Summer Doldrums Starting Early

Here we are June 1st and the doldrums are upon us. I believe that we will have a very subdued trading climate for the rest of Summer as the world continues to digest the events of the last 6 months. My feeling is that we are reaching an exhaustion point concerning the level of distress.
Like the rats in a BF Skinner Psychology experiment, traders both large and small are moving towards the point of ‘learned helplessness’. To refresh your memory, there is an experiment where a rat in a controlled environment has a totally random experience as to when they receive a reward […]

Re Print of May 8th blog- Thank you Newsweek

Given the level of fear and loathing of the financial markets coming out of Asia and Europe, I think I am looking for a further pull back.
Is this the end of the world?
No, but the market was due for a pull back.
We did get a 62% retracement of the 2007-2009 market of characterized by projectile vomiting of all ownership of all equities. The recent highs we were enjoying just
3 weeks ago were : 4/26/10 we saw a high in the cash Dow at 11,258. More importantly, we saw 3 days in a row 4/23, 4/27 and 4/28 with settlements […]

Volatility is the only constant

The Heisenberg uncertainty principle is frequently confused with the “observer effect”. The uncertainty principle actually describes how precisely we may measure the position and momentum of a particle at the same time — if we increase the precision in measuring one quantity, we are forced to lose precision in measuring the other. Thus, the uncertainty principle deals with measurement, and not observation. The idea that the Uncertainty Principle is caused by disturbance (and hence by observation) is not considered to be valid by some,[who?] although it was extant in the early years of quantum mechanics, and is often repeated in popular treatments

To Quote Wickepedia, […]

Born in the USA

Bruce Springsteen’s most famous and commercialized song is actually a protest song, if you really listen to the words. In the 80’s, when he wrote it, is almost seemed an homage to Pete Segre’s “This land is your land, This land is my land”, also a protest song.
I remember how mad the Boss got when Regan’s support team in the GOP, for a very short time, tried playing it as a positive for their rallies.
Bruce Springsteen is decidedly liberal, and he was incensed at the time. Like a lot of entertainers with working class roots, Bruce seems to think its OK for […]

Where is the support? I’d say down at 50%

Perhaps as traders we should heed the old adage, sell in May and go away. Take advantage of the coming slow months in equities.
Thursday was only a 30 perecent correction. I would be more interested in a 50% pullback as a chance to get in, fade the misery, and pick up some bargins.
50 percent back in the Dow Cash would be
8861. 50% in the SP500 Cash is 942.50.
Ironically, Cramer on CNBC, juat this Friday said don’t buy the Dow until 9000. I wonder where he got that big idea? I guess he has a calcultor too. I will say that […]

Why we use stops-today was a prime example

If you were long today trading S&P futures or Dow futures, you learned the benefit of using stops. Luckily, the market rebounded and it seems that many trades in individual stocks, P&G to be specific, will be limited on the NYSE to a low of 56.
In the futures market, the CME, where the S&P 500 future and the Dow future are traded, have made no such decree.

When the proverbial sxxt hit the fan today, if you were long and wrong, you really had no escape, unless you had had a sell stop in behind any long position you had.
I remember in […]

2 percent is enough to say the sky is falling?

We’ve rallied for 14 months and today a 2 percent down move is enough to send the collective cable investment/trading commentators start looking at one another like Freddie Krueger is behind the teleprompter.

This is a combination of the continuation of the Greece issue. Now we are to believe, like the domino theory of the 1950’s, we are not looking at countries falling one by one to communism. Instead, the fear is that every nation with potential problems in the EU from Ireland to Portugal, the fear is that they will all follow suit. At some point Germany, apparently the only country in the EU […]

Waiting for the other shoe to drop?

Still on Wall Street we climb the wall of worry, inexorably higher, creeping like a vine up the side of a building, seeming to defy the laws of nature and what “ought to be”. Its a market, like the vines on a building, that creeps higher at an intolerably slow pace, seeming to do most of its growing out of sight and mind.
Like the forests of Mt. St. Helen’s after the last eruption, tiny shoots of green give way to a new growth forest, in a wasteland which looks as if it couldn’t ever support life.

Can anyone imagine a scenario where an apparent […]