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Thread: Interesting Links

  1. #51
    Join Date
    Dec 1969
    Location
    Seattle, Washington USA
    Posts
    151

  2. #52

    Radio interview with Ed Hornstein

    http://www.tigeruniversity.com/mp3/SCR010512.mp3

    Link to a short radio interview of Ed Hornstein by Kate Stalter, formerly of IBD. The interview starts about two thirds of the way through.

  3. #53
    Join Date
    Dec 1969
    Location
    Brussels, Belgium
    Posts
    1,999

  4. #54

    Ed Hornstein's latest.

    A New Year has dawned upon the market, but not much has changed since late last
    year. For the reasons I describe below, I continue to play this market
    defensively until I see more characteristics indicative of a bull market move.

    First and foremost, an examination of historical follow-through days shows that
    the market's recent follow-through should be treated with caution.

    We know that no bull market begins without a follow-through day and that around
    two thirds of follow-through days lead to bull moves. However, what we also
    know is that over 85 percent of successful follow-through days have occurred
    BEFORE day 17 of an attempted rally. The December 20, 2011 follow-through day
    occurred ON day 17 of an attempted rally. At the outset, the odds of this
    follow-through day leading to a large bull market move are somewhat diminished
    to begin with.

    Of course, later follow-days have occasionally worked. On August 15, 2006 the
    major indices flashed a 21st day follow-through day that led to a giant bull
    market for growth stocks. Even after that follow-through, the "fat pitch" for
    the growth investor did not kick into gear until almost five weeks after the
    follow-through day when former leader RIMM (on its earnings report on September
    29, 2006) gapped out of a base on stellar volume. That one stock was the "go"
    sign for growth investors, and thereafter a plethora of other growth stocks
    staged powerful breakouts. Prior to the RIMM breakout, growth stocks were
    meandering around and simply base-building -- other than a few select stocks
    such as MA and CPA which broke out around the August 15th follow-through day.

    In any event, even when a delayed follow-through day in 2006 worked, growth
    investors were rewarded only if they exhibited patience and waited for the "fat
    pitch" around ten weeks after the market bottomed and five weeks after the
    delayed follow-through day. As I describe below, we have not entered a sweet
    spot for growth investors, which means that plowing into this market is anything
    but a prudent approach.

    Second, most strong markets follow-through very quickly off their lows (usually
    as early as days 4-7 of attempted rallies), and display more then a few
    breakouts in growth leaders around the time of the follow-through day.

    For example, during the days surrounding the market's March 17, 2003 follow
    through-day (which unofficially ended the 2000-2002 bear market), leaders CME,
    AMZN, CRDN, GRMN, and YHOO broke out of basing patterns and began their price
    accelerations on heavy volume. A similar phenomena occurred on September 1,
    2010, when the market-followed through on the fourth day of a rally attempt, and
    leaders CMG, SINA, AAPL, AMZN, NFLX, RVBD, and PCLN all broke out of bases in
    the days surrounding market's follow-through.

    The key concept here is that successful follow-through days generally contain
    growth stocks moving into new highs around the time of the follow-through day,
    leaving anyone but the quick and astute speculator far behind.

    Focusing on the current market, there were virtually no stocks breaking out on
    good volume around the December follow-through day. Instead, defensive areas
    have provided leadership such as food and beverage stocks, utility stocks,
    consumer staple stocks, and tobacco companies such as MCD, PG, WMT, MRK, KFT,
    PFE, AMGN, PM, CVS, ABT, UNH, HUM, AEP, NEE. Indeed, the IBD growth indices
    have outright lagged the general market indices and defensive names. Bull
    markets generally show the opposite trait.

    Third, three months removed from the market's October bottom, leadership is
    virtually nonexistent (with a few recent exceptions that I describe below). This
    is further underscored by the paltry number of 52-week highs in the market. If
    you remove the various close-end funds from the new high list, it continues to
    look nothing like what it should from an important market bottom. Until the list
    expands considerably, caution is warranted for the intermediate speculator.

    Fourth, bull markets generally begin with healthy skepticism and negative news.
    While the news generally has been negative for the past few months, sentiment is
    anything but negative. Indeed, the latest reading from the AAII recorded one of
    the lowest prints for bearish sentiment in the past few years. Only 17 percent
    of respondents had a bearish view of the market environment, and almost 50
    percent of respondents are bullish (which is one the highest levels in almost
    one year).

