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The Blog of Adam H Grimes

musings on markets, risk, and life.

That trend indicator, is it helping or hurting?

Continuing from my previous post on moving averages, let’s take a look at using a moving average as a trend indicator. Again, here is some material from the unpublished part of my book, on using the slope of a moving average as a trend indicator, and a look at a... read more

Moving averages: digging deeper

Ok, so I’ll warn you up front: this one’s going to be a little bit difficult. The response to my post on the 200 day moving average in the DJIA and the S&P 500 was very positive, and I received many thought-provoking questions and requests for more... read more

Does the 200 day moving average “work”?

This is one of those technical questions that does not have a quick, simple answer. The best answer is “no, not really, and almost certainly not in the way most people think”, but there are some nuances to consider. I have done extensive quantitative work... read more

The line in the sand

Everyone does it. I used to do it too, but I stopped because I realized I looked silly a few months down the road. You’ve heard the predictions: “if this level breaks, it’s game over”, “if the 200 day breaks, it’s the end”,... read more

The big problem with seasonality

This is the time of year when we typically start hearing seasonal predictions for the stock market. There are a few problems with seasonality, the biggest of which is that market data is highly random, and analytical tools will tease seasonal tendencies out of... read more

This is what “risk off” looks like in stocks

The chart above shows the 12 month return (vertical axis) against the shorter-term momentum (horizontal), for the major sectors of the S&P 1500. We can clearly see that the only two sectors showing any remaining positive momentum are the defensive Utilities and... read more

Where the wild things are? No, where the open is.

The open, in many ways, is the most important price of the day; action off the open can often define the character of the entire session and even have implications for following days. Even if you are a longer-term trader, there are elements of short term price... read more

About those small and mid caps…

Everyone is talking about the recent underperformance of small caps (and I’ve talked about it too!) This underperformance is taken to be a sign of an impending crash, or at least a sign that the market cannot rally. This might be a mistake, as a look at some... read more

One step ahead…

The most important factor setting up pullback trades, and a simple framework for market and trend analysis that really works.

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Hey, that’s different!

It pays to think deeply about markets, how they move, risk, opportunity, and how it all plays out in the grand scheme of probability. We can and should spend a lot of time crafting our trading plans, understanding our risk tolerance, and monitoring our adherence to... read more

Market stats: how to catch a common error

Financial markets are highly uncertain, and every decision we make is ruled by the iron fist of probability. For traders and investors, statistics, whether expressed explicitly or learned implicitly from long contact with the market, are one of our most important... read more

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