Archive for March 5th, 2012

Neuroeconomics expert talks about brain science behind economics

By Eryn Brown, Los Angeles Times

Neuroscience might seem to have little to do with economics, but over the last decade researchers have begun combining these disparate fields, mining the latest advances in brain imaging and genetics to get a better understanding of the biological basis for human behavior.

Paul Zak is a pioneer in this nascent field of neuroeconomics. In a recent paper published in the journal PLoS One, he examined genes that may predict success among traders on Wall Street. His forthcoming book, "The Moral Molecule," will explore how a chemical in the brain called oxytocin compels cooperation in society.

Zak, director of the Center for Neuroeconomic Studies at Claremont Graduate University, discussed this work with The Times.

What does a neuroeconomist do?

Neuroeconomics measures brain activity while people make decisions. The reason for doing that is that people can't often clearly articulate why they're doing what they're doing.

Keep reading: Neuroeconomics expert talks about brain science behind economics – latimes.com.





Volatility, Fear, Stocks and Gold

Courtesy of ZeroHedge. View original post here.

Submitted by ilene.

Volatility, Fear, Stocks and Gold

Courtesy of Chris Vermeulen

Over the past 5 months we have seen volatility steadily decline as stocks and commodities rise in value. The 65% drop in the volatility index brings it to a level where it has triggered many selloffs in the stock market over the years – this reflects investors becoming more and more comfortable and greedy with rising stock prices.

Looking at the market from a HERD mentality and seeing people run to buy more stocks for their portfolio has me on edge. We could see a strong wave of fear/selling hit the S&P 500 Index over the next two weeks catching the masses with their hand in the cookie jar . . . again.

If you don’t know what the volatility index (VIX) is, think of it as the fear index. It tells us how fearful/uncertain investors are or how complacent they are with rising stock prices. Additionally a rising VIX also demonstrates how certain the herd is that higher prices should continue.

The chart below shows this fear index on top with the SP500 index below and the correlation between the two underlying assets. Remember the phrase “When the VIX is low it’s time to GO, When the VIX is high, it’s time to BUY”.

Additionally the Volatility Index prices in fear for the next 30 days so do not be looking at this for big picture analysis. Fear happens very quickly and turns on a dime so it should only be used for short term trading, generally 3-15 days.

Volatility Index and SP500 Correlation & Forecast Daily Chart:

VIX Volatility Index Trading

 

Global Issues Continue To Grow But What Will Spark Global Fear?

The stock market has been on fire since the October lows of last year with the S&P 500 Index trading up over 26%. It has been a great run, but is it about to end? Where should investors focus on putting their money? Dividend stocks, bonds, gold, or just sit in cash for the time being??

Below is a chart of the Volatility index and the gold exchange traded fund which tracks the price of gold bullion. Notice how when fear is just starting to ramp up, gold tends to be a neutral or a little weak? But not long after investors start selling their


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Mystery Trader Revealed…And His Name Is ‘Hope’

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The UK’s Daily Mirror newspaper has uncovered the FX trader who dropped over $300k in a Scouse club. It is a 23-year old ‘self-taught’ barrow-boy named (somewhat ironically in our view) Alex Hope. Self-described as “talented (three years in and a six-figure salary, hhmm), charismatic (its amazing how much ‘charisma’ a GBP125k bottle of bubbly will buy), and thoroughly likeable (ditto) man. Alex Hope exudes knowledge…” and is willing to share it with you according to his website. How did he become this B.S.D. of the FX markets? “I took two months off my job at Wembley, got really obsessed with reading charts and got the guts to start trading properly.” This self-made rosy-cheeked young man with a penchant for mind-numbingly-arrogant-looking photos on his website may have just become the poster boy for all that is ‘great’ about the free market – or perhaps a skim through his blog and media exposure will reassure us all that anything is possible as we note he does have some good taste (not just in Champagne) in RTing our posts on Twitter.

 

We can only HOPE that the next time he decides to go down the rub-a-dub-dub for a Leo Sayer, maybe he’ll take some of us Septic Tanks with him on the frog-and-toad…as the days of the ship-it-in-large-on-the-left John, done-a-yard by-breakfast spot FX trader are clearly back with us.

 

And here is his Bio, enjoy:

London born and bred, Alex Hope, 22, is a self-taught trader who specialises in the Foreign Exchange Market. Despite his tender years, Alex is a name to watch out for in the city; an expert in the UK economy, he works the currency markets, regularly trading millions.

