Psychology
Rhythm is important. Without the rhythm of the tides and seasons, there would be no life on Earth. When the rhythmic pulse of our heartbeat, breathing, or neural activity is disrupted, we suffer greatly. Rhythm moves in us and through us, and we know it--children in Brazil beat samba rhythms
General Comments
There must be a thousand ways to lose money trading, and most of them are bad ways. Many traders, especially newer traders, are paralyzed by fear of loss. Many traders go "on tilt" due the frustration of losses, and throw good money after bad, sometimes wrecking trading accounts
General Comments
We are seeing a potential divergence in the performance of US and European stocks. European stocks are showing overtly bearish patterns, lead by clean breakdowns out of weekly bear flags in France and Germany. US stocks have certainly suffered, but the best shorts are likely to be in Europe. There
General Comments
A lot of people are focusing on the recent small cap underperformance today. Let's take a look at a little bit of history; here is a chart of the Russell 2000 index (representing small and mid cap stocks), with a line underneath showing its relative performance relative to
General Comments
We are awash in opinion and speculation. Every trader is writing blog posts or tweets about why the market will go up or down, and citing any number of factors. To my way of thinking, simple is better. There is only one thing that matters, and that is whether the
Failure Test
I've focused quite a bit here on quantitative aspects of trading and market analysis, and I've also just scratched the surface of the thorny subject of intuition. Today, I want to look at something slightly different: how we can use some subjective elements in our analysis,
Failure Test
US Stocks stand at an important potential inflection. Structurally, we have seen much support for US stocks to emerge as the global relative strength leader, should stocks break out into another rally leg, and it is important to temper any natural bearishness. Yes, much of 2014 has been confusing, and
Market Math
Last week, I wrote a post looking at the (apparently) impending Death Cross in the Russell 2000 index. In that post and the data examined, I found an interesting and statistically significant short-term signal for the Death Cross, but no effect for the Golden Cross. I suggested that this was
Market Math
One of the recurring themes in my work is that most of the technical tools most people use do not show an actual edge in the market--in other words, as hard is it may be to say, most things most people do simply do not work. In particular, there are
Psychology
Reader Thomas asks: have you ever written about regrets in trading? They seem to dominate mine...missing an entry, not taking the exit, etc Good question, Thomas, and, no, this isn't something I have written about recently. I do think it's an important topic, and worth
Market Math
So, in doing my weekend work, I found what looks like a decent long trade in NYSE: STT. There are a number of supporting factors on this chart, but it is essentially a breakout trade supported by consolidation below the level and higher lows into resistance: But then, a look
General Comments
This post continues the discussion on finding the Art in technical analysis. Read that first, and also this post, on bringing broad intuition into your experience. For quantitatively-inclined traders (such as myself), discretion can be a problem. First, many system rules are slightly counter-intuitive (which may be why they work)