oldprof

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Weighing the Week Ahead: Time to Rebuild the Wall of Worry?

As some market worries have been put to rest, there is a growing appetite for new ones. Pundits who say that things look OK are not very exciting. Last week we saw a shift in attention. Despite healthy earnings and good economic data, I expect pundits to be asking: What should investors be worried about?
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Stock Exchange: Long-term (Energy) and Short-term (Finance and Software)

Every trader has a method linked to a time frame. Our group has some new ideas, but the members are sticking to their guns on some positions. Long-term viewpoints emphasize an economic rebound, with materials and energy stocks leading. Short-term methods show opportunities in financial stocks and software. Review Our last Stock Exchange discussed contrarian
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Weighing the Week Ahead: How Should Investors Cope with Geopolitical Risk?

Last week I suggested that the market might be ready for some real news—corporate earnings. That is still a key topic, but attention is focused on world events. Pundits will be asking: How Should Investors Respond to Geopolitical Risks? Last Week Last week the economic news was good, but mostly ignored. Theme Recap In my
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Stock Exchange: Three Contrarian Ideas

Every trader wants to be a contrarian. You get to be the “smart money.” You buy low and sell high. Buy the dips and sell the rips. Contrarians may not always be right, but they certainly get attention. Brett Steenbarger, everyone’s favorite expert on trading, did a study of this in 2006. He compared two
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Are You Fooled by this Chart?

Throughout the big rally investors have been bombarded for reasons not to join in.  It is very profitable to play upon fears.  You then sell page views and advertising, conferences, gold, annuities, or fancy structured products. I have taken a much less popular path – trying to educate investors.  Even though the issues at hand
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Weighing the Week Ahead: Will an Earnings Surge Revive the Stock Rally?

Are you ready for some real news? How about corporate earnings? While there is some economic data on tap, the Q1 earnings season starts in earnest this week. With questions about economic strength, the dollar and the Fed in mind, pundits will be looking for fresh data. They will be asking: Can resurgent corporate earnings
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Stock Exchange: Finding Trading Ideas in a Low Volatility Market

Ted Williams was a terrific ball player, but he had one tactic that many found…questionable. He almost never swung at the first pitch. Many short term traders and individual investors could take a lesson. The market has been dragging sideways for weeks. Volatility is low. There’s a great temptation to force in a few trades. It
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Weighing the Week Ahead: What Can We Learn from the Trump-Xi Meeting?

We have a big economic calendar and potential Fed news. Those stories will take a back burner this week. My safest prediction is that we are about to see a new rash of China experts both in print media and on CNBC! These freshly-minted pundits will be asking: What will the Trump-Xi meeting mean for
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Stock Exchange: Are You Guilty of Voodoo Chart Reading?

Michael Kahn, a leading technician and columnist, provides the inspiration for this week’s Stock Exchange. In a recent post he take on a quest: Unmasking the Voodoo of Chart Reading. This topic really hits home with our Stock Exchange Group. Since they cannot explain their methods in great detail, outsiders sometimes think of them as
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Headline Spin — Recession Forecasting is Back!

Investors have learned from both data and personal experience that business cycle peaks (popularly known as recessions) are associated with the most important stock declines. It is natural that any news about a possible recession gets extra attention. There are so many sentiment measures – surveys of different populations, including non-investors – that it is
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Weighing the Week Ahead: What Does the Health Care Decision Mean for Stocks?

The economic calendar is light, but it really would not matter. The defeat (via retreat) of the effort to replace Obamacare will dominate financial market stories this week. The pundits will be asking: What does the health care decision mean for stocks? Last Week Last week the news was mostly positive, but irrelevant. Markets were
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Stock Exchange: Trading in a Time of High, News-Driven Risk

Many seem convinced that market risk is elevated – perhaps at an all-time high. I know this from contacts on my vacation, where I see many high-net worth people, messages from my clients (an intelligent and cool-headed lot), and even some objective measures of angst. Whether it is uncertainty about the new President and policy,
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Stock Exchange: The Role of Valuation in Trading

  Investors who use valuation do it in an absolute sense — the way we do in our Great Stocks program — but what about traders. When the market sets a price that is much different, it reflects broad-based opinion that the typical valuation method is not accurate. Our models sometimes pick that up. Our trading model
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Stock Exchange: Can Humans Compete with High Frequency Traders?

