How to trade pullbacks
I'm starting a short series of posts here on pattern recognition, focusing on simple patterns that I have found useful in actual trading. Some of my readers may have questions…
Reader question: Sentiment analysis?
Reader Tom asks: I have been reading your blog for a few weeks and I don't see any mention of sentiment. I also see you trade futures but you do…
Why should you be able to make money?
This is an obvious issue, but one that is often ignored. The argument of many academics is that you can’t make money trading; your best bet is to put your…
Reader question: what’s the music?
I recently received a couple questions on the same topic: people asking where the bumper music I used for the videos for my (free) trading course comes from, with a…
When markets go wild
Markets normally move in alternating waves of with-trend impulse moves interspersed with lower volatility pullbacks. This is a reliable trend pattern, and, in fact, is enough to base a trading…
What works?
I post a lot of critical thoughts, and spend a lot of time encouraging people to think deeply about the technical tools they use. Recently, I've received a lot of…
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 Again, here is some material from the unpublished part…
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…
A look at the current market conditions: trades, risks, and opportunities
I thought this was a good time to take a look at current market conditions in US stocks. This is certainly a time when risk, emotions, and volatility are elevated,…
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…
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…
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…
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…
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…
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…
One step ahead…
The most important factor setting up pullback trades, and a simple framework for market and trend analysis that really works.