 

Alex teaches people how to make money from trading the biggest financial market in the world, the Foreign Exchange. With a trading volume of $4 trillion a day, in his eyes it is undoubtedly the best and most exciting market to be involved in. Another specialist area for this young entrepreneur is Commodities – Gold, Silver, Copper and Platinum; all materials that have great volume and movement on a daily basis and can earn a healthy profit.

 

Alex knows and loves the FX market. Throughout his youth, his passions were


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What the Market Wants: Be Patient

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Walter Gault, Communications Editor, Sabrient

Editor’s note: Walt Gault is the guest author this week. David Brown will be back next week.

Today, stocks traded lower for their third straight session. The markets were down on news that China had cut its 2012 growth forecast to an eight-year low of 7.5%. Factory orders came in better-than-expected, albeit -1%, versus the expected -1.6%.

Last week, most of the market moving indicators beat consensus estimates.  Total vehicle sales, as well as domestic vehicle sales, were higher by nearly 1 million. Jobless claims continue to remain low, falling to 351K from 353K. Personal income and consumer spending increased. Real U.S. GDP was revised upward to +3.0% from +2.8%. Consumer confidence rose dramatically from 61.5 to 70.8; which is far above October 2011’s reading of 40.9 but still shy of February 2011’s reading of 72.

However, last week brought disappointments as well. The ISM Manufacturing Index fell short of the consensus estimate and a widely expected sharp acceleration. Construction spending fell -0.1%, well short of the expected 1% increase.  Durable goods fell -4%.

Technically, the markets achieved some important milestones last week. The Dow traded above 13,000 for the first time in four years, and, perhaps more importantly, posted its fourth consecutive month of positive gains. The S&P 500 logged a gain for the third consecutive month.

Large-cap Growth led the market caps last week with +0.3% gain. All Small-caps and Mid-caps were negative. Cyclical Consumer and Technology led the sectors while Industrials, Basic Materials, and Energy were all down around a -1%. Looking forward, our SectorCast model favors Financials, Basic Materials, Healthcare, and Consumer Cyclicals, though none have great scores.

Here are the market stats.

What more can be said about our current climate? We continue to get mixed batches of economic data. Last week, we got lots of news, some good, some bad. Iran got a record voter turnout (above 60%) for its elections that some say is a sign of stability, and the rumored blast near a Saudi pipeline turned out to be nothing more than Iranian propaganda. European leaders remain divided over the right balance between austerity and measures that will allow…
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Can’t Even Urinate In His Own Yard Anymore

Courtesy of ZeroHedge. View original post here.

Submitted by testosteronepit.

Wolf Richter   www.testosteronepit.com

While some people fretted over Google's new “privacy” policy that took effect March 1—“Calling this a ‘privacy policy’ is Orwellian doublespeak,” said John Simpson of Consumer Watchdog—others counted their AdSense revenue from their blogs, hoping that Google could collect more user data so that ads would generate more revenues. Ka-ching. Just then, an insidious and at once funny information-age issue erupted in France, or more precisely in a tiny village in Maine-et-Loire.

A guy was minding his own business in his yard…. He was, well, urinating, but the gate was closed. There must have been something appealing about it. Or maybe he was just too lazy to go inside or whatever. However, we know that he was doing it because a Google Street-View vehicle drove by, and its rooftop camera that was mounted on a post could see over the gate and caught the hapless but otherwise relieved guy in flagrante delicto.

But he didn't know it, and he still didn't know it when the scene appeared on Street View—the photo, though slightly blurred, showed him in his yard, relieving himself. His neighbors discovered the photo, and it was only as he was becoming the laughingstock of his village that he learned about it, according to his lawyer, who’d filed a lawsuit against Google, demanding the immediate removal of the photo and €10,000 ($13,000) in damages. "My client doesn’t do this for money, he just wants his privacy respected," the lawyer said.

It might be hard to feel sorry for this guy—as a commenter wrote: “Before, he was the laughingstock of his village; but thanks to his legal action and his lawyer, he has become the laughingstock of all of France.” But it’s one more example of how privacy, even in our own yard—and for whatever silly reason we may desire it—has become a quaint concept of the past.

