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10 Fast Facts About the $SPY Chart 10/19/14

19 Oct
October 19, 2014

 

  1. Last week the markets did things that have not happened in a long time all of them pointing to a down trend and a structural change in the market.
  2. The 200 day was lost and then the market dropped dramatically. The 200 day has held as support since 2012.
  3. The 30 RSI was lost intra-day and not recovered by the end of the day which has not happened in a very long time.
  4. Swing traders and dip buyers buying weakness and fear was finally punished by relentless plunging.
  5. Trend followers finally started making money going short below the 200 day.
  6. The market for the first time in a long time started truly having fear about the end of quantitative easing.
  7. The gap up on Friday was met by selling all day as it finished where it began and used the previous day’s high of day as support. This was not a bullish gap and go just a gap and hold.
  8. $SPY was rejected at the 200 day sma on Friday which was not a confirmation long for my system. A close above the 200 day would get me to start wading in long. Friday was just a rally inside a down trending market at this point.
  9. $IWM was rejected strongly in its Friday move back into the red. $IWM has been leading the other market indexes up and down in recent weeks this correlation has good odds of continuing.
  10. Some recent hot stocks like $TSLA $SCTY $NFLX $AAPL and $GOOGL have appeared to be under distribution as well. A sign of an aging uptrend in equities.

5 Great Trading Articles For Weekend Reading 10/18/14

18 Oct
October 18, 2014

 

Lessons From Dorsey Wright’s Thomas Dorsey

How Often Does the Stock Market Correct?

Fat F1nger Trading Blog Random Thoughts

Top Trading Tweets of the Week 10/17/14

17 Oct
October 17, 2014

I Love These Five Trading Books

16 Oct
October 16, 2014

 

 

Reminiscences of a Stock Operator

Reminiscences of a Stock Operator

Reminiscences of a Stock Operator has stood the test of time. You know that you are talking to a trader when they love this book and have read it over and over again. It teaches principles that successful traders will be using for many years to come. Like all classic texts, this book doesn’t feel dated, despite being in print for nearly a hundred years.

Market Wizards

Market Wizards

Market Wizards was a landmark trading book. Jack Schwager wanted to write a book like Reminiscences of a Stock Operator, so he followed the yellow brick road lined with profitable trading returns, and interviewed the most successful trading wizards. Schwager did an amazing job of interviewing the right people, asking the right questions, and editing the book flawlessly. The wizards were generous with their time and wisdom, providing a fascinating glimpse into the mind of a successful trader. 

Trend Following

Trend Following

Trend Following was another landmark book that brought professional futures management trend following to the masses. This book was a game changer for me as it explained how trend followers operate their business. It explains in great detail, how reactive technical analysis and risk management can dramatically help a struggling trader attain profitability.

Trade Like a Casino

Trade Like a Casino

Trade Like a Casino  will create a paradigm shift in thinking for new traders, as they will have a difficult time continuing to gamble in the markets with the odds against them. It will cause its readers to realize that having a statistical edge and managing risk is paramount to their success. Traders want to be the casino taking the money from the gamblers and not gambling themselves. This book will change the way traders think.

Trading for a Living

Trading for a Living

Trading for a Living does a great job of bringing together the three M’s: money management, method, and mindset of trading, and explaining how they are all needed for trading success. Without all three legs on a stool, it tips over regardless of the strength of any one leg.

These five trading books are a great foundation for the journey ahead. I still recommend “New Trader, Rich Trader” as a new traders very first book, but of course I am biased.

 

The Flow Of Money Explained

15 Oct
October 15, 2014

 

Money and investment capital are very picky things. They are constantly flowing from those who know how to manage it, to those who do not. Money is not static, it is in constant flux. This is why a person that starts out poor in America can end up wealthy, and also why generational wealth can dissolve in one generation due to bad management. The flow of money is why a lottery winner that wins a jackpot and does not know how to manage it can quickly find themselves in bankruptcy. No amount of money will overcome consistently bad decisions. In a free market, capitalistic system, money flows continually to those that create value and away from those who do not.

  • Money leaves those who risk it’s loss too many times, and ends up with those that protect it and make it grow.
  • Money flows from consumers of goods and services to the owners of the businesses that provide the right products.
  • Money flows to entrepreneurs when they create desirable goods and services. Money flows away from consumers that do not have self control.
  • Money flows to employees that develop skills that employers will pay a premium for. Little money flows to employees that lack skills, or the work ethic to attain them.
  • Money flows from customers to businesses.
  • Money flows to innovators and away from outdated, stagnant businesses.
  • Money flows to well managed businesses and away from mismanaged ones.
  • Money flows from bad traders to good traders.

 

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