Many individual investors have been frustrated by the growing prominence of High Frequency Trading. Complicated algorithms can process new information and react in fractions of a second. It sounds intimidating, and in some sense, it is. Individual Investors would be poorly suited for direct competition. Instead, stick to what the market is giving you. The
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Weighing the Week Ahead: Will a More Aggressive Fed Derail the Stock Rally?

The economic calendar is light until the Friday employment report. Most of the punditry are still digesting the more aggressive talk in the recent speeches from Fed participants. With many observers expecting a correction and looking for a catalyst, pundits will be asking: Will a more aggressive Fed derail the rally in stocks? Personal Notes
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Stock Exchange: How to Trade an Overbought Market

For the last three weeks, the term “overbought” has been frequently used to describe the overall market as well as many specific stocks. What does this really mean? It has a dangerous sound, and that is indeed the common message. A stock, or a sector, or the overall market has rallied more than expected over
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Trump’s Address to Congress: A Preview for Investors

A Presidential address to Congress is an important occasion. In the first year of a term, it is called just that. In later years, it will be called the State of the Union Address. The circumstances, ceremony, and protocol are the same. I have been watching these speeches for decades, first as a political science
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Weighing the Week Ahead: Have Stock Prices Lost Touch with Reality?

It is a big week for economic data and the first address to Congress from the new President. Most of the punditry is engaged in a collective head-shake about overbought conditions. Even if the data flow remains strong, pundits will be asking: Have stock prices lost touch with reality?   Personal Notes I always try
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Stock Exchange: How to Play Sector Rotation

Sector rotation is a regular media topic, but few really understand it. Stock moves are often described in sector terms – retail, transports, industrials, biotech, etc. You get the drift. There has been a movement to define sectors in terms of ETFs, but the slicing and dicing was not very accurate. Trades often included companies
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Weighing the Week Ahead: Will Trump Policies Extend the Business Cycle?

We have another holiday-shortened week with little fresh data. While there are some Fed speakers on tap, it is not enough to feed the avaricious punditry. There are two competing themes: the spike in inflation and the continuing assessment of Trump Administration policies. Once again, I expect the two to be joined in most commentaries.
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Stock Exchange: How to Buy the Dips

Pure traders love to buy the dips – and of course sell the rips. Everyone wants to buy low and sell high. Is this part of your strategy? Do you know when and how to make that your plan? Today’s Stock Exchange will help. As a bonus, we have some interesting ideas to explore. Review
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The Fastest Way to Improve Your Investment Results

Here is the key concept: Abandon that which is not helpful! Background One of my best friends loved “investing” in baseball. He had an opinion about every team and every game. He also had a happy bookie. He called me after taking a course in baseball betting. He explained that you could improve your results,
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Weighing the Week Ahead: Trump V. Yellen Round One

A week featuring the Fed Chair’s semi-annual Congressional testimony, and daily speeches by most of her Fed colleagues, would normally represent a commanding first choice for the upcoming theme. This time is different. (Yes, I know that you are never supposed to say that). The first weeks of the Trump Administration have generated daily news
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Stock Exchange: Is your trading skillful or just lucky?

Would you like to know whether your trading is lucky or good? Today’s Stock Exchange will help. As a bonus, we have some interesting ideas to explore. [Important Update – Market Open 02/10/17]  Holmes gave a “sell” alert on CASY this morning.  Obviously I did not expect this, or I would have used a different
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Weighing the Week Ahead: Is Market Optimism Justified?

