A post today on the Trader’s Narrative blog presents the figures of how the US stock market trades around the Thanksgiving holiday (that’s Thursday coming up for you non-US readers). The main thrust of it is: The markets tend to be in a good mood the week before holidays, since 1950, the S&P 500 is 40-19, up 67.85 of the time during the four day week (including Friday) of Thanksgiving for an average gain of 0.78% On average, all of those gains come on the two days surrounding Thanksgiving, which are 51-8, up...

The following comment, sent to me by email, and referring to the Market Wizards and The New Market Wizards books, strikes at the very heart of why so many folks end up crashing and burning when it comes to trading, or take longer than necessary to reach a reasonable level of success. They are not worth reading. None of the wizards share any of their strategies. A complete waste of time in my opinion. First of all, the statement that none of the wizards share their strategies is technically incorrect. William O’Neil from...

The folks on CNBC and elsewhere in the media are all over the fact that the Dollar Index got below 75 yesterday, the lowest level since August 2008 (the lowest point was about 70.70 in March 2008). Yes, the dollar has been weakening pretty consistently from the time stocks turned north in March, but there’s something you need to be aware of here. The dollar index is more than half weighted to the euro. Here are the weights as per this document from the ICE. Euro = 57.6% Japanese yen = 13.6% British pound = 11.9% Canadian...

Talking heads abound in the markets. There are corporate CEOs and other high-level officers. There are central bank members. There are treasury and ministry of finance officials. There are heads of state. There are prominent money managers, economists, and other professionals. Opinions and philsophy and ideas come at us constantly. Personally, I mostly ignore those offering opinion. Generally speaking, those folks aren’t the type of decision-makers who will actually drive prices. The government and central banks speakers,...

My British and Aussie/New Zealand readers will understand the above headline, as will those who have spent any time (as I have) with friends or colleagues from there. The rest of you will figure it out quickly enough as you read on. No, it isn’t about urine! :-) Actually, I’m not talking about the whole of Goldman Sachs here. It’s just one analyst based in London (I believe), but does demonstrate that not everyone who works for the company is brilliant. A colleague of mine sent along this story Goldman’s...

Then walk a way now, cause it ain’t going to happen! My focus, and the focus of this blog, is trading education. It isn’t, and will never be, trading signals or anything like that. It’s that whole give a man a fish, teach a man to fish thing. If I tell you what to do and when to do it then basically I’m just managing your money for you. If that’s what you want, give your money to someone to run on your behalf or put it in to a fund. You’re not looking to be a student.  I’m here to help...

A lot of traders have been utterly confounded by the way things have been playing out in the markets lately. In particuarly, I have seen numerous questions as to why better than expected economic data – like last week’s Q3 US GDP reading – is actually seeing the dollar get sold off rather than bought. The question these traders and investors have is “Why is good news not good for the dollar?” First of all, I’ll repeat what I’ve said many, many times now: In the current market cycle, good...

While I’m no longer a stock market analyst (I’m focused on forex these days), I still keep my eye on what’s happening in equities. It is, after all, a big inter-linked financial world. One of the things I watch when looking at the big stock market picture is the Advance/Decline line. Basically, that’s a measure of how many stocks have risen vs. how many have fallen on a given day. Because there can be big swings day to day based whether the market is up or down, most A/D lines do something to produce...

I’ve mentioned the Commitment of Traders data on a few occasions previously in terms of its usefulness for tracking the positions market participants are carrying in the futures market (see Commitment of Traders – A Weekly Report Worth Viewing). The action in the British Pound of late provides a pretty impressive example of how you could have seen ahead of time the prospects for a big reversal were you tracking the COT figures Take a look at how short the big traders had gotten in BP futures. Notice in particular the...

I got the question in the title of this post from a “fan” of The Essentials of Trading Facebook page. If you’ve followed this blog for any length of time you know that the topic of stops and how to use them is a frequent concern among new and developing traders (for example Where should I put my stop and take profit orders?). Let me approach this from a couple different angles. The market will come back If you are not using stops because you “know” the market will eventually come back you need a...

Note: This is a cross-post. It was initially put up on the Currensee blog. The Commodity Futures Trading Commission (CFTC) produces, on a weekly basis, something known as the Commitment of Traders (COT) report. The COT report breaks down the futures (and options) open interest as of Tuesday each week in terms of what positions are being held by the different categories of traders. Traders have been using this information for many years to see what the smart money (and dumb money) is doing in the markets. (For more information...