After surging for a full week, I will not be surprised to see a little pullback here. Watch these HTFs for a breakout.
$NFLX looks to be completing an orderly consolidation.
$PRKR looks like it is soon going to go higher.
Have a great week trading!
Comments »Today was my 11 year old son’s first baseball tournament of the season.
The morning started with him saying he felt sick to his stomach. The look on his face when I told him he’d eat some oatmeal anyway said to me he was probably serious, and it wasn’t just nerves. We continued getting ready to go. He went to his bathroom to try to take care of the cramps. He was moderately successful, but I won’t go into details, for reasons that should be obvious.
10 minutes before we need to leave, he is still complaining about his cramping stomach. I give him some Pepto. His team has only 9 players for this series, so I have to get him right. He goes to the bathroom again. He doesn’t say much when he is finished except that he feels a little better. We get in the car to leave. We are 10 minutes late and have an hour and 15 minute drive.
About 10 minutes into the trip, he starts moaning and curls up into the fetal position. I know my son, and he has very little tolerance for pain, so I pretty much ignore it and keep my foot on the gas. The moaning eventually stops, and he either sleeps or pretends to sleep.
About 50 minutes into the trip, my wife decides the coffee is working on her, so we hit a rest area. I ask my son if he needs to go, and he says no. Pretty much as soon as we get back on the road, he says something to the effect of, “do I have to play today?” I explain that yes, barring major catastrophe, he must play. I asked why he asked, and he begrudgingly informs me that he still needs to relieve the pressure and that he is feeling as if he might throw up. Again, we had just left the rest area. It is not hard to imagine what my blood pressure is starting to do. My wife, sensing the need for her calm concern, asks why he just did not go at the rest area. “Because once I start it will never stop,” was his answer. As ridiculous as that sounded, my wife knew what he meant and tried to reassure him that it would eventually stop. I’m not sure what else she said, but I think she was convincing him to try and use the bathroom again. I wasn’t sure what she was saying because I had heard two very scary words – “throw up.”
There are a few things in life that I simply will not be involved in, and one of those things is any vomit that does not issue forth from my own gut. So when it became apparent that there might be vomit, and worse, it might be close to me in the car, it was time for me to take immediate action. And almost on cue, the reserve fuel light came on. We took the next exit.
I swear to God, every time we are really hungry or really have to use the bathroom or the tank is totally empty, we end up taking one of those exits where the closest gas station is 5 miles from the exit. My GPS is all, “turn left. Turn left and then turn right. Stay right. Stay right!” while I’m cursing under my breath. Not only have I chosen the exit with the closest gas station miles away, but I actually have to turn on some other roads to get there. Dammit!
We arrive, and to my delight, as most things are near Williamsburg, Virginia, the gas station is nice, for a gas station. My wife intuitively understood where I was with my vomit phobia, so when I explain to my son that he absolutely will get out of the car and try to make something happen in the restroom, she reinforces my pleadings and offers to walk in with him.
I get out and pump gas. Yes, I understand that pumping one’s gas is a strange concept for Northerners. Here in Virginia the government of the Commonwealth trusts the proletariat to pump their own gas. I climb back in the van and wonder if the new puppy is also about to soil my vehicle. I don’t have very long to ponder this though as my wife is walking back out of the store.
I open the van door.
“How’s it going in there?”
“He said he threw up and pooped in his pants.”
“What? How did that happen?”
“I don’t know honey, why don’t you ask him?”
At this point, the likelihood of forfeit seems high, so I called the coach and sent my wife back in. Seeking to avoid further disaster, I took the puppy out to a grassy area where she promptly relieved herself. Good girl! My wife walked out and grabbed the puppy. “He won’t let me in. You need to go in there and check on him.”
As I said, the gas station was nice for a gas station, and he had the good sense to use the handicap stall. When I entered the stall, it looked like it was last visited by a group of Parkinson’s patients with explosive diarrhea and bad hangovers. Clearly he will need some practice at this before college.
“Dad, I pooped in my underwear, but I feel much better!”
“How did that happen?”
“Well, I started throwing up, and I just lost control.”
“Yeah, that really sucks. Let’s get you cleaned up.”
At this point in the story, it is important to explain to those of you who don’t have boys playing baseball that they typically wear what they call “sliding shorts.” These are lycra/spandex shorts that are worn underneath their pants and are long enough to protect their thighs and hips from abrasion when sliding. Usually they have a pocket for a cup. For whatever reason, my son prefers to put briefs on underneath his sliding shorts.
“Dad, can you get me some paper towels so I can wipe my underwear out?
Obviously my son has never had to do his own laundry.
“No way. Take it all off.”
Unfortunately I had to help with that process. As I walked out of the stall, soiled garment in hand, he was mortified as he thought for a moment that I was going to carry it out of the restroom, just like that, for all the world to see. Instead, I carefully slid it into the garbage can. He was impressed at that simple solution to such a complicated problem.
“Are you sure you feel better?”
“Yes, I feel great!”
“You gonna be all right with just your sliding shorts?”
“Yep!”
He cleaned himself up and got dressed while I washed my hands three times.