We have a rather light week for economic data. The biggest reports came last week. Earnings season continues. Everyone is keeping a close eye on President Trump, wondering what might happen next. Meanwhile, stocks are at all-time highs and interest rates have stabilized. This combination creates more questions than answers, which will lead the punditry
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Stock Exchange: Finding Your Trading Sweet Spot

Our last Stock Exchange (two weeks ago) discussed diverse ideas from our experts, and also explained why I vetoed one of the recommendations. When trading using models, you can link directly to a platform if you do many trades and have a very short time frame. Otherwise you should not blindly follow the model. A
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Why You Never See the Best Employment Data

On the first Friday of each month the Bureau of Labor Statistics releases the Employment Situation Report. The data – especially the payroll employment change – is the subject of much speculation, forecasting, and spinning once it is announced. Most sophisticated analysts (like me) regularly report that the sampling error is +/- 120K jobs or
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The Quest for Investing Excellence and the Lesson of Dow 20K

The new movement to passive investments is a sharp break from the historical quest for excellence. Many articles claim that no one can do better than the market average. If that is true, you should just throw out your investment library and skip the popular lists of “best investment books.” This post will suggest a
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Finding Investment Excellence

There is a lot of recent buzz about active management – basically showing that excellence is difficult to achieve. The conclusion is popular, especially among those who have no aspiration to beat average. I cannot do this in a single post, but I must start somewhere. As I often do, let me start with something
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Weighing the Week Ahead: Will Policy Uncertainty Increase Stock Volatility?

We have a normal calendar for economic data. There will be important news will come from corporate earnings reports. Since this earnings season is part of an inflection point – the end of the earnings recession– it is special. That said, the uncertainty over policy change has market observers both divided and on edge. I
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Stock Exchange: Diverse Ideas, but a Presidential Veto!

Last week’s Stock Exchange illustrated how human traders could call upon models as “consultants,” effectively creating their own trading room. If you missed the post, please check it out. This week the gang is short on fresh ideas — and I vetoed one of them! We never reach for new trades, and that itself is
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Neglected Investment Ideas

Peter Lazaroff’s series has interesting questions for some of the top investment bloggers. It is getting good attention. I am enjoying it, and I’m sure others are as well. The comments from the heavy-hitters on his list are all very interesting. Except for one question. He asks them “What in the world of finance is
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Weighing the Week Ahead: Will Q4 Earnings Confirm Recent Economic Strength?

We have a light calendar for economic data and a short week of trading. The biggest news will come from corporate earnings reports. Some financial stocks reported on Friday, but this is the first big week for Q416. Earnings season is always important, but sometimes it is special. This week the pundits will be asking:
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Stock Exchange: Need Some Trading Room Help?

Last week’s Stock Exchange illustrated how different approaches worked to generate varied ideas. If you missed last week, you will find it to be useful background for today’s topic. In the last two weeks the market has been relatively quiet. Dow 20K is still a gleam in the eye. Some are announcing that the “Trump
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2016 Silver Bullet Awards Part Two

Each week I try to give special attention to those who do important work, even though it is probably unpopular. These contributors are so important, and their work is so helpful, that we recommend taking another look at the end of the year. (Part One is here).   7/13/16 In a WTWA first, CNBC anchor Sara Eisen
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2016 in Review: Best of the Silver Bullet Awards Part One

Since the earliest days of A Dash of Insight, Jeff has brought attention to journalists and bloggers who dispel myths in financial media. We congratulate these writers with the Silver Bullet Award – named in honor of the Lone Ranger, who lived by a strict code: “…that all things change but truth, and that truth alone,
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Weighing the Week Ahead: Digging Down on the Trump Effect

We have a reasonable volume of economic data, but few important reports. We are awaiting earnings season. The elephant in the room (sorry – I just couldn’t help myself) is the transition to the Trump Administration. Many are tired of hearing about this and thinking about the consequences, but that is not a sound plan
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Stock Exchange: Three Approaches Yield Three Trading Ideas

Last week’s Stock Exchange was a discussion of how to find new trading ideas. There are always plenty of names floated, but that is more about media than method. If you missed last week because of the holidays, you might find it useful to catch up. This week I turn theory into practice. We have
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Profitable New Year’s Resolutions for Investors

As part of my preparation for 2017, I asked how I could be most helpful for individual investors. The suggested resolutions are a combination of expert investment methods and avoiding the most common investor mistakes. They may be difficult to follow. If you can, you will find them profitable. Make a fresh start. We should
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Weighing the Week Ahead: Santa Rally Trumped?

