Posts Tagged ‘confidence’

THE STOCK TRADER’S RIGHT TRIANGLE MIND-SET

Courtesy of David at Crosshairs Trader

Successful traders are successful because they have developed the skills necessary to maintain self-control when in the heat of battle.  Self-control requires confidence in the face of uncertainty (such as we find in the stock market).  In turn, an uncertain environment is best managed with focus, patience, and discipline.  Without the proper skills developed via confidence, we experience any number of self-defeating negative behaviors such as fear, desperation, confusion, anxiety, and frustration, among many others, none of which contribute to the proper mind-set… or the bottom line.

Take a look at the following right triangle.  As confidence increases, negative behavior decreases, presenting opportunities.

Confidence grows when fed a diet of focus, patience, and discipline.  As confidence grows negative behaviors such as fear, desperation, confusion, anxiety, and frustration begin to diminish in opposite proportion.  This creates a mind-set that is open to any market opportunity that presents itself.  When negative behaviors dictate action, then we are not able to think and see as clearly as would otherwise be possible.  Market opportunities are then hidden behind the negative behaviors.

The right triangle mind-set, one of confidence, is built by developing the following skills:

FOCUS: Have you ever stopped to consider how many different trading strategies there are? How about time frames for each strategy? And what about the best instrument to trade that strategy within the time frame selected? What about the indicators? Which ones are we planning to apply to the strategy? If we were to add it all up there are literally hundreds, if not thousands of strategies, just in one time frame! And what about the other traders trading one of these strategies that may be designed specifically to trade the opposite of what you trade? There is absolutely no way humanly possible to master all, or even a large number of, the strategies available to us. Therefore, we must focus on a particular strategy and become a strategic specialist. In doing so, we defeat the ego’s need to know everything, which we know is impossible in the first place.  With focus, we can think clearly about our specialized strategy knowing when and where to enter and exit the market since we know exactly what the market is supposed to look like to do either one.  This focus helps eliminate the confusion and frustration we experience when the market does not make sense (which is…
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SENTIMENT TAKES A TURN FOR THE WORSE

SENTIMENT TAKES A TURN FOR THE WORSE

Courtesy of The Pragmatic Capitalist

Investor sentiment took a turn for the worse this week as most investors became increasingly bearish.  The Investor’s Intelligence survey showed a steep 5% decline in bullishness while the AAII‘s survey showed an even larger decline of 9.7%.   Although both surveys have declined dramatically in the last week neither is at extremes:

II2 SENTIMENT TAKES A TURN FOR THE WORSE

aaii3 SENTIMENT TAKES A TURN FOR THE WORSE

Charles Rotblut of AAII elaborated on the AAII results:

“Bullish sentiment, expectations that stock prices will rise over the next six months, fell 9.7 percentage points in the latest AAII Sentiment Survey. Bullish sentiment registered 30.1%, a six-week low. The historical average is 39%.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, fell 2.7 percentage points to 27.4%. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 12.4 percentage points to 42.5%. This is a four-week high. The historical average is 30%.

Bearish sentiment has been firmly above its historical average for 14 out of the last 15 weeks. Sustained volatility in the market, continued economic uncertainty, a negative year-to-date return for the S&P 500 and low bond yields are all combining to fray individual investors’ nerves. Confidence is likely to remain fragile until investors have a sense that a bottom has been established for stock prices.”

Source: AAII & II 


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CBO Director: A Somber Warning

CBO Director: A Somber Warning

Courtesy of Karl Denninger at The Market Ticker 

File this in the "no, really?" box:

With U.S. government debt already at a level that is high by historical standards, and the prospect that, under current policies, federal debt would continue to grow, it is possible that interest rates might rise gradually as investors’ confidence in the U.S. government’s finances declined, giving legislators sufficient time to make policy choices that could avert a crisis. It is also possible, however, that investors would lose confidence abruptly and interest rates on government debt would rise sharply, as evidenced by the experiences of other countries.

So let’s see…. if you buy bonds today there’s a chance you could lose some of your money, or there’s a chance you could lose a whole lot of your money.

That sounds comforting, doesn’t it?

But it’s the next sentence that ought to make you sit up in your chair:

Unfortunately, there is no way to predict with any confidence whether and when such a crisis might occur in the United States.

Right.

This is what history tells us.  It is also what I have been trying to amplify now for the past three years.  The reason is this graph:

What I find amusing is that the CBO is flapping its jaws over only the government’s liabilities.  It, by the way, is also looking only at the debt held by the public (and not the games played with FICA and Medicare):…
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Small Business Owner Confidence Plunges

Small Business Owner Confidence Plunges

Courtesy of Mish 

Jewelry store employee with grand opening sign

Although the Fed and most economic forecasters are all looking ahead to the recovery, small business owners do not seem convinced. Please consider Economic Confidence Plunges; Low Expectations for the Holidays.

Economic confidence among America’s small business owners plummeted in November, as more owners cited serious concerns about cash flow and saw economic conditions for their own businesses getting worse. The Discover Small Business Watch index fell 12 points in November to 76.5 from 88.5 in October.

