Crunching Price Data

Truth in all things. Even markets.

by will on January 15, 2016

Markets are like liars, they believe not getting caught in a lie is the same thing as telling the truth. Part of that line is from the movie Three Days of the Condor, but it is true of people and what drives our bias to win, be right, and save face.

The lie stock markets generally promote is that markets are efficient and thus makes it prudent to invest in stock pension and retirement investment vehicles with long only designs. But markets are not efficient and are driven into price constructs from random price discovery capable of destroying large portions of an investor’s wealth. A portion of these investors are mindless of the opportunities to improve the probability of success in all markets, bull and bear. But what is worse is there are many investors repeatedly exposed to alternative investment products who still refuse to adapt to better approaches.

At this posting, the DJIA is down 460. As a professional trader, these are the days of tremendous opportunity if you are smart. The capitulation of earlier price constructs often are the buying opportunities which pay, not the opportunities to add to longs an investor hears during the days of the bull market. But whether this is a temporary opportunity or a death dive to slalom around, one should be in part and portion into those alternative products which increase the probability of success in all market conditions, not just on the upside.

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The Year Ahead

by will on January 3, 2016

Most of the year ahead will contain much as it always does. Big name hedge fund managers with mediocre returns being resourceful enough to maintain a great life on management fees while the actual balance of profits in the fund from trading and investments is less than 20%. What fool dispensing funds would give any of the top managers in the world any money at all? The answer is all of them.

Markets it would seem will have to find footing in a flat environment with the usual chorus defending the upside of buy and mold. Enough economic growth to keep the Fed from lowering rates will for the first time be  bearish as it will mandate enough investment flow to bonds to keep stock buy backs from generating much zeal.

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CoverRisk Q8 2015

by will on January 1, 2016
105.26 16.83 758.88 180.23 137.62 55.48 14.09 32.28 1300.67
YTD -5.12 -1.06 232.48 -13.6 -22.82 9.03 -1.41 1.13 198.63 YTD
%YTD -4.64% -5.93% 44.16% -7.02% -14.22% 19.44% -9.10% 3.63% 18.02% %YTD
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Loading Up UP Here

by will on December 31, 2015

Recent pushes in GOOG and AMZN is clear evidence that loading up certain stocks is a soft spot for managers needing  help to click the buy button. These two stocks in particular, as many before them, have to stretch price to accommodate all comers.   GOOG oddly does not have extreme riskvalue problems but that does not mean it could not have a 150 dollar correction.  CoverRisk data says GOOG is better than AAPL but on a pure dollar down basis GOOG will decline more than AAPL,   it is just that more owners of AAPL will be underwater than GOOG.

IBM has cleared the worst of the riskvalue issues and has the best relative outlook.

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Markets Slide

by will on September 28, 2015

Markets continue to slide as the retracement of the bull run evolves and the 2008 trading pattern takes hold.  October will be the battle ground to determine if equities accelerate towards a low correction bottom in the first quarter of 2016, or are able to stabilize within the -20% to -25% pull back zone.

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Fed Basically Admits It Is Afraid To Stop

by will on September 17, 2015

Fed action basically admits it is harder to sustain any asset value now and will need negative interest rates to keep the economy afloat. The greatest bubble in modern times may have gotten new life as Yellen cannot stop the life line to equities.  Keeping it all in the air may be difficult as there is little the Fed can do to cure a panic.  

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Fed Day

by will on September 17, 2015

Whether the markets explode higher, crashes lower, or just lays an egg in the next few hours, alternative strategist should have already banked more than enough return this year to easily handle any volatility.   Buy side investment bias is the trading opportunity gift which keeps on giving and is based on bizarre notions of market efficiency and macro trend expertise.  Successful alternative strategies execute a in probability game where positive outcomes are not dependent on a bull market or a Fed which has helped float an industry based on a faulty decision bias.

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September Rate Hike and Government Shutdown

by will on September 16, 2015

September, the month where the Fed raises interest rates and the markets get a government shutdown.
So if neither happen the markets still have to deal with trading and investment fatigue where there is more downside than upside for the first time in six years.  A 14.2% break in the S&P500 since May of this year leaves plenty of room for more down.  A minimum  20% correction is indicated by decision models.

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Market Bears Still Have The Edge

by will on September 14, 2015

Fed should raise rates this week as it will make no difference whatsoever to the world economic order.  Markets do not need anymore protection than they receive everyday from sovereigns and normal central bank interventions.  China is a fraud but what’s new.  It is an overplayed card.  Markets could withstand another eight to fifteen percent break just on normal retracement action.  We still have the 2008 downside pattern intact which would lead to a terrible October.  

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