2017 begins with plenty of economic data crammed into a short week. While most expected at least a touch of Dow 20K last week, it did not happen. The conversation quickly shifted to why the rally stalled out. In the coming week, the punditry will be asking: Should we expect a weak start to 2017?
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Stock Exchange: How to Find New Trading Ideas

Last week’s Stock Exchange was about the need for focus and discipline in your trading. Even with the help of systems and models, the human trader needs to maintain confidence. The inevitable rough patches present a challenge. This week I turn to a very common trading problem – finding fresh ideas. Sometimes the muse does
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Is Forecasting Always A Folly?

Forecasting season is upon us. Anyone who gets to be quoted in print or speak to a reporter is asked an opinion. Expertise not required! It is paradise for pundits. Many have decried the “folly of forecasting.” People love to laugh at supposed experts, looking back at old forecasts. Since most forecasts are based upon
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Stock Exchange: Great Trading has a Foundation of Focus and Discipline

Last week’s Stock Exchange was about how emotion and symbols affected technical analysis. Could our charts help us when the picture displayed involved some psychological event like Dow 20K? This week I turn from the charts themselves to the trader who must interpret them. Successful trading requires focus and the discipline to stick with successful
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Why Wall Street Strategists Always Seem Bullish

Let us divide those writing about forecasts into three camps: Those who make specific forecasts, sometimes required as part of their job; Those who criticize, but do not forecast; Those who make dramatic, non-consensus forecasts to get attention. I plan a few more posts on this theme, but today I want to consider group 2.
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Weighing the Week Ahead: New Year, New Highs, and a New List of Worries

There is a normal dose of economic data this week, but we are entering a quiet, pre-holiday period. As the rally faltered a bit, the Dow 20K talk yielded to a discussion of what could go wrong. I expect this discussion to continue in the coming week, and perhaps the next one as well. The
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Stock Exchange: Does the Symbolism of Dow 20K Affect Technical Analysis?

Last week’s Stock Exchange focused on making hay while the sun is shining. The week before we discussed risk, where every trader and investor should start. Now the models must deal with news and symbolism. Dow 20K is grabbing the headlines as I expected. It is very nice to get some recognition for my early
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Weighing the Week Ahead: Dow 20K?

The post-election market run has been accompanied by improving economic data and increasing confidence. The result has the punditry asking a question that seemed crazy in January: Will the Dow hit 20K? Before reading this week’s installment, “Sherman, set the WABAC machine to” mid-year, 2010. The Dow was at 10K and many famous pundits were
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Stock Exchange: How to Maximize Gains

Last week’s Stock Exchange focused on risk – my first step in speaking with a new client. If you take on too much risk, you will find yourself bailing out at the first modest downturn. Our guest expert last week, Blue Harbinger, helped us in discussing the topic. Mark did a great job, just as
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Stock Exchange: Model Picks Teach Us to Manage Risk

Individual investors are intensely focused on the concept of risk. And why shouldn’t they be? Finding an appropriate level of downside risk is paramount. However, too few give equal weight to the potential upside risk in their decisions. Permabears and doom-and-gloomers often watch from the sidelines as the market rallies beyond the fear of the day.
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Weighing the Week Ahead: Are Stocks Ready for Stronger Economic News?

It is (ahem) a very big week for new data. The A-teams are back from their mini-vacations, ready to take a fresh look at the new world. While some will continue to work the Trump Administration/stock theme, it remains mostly guesswork. There is a new theme, which markets and pundits will get around to, perhaps
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