May 6, 2021
In 1896 Charles Dow pioneered the idea of stock indexes with his creation of the Dow Jones Industrial Average. He viewed the basket of big industrial companies as a proxy for economic health. Soon after, he built the Dow Jones Transportation Average to track railroads and other related companies.
April 30, 2021
Yesterday we explored using a price filter to weed out fakeouts. Today we’re looking at time filters.
If a stock breaks above resistance but only remains there for five minutes before plunging back below the ceiling, then was it a legit breakout?
April 29, 2021
One way to increase your ability to spot real breakouts versus their fake counterparts is to use a price filter. Say a stock has resistance at $50. If prices rally to $50.01, are you confident it’s a legitimate breakout?
The market is not a scientific machine. It’s a game run by emotion-riddled, biological beings. Support and resistance are zones, not prices to the penny. As a result, it’s often best to wait for slightly more confirmation to avoid getting suckered into trades on noise.
April 23, 2021
By Greg Holmes
There are a couple of questions that come up often from traders that are new to the game. Those questions are “what” I am supposed to with my trades when the market misbehaves? This question usually comes when one gets into a trade without truly understanding both the mechanics of the trade and more importantly how to manage the trade. This can include closing out the trade or in the case of options, changing the trade into something more appropriate for the changing markets.
April 22, 2021
By Greg Holmes
Have you ever scrolled through charts of the same stock in different time frames and noticed that even though the candles are the same colors and often the same size and even sometimes in a similar trend or pattern that the view looks very strange?
April 16, 2021
Stocks are the ultimate wealth generator. If someone with a long time horizon asks me when the best time is to buy them, my answer is always “now.” History bears out the wisdom of this response. The longer your sit in cash, the greater your underperformance.
April 15, 2021
Today’s message complements yesterday’s Tackle Today, highlighting the S&P 500’s high P/E ratio. Here’s how I think about valuation. It matters little, if at all, in the short-run (say, 1 year). But it does matter some in the intermediate-term (5 years).
April 9, 2021
There isn’t always a direct link between the economy and the stock market, but historically stocks have a tailwind when the economy is rockin’. This sentence is neither earth-shattering nor illogical. And yet, some will say that the stock market has already priced in the post-pandemic boom.
April 8, 2021
When I was a new trader, I rarely looked to the horizon. Instead, my gaze was set a few steps in front of me. My trade duration was minutes to days, not weeks to months. In my youth, I cared little for the tide. It was all about surfing each wave.
April 1, 2021
I’m writing this on a day where the Russell 2000 Index dropped 4%. The bloodbath reminds me of a stellar Peter Lynch quote. He was a rock star fund manager that ran the Fidelity Magellan Fund from 1977 to 1990. Over that time, he averaged a 29.2% annual return which more than doubled that of the S&P 500. He also wrote a classic book called One Up on Wall Street.
March 26, 2021
There are two paths to investing for the long run in the stock market. The first is diversified; the second is concentrated. You can buy the entire market through an ETF or mutual fund, or you can buy individual stocks.
March 25, 2021
Does it make you nervous when you see headlines about how stocks are at all-time highs? Do you conflate “high” with “risky” and “low” with “safe?” If so, knock it off. It isn’t true. At least not in the short run.
March 19, 2021
A subset of technical analysts focus on seasonality or the historical patterns that play out at certain times of the year. One of the more popular measures known as the January barometer states, “As goes January, so goes the year.”
March 18, 2021
Guess which asset didn’t get touched during the pandemic—residential real estate. Not only did housing prices not turn lower, in most cases, they rocketed to the moon. It’s undoubtedly a win for homeowners. Home equity is multiplying. And, historically low interest rates allowed for refinancing and the reduction in borrowing costs.
March 12, 2021
Interest rates drive the cost of capital and are an integral input to countless economic models. From a trading perspective, the direction of rates can pull money from one sector while pushing it into another. I’ve seen dozens of charts in my day which illustrate the concept of sector rotation.
March 11, 2021
By Greg Holmes
There is a phenomenon in trading that involves the two evils of trading. Those evils of trading are fear and greed. We have talked many times about these two forces and the damage they can do to a trader’s psyche and their respective trading capital.
March 5, 2021
Part of the education and application process of a trader is learning how to adjust to different market conditions. Markets do not always go straight up as has been the case since the November elections. At times we will experience bearish and neutral conditions too.
March 4, 2021
Today let’s dive into the application process of trading. Most people want to bypass the education and just directly into clicking buttons. I won’t lie, I was one those people. trick. I quickly learned that the easiest part about trading is clicking the button to buy or sell. What happens after that is what I wasn’t prepared for but I quickly learned.
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