Big-city folks have long gotten used to video surveillance cameras on sidewalks and inside buildings. Drivers are routinely filmed crossing red lights, an expensive event. The newest reincarnations are systems that study consumer behavior in stores. Customers with smart phones can even be identified. At the Safeway down the street, there is a small sign in the wine aisles telling you that you’re on video—that your cumbersome decision making…
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Welcome To Sub-Nanosecond Markets

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Just as market regulators were finally getting wise to the fact that they have no clue how modern market works, what modern market topology is, or how High Frequency Trading impacts the stock market (think Flash Crash), here comes Certichron, the supplier of a time service center at a Savvis market center in Weehakwen, which says it has now mastered sub-nanosecond readouts which are now “compliant with the FINRA Order Audit Trail System and is likely to be compliant with any Consolidated Audit Trail that might be specified by the Securities and Exchange Commission.” In other words, here come sub-nanosecond markets.

For those of you scratching their heads at this development, curious as to how or why on earth anyone would need sub nanosecond time-stamping, you are not alone. Because as a reminder, 1 nanosecond is the time it takes light to travel 30 centimeters. Light. Via fiber-optic cable: which happens to be the medium by which the fastest news (and thus response to) can propagate.

There was a time when the smallest gradient of trading was in the millisecond range, but then HFT algos became collocated at the exchanges so that in response to any one headline, an algo could generate a kneejerk reaction to (whether buy or sell) long before the rest of the trading world was aware what is going on, in the time light moved 300 meters. This is what causes those massive moves up or down in virtually every market once a big, red, all caps BBG headline hits the tape, before any retail trader has the capacity to react. However once you get to the sub-nanosecond space, unless GETCO has found a way to trade backward in time, there is absolutely no way that this increment is even remotely necessary for normal market operation – and by that we mean cause and effect, even purely for robots – for most humans it takes seconds to react to news – alas not for robots, which is a main reason why the market has been so increasingly irrational ever since the passage of Reg NMS. Unless it actually is, and it is being implemented precisely to allow the quote stuffing packets which already occur thousands of times every second (just ask Nanex – a quote packet churn storm…
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Global Stocks, ETFs Flash Warnings (SPY, IWM, QQQ, VGK, DIA)

Courtesy of John Nyaradi.

Global Stocks Flash Warnings  (SPY, IWM, QQQ, VGK, DIA)Major global stocks and ETFs flash fundamental and technical warnings

In a relatively slow day of trading, major U.S. and global stocks and ETFs flash warning signals on both technical and fundamental levels.

On the fundamental level, China spooked investors by lowering its growth rate target to 7.5% from 8% and Europe continued making news with the deadline approaching for the Greek bond swap later this week.  A European purchasing managers index dropped to 49.3 from 50.4 for January, missing estimates and below the 50 level that separates growth from contraction, and so this data point confirms Europe’s slow slide into recession.

At home, the ISM services sector gauge improved to 57.3% for February, beating expectations, however, the employment index slipped, and most problematic for advocates of more quantitative easing, the price index jumped to 68.4% from 63.5%, indicating an underlying inflation push coming back into the economy.

Further economic slowing at home was evidenced by January Factory Orders  declining 1% compared to the previous month’s expansion of 1.4%.

But the big news of the day was Apple Computer and the Nasdaq 100 as Apple shed 2.2% and the Nasdaq 100 dropped 1% from extremely overbought levels.

On the technical front, the Nasdaq broke down hard, while other major indexes waffled sideways, unable to break through resistance to higher levels and remaining at extremely overbought levels.  The break in the Nasdaq follows the Russell 2000′s even more significant drop on March 2nd, so now we have two market leading indexes flashing weakness.

 ETF Summary:

SPDR S&P 500 Trust (NYSEARCA:SPY) -0.4%, unable to breach resistance at the 1370 level and continuing its drift in this long sideways channel.

Russell 2000 Index ETF (NYSEARCA:IWM) up 0.1% to consolidate after recent sharp declines.

Nasdaq 100 (NYSEARCA:QQQ) down 1% on weakness in Apple, Google and Hewlett Packard.

Vanguard MSCI Europe ETF (NYSEARCA:VGK) down -0.4% on concerns over the ongoing European slowdown and Greek’s debt deal this week.

Dow Jones Industrial Average (NYSEARCA:DIA) down -0.1% after recovering from early losses but still unable to hold the psychologically and technically important 13,000 level with today’s close at 12,962.

Bottom line: Global markets remain in a perilous place, at significant technical resistance levels and with increasing headwinds on a fundamental basis. 

Check out our new ETF Control Room

Click here to
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Weekly Gasoline Update: Premium Now Above Four Dollars

Courtesy of Doug Short.