November Highlights:

  • The mood of small business owners generally has soured in November for three straight years, as economic confidence dropped from October to November in 2007 and 2008. The November 2008 index of 67.5 is the low point for the Watch since it started in August 2006.
  • 52 percent of owners say they have experienced cash flow issues in the past 90 days, up from 44 percent in October. Forty-one percent of owners say they have not experienced cash flow issues, which is the lowest response in this category since the Watch began. The remaining 6 percent said they weren’t sure.
  • 53 percent of small business owners see conditions getting worse in the next six months, up from 43 percent in October; while 19 percent report that conditions are improving, a sharp decline from 29 percent in October; 23 percent see conditions as the same, and 5 percent weren’t sure.
  • 62 percent of small business owners rate the economy as poor, an increase from 55 percent in October; 30 percent rate it as fair, and 8 percent say it is good or excellent.
  • 53 percent of small business owners think the overall economy is getting worse, up from 44 percent in October but still significantly lower than the 69 percent of owners who felt that way in February 2009, the last time the Watch index was this low. For November; 28 percent say the economy is getting better, down from 35 percent in October; 16 percent see it staying the same, and 3 percent are not sure.

A majority of small business owners think the economy is getting worse, not better. And if small businesses are not confident, then they are not hiring.

Odds are increasing that Congress will need to pass yet another stimulus package but if so, it…
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Stock Market Rally: Shenanigans Abounding

Stock Market Rally: Shenanigans Abounding

Courtesy of Jesse’s Café Américain

This is just an opinion, and it could be wrong, as all opinions may be.

To be long US equities at this point seems risky, bordering on reckless, for anything but a daytrade. And there is plenty of that going on.

The US markets in general have every mark of a maturing Ponzi scheme in the steady run ups on weakness, and the ramps into the close with the selling after hours on weak volumes.

But why?

Thursday is option expiration, a quadruple witch as we recall. September is one of the big ones, often setting up declines in the month of October. Further, we have Rosh Hoshanah beginning at sundown on Friday September 18. As the saying goes, Sell Rosh HaShana and Buy Yom Kippur.

The government is anxious to encourage ‘confidence’ to the extent of skewing the statistics to create hope in the public, the consumers. The banks are flush with liquidity, but really have no place to put it but for a minimal return at Treasury, or in some hot money trades.

Where is Goldman Sachs business revenue and profit coming from now? How much real investment banking is being done? How much M&A activity and IPOs are there to sustain it at this size, unscathed by the recent market downturns?

Obama and his team have NO credibility for reform on Wall Street after their handling of Goldman Sachs and the AIG payouts. We hear that Goldman had shopped the idea of those derivatives to them, became their biggest customer, and then managed the 100 cents on the dollar payouts from the government even as AIG became hopelessly insolvent.

Bonds, stocks, metals, sugar, cocoa, and oil are all moving higher, while the dollar sinks. Is the dollar funding a new carry trade?

The markets are increasingly the flavor of choice, and if the markets do not show a way, they will make one. Volatility is a screaming buy. Put vertical spreads are remarkably cheap.

Be careful. October looks to be the stormiest of months, if we hold out until then. The market is overdue for a correction, which can be up to 20%. Given the distance we have come on thin volume, what may make this correction shocking is the speed with which it will come.

Watch the VIX.

We remain guardedly ‘optimistic’…
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IT’S ALL ABOUT LIQUIDITY!

Have you wondered, is it true, is the rally really due to tons of money lying around with nowhere else to go?

IT’S ALL ABOUT LIQUIDITY!

liquidityCourtesy of The Pragmatic Capitalist

Is the real economy rebounding or is this just a liquidity/stimulus driven rebound? David Rosenberg has an opinion:

IT’S ALL ABOUT LIQUIDITY, ROSENBERG!

This is what we are hearing. The fundamentals take a back seat because there is so much liquidity to be put to work, and it all must go into equities. This reminds us of all the liquidity talk during the bubble peak of late 2007. The reality is that the mountain of money is no higher or lower than it was when the market was plumbing the depths through 2008 — money market mutual funds back then were $3.5 trillion and guess what? Today they are $3.5 trillion. Go figure.

So you see, liquidity is a catch-all term when nobody can really explain why the market is going up. This rally is based on a lot of hope that we are going to see a V-shaped economic recovery in the U.S. The S&P 500 is priced for 4% real GDP growth. We don’t see it. Try 2%, which is what the investment-grade corporate bond market is priced for. If we get 4% GDP growth then the equity market is fully priced, but that sort of economic expansion would take Baa spreads of U.S. Treasuries down another 100bps to 200bps, if historical relationships were to hold. But if we see 2%, then at least you will clip your coupon in the fixed-income market. The S&P 500, which at one point would have licked its chops over such a possible outcome (back when it was priced for -2.5% growth last March), would now see 2% growth as a disappointment and would correct down towards 850, again, based on our models.

