Archives

Will Prices Give Us A Christmas Gift?

Is there a Christmas rally in the stock market? Is there liquidation at the end of the year? So far, our election predictions have been correct, that the day after the election will determine the direction of prices for the next three weeks. We’re now past that. What can we expect for the rest of the year? If we look at the history of December performance from 1950, shown in Chart 1, we see … [Read more...]

Entering at the Right Time of Day Can Double Your Long-Term Profits

We’ve all heard a lot about averaging down, scaling in, waiting for a pullback, and other clever methods for entering a position. Most active investors, those who follow a medium to long-term trend, wouldn’t think that whether you enter on open following a signal, or the close, or even the next day, would make much difference in the long run. But it does. Buy or Sell First? When I’m entering or … [Read more...]

Uncovering the Best Tradeable Bond Fund

From the view of alternative investments, bonds have had the best returns for the past 40 years. Well almost. There are periods, some recent, where bond prices have gone down anticipating higher rates that never came. When we think of buying a bond funds, any of a large number of ETFs, the elephant in the room is the risk of interest rates turning higher. It will happen – someday – and we need to … [Read more...]

The Pattern In Politics, Redux

The Presidential Cycle 2016 and 2017 Once upon a time, the 4-year Presidential Cycle was reasonably predictable. In the year of the election, the incumbents would try to boost the economy, which was reflected in the stock market, and everyone would be happy. In the year after the election the President was able to implement a few of the more visible campaign promises and the market continued … [Read more...]

How To Trade “Brexit” And Other Price Shocks

We all know that we can’t predict a price shock, at least not many of them, and not which direction prices will go. If we could, it wouldn’t be a shock and we’d all be rich. But there are different kinds of prices shocks and different opportunities. The British vote to leave the EC is a good example, and that’s not played out yet. Predicting a Price Shock Yes, if you know a major event is … [Read more...]

Timing Can Be Everything

Entering at the Right Time of Day Can Double your Long-Term Profits We’ve all heard a lot about averaging down, scaling in, waiting for a pullback, and other clever methods for entering a position. Most active investors, those who follow a medium to long-term trend, wouldn’t think that whether you enter on open following a signal, or the close, or even the next day, would make much difference in … [Read more...]

Sector Rotation — Still Alive and Prospering

Sector Rotation has been a successful investment strategy for decades. It is simply trading those sectors that have performed the best recently. It relies on what the analysts call “persistence,” the ability for a sector, or any stock price, to continue doing what it was doing before – going up, down, or nowhere at all. It’s also the reason why trend following works. In Chart 1 we can see … [Read more...]

Capturing Seasonality with Commodity ETFs

Seasonality in commodities is one of the great patterns for capturing profits. Think of it as a gift from Nature. It does require that you compare the current price patterns against the price history to decide if the commodity is acting correctly according to the season patterns. One obstacle in taking advantage of seasonality is that the only way to trade it was using futures, and futures … [Read more...]

Gaming the System — Profiting from Fund Flows

It seems that the big traders have the advantage. They can capture lots of small profits with high-frequency trading, pairs trading, merger arb, or countless bond arbitrage trades based on the yield curve. But there are some opportunities still there for low-frequency, less intense traders. One game still played is taking advantage of the way Goldman Sachs rolls the GSCI. Because it’s a public … [Read more...]

A Short-Term Trading Strategy Based On Volume

Why don’t we see algorithmic systems that use volume? It seems that all of them use price, sometimes as spreads as in pairs trading, sometimes the term structure of futures, often Eurodollar rates or crude oil. But rarely does volume enter into the decision except when selecting the most liquid equities or futures contacts. Yet it offers valuable information on how the buyers and sellers are … [Read more...]

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