Here is my weekly gasoline chart update from the Energy Information Administration (EIA) data with an overlay of West Texas Crude (WTIC). Gasoline prices at the pump, both regular and premium, increased 7 cents over the past week, continuing their steady increase since mid-December. Regular is up 56 cents and premium 54 cents from the interim weekly low in the December 19th EIA report. In fact, the US average for premium is now above $4.00. WTIC closed today at 107.04. It is 6.0% off its 2011 interim high, which dates from early May 2011.

As I write this, GasBuddy.com shows three states, Hawaii, Alaska and California, with the average price of gasoline above $4 and another 6 states with the price above $3.90.

 

 

The next chart is an overlay of WTIC, Brent Crude and unleaded gasoline (GASO). During much of last year there was a growing spread between WTIC and Brent Crude, but over the last quarter that spread has shrunk considerably.

The price volatility in crude oil and gasoline have been clearly reflected in recent years in both the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE). For additional perspective on how energy prices are factored into the CPI, see What Inflation Means to You: Inside the Consumer Price Index.

 

 

The chart below offers a comparison of the broader aggregate category of energy inflation since 2000, based on categories within Consumer Price Index (commentary here).

 

 

 

 

 

 





Color Gets Dumber

Courtesy of ZeroHedge. View original post here.

Submitted by Tim Knight from Slope of Hope.

This is my third post I’ve done about Color.com, the “company” into which mentally-challenged venture capitalists poured $41 million. Good luck on seeing any of that back, fellas.

In my first post, written eleven months ago, I introduced you to the firm and its, errr,  product. In a follow-up post, I wrote about how the company – – which I guess found that no one wanted to use their crappy creation, $41 million in the bank notwithstanding – – repositioned themselves with a product that struck me as even less useful.

So why am I bothering with a third post? Two reasons, I guess. First is that I pass by their headquarters at least several times a week, and although one half of their huge office is completely empty, the other half is covered with butcher paper (for privacy? out of shame? Who knows). So I’m reminded of it.

The other reasons is that it really chafes my hide that I started a successful, profitable company for $3,000 (and sold for millions to the benefit of all our investors) and these kids get an enormous eight-figure check dropped in their laps for something which, in my opinion, is destined to produce a return of approximately negative 100%.

Anyway, as Color.com continues to be A Solution In Search Of a Problem, they have outdone themselves. Now all their product seems to be able to do is update your Facebook status with a short video (which they bizarrely seem to brag lacks “audio” and “editing”, which I figure most people would sort of want). Here in the Valley, this is what we call “A feature, not a product.” And certainly not a company.

0305-color1

All the same, if you want to do a feature story on this bubble-funded enterprise, feel free to hop onto their press page. I think they’ve still got room.

0305-color2





Morgan Stanley’s Latest ‘Commodity Thermometer’

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Two weeks ago we presented the latest and greatest “commodity thermometer” courtesy of Morgan Stanley’s commodities team. Below is the latest just released iteration. Not much of a change, with gold still the most loved, and inc the most hated (this could well be one of those “endorsed by John Paulson” moments), and the only notable change being that silver has pushed above Live Cattle and entered the Top 5.





 
 
 

Zero Hedge

Armed Man With A Knife Rams Car Into Pedestrians In Heidelberg; Attacker Shot By Police

Courtesy of ZeroHedge. View original post here.

In what may be the second vehicle-based terrorist attack in Germany in as many months, moments ago the AP and local press reported that according to German police a man rammed his car into a pedestrian area in a central square in the city of Heidelberg, injuring three people, then fled armed with a knife, and was subsequently shot after being tracked down by officers.

Police spokesperson Anne Baas said one of the three people hit outside a bakery on Saturday afternoon was seriously injur...



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Phil's Favorites

Dutch Parliament to Debate Leaving the Eurozone: Nexit on the Way?

Courtesy of Mish.

Potential Eurozone disruption possibilities keep compounding. The Netherlands Parliament will now debate leaving the Eurozone.

For example, the Netherlands Parliament will now debate leaving the Eurozone.

In long-winded wording for a potential “Nexit”, Reuters reports Dutch relations with euro up for debate after lawmakers commission probe

The Netherlands’ future relationship with the euro will be comprehensively debated by its parliament following elections in March after lawmakers commissioned a report on the currency’s future.

The motion approving the investigation by the Council of State, the government’s leg...



