In this special episode of The Money Game, Phil asks me about any new trends I’m seeing for 2020. I give him both the sexy answer, that everyone seems to want to hear, and the real answer. I think this was a quick but valuable conversation about US and foreign markets, US Sectors like Technology and Financials and even what we see coming for Bitcoin. We had good timing on this conversation as we’re just getting starting the new year.
The US Stock Market Indexes are all hitting new highs. This shouldn't be a surprise to anyone who reads the work we put out.
Isn't it nice when we just let the data dictate our actions?
Good music and clean charts. It works.
So today we're going to focus on a new sector that I think is just getting started: Industrials. Take a look at the fresh breakout from its 2018-2019 consolidation:
Click on charts to zoom in
See how this one is resolving? Consolidations tend to resolve themselves in the direction of the underlying trend. This one here is apparently no different.
As January gets under way, it’s time to review positions with January options that remain open (haven’t already hit profit targets or been stopped out).
Most trades I put on for All Star Options tend to have a minimum duration of 30 days (short premium plays) and often as long as 6-8 months (for long premium plays). As options approach expiration, greeks like theta and gamma start to become my enemy and whipsaw my P/L. Therefore, as options and spreads get into the expiration month, my best practice is to put each position on notice — it’s time to take action.
I'm telling you. That's my secret. And it's been starring at us right in the face at the end of every single month.
It takes me about half an hour to go through my Monthly Charts. When you add that up over 12 months, it's only 6 hours of work. There is no 6 hours the rest of the entire year that even comes close to the value I get from this monthly exercise.
Typically on Tuesdays, I post a Mystery Chart, but I expect participation to be lacking this week and I've not found a chart I think is worthy of the exercise...I don't want to make it too easy on you guys.
Instead, I want to look at a few charts that are all suggesting we may be due for a period of consolidation over the next few weeks.
I was down in New York City this week and dropped by the Nasdaq to chat with my old pal Frances Horodelski on BNN Bloomberg. Frances and I have been rapping about the markets for the better part of the past decade. It was great to chat with her once again.
In this short clip, we talk about the new bull market for stocks, rotation into Emerging Markets and Energy, where we think gold goes and how bad bonds are going to get hit if interest rates get to the 3% mark we're looking for in the US 10-year Yield.
I received an email recently from a newish trader who was asking for some trading career advice. I thought I'd turn my response to him into a blog post because there are probably many out there with the same or similar questions.
And considering my trading career has been anything but a smooth upward assent, I feel like I can empathetically relate to the urgency of his questions because I have some serious misgivings about where I spent energies early in my career, and more importantly where I did not.
Here are his two questions:
If you had to start all over again, what would be the 20% you would focus on in order to make up for 80% of your results?
What are the things you'd absolutely avoid being a beginner in swing trading?
There seems to be more data available than ever as we head into the end of this decade. It's up to us to decide how we use it, or ignore it in many cases.
I have my process and everyone else has theirs. But one thing that is a common denominator among all of us is this current period of resetting before we begin a new year.
This week I asked Phil if this calendar thing was something we made up as humans or if this is something real that we should embrace. This was his response:
Rebirth is a universal theme. Dates are milestones adding rhythmic structure. Not "required" but common across cultures and eras."
I'm glad he said that because I enjoy this time of the year. I like thinking about the things we're thinking about.
We'll have a lot more charts and trade ideas this week, of course, as we approach our Monthly Conference Call Thursday (email me if you have not registered).
It's that time of the year again. They all keep calling and emailing me asking for my "predictions" for 2020.
What do you want me to say?
I have no way of knowing what's in store for next year, yet alone what to expect in December of 2020. And I think it's really important to reiterate that. This idea of the unknown unknowns gets lost in the shuffle.
Sure, we were fortunate to make some good calls this year. Our customers have only sent us positive feedback. But as Babe Ruth once said, "Yesterday's home runs don't win today's games".
This week, and really until Monday January 6th is a period of time I often refer to as "Garbage Time."
This time between Christmas and New Years' Day in the markets is a time to clean out the garbage in your portfolio. Many tax-savvy investors like to close out losing positions to help offset gains realized elsewhere. Other than this activity, there really isn't any benefit to beginning any new positions during this time.
Of course, last year was the exception that proves the rule.
In my opinion, the reason people have been so bearish towards stocks and fighting strong trends is because they're allowing other biases influence their decision making. Whether they don't agree with the Fed, or the Trump, the direction of the Economy, or whatever it is, they're choosing to give more weight to these "opinions" than they do to price itself.
Fortunately for us, we're 100% data driven. So we don't care who the president is. We ignore everything the fed says and does. We assume anything a journalists creates is gossip, whether it is or isn't. And we certainly don't have time to care what the economy is doing.
So because we are so trained to focus on actual data, it's a lot easier for us to ignore those whose job it is to distract us. It's not "easy", but it's definitely easier for us as technicians than it is for most of society. The fact is most people are unaware, or choose not to care, that they're consuming content produced by those with ulterior motives. They're just here to sell ads to their sponsors while we're only trying to make money in the market. It's a big difference, and it becomes a problem.
As we all let Holiday dinners settle this week, and after the holiday cocktails begin delivering the desired effect, eventually old Uncle Morty will start pontificating about every thing that is wrong in America. Everyone's got that one Uncle (or aunt, grandfather, brother-in-law, etc).
The undisputed fact is that life on Planet Earth has never been better. In fact, it gets better every year. Are there problems? Are there people at the short end of the stick? Of course. Humankind will never achieve perfection. There is no such thing. But the undeniable fact is that life and mankind is getting better, on the whole, for everyone.
