A Look at What is Lagging in a Strong Market
At the same time that we see stocks (S&P 500 Index; SPY, top chart) challenging their bull highs, several sectors are lagging. Those include banking stocks (second chart), homebuilding shares (third chart), energy issues (fourth chart), and indust...
Evening Briefing for July 20th
* MARKET THEMES FROM MONDAY'S SESSION: Continued strength on afternoon break above morning range. Firm oil prices, weak U.S. dollar, though we've reversed some of that after hours. Consumer discretionary stocks strong, outpacing consumer staples is...
Trading Order Flow: Lost Skill, Important Art
I want to call attention to Damien Hoffman's excellent interview with Mike Bellafiore of SMB Capital. Damien has assembled a number of high quality interviews at the Wall St. Cheat Sheet site that are worth reading. Mike offers his perspectives from ...
The Psychology of Trading Slow Range Days
If you click on the chart above for the S&P 500 e-mini (ES) futures, you'll see that the market has probed both extremes of its overnight range, reverting back into the range each time. Note how the market's volume has been steadily declining duri...
A Worthwhile Indicator of Investor Sentiment
One quick and dirty way to evaluate investor sentiment and risk appetite is to compare the performance of investment grade corporate bonds (LQD; top chart) with that of high yield corporates bonds (JNK; bottom chart). When investors are bullish on the...
Sector Update for July 20th
Last week's sector review noted the possibility that selling could dry up in stocks, frustrating the bears and leading to an intermediate-term move back into the May/June trading range. With stocks unable to take out the prior week's low on Monday wea...
Evening Briefing for July 19th
* MARKET THEMES FROM FRIDAY'S SESSION: Range bound trade on Friday consolidated the gains during the week, with averages either near or above their May/June highs. The number of stocks making new highs remains below the levels seen in May/June, but ...
How Can I Test Trading Ideas?
Here is an excellent post from Henry Carstens that walks readers through how he generates an idea and how he tests it for a prospective, directional edge. His final example is particularly valuable: it's possible to run so many tests and so reduce yo...
Historical Observations on Day Structure: Two Worthwhile Lessons
In past posts and in the recent seminar, I stressed the importance of making an early identification of day structure. (For more on this topic, see here and here). That gives you a basic sense for strategy: whether you will trade moves to new highs ...
Thoughts on the Changing Demographic Face of Trading
In the previous post, I outlined some of the challenges faced by the children of the baby boom generation. Now we take a look at a different picture: how those affected by economic crisis might be looking toward self-directed trading and investment a...
Breaching the Social Contract
Consider the following situations that I have encountered in recent weeks:* A young lady in college is suddenly told by her parents that they no longer have the funds for her education. She will have to go to work to come up with the tuition. She ca...
Psicología del Trading/Trading Psychology: The Perils of a Divided Mind
Many thanks to the Serenity Markets site for the Spanish language translation of this important post outlining the role of emotions and intuition in trading decisions.A while back I met with a trader who had been losing money consistently. He was frus...