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ValueWalk

Charlie Munger's Parody

By VW Staff. Originally published at ValueWalk.

Notes from Charlie Munger’s annual meeting at the Daily Journal are making the rounds. This parody, from a few years back, was too good not to share again. “One thing about doing something dumb is that you’re unlikely to do it again.”

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Charlie Munger's Parody

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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Stocks across Europe dived into the weekend (Business Insider)

Stocks all over Europe dived Friday, as markets took a cautious approach and investors took profit after US stocks hit record highs Thursday evening.

Trump Is on the Verge of His Own Bull Market (Bloomberg)

Consecutive gains in the Dow Jones Industrial Average have left it at the doorstep of history, including a 20 percent surge in futures from the early hours of Nov. 9 that could be loosely framed as the president’s own bull market.

...



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Digital Currencies

As Bitcoin Surges To Record High, China Prepares Its Own Digital Currency

Courtesy of Mike Shedlock (Mish)

Bitcoin hit an all-time high over $1200 today.

Traders are happy because the SEC is expected to rule on a Bitcoin ETF by March 11.

Meanwhile, Bloomberg reports China Is Developing its Own Digital Currency.
 

After assembling a research team in 2014, the People’s Bank of China has done trial runs of its prototype cryptocurrency. That’s taking it a step closer to becoming one of the first major central...

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Kimble Charting Solutions

Crude Oil; Energy stocks suggesting its about to fall, says Joe Friday

Courtesy of Chris Kimble.

Below takes a look at the price action of Crude Oil, Energy ETF (XLE) and Oil & Gas Exploration ETF (XOP) over the past three years.

Could Energy stocks be suggesting the next big move in Crude Oil again? Which direction are they suggesting?

CLICK ON CHART TO ENLARGE

At this time the intermediate trend in Cru...



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Members' Corner

The Manchurian President

 

The Manchurian President

Courtesy of  at BillMoyers.com

As the Trump presidency unravels, unraveling the country along with it, there is no real political antecedent, no lessons from American history on which to draw and provide guidance. We are in entirely uncharted waters.

But there is an antecedent in our popular culture that provides a prism through which to view the contemporary calamity, especially the alleged collusion between Trump’s henchmen and Russian intelligence to deny Hillary Clinton the presidency. I am not the first observer who has ...



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Chart School

Good Recovery

Courtesy of Declan.

In early morning action it was a clear swing to sellers after yesterday's non-event. However, buyers came back and were able to make a good chunk of these losses into today's close.

Large Caps remained the most attractive as defensive stocks often are during times of doubt. The S&P registered higher volume accumulation as intraday action proved to be relatively tight.

The Nasdaq suffered larger losses, but there was no distribution to go with it. Technicals were relatively immune to today's action.

...

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OpTrader

Swing trading portfolio - week of February 20th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Mapping The Market

NSA May Be Withholding Intel from President Trump

By Jean Luc

These GOP guys were so worried about Hillary's email server and now we find out that we had something close to a Russian mole in the White House. In the meantime, Trump keeps on using his unsecured phone, had high level conversation in his resort in front of dinner guests! It's getting so bad that rumors are now circulating that the NSA is not sharing information with the WH:

NSA May Be Withholding Intel from President Trump

By 

….Our spies have had enough of these shady Russian connections—and they are starting to push back….In light of this, and out of worries about the White House’s ability to keep secrets, some of our spy agencies have begun withholding intelligence fro...



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Promotions

Phil's Stock World's Las Vegas Conference!

Learn option strategies and how to be the house and not the gambler. That's especially apropos since we'll be in Vegas....

Join us for the Phil's Stock World's Conference in Las Vegas!

Date:  Sunday, Feb 12, 2017 and Monday Feb 13, 2017            

Beginning Time:  9:30 to 10:00 am Sunday morning

Location: Caesars Palace in Las Vegas

Notes

Caesars has offered us rooms for $189 on Saturday night and $129 for Sunday night but rooms are limited at that price.

So, if you are planning on being in Vegas (Highly Recommended!), please sign up as soon as possible by sending...



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Biotech

The Medicines Company: Insider Buying

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

I'm seeing huge insider buying in the biotech company The Medicines Company (MDCO). The price has already moved up around 7%, but these buys are significant, in the millions of dollars range. ~ Ilene

 

 

 

Insider transaction table and buying vs. selling graphic above from insidercow.com.

Chart below from Yahoo.com

...

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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