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Steve Jobs on How To Live Before You Die From a Stanford Univ. graduation and presented by TED – Ideas worth spreading.

This LINK is an insperational address that Apple Founder Steve Jobs on loving what you do and how to make the most out of what happens “when life hits you like a brick.” Jobs “love what you do” and “live each day as if it were your last”  is inspirational.

As you know Steve Jobs is a cancer survivor who has just resigned from Apple because of his illness

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KISS & Stocks

(Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Index Percentage Volume
Dow +0.46% low
NASDQ +0.13% low
S&P 500 +0.49% low
Russell 2000 -0.17% -

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Market Analysis

Focus on Technicals, Fundamentals & HFT’s

Shorter Term Outlook.

day/days/week

  • Repeat*Low volume rallies, are a signature of HFT trading.  In past year we’ve seen that this can last a long time. But fundamentals and money supply eventually will turn the tide.
  • Repeat – Technically we have formed a double bottom for most major indexes Now major indexes have formed short term higher highs. (see charts of major indexes on right side of blog). Traditional technical analysis says this is bullish. Short term momentum is with the bulls.

Investors411 Forecasting Tools.

  • The PCR rose to 1.22 (Above 1.00 is Bullish and below Bearish)(last two years the highest for PCR is @1.50 and lowest @0.60)   For more information on PCR LINK Since the PCR is new we’ll work refining how to better read this chart. A 1.22 figure = Neutral/Bullish

The McClellan Oscillator

  • (MO) rose  to +85.84 (Rough estimates =-30 somewhat oversold, -60 oversold, -90 OMG oversold)( +30 somewhat overbought, +60 overbought and +90 OMG overbought) This is about as high as the MO has risen in last two years (One time higher) Strong indication that the bullish trend for US stocks is worn out. (at least in the short term) Bearish

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Reading The Tea Leaves

There seems to be a conflict between the pros and programed traders (HFT’s) who mostly use Put/Call and the MO. Ones strongly Bearish and the others getting more bullish. Best guess is for more 2%+ swings like yesterday because of HFT’s. Technically, Short term nod to bears, but bulls still in charge of longer term trend.

Longer Term Outlook

month, months,

  • Repeat Same old mantraMay 20th forecast still stands. The May 20th summer forecast has come to pass and now we wait to see the Fed’s next move. Add to this Europe is a whole lot worse than previously thought back in May.

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Paul’s Corner

Much discussion has been give to the effects of the High Frequency Traders. While HFT’s do disrupt the volume calculations, they may not have an affect on the price of the security. I questioned Ron Brown from HGSI about the HFT’s and he forwarded me the following:


Dormeier, Buff (2011). Investing with Volume Analysis: Identify, Follow, and Profit from Trends (p. 226). FT Press. Kindle Edition.


High-Frequency Trading


Because there are numerous high-frequency trading strategies, they might be best described by the attributes they share: • In Texas, there are large billboards posted all along the highways stating “Speed Kills.” Along the Internet highways of high-frequency trading, the signposts read “Speed Wins.” As the name implies, high-frequency traders trade at exceptionally high speeds. High-frequency trading is an ultra fast-turnover trading strategy. I am not referring to day traders here. A day is an eternity to the high-frequency trader. A high-frequency trader never holds a position overnight. Even a minute is a heck of a long time to a high-frequency trader. In fact, the International Economy reported that one of the high-frequency CEOs said his company’s record duration of holding a position was 11 seconds, which in his words was “unacceptably long.” Ideally, these traders operate in the realm of milliseconds.


• A high-frequency trading strategy typically consists of a multitude of small orders to establish and liquidate securities very quickly. Generally, high-frequency traders do not trade directionally. Their primary purpose is to identify very small but numerous scalping opportunities or earn rebates paid by the exchanges for posting liquidity. • To accomplish this, high-frequency traders send numerous orders knowing that most orders will not be filled and, if not filled, might be subject to immediate cancellation by the high frequency trading firm. • To achieve the highest speeds, not only do high-frequency traders employ the fastest computers and routers, but they also want to be as close to the market as possible. Co-location is a practice where high-frequency traders place their hardware adjacent to the market matching engine. According to the Nasdaq, this can improve speed by up to 4.6 milliseconds. In general terms, high-frequency traders are typically proprietary trading shops that use their own capital with some limited intraday leverage. They operate by injecting temporary liquidity within tiny market inefficiencies offered between the bid and the ask. Because of their high turnover, just a few million dollars can generate millions of shares in trading volume. It is estimated that between 50 percent and 70 percent of the total market volume results from high-frequency traders. With that information, you might correctly conclude that these activities have grossly exaggerated the volume data on the market indexes. However, since the introduction of decimalization, the volume increases from high-frequency trading have been worked in over a period of years. This growth represents the vast majority of secular volume growth across the last decade. It has been brought about by the increased opportunities to scalp created by these changes in regulations and advancements in technology. When considering how high-frequency trading has affected volume analyses, you must consider that these actives have not occurred overnight but rather have accumulated over the last decade and now represent the new reality.


Because these high-frequency trading activities had an impact on volume growth, the volume analyst generally need not be overly concerned that current volume flows are misrepresented by high-frequency trading. There can be special situations in which high-frequency traders are attracted in or out of a certain security, but this is the exception not the rule. Volume analysis primarily concerns how much volume it takes to push a stock so far relative to previous volume levels. Yet high-frequency trading has a negligible impact on price movement. True demand comes from investors accumulating shares over and above the availability of supply at a given price. Likewise, true supply is created by more shares being distributed than those demanded at a given price. Therefore, high-frequency traders have little if any direct impact on price because the shares traded are typically immediately redistributed to the public at or between the best bid and offer. An investor engaging in such activities who begins the day flat and ends the day flat is not materially affecting price. Although this has created higher volume, the volume growth has been worked in slowly over a period of several years. In volume analysis, volume surges are the most significant sign in identifying developing new trends, breakouts, and reversals. However, the secular growth trends of volume over the short and intermediate time frames are a negligible factor in short- and intermediate-term volume analysis.


Dormeier, Buff (2011). Investing with Volume Analysis: Identify, Follow, and Profit from Trends (p. 226). FT Press. Kindle Edition.

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Current Positions

Below – Investors411  hypothetical portfolio that should outperform the S&P 500.

See POSITIONS Section of blog for more on YSL#5.(scroll to bottom)

Strategy has always been to buy the dip in a bullish trend. Most stocks sure as hell are not dipping now. But stocks have started to trend higher.

NLYAnnaly Capital Mgt. Ultra high dividend stock – Up about 3% to 5% from when is was bought and a 14% dividend to boot

I still have a Put position to protect NLY. (strike price $17.00 for 3rd Friday in Sept) Also puts on other dividend stocks.

GLD – (Long Gold ETF)  Bought at 167.05 last week – a half position. GLD closed yesterday at 177. 72%  Stop/loss on GLD at 166.

Disclaimer Personally I own  a group of dividend stocks including NLY, SNH, KMP, MO, HTD, T, ABV & AGNC and a few other smaller positions I have puts on over half of dividend stocks I own.I own TZA & SDS (3x & 2X short ETF’s) I buy everything in the hypothetical Investors411 portfolio. I will be purchasing additional YSL #5 stocks when we have a lower MO.

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Long Term Outlook

(for US stocks)

The most important  foreseeable fundamental factor in determining the log term outlook is what The Fed (Bernanke) does to impact money supply (example – a new QE#3)

NEUTRAL*

*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

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