THE TRADER'S JOURNAL - Asia Pacific's Preeminent Trading Magazine, Equities, Futures, Forex

Stock Bear Cycles

Earlier this week, a friend asked me if I thought this stock bear was over. My first thought was “which bear?” for there isn’t just one. The stock-market action over the last couple years has been a tale of two bears. Investors who have failed to understand this critical truth are very confused on what to expect from stocks going forward.

This Way Be Dragons

In fantasy novels, the intrepid heroes come across a sign saying “This Way Be Dragons.” Of course, they venture on, facing calamity and death, but such is the nature of fantasy novels. We live in a very real world, and if we do not turn around there will be some very nasty dragons in our future. In this article, we will look at three possible paths we can lead the world down. We will also review a number of charts and data on the housing market.

Plan, Execute, and Then Go Do Something More Important than Trading

This piece will focus on a shorting opportunity we identified in the S&P. Many active traders think it is their job to wake up each day and trade. The astute trader knows it is their job to wake up each day and search for low risk, high reward and high probability trading opportunities. If that opportunity is found, the astute trader applies their rule-based strategy and executes like a robot, very little thinking (if any) involved.

Does Size Matter?

One of the big attractions to futures trading for many people is the low start-up cost involved in funding their accounts to day trade. Unlike equities, where you have to come up with about $30K to open a day trading account, you can open a futures account with about $5K and control futures contracts worth hundreds of thousands of dollars.

What Gold Is…

For an inert metal, sitting there at No.79 in the periodic table and useless for pretty much everything but ownership, gold sure is a busy lump these days.

”[Gold Bullion] is the most positive defining instrument of the global appetite for risk and reward,” reckons Barry Sergeant at MineWeb in Jo’burg, South Africa. Indeed, it “thrives on economic uncertainty,” according to his colleague Lawrence Williams. Yet for Steven Barrow at Standard Bank here in London, gold offers “the best indicator of liquidity,” with the recent recovery in gold prices implying that “liquidity has been better restored.”

Big Inflation Coming

At the height of the stock panic in late November, the flagship S&P 500 stock index had plunged 49% year-to-date. Fully two thirds of this decline happened in the 9 weeks leading into the panic lows! Naturally, the psychological impact of such an epic selloff was utterly massive. Fear exploded to unprecedented extremes.

Green Shoots or Smoking Weed?

Asset bubbles are strange animals. Ideally, you would like to punch the air out of them before they become a real danger, but it is not quite so simple in practice. Ben Bernanke and Alan Greenspan have actually both argued that asset bubbles cannot be detected and monetary policy should not in any way be used to offset suspected bubbles

The New, New Normal

We are coming to a critical inflection point, perhaps the most critical point that we have had in 70 years for the U.S. and to a great extent the global economy. The choices we make (or that Congress and the Federal Reserve make for us) will affect not just our investment portfolios but business and our jobs for a very long time. I have talked about the three paths we face as a nation. I want to expand upon that theme. You need to clearly understand the risks so you can interpret the actions and data that will be coming at us in the next few quarters. I am a little tired today, so I am going to take the liberty to reproduce Bill Gross’s latest comments, which are somewhat in line with my own.

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Market Observatons

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If You Can’t Spot It, Don’t Trade It

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"By failing to prepare, you are preparing to fail." ~Benjamin Franklin

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