out very nicely as the Yen topped out in October 2011 … Continue reading

Where Do We Go From Here?

The S&P had a huge down day after Bernanke’s statement yesterday about tapering QE towards end of the year and ending QE by mid-2014. So where do we go from here? What are the possible scenarios that can occur moving forward (especially for the next 2 days)? Below is my thinking for the immediate term. … Continue reading

Intraday Trend Trading Maxims (a.k.a. The Art of Train Catching)

The Basics First, check the direction the train is travelling. It must be clear to all professional train catchers. If it is unclear, that means that if you board the train, you have no good idea where you’re going. Why board the train at all? Wait at a safe platform to hop on board the train. … Continue reading

Price Action Trumps Divergences

I was reading the RSI page on StockCharts.com and came across some interesting conclusions. I quote: “Positive and negative reversals put price action of the underlying security first and the indicator second, which is the way it should be. Bearish and bullish divergences place the indicator first and price action second.” That explains why one … Continue reading

Why Do Pullbacks / Retracements Happen?

Markets don’t ‘gap around’ as what you might expect to find in a perfectly efficient market. When price moves from A to B, it seldom moves in a straight line either. To get from A to B, price moves in that direction, retraces a little, moves in that direction again (more than the retracement), retraces, … Continue reading

The Trading Edge From Early Access to Key Data

There is a pretty interesting article at WSJ (link here) on how traders get early access to market-moving data releases to make millions of dollars. Within 1 second of receiving the early data (machine-readable), HFT firms trade millions of shares / contracts across thousands of securities to push the market down / up to reap … Continue reading

How the Yen Affects the U.S. Stock Market

Just read a good article here on how the Yen affects the U.S. stock market. In a nutshell As the interest rate for Yen is near zero, traders borrow Yen, and convert to other currencies to invest in stocks and bonds, including the U.S. stock market. This is known as a carry trade. When the … Continue reading

Buy Programs and Sell Programs (Program Trading) in the Markets

If you’ve been trading in the stock market for some time, you might have had some questions of this nature: Most stocks have very similar intraday price action patterns as the index (unless there are stock-specific news or events). Why is that? Can the scale really be due to “manual trading”? If the big boys … Continue reading

Review of Current Arguments On The Japanese Market

I have summarized some of the bull / bear arguments below. In a nutshell, the bull argument is that funds are buying, the bear argument is that the real economy is still not recovering. Both arguments can be true, so what does that mean? It’s the actual buying and selling that moves prices, so yes, over … Continue reading

Book Review of The Art of Meditation by Matthieu Ricard

This probably sounds like an odd book to review for this site.  You might ask, what does meditation has to do with trading? Well, I came across this book when I was reading more about mindfulness techniques to manage emotions in trading. On the front cover was a quote by George Soros complimenting Matthieu Ricard. … Continue reading

Gold Has No Short-Term Fundamental Driver

Just read an article by Mark Hulbert (link here). Basically, the conclusion from a NBER study is that there are no fundamental drivers which justifies the short-term fluctuations in gold. The popular linkages to gold as an inflation hedge (whether using official or shadow statistics), currency debasement, the threat of hyperinflation, money supply growth, etc. … Continue reading

Nature of Pullback and Current Market Rally

So the markets did indeed sell off big yesterday, and had a bounce today. Two interesting observations from other blogs on this pull back and stock market run. Bespoke Investment Group has an article (link here) that the winners (50 best performing stocks YTD) held up the best during this pullback, so this is bullish. … Continue reading

Thoughts on the Current Market Situation

Now what’s on many traders mind would be, is it the start of a decent market correction, or will this dip be bought as always? For me, I see more troubling signs than positive signs. Those who are more conservative may want to just get out and stay in cash until the situation becomes clearer. … Continue reading

Book Review of Market Mind Games by Denise Shull

The full title of this book is “Market Mind games: A Radical Psychology of Investing, Trading, and Risk” by Denise Shull. This book is not easy to get through. The style of writing switches among three things: (i) a story being told, (ii) snippets of talks, and (iii) what you would have expected to find … Continue reading

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