Here is some great market wisdom from Bruce Kovner, legendary hedge fund billionaire, sure to add value to your long holiday weekend.
“The first rule of trading – there are probably many first rules – is don’t get caught in a situation in which you can lose a great deal of money for reasons you don’t understand.”
‘You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.”
“They are strong, independent, and contrary in the extreme. They are able to take positions others are unwilling to take. They are disciplined enough to take the right size positions. A greedy trader always blows out. I know some really inspired traders who never managed to keep the money they made.” -Bruce Kovner on personality traits of successful traders
“Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I’m getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis. For example, if the market is in the midst of a trading range, it makes no sense to put your stop within that range, since you are likely to be taken out. I always place my stop beyond some technical barrier.”"One of the reasons I am in this business is that I find the analysis of worldwide political and economic events extraordinary fascinating.
It doesn’t feel like work, except when you lose – then it feels like work.”
“For me, market analysis is like a tremendous multidimensional chess board. The pleasure of it is purely intellectual.”
Last Friday evening, we observed a long-term chart of Johnson & Johnson as a stock up twenty weeks in a row. While the broad market has not enjoyed quite that type of uptrend, it has certainly been an impressive rally in 2013. And we have been looking at a “great sugar rush market,” as I called it.
Updating the JNJ weekly chart, below, you will note that price actually pushed to make a new high Monday through Wednesday, before selling finally set in as the stock finished lower by the time the week had ended. The subsequent weekly chart candlestick raises the issue of whether we have just witnessed a meaningful reversal not just in JNJ but also the major indices, printing their own respective mid-week reversals, as we head into the unofficial start of summer.
I will delve into that issue, and much, more more, including specific trading ideas and in-depth analysis, in my Weekly Strategy Session, set to be published on Sunday.
See you there.
Have a happy and safe Memorial Day weekend.
I have been early on it, but there is now an even more interesting pattern developing on the U.S. Dollar/Japanese Yen cross, which I will discuss this weekend most likely either here or in my Strategy Session.
Can you spot it below?
(Hint: My April 2012 bearish post on DECK– Technical Voodoo Dolls Attack Ugg-Wearing Fashionistas)
Google and Netflix have now pulled back to their respective rising 20-day moving averages. Sell volume has not been too bad. But now comes the big test, either way. Buyers should present themselves around current levels to support these two leading stocks. If it turns out that the pullback is too pretty or obvious, then we could see a trap door lower to start the holiday-shortened week.
Because they have been leading stocks in the market, it is worth watching to see in which direction they break.
Metamorphosis of Narcissus (1937): Oil-on-canvas painting by the Spanish surrealist Salvador Dalí.
Here is a quick update to my market look this morning.
SPY appears to now be morphing into a descending triangle on the 30-minute chart, below. Bears will argue this is a clear bear pennant/flag still intact, while bulls are pushing the double-bottom thesis dating back to Wednesday.
I suspect we will not have resolution until at least Tuesday.