Posts Tagged ‘Round Numbers’

Irrational Numbers: Price Clustering & Stop Losses

Irrational Numbers: Price Clustering & Stop Losses

Courtesy of Tim at The Psy-Fi Blog

Professor holding astronomical globe

Universal Number Theory

One of the odder things about the universe is that the small set of numbers that define its structure, the so-called universal constants, don’t seem to have any structure of their own. You’d have thought that whatever immortal deity breathed life into the whole shebang would have at least have bothered to make sure that reality was defined in simple integer values your average gameshow contestant could remember. Yet someone’s just calculated Pi to more decimal places than you can read in a lifetime. The universe is strangely irrational, it would seem.

More likely, however, is that the irrationality lies in our heads. If you look at the way we treat numbers for investment purposes it’s probably a good job the infinite cosmos is specified in irrational numbers, because if it were otherwise we’d probably have sold it to the lowest bidder eons ago. Humans, it seems, treat numbers as an approximation to reality, unlike reality, which treats humans as an approximation to nothing.

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That Friday 13th Feeling

Under standard economic theories one price should be much the same as another but all experienced practitioners know that this isn’t so – some numbers are much more likely to occur than others. Anyone with even a basic appreciation of behavioural psychology would expect no more or no less – people are as arbitrarily inconsistent about numbers as they are about everything else. In western culture, for instance, thirteen has acquired negative connotations to the point where many tower blocks omit the number from their floor numbering plans, presumably on the grounds that the universe can’t count. Beware, for fourteen is the new thirteen. Ha!

Despite the obvious irrationality of ascribing luck to a number many people are petrified of Fridays falling on the thirteenth of the month. Such is the human propensity to translate mental muddle into actual behavioural nonsense that it turns out that more accidents do occur on these days. So either there’s a malevolent demon tripping us up or our incipient fears are causing us to fall over our own feet. Mental confusion in our heads often turns into real problems in the real-world.

metallic zero

Round Number Attractions

It’s no surprise to find this numerological naughtiness feeding across into investment,…
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Eight Trading Superstitions

black cat

Every profession has its own idiosyncratic superstitions.  In honor of tomorrow being Friday the 13th, I thought this would be a good time to discuss this topic.

Actors performing MacBeth will refer to it only as “The Scottish Play” for fear of being crushed by a stagelight.  Sailors never set foot on a boat with their left foot first.  The baseball player is perhaps the most tormented by ritual, from tapping the bat on home plate to never stepping on a foul line to the prolonged use of a lucky bat or glove way past what its condition warrants.

Traders and investors have their own set of superstitions, and these can seem every bit as silly as those we see in other walks of life.  That said, trading superstitions are very tough to let go of, even for the most logical and circumspect of market players. 

Let’s look at a few of them:

Never Sell a Stock Crossing 90 – There is a widely held belief that you never sell a stock you own as it crosses $90 per share because they almost always go straight to $100.  This concept is demonstrably specious, but I know 20-year veterans who will never be convinced otherwise.   

The Maiden Sacrifice to the Volcano - In times of market turmoil or in the midst of a heavy sell-off, many portfolio managers and investors believe that they have to blow out one position to appease the market gods, tossing a maiden into the volcano so that the island will be spared the wrath.  This thinking is as primitive as you get, but sometimes it feels good to toss out some AK Steel on a down 200 point day only to see the market rally.  If this happens once or twice, logic aside, you will swear by it.

Options Expirations/ Triple Witchings - “Never buy or sell on the third Friday of the month which is when monthly stock options expire.  And no matter what you do, stay away from everything on the four Triple Witching days of the year, when stock option, stock index options and stock indexes futures all expire together.”  Obviously absurd, but deeply ingrained in many investors.

Don’t Go Back Into a Stock the Third Time – This is a variation on the old “sticking your hand


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Zero Hedge

More States Are Seeing Unused COVID Jabs Pile Up As Poor Countries Shut Out

Courtesy of ZeroHedge View original post here.

The other day, we reported on an interview with from Dr. Scott Gottlieb, a former director of the FDA under President Trump who frequently appears in the press to offer analysis and commentary on the rollout of the COVID vaccine, along with federal COVID policy more broadly.

