From the Desk of Kimmy Sokoloff
The indices recaptured their respective eight-day moving averages, and it seems they’re forming bull flags.
Maybe now we are on the way to $SPY 403.
Expert technical analysis of financial markets by JC Parets
by David
From the Desk of Kimmy Sokoloff
The indices recaptured their respective eight-day moving averages, and it seems they’re forming bull flags.
Maybe now we are on the way to $SPY 403.
by JC
Note: Our Live Mid-month Conference call is this coming Monday Nov 21st @ 6PM ET. Premium Members can register here.
For quite some time we’ve treated Bitcoin and many Altcoins as just more stocks to choose from.
More specifically, we can argue they might be software stocks, or Tech stock of some kind.
At the very least, we’ve agreed that they’re in the growth category and part of that long-duration trade.
And the correlations have been there to justify it.
So the divergence we’ve seen lately really stands out.
Regardless of market capitalization, you can see the growth stocks holding on to their June lows, but Bitcoin and many Altcoins have not.
They’ve gone on to make lower lows:
by Ian Culley
From the Desk of Ian Culley @Ianculley
Don’t take your eyes off the US dollar and interest rates!
I know it’s been a long year, but we’re finally witnessing early signs of potential trend reversals. The breakdown in the dollar last week confirmed the mounting evidence suggesting the USD has reached its peak.
Now, will interest rates follow?
One of the “secret sauces” to successful long-term trading is the ability to smartly adjust my position sizing to better take advantage of opportunities.
Feels like I’m often thinking to myself that my losing trades were position-sized too large, and my winning trades were position-sized too small. That will always feel true. Makes sense. But I don’t have a crystal ball to know ahead of time which trades will be the winners and which will be the duds. And I can’t go back in time to change my decisions.
So what can I do to increase the odds that I win bigger and lose smaller?
The simplest way is to risk the same percentage of my account on every trade — say 50 basis points (half of 1%) of my total risk capital. In this scenario it would naturally lead to my position sizes increasing when I’m winning (because my capital base is rising), and conversely, my positions shrinking during losing streaks.
This is a perfectly acceptable risk management strategy. But maybe not the best. I don’t believe there is a “best.”
Another way is to systematically add to my winning positions. When I get into a trade and it starts working, I can add more units (shares or options contracts) as my open profits continue to build in the trade. Some call this pyramiding. Whatever you want to call it, it can lead to some monster wins when I get a hold of a good trend. But these positions become harder and harder to hold as my PnL volatility increases with each additional unit. It takes some stones to sit through normal pullbacks that might feel exponentially worse to me due to my larger-than-normal position. Easier said than done.
A third way to increase my odds of winning bigger and losing smaller might be to only position bigger from the start when I’ve got a PnL cushion giving me a position of strength. This probably makes more sense if I was day trading. Basically, the thinking here is as my intraday profits pile up, I may risk my normal amount + some percentage of my current daily gain. For example, let’s say I’m usually risking $500 per trade; at midday, I’m currently up +$1,200 on the day. Maybe I’m willing to risk 25% of my open profit in addition to my normal risk. In this case, I’d risk $500 + (.25 x 1,200) = $800.
This is not an exhaustive list of ways to alter my position sizing, but it is three common approaches I use and I hope it may spur some brainstorming on your end to help you level up your risk management game.
What works for you? Please tell me about it!
by David
From the Desk of Kimmy Sokoloff
Today was like a strange pendulum — back and forth and up and down and all around.
The $SPY tried hard all morning to hold on to the eight-day moving average at 391.40.
Once $AAPL started to move higher, so did the indices — SPY ran up to 394-plus.
by JC
This week we came right out of the gates with the Chart of the Decade.
The catalyst for stocks to have a sustained rally is a weaker US Dollar.
The market keeps proving that to be right.
And yes, I am aware that in the 1990s, a weaker Dollar was not the bullish catalyst for stocks.
But are you aware that this is not the 1990s?
It’s 2022 and the correlation has been consistently negative between stocks and Dollars.
Until that changes, we’re not going to fight it.
And while this week’s chart was comparing the US Dollar to Emerging Market Currencies, in this post I want to focus on the more developed countries.
The Euro, British Pound and Yen represent 83% of the entire US Dollar Index.
The Euro and British Pounds both bottomed in late September, while the Yen put in its low last month. [Read more…]
by David
From the Desk of Kimmy Sokoloff
The S&P futures broke below 3,950, and now they’re riding the eight-day moving average at 3,930.
So far, this is a healthy contraction, one that I’ve been looking for.
[Read more…]
by JC
These are the registration details for our live mid-month conference call for Premium Members of All Star Charts.
Our next Live Call will be held on Monday November 21st at 6PM ET. As always, if you cannot make the call live, the video and slides will be archived and published here along with every other live call since 2015.
Here are the details for Monday night: [Read more…]