Trading Systems blogs

Educational use only. Never intended as advice.

Investment principles.

1. Capital preservation comes first.

2. Markets revert to the mean. Both oversold and overbought markets reverse.

3. For me, the worst time to invest long is when the market is intermediate and short-term ramping.

4. Market dynamics are critical, particularly a) pure price action, b) breadth, c) examination of percentage of stocks overbought or oversold in indexes, d) volatility index behavior

5. Because volatility is cyclical, volatility expansion/contraction can be very helpful with equity and options trading.

6. Volatility bands, combined with measures of cyclical buying (tick) and short-term stochastics can also produce defined ri

What's Your Routine?
at 2005-11-12 23:55:02

Educational use only. Never intended as advice.

I like to think of the nightly preparation as 'game planning', which supplements the day-to-day intraday methodology (sequence trading) when I get screen time. As a physician, sometimes I get it, sometimes I don't. That's just the way it is.

First, I download Richard Russell's comments and charts at www.dowtheoryletters.com (subscription) and review Russell's big picture view. I then usually check out www.tradingmarkets.com for some of the major pieces from Dave Landry and Gary Kaltbaum. If you have a lot of talent to give market perspective, it's silly not to use it. Intraday, I have on the www.minyanville

Top Ten at Ten PM
at 2005-11-12 23:55:02

Educational use only. Never intended as advice.

Anybody feeling that this rally is getting a little tired?

1. Minimum 6 week high with close for the week below the open?
Likely candidates, GS, WFMI, and OSX (not advice)

2. Overbought, oversold? Stochastics oversold is 6% on SPX stocks and 8% on NDX stocks. The VXO continues to fall.

3. Where are the volatility expansion possibilities? BBH has the Narrowest range of 7 days pattern and a Doji candle.

4. What is my 'low priced' new highs count? Only 10 to watch (not many) of which I happen to own one. I won't discuss it because it is too thinly traded and I'm not here to pump microcap stocks.

5. What ETFs are oversold (proprietary criteria) AND liquid? EWQ (France...not going there, even with blood in the streets)

6. Reality bites. The Dow, NDX

Banking on It?
at 2005-11-12 23:55:02

Educational use only. Never intended as advice.

Short report tonight as I just got back from the Massachusetts Division II North semifinal playoff. Melrose topped Arlington Catholic to advance to the finals Saturday. My twin daughters both were named All-State in volleyball this week, so it's pretty cool. They didn't get any volleyball talent from me. Hey, it's not California or Florida, but still a great honor.

Meanwhile, speaking of 'on a roll' the Bank Index broke through 102 and the RKH has risen about 12% in just 21 session.

The SPX now has 75% of its stocks over their ten day a

"Level" Playing Field
at 2005-11-12 23:55:02

Educational use only. Never intended as advice.

RKH - The Regional Bank Holders has that 'v-bottom' appearance as anyone negative about inflation and its relationship to bank profits gets trampled. Tom DeMark has some thoughts about levels in his book New Market Timing Techniques. Although like much of Tom's innovative work, it has obscure (observational) origins, he looks at multiples of 1.0556 on the upside off lows. For RKH, that works out to about 141. All technical trading techniques are 'guideposts' not stone tablets, and can only be used to form trading hypotheses. Some will be correct and profitable, while others will fai