Yesterday, the focus of the interview was a criticism lodged by Dr. Gottlieb against the Biden administration's target of 200MM Americans vaccinated by the end of the month. Hours after our post, Bloomberg News shared a startling piece of analysis: Across the US, unused vaccines ar...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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Phil's Favorites

Scorpion Capital Calls a New York Stock Exchange Listed Company a Fraud

Courtesy of Pam Martens

New York Stock Exchange

On April 1 we wrote the following about the sorrowful state of the listing standards at the New York Stock Exchange:

“We rarely make predictions but we’re going to make one with confidence today. The New York Stock Exchange’s efforts to capture more market share of the IPO business by listing highly questionable Chinese companies and blank-check companies (...



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Biotech/COVID-19

Scientists are on a path to sequencing 1 million human genomes and use big data to unlock genetic secrets

 

Scientists are on a path to sequencing 1 million human genomes and use big data to unlock genetic secrets

A complete human genome, seen here in pairs of chromosomes, offers a wealth of information, but it is hard connect genetics to traits or disease. HYanWong/Wikimedia Comons

Courtesy of Xavier Bofill De Ros, National Institutes of Health

The first draft of the human genome was publ...



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Chart School

Money Printing Asset Price Targets

Courtesy of Read the Ticker

The FED giveth and the FED taketh away. Right now the FED is giving a lot into 2022 US Mid Terms. 

Unless the FED breaks the market, here are some BRRRRR asset price targets, not normal price targets but money printing adjusted price targets. 


BITCOIN 175,000 to 500,000 USD

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DOW to 40,000 to 50,000

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More DOW

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Politics

Colombia gives nearly 1 million Venezuelan migrants legal status and right to work

 

Colombia gives nearly 1 million Venezuelan migrants legal status and right to work

Venezuelans wait at the Colombian border to be processed and housed in tents in 2020. All Venezuelans now in Colombia will receive a 10-year residency permit. Schneyder Mendoza/AFP via Getty Images

Courtesy of Erika Frydenlund, Old Dominion University; Jose J. Padilla, Old Dominion University...



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Kimble Charting Solutions

Will Historic Selloff In Treasury Bonds Turn Into Opportunity?

Courtesy of Chris Kimble

Long-dated treasury bonds have been crushed over the past year, sending ETFs like TLT (20+ Year US Treasury Bond ETF) spiraling over 20%.

Improving economy? Inflation concerns? Perhaps a combination of both… interest rates have risen sharply and thus bond prices have fallen in historic fashion.

Today’s chart looks at $TLT over the past 20 years. As you can see, the recent decline has truly been historic. $TLT’s price has swung from historically overbought highs to oversold lows.

At present, the long-dated bond ETF ($TLT) is trading 7.8% below its 200-...



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Digital Currencies

Crypto - The Beginning of The Beginning... and the Coinbase IPO

 

Crypto – The Beginning of The Beginning… and the Coinbase IPO

Courtesy of Howard Lindzon

I am starting to say the ‘beginning of the beginning’ a lot.

Last month I used it in a blog post about active investing.

Bitcoin and Ethereum are a main reason I believe we are at the beginning of the beginning of active investing and the Coinbase ($COIN) direct listing tomorrow [Apr. 14] is likely why we are still just at the beginning of the beginning of crypto and decentralization.

If it was t...



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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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Promotions

Phil's Stock World's Weekly Webinar - March 10, 2021

Don't miss our latest weekly webinar! 

Join us at PSW for LIVE Webinars every Wednesday afternoon at 1:00 PM EST.

Phil's Stock World's Weekly Webinar – March 10, 2021

 

Major Topics:

00:00:01 - EIA Petroleum Status Report
00:04:42 - Crude Oil WTI
00:12:52 - COVID-19 Update
00:22:08 - Bonds and Borrowed Funds | S&P 500
00:45:28 - COVID-19 Vaccination
00:48:32 - Trading Techniques
00:50:34 - PBR
00:50:43 - LYG
00:50:48 - More Trading Techniques
00:52:59 - Chinese Hacks Microsoft's E...



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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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