    The high level of bullishness and low level of bearishness flies directly in the
    face of people that believe that the market "has to" rally because everyone is
    so negative. First, the market never has to do anything at all. Second, with
    the level of bears at historic lows (at least as read by the AAII), it suggests
    that most people have not treated this rally with healthy skepticism. Throw in
    the steep sell-off in the VIX, (although it still is not very low by historic
    measures) and clearly there are higher levels of complacency and bullishness
    than one would generally want to see at the outset of a new bull market.

    Fifth, an examination of s and p 500's monthly chart shows that its 12-month
    moving average has almost always contained every bull and bear market going back
    to 1994. From 1994-2000 the s and p only closed two months below its 12-month
    moving average. In 2002-2002, the 12-month moving average contained the entire
    bear market. The moving average also contained the entire 2003-2007 bull
    market, and the ensuing bear market from 2008-2009, as well as the 2009-2011
    bull market (with a quick closing undercut in the summer of 2010). Presently,
    the s and p is just shy of its 12-month moving average, so this should be
    watched closely. A failure at this level would bode ill for the bulls, however
    a monthly close above this level would be extremely bullish.

    Lastly, January historically has been one of the trickiest and sloppiest months
    to get a read on trends, as the market's action can usually best be described as
    "Jell-o moving on the plate". The first week of January 2012 has been no
    exception. In addition, markets often run up in early January only to roll over
    hard later in the month or early in February. January can often give false
    senses of hope to the bulls, so some caution is certainly prudent until earnings
    season kicks into gear later this month which should give us a better read on
    the intermediate and longer term trends of the market.


    Despite the reasons to maintain a defensive posture at the moment, there have
    been some positive developments in the market during the past few weeks.

    First, most of the major indices have retaken their longer term 200-day moving
    averages. The longer these indices stay above these levels, the more likely the
    200-day moving averages can become support instead of resistance.

    Second, while new highs and breakouts remain lacking as a whole, there have been
    a few areas starting to assert themselves in recent days such as medical stocks
    (ALXN, SLXP, CBST, CNC, ISRG, BIIB, JAZZ), and oil stocks (SNP, ATLS, CLR,
    AREX). In addition, a few growth leaders broke out recently and held their
    breakouts such as GOOG, ISRG, and SCSS. While it remains a rather narrow tape
    for leadership and new highs, it has expanded a bit in the past week few weeks.

    Finally, an increasing number of stocks have tightened up in their basing
    patterns and/or climbed the right sides of potential bases such as LULU, NUAN,
    LQDT, CFX, TYL, PNRA, BWLD, CMG, WFM, AAPL, SYNA, MELI, KLAC, NKIE, UA, COH,
    MELI, SNDK, QCOM, DE, MON, JBL, INTC, IGT, and SLAB). If some of these stocks
    can stage breakouts on volume in the coming weeks, it should bode well for an
    improved market environment.



    In sum, a defensive posture and a decent amount of cash reserves remain the best
    bet for the intermediate speculator at the present time. In spite of the fact
    that the indices continue their assent higher in the short-term, the evidence at
    hand suggests that the market lacks power, leadership, and many other
    characteristics of a healthy bull market move. If things change (WHICH THEY CAN
    IN A MATTER OF DAYS), I will provide a timely market update.

    This email was sent by Edward Hornstein, 60 east 42nd street, suite 1144, ny,
    NY 10165, using Express Email Marketing.

  5. #55
    Join Date
    Jan 1970
    Location
    New York, NY
    Posts
    191

    Great Article on VIX

    Tom Preston on of the smartest minds in the option business - I believe double PhD's and a successful pit trader for decades wrote I think a great article on the VIX.

    http://www.thinkmoney-digital.com/th...inter2012#pg12


    Enjoy the weekend,

    Ernst

  6. #56
    For members in the NYC area, this event is coming up:

    http://www.moneyshow.com/tradeshow/n.../traders_expo/

  7. #57
    Join Date
    Jan 1970
    Location
    New York, NY
    Posts
    191

    Five signs you have matured as a trader


  8. #58

  9. #59
    Join Date
    Dec 1969
    Location
    Kalmthout, Belgium
    Posts
    35
    Understanding the Link Between Volatility and Compound Returns :

    http://cssanalytics.wordpress.com/20...pound-returns/

  10. #60
    Join Date
    Dec 1969
    Location
    Kalmthout, Belgium
    Posts
    35

    Equity Curve Control - part 1

    http://www.chartmill.com/documentati...+Curve+Control

    The truth is a once working system (ok if it’s not merely based on a technical arbitrage) never dies. It merely runs in and out of synch with the market.

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