In part 1 of this series, we looked at some tools that I use to evaluate the appropriateness of a trading strategy. In this article, we will explore the use of a filter to improve not only the reward to risk profile of the strategy but also the feasibility of implementing and trading that strategy. [...]
What seemed like a timely “call” back on October 8, 2009 “that crude oil could move significantly higher over the next couple of months” has kind of turned into a dud. Two weeks after this initial post, the United States Oil Fund (symbol: USO), the ETF that tracks crude oil futures, moved 14% higher. Since [...]
It’s Monday, and there is no better place to start the week with the only asset that has mattered for the past 8 months – the Dollar. Although Friday’s job report brought a spike in the Dollar Index, the down trend remains intact. However, the likelihood of the downtrend ending leading to a counter trend [...]
On Friday, yields on the 10 year Treasury spiked higher by little over 3%. Our composite indicator that assesses the strength in the trends of gold, 10 year Treasury yields, and crude oil is back into the extreme zone. This represents a headwind for equities. Figure 1 is a weekly chart of the S&P500 and [...]
The trading range that has developed over the past several weeks is emblematic of the cross currents confronting this market. New highs seem to be made daily and then boom, the rug is pulled out from the market, and prices plunge for a couple of hours. Buyers appear and back to the highs we go [...]
Some intra day observations are noteworthy. At first blush, it would seem we are in a new paradigm – all of a sudden. The Dollar Index is up. Equities are up but former high fliers – the metals and gold and emerging markets – are taking a beating. Treasury yields are rocketing higher as though [...]
In this article, I am going to take a simple trading strategy and show you some of the metrics that I use to determine if it is suitable for trading. Subsequent articles will expand on the strategy and the back testing process, and in the end, we should have an acceptable strategy that is easily [...]
Figure 1 is a weekly chart of gold (cash data) through last week’s close. The indicator in the middle panel measures gold’s 52 week performance relative to a basket of 8 currencies.Those currencies are: 1) Australian Dollar; 2) Canadian Dollar; 3) Swiss Franc; 4) Eurodollar; 5) British Pound; 6) Singaporean Dollar; 7) Japanese Yen; 8) [...]
How could I forget the only chart that matters? Figure 1 is a weekly chart of the Dollar Index. This is the same chart I have been showing since June, 2009 – prior to the Dollar Index unraveling. Last week there was a weekly close (price bar with down red arrows) below the low of [...]
For those of us without a crystal ball, we have to rely upon techniques or signals to get in and out of the markets. These could be moving average crossovers or other more “sophisticated” methods like counting negative divergences, which I have developed and discussed previously. Regardless of what you do, just have a plan. [...]
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The composite indicator that measures the trends in gold, crude oil, and yields on the 10 year Treasury has moderated significantly. See figure 1 a weekly chart of the S&P500 with the indicator in the lower panel. Figure 1. S&P500/ weekly During the past 6 weeks when the indicator was in the extreme zone, the [...]
As expected, last week’s holiday infested market action provided little clarity. The sentiment picture remains relatively unchanged. Nonetheless, there was a market moving event, and the “default in Dubai” will likely leave investors with one of two conclusions: 1) coordinated efforts by central bankers to re-liquify the world economy are likely to continue as bad [...]
In his most recent commentary, PIMCO’s Bill Gross provides his rationale to invest in utility stocks. Gross suggests that the Federal Reserve will remain accommodative for a very long time: “Raise interest rates with 15 million jobless and 25 million part-time working Americans? All because gold is above $1,100? You must be joking or smoking [...]
As long as we are talking Treasury yields today, I thought I would take a look at two charts that suggest that longer term Treasury yields are headed lower, and this should be a tradeable move, which means you won’t have to “thread the needle” to make some money. In other words, I cannot imagine [...]
You Got To Be Kidding Me
Wow and I thought we had real problems in this country! Congress is now stepping in to lend its wisdom and oversight to the Bowl Championship Series (BCS) which determines a national champion in college football. Holy Keith Jackson! What’s next? The jump rope championships at my kid’s school. This from the Wall Street Journal: [...]