When calculating risk in a given trade or investment, I find that opportunity cost is often overlooked. Remember, it’s not just how much money you can potentially lose on a given position, it’s the opportunity to make money elsewhere that you are missing out on while that position remains in your portfolio. This “Opportunity Cost”, is the type of risk that we like to refer to as, “A waste of money”. Today I want to point out what waste of both time and money it has been to be in Bank Of America over the past 2 years. But things could be about to change… [Read more…]
Real Talk: Whipsaws Rule This Time Of Year
There is a lot of noise surrounding the period between Christmas and the start of the new year. Santa Claus rally this, end of 2016 predictions that, what worked this year, what didn’t….. The truth is, most of that doesn’t matter and is just a lot of air-time filling, click baiting noise. Sure, if Santa Claus doesn’t show up and the U.S. Stock Market doesn’t rally during the last 5 trading days of the year and first 2 of January, bad things tend to happen. Fine. But end of year predictions are always wrong and they’re just a sell side marketing gimmick that the financial media eats up and loves to promote. It’s just noise. As far as what worked this year and what didn’t – it’s too late now anyway, so who cares. We want to look forward don’t we? Aren’t we here to make money?
What we really want to focus on during this period of the year is [Read more…]
[Chart Of The Week] CRB Index Hits 42-Year Lows
As we close out 2015, one of the biggest stories of the year has to be the crash in Energy prices. The CRB Commodities Index is heavily weighted in Energy and, as an Index, has fallen over 20% this year now down almost 65% from its peak in 2008. Here is how I think we can profit from this in 2016: [Read more…]
BNN TV Appearance: Dow Jones Industrial Average, Apple & Inverted Yield Curves
This week I sat down with Frances Horodelski over at Business News Network to discuss the disastrous implications of a breakdown in the Dow Jones Industrial Average below last week’s lows. Apple continues to be a ‘sell on any strength’ stock and an inversion of the yield curve is likely to come next year.
Here is the video in full: [Read more…]
[Premium] Our Weekly Letter About The Current Market Environment
In this week’s members-only letter we discuss the following topics:
- What We Need to See For Crude Oil To Bottom
- How High Yield (Junk) Bonds will Move in January
- What the Period of the Santa Claus Rally Really Means
- Is The U.S. Dollar Still a Short?
- How Crude Oil could affect Energy Stocks in the First Quarter
- What do we do with Uranium in 2016
Bloomberg TV Appearance: Stocks vs Bonds, Apple & Interest Rates
This week I had the opportunity to join Joe Weisenthal and Alix Steel on Bloomberg’s What’d You Miss? On this appearance I wanted to follow up on our Apple discussion over the Summer when I warned that a break of key support would lead to a much bigger problem. This is precisely what occurred in August and since then this stock has continued to be a sell on any strength. Looking bigger picture, Bonds keep outperforming stocks as they have for the last 2 years and still think this trade keeps working. We also touch on the yield curve where if 10s minus 2s break 1.20, then I think the next stop is an inversion of the yield curve.
Here is the video in full: [Read more…]
Edwards & Magee on Technical Analysis
Technical Analysis of Stock Trends by Robert D. Edwards and John Magee is widely considered to be the Bible of Technical Analysis. Today I thought it would be a good idea to share with you guys Page 1 of Chapter 1, so you can see exactly what these guys were thinking when they first wrote the book in 1948.
Enjoy! [Read more…]
Dow Jones Industrial Average Flirts With Disaster
Since October 23rd, the Dow Jones Industrial Average has been a place where we’ve wanted to stay away. This was the day that it first crossed above what was then, and still is, a flat 200 day simple moving average. When prices are anywhere near a flat 200 day, we want nothing to do with it. For almost 2 months now, this index has been stuck in a tight, yet volatile range, frustrating both the bulls and the bears along the way. But after the dust has settled, prices are exactly where they started on October 23rd. To me, it’s the perfect example of why we avoid these sort of situations. Who needs that headache?
The problem that I see moving forward [Read more…]
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