"A Few Signs of Caution"

Seems like posts about market direction are becoming a dime a dozen lately. Amidst an environment of strong conviction by so many, I think it is important not to let your thesis overlook price.

I figured I would share a few reasons why I have become cautious on this market.


$QQQ- Start with the Nasdaq which seems to be showing signs of distribution on the daily. I will be watching how price reacts to the $64.50-$65 area which is a confluence of price support and moving average support.

$SPY- The macro trend from the 10/04 low was breached recently, which changed my point of view from an uptrend to a neutral trend. The more recent price action has illustrated a bear flag on the daily. A break below $137.50ish, more importantly 1370 on the S&P cash would be a sign of weakness for me. Both the 10 and 20 period moving averages had served as support and were broken. As price negotiates the 50 day moving average we are not seeing much of a bounce.

$AAPL charts are all over the place; however it has led this monster run the entire year. Flirting with the 50 day and looks heavy, we'll see how earnings look. However, the recent distribution is definitely a sign of caution for me.

$JJC- Lastly, king copper recently broke below its recent trading range which is another sign of caution in my opinion.

Could we rip higher this week and fool a number of people including myself, sure. However, as long as we are below the 10 and 20 period moving averages with few signs of accumulation on the S&P I will remain cautious.


"The less I cared about whether or not I was wrong, the clearer things became." --Mark Douglas

How a Photo and Social Media Inspired a New Passion and Hope

A few months back one of the traders I follow on a regular basis posted a vacation picture from Cinque Terre Italy. In looking at the photos I would be hard pressed to find a more amazing landscape. Although Italy had always casually awed me with respect to culture, history and family tradition I had never gone much beyond hand me down traditions and here say stories. A combination of the sheer beauty of the photo, an unending interest in Italian cooking and an excuse to escape studying for a professional certification exam sparked an unimaginable curiosity I had never expected in my wildest dreams. And so I began my journey into learning Italy through casual reading, followed by sharing my new found passion with friends.

The entire situation still strikes me funny, as I would have never expected an individual I have never and likely will never meet spark months of unparalleled curiosity in my life. None the less, many months later, my passion to learn Italian culture is only becoming stronger and more enjoyable. The journey has taken a strikingly similar path as my interest in trading did, which began with casual reading on my own, followed by a need to share my passion with friends of similar interests and exchange ideas and information. 

Aside from the enjoyment I get from learning a unique and amazingly interesting Italian culture which I will likely post about going forward; I also find reprieve in the social forces of my generation that enabled such passions to foster. I’m still not sure whether or not the ease with which I was able to find friends with comparable passionate interests to mine a result of chance, or a representation of our generation.

However, being the relatively optimistic person I am, I’d like to think it speaks to the potential of our generation. The aforementioned individuals I had encountered along my adventures of trading and learning Italian culture had a head start on their respective learning curves. Both were exceptionally receptive to my new found interest and willing to fulfill my curiosity on a recurring basis that most would take to be obnoxious. They had both exploited the wealth of information available to our generation through 24/7 internet access, blogging, social media, tangible experience and were more than willing to collaborate on their findings with me.

Is it merely a coincidence to find such individuals? Maybe.  Is it just a one off example of a group of college students amidst many within our society without such privileges? Maybe. Or do these peer mentors of mine speak to an example of the value within the structure of our generation and the passion, intelligence, willful collaboration and generosity of the generation to come. Let’s hope.

Thanks for your help.

Idea for the post inspired by Barry Ritholtz

http://www.ritholtz.com/blog/2012/04/the-future-of-america/?utm_source=dlvr.it&utm_medium=twitter

"The Value in Getting Away: A Subtle Lesson of Stocktwits"

Being a relatively new trader with only a handful of years’ experience I’ve attempted to learn the business in a wide variety of forms. Whether it be academic and theoretical ideology, “Security Analysis”, Livermore, O’neil etc, I have at least considered most of the frameworks.  However, one area of the business that often goes without discussion is mentally removing oneself from the trading.  As a young trader trying to develop a concrete strategy, it is easy to become completely mentally immersed in trading. Prior to my encounters with Stocktwits I had overlooked the importance of completely removing myself from the business on a recurring basis.

In addition to providing great value in terms of idea generation, one of the more subtle lessons of trading presented on the stream is the mental game of trading.  Although Mark Douglas does an amazing job discussing the psychology of trading, there is limited literature on the importance of detaching yourself from trading.  In following traders such as @gtotoy, @jfahmy, @daytrend, @howardlindzon etc I’ve observed the value they all seem to place on “getting away.”

@gtotoy is among the most consistent and transparent traders on the stream in my opinion. In following him, I’ve noticed he regularly discusses the joy he gets in getting away regularly. I’ve observed @daytrend discussing that by the end of the week traders should be mentally exhausted and in need of getting away (like making a killer BBQ that makes me hungry every time). @jfahmy has always provided comic relief throughout the week on the stream. While @howardlindzon adds to the Instagram valuation by posting his feet on Coronado Beach.

Since I’m not a fan of preaching I will wrap it up quick. I think it is easy to become completely immersed in this business, especially as a new trader. In following more experienced traders, I’ve learned a subtle lesson that it is not widely discussed. Having the where with all to escape is important for traders of all levels and skill sets.  This is not to say working hard is not a good idea. I’m sure I can speak for most in saying that trading requires a significant time commitment; however it cannot and should not be one’s end all in my opinion.