We walked out of the restroom and I asked the store clerk for a few plastic bags. No way was I going to turn this somewhat muted success story into an absolute failure by having a follow-on vomit episode in the van.
We made it to the tournament without incident.
He played very well and went 4 for 6 in his at-bats, despite having a fever by the start of the second game. His team lost both games, but I was extremely proud of him for not giving up after crapping his pants. There is no crying in baseball. There is also no puking and then crapping your pants and then quitting in baseball.
The video below shows all of his 6 at-bats. If you are a big baseball fan, watch him battle (and ultimately lose to an outside off-speed pitch) during his 3rd at-bat.
Comments »Mean Reversion Trading in Moderation
Can the VIX help us know when it’s time to leave the incredible party Wall Street is throwing?
State of Trend Following in February
AAII Investor Sentiment Survey Results Week Ending 3/6/13
A Bridge in the Climate Debate – How to Green the World’s Deserts and Reverse Climate Change
You can find some of the articles, and more, over at The Whole Street: Quants.
Comments »Huh.
Your first sign that the title was a load of crap written solely for maximum clickatude is that I used an exclamation point. Only snake oil salesman and Timothy Sykes (but I repeat myself) use exclamation points in their titles. Your second sign that the title is simply bullshit is my post from last night where I wrote about how bull markets are bad for blogging. If those first two clues weren’t enough and you still haven’t figured out how unserious the title is, note the reference to Timothy Sykes in the body of this post, which can only have one purpose: to drive maximum traffic through agitation of the yahoo finance message board rejects.
Now that I have your attention…
I do have something more serious to discuss tonight, and that is the fact that the S&P 500 has traded above its 50 day simple moving average for 46 days.
Using this statistic as a setup, I’ve come up with a simple little study that should help us determine how much longer this market can trade before correcting.
The Rules:
Results Using $SPY:
The equity curve above was generated from trading the setup as a system with starting equity of $10,000.
The stats are telling us that if you are waiting for a close beneath the 50 day moving average to sell, there is a substantial chance that the market will be lower than today’s close when that happens. On average, it has taken the market about 5 weeks from this point before it closed beneath the 50 day average, but sometimes it trades higher for much longer (159 more days) and sometimes it starts to correct almost immediately (13 days).
Let’s Look at Results Using $SPX:
Looking back over 80 years, this setup seems to catch one good trade every decade or so. The rest consistently lose. What I find remarkable is that the average number of days the trade is held is stable over the long term and shorter term at roughly 30 days. If this pattern holds true, we can expect some weakness to begin in late March or early April.
But what if we wanted to be sure to catch the big winning once-in-a-decade trade while not losing too much on the rest? The answer is simple, really. We want to make sure we hold our winners longer while still cutting lose the losing trades before they kill the account. Here is what that looks like.
The only thing different is that now we are selling on a close beneath the 100 day moving average, rather than the 50. This change means our average trade is held for 84 days after the setup (versus 30). Look at how this simple change affects the average winning and losing trades:
This illustrates what happens when we hold winners longer while still selling losers for a reasonable loss. In real-life, most people find it incredibly difficult to hold winners long enough. This may be because their emotions override their knowledge, or because they don’t have enough knowledge to be able to override their emotions.
And that my friends is how you blog during a bull market.
Comments »
Perhaps it is just me, but it seems as if bull markets are bad for blogging.
Blog traffic typically spikes as the market enters a correction and swoons near tops in the market. That cycle makes sense as who needs financial advice when just about everything is going higher?
The other problem with blogging during bull markets is that blogger restlessness brought on by the relentless march higher typically leads to calling tops – prematurely, in most cases. Sure, it drives traffic, but soothsaying people out of the market while the bull is still charging only furthers one of the primary reasons for investor under-performance: the tendency to sell winners too early and to hold losers too long.
Honestly, I have grown to miss a good 10% correction.
How about this. Is it too much to ask for just regular little pullbacks? Not only have they been presenting great buying opportunities, but they also get the ol’ creative blogging juices flowing.
Or, I could just succumb to the restlessness and run some tests to see if this rally is getting long in the tooth…
Comments »
Consider that to be an open question from a guy who rides a trend with little consideration as to what might be the fundamental reason for the trend.
The Fidelity Sector Rotational System has been long transports for a couple of months. The trend has seemed odd to me, with rising fuel prices and all that. It seemed odd to Scott Bleier as well. He declared it a Constanza trade:
The economy is tanking & energy prices are soaring. So what is leadership? Transportation. #COSTANZA http://t.co/CXYLGviB @woodshedder
— Scott Bleier (@CreateCapital) February 20, 2013
So now $IYT has broken out again, and Air Transportation and Transportation funds are the top 2 ranked Fidelity Sector Funds.
And so I ask, “Why are transports breaking out?”
Anyone know or care to guess what is driving this trend? I would very much appreciate hearing from you in the comments section.
Comments »There was good volume on Friday’s move higher. While I’m still concerned about the $VIX spike, it is looking like we might see new highs. As long as the market wants to grind higher, we want to watch the high tight flags.