I would argue that it’s all about psychology really.  As the global economy began to fall off a cliff last summer and fall investors began to worry.  When we saw some of our most prominent financial institutions vulnerable investors panicked and sold everything.  Now, we’re seeing the return of rational thinking and cooler heads.  The government has certainly helped to steady the markets, but what has really returned to the market is some semblance of confidence.  What the government needs to start worrying…
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ValueWalk

Bitcoin Investors Buys The Dip But The Dip Kept On Dipping

By Eloise Williams. Originally published at ValueWalk.

In the world of cryptocurrency it is exciting and challenging all at the same time. Investors are realizing that this currency could be the way of the future. But in the recent weeks Bitcoin has dropped a significant amount.

Q4 2021 hedge fund letters, conferences and more

Disclaimer: This is a satirical article.

Investors Dump Money In Bitcoin

Some investors frantically sol...



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Phil's Favorites

Indiscriminate selling

 

Indiscriminate selling

Courtesy of 

There are a few green stocks in the market today, and by “a few”, I mean you can count them on two hands and still have a few fingers left over. To gag yourself with. Those green stocks are things like Kohl’s (a special situation takeover story) and then it’s like grocery stores and shoe cobblers. That’s really it. Tesla is being absolutely mangled, which tells you which type of mutual funds and ETFs are being redeemed (liquidated?) today.

I have some buy limit orders in at completely out...



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Zero Hedge

Asian EM Stocks Clubbed Into Corrections As Monetary Tightening Takes Away Punch Bowl

Courtesy of ZeroHedge View original post here.

Major equity indexes in Asia are approaching or have already entered corrections as central banks (ex-China) prepare to hike this year. 

On Tuesday, Andrew Tilton, the chief Asia-Pacific economist at Goldman Sachs, told clients that Asian central banks (ex-China) would join the so-called "normalization train" with other monetary authorities and begin to hike interest rates in the second half of the year. 

Tilton points out that emerging market policy tightening is well underway. This means EM assets will face a challenging macro backdrop as elevated valuation...



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Biotech/COVID-19

How mRNA and DNA vaccines could soon treat cancers, HIV, autoimmune disorders and genetic diseases

 

How mRNA and DNA vaccines could soon treat cancers, HIV, autoimmune disorders and genetic diseases

Nucleic acid vaccines use mRNA to give cells instructions on how to produce a desired protein. Libre de Droit/iStock via Getty Images

Courtesy of Deborah Fuller, University of Washington

The two most successful coronavirus vaccines developed in the U.S. – the Pfizer and Moderna vaccines – are both mRNA vaccines. The idea of using genetic material to produce an immune response has opened up a world of research ...



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Politics

5 things to know about why Russia might invade Ukraine - and why the US is involved

 

5 things to know about why Russia might invade Ukraine – and why the US is involved

Courtesy of Tatsiana Kulakevich, University of South Florida

U.S. President Joe Biden said on Jan. 19, 2022, that he thinks Russia will invade Ukraine, and cautioned Russian president Vladimir Putin that he “will regret having done it,” following months of building tension.

Russia has amassed an estimated 100,000 troops along its border with Ukraine over the past several months.

In mid-January, Russia began moving ...



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Kimble Charting Solutions

Nasdaq Erases 7 months of Gains With Sharp Decline! Just Getting Started???

Courtesy of Chris Kimble

The tech wreck has been fast and furious. And considering that the stock market correction is still relatively new, we really don’t know if it will end soon or carry on for weeks/months.

Today’s chart is “linear” and takes a long-term “monthly” view. As you can see, the Nasdaq Composite Index registered a bearish monthly reversal at the top of the channel at (1).

And in the first 21-days of the year, this broad index of technology stocks has wiped out the prior 7 months of gains!...



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Chart School

Bitcoin Swings Down to Support

Courtesy of Read the Ticker

Come on! Seriously do you think a 400% rally for Bitcoin was going to be given to the public easily. Without any pain! Come on muppets!



The uniformed (public) buy when price is rising or breaking new highs, the informed buy when price is falling or breaking lows.



The informed have to do it this way as they are large volume players and the only way they can buy large volume is to create chaos. The chaos brings to the market the weak holders and a forced sell. Price is moved to where the volume can be accumulated, in a bull trend that is down to critical support.



Of course if price is in a true bull market the 'chaos' created should not break critical long term trend signals, ...



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Digital Currencies

The metaverse is money and crypto is king - why you'll be on a blockchain when you're hopping

 

The metaverse is money and crypto is king – why you’ll be on a blockchain when you’re virtual-world hopping

In the metaverse, your avatar, the clothes it wears and the things it carries belong to you thanks to blockchain. Duncan Rawlinson - Duncan.co/Flickr, CC BY-NC

Courtesy of Rabindra Ratan, Michigan State University and Dar Meshi, Michigan State University ...



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Promotions

Phil's Interview on Options Trading with TD Bank

TD Bank's host Bryan Rogers interviewed Phil on June 10 as part of TD's Options Education Month. If you missed the program, be sure to watch the video below. It should be required viewing for anyone trading or thinking about trading using options. 

Watch here:

TD's webinar with Phil (link) or right here at PSW

Screenshots of TD's slides illustrating Phil's examples:

 

 

&n...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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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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