Reflections Looking Back at 2013 & Forward to 2014

In today’s video, I share my new year reflections as we enter a new year of trading and life.

Topics covered include current trading rhythms, Expo thoughts, reflections and feedback to the book, platform updates, and seeking ideas for further trader innovations for the new year.

Links referenced in the video include the 2007-09 diary blog, our Trading After Dark efforts, FuturePath Trading (Photon platform), World Vision, and live Jellie training effort.

Please email any trader enhancement suggestions or interest in a 1st Quarter live Jellie training effort to me at don@donmillereducation.com.

Don Miller’s S&P Trading Tank

I Bought Oracle Today – Here is Why

Written By: DragonFly Capital

Oracle climbed steadily between the 2009 low and May of 2011. Since then it had been consolidating in an ascending triangle which it broke out of 3 weeks ago. I missed the initial break out but you can see from the chart below that it carries a target of 48 still $ 10 higher than the current price. The problem then is how do you enter the stock. You could always just

orcl w

buy and use a trailing stop. But I prefer to look for a good technical entry. This happened today. If you switch focus to the daily chart below you will see that after the initial break higher the stock pulled back, in a bull flag. It broke the flag on Tuesday and today, Wednesday, it poked its head above the previous high. This was my trigger. You can look at it as a double trigger. Over the flag and over resistance. This also gives you a natural stop loss level under the bottom of the flag. So don’t just give up on a stock if you missed the initial signal. It may give you another opportunity if you are patient.

orcl d

Don’t forget to download A Longer Perspective, my take on 12 broad markets for 2014 and beyond, for the price of a latte.
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Who appreciates the Dave Eggers book “The Circle”?

Folks: Who else is reading The Circle? The ideas for technological innovations are banal (video cameras everywhere, RFID tags inside humans) but I like the way that the interior life of the mega-corporation and the ambitions of its employees are painted. (The company is a combination of Google, Facebook, Twitter (“Zings” instead of “tweets”!), and PayPal.)

I’m about one third of the way through, listening as a book on tape, and the Amazon reviews (“well written but pointless”) are encouraging me to return it to the library before I’m finished. Who has read to the end?

[Oftentimes I find that with science fiction-tinged books the author’s best ideas are in the first 100 pages.]

Philip Greenspun’s Weblog

Christmas and New Year’s wrap-up

Here are some snippets of what was on friends’ minds at various Christmas and New Year’s gatherings….

A 65-year-old led off his good news summary from 2013 by pointing out that stocks had reached an all-time high. His cohorts were cheered by reflecting on this. I didn’t want to break their hearts by showing them this chart of the S&P 500 in real (inflation-adjusted) dollars. It turns out that the peak was actually in August 2000. We’re getting close to that high point from 13.5 years ago but we aren’t there yet (i.e., a person who is today 65 and put money away for his or her retirement back at age 52 would still be waiting for a positive return on that investment). Measured in barrels of oil, a good proxy for the kinds of things that a comfortable person might want to buy, e.g., gasoline or airline tickets, things are far worse. Oil in August 2000 was about $ 30 per barrel (source) whereas today it is about $ 110. So the S&P at 1565 in August 2000 would have purchased 52 barrels of oil. At today’s price of 1830, the S&P buys just 16 barrels of oil. What if you wanted to buy houses in the U.S.? The Case-Shiller index was about 100 in August 2000 and is now 150, so you could buy 15.6 houses back then with an S&P 500 position compared to 12.2 today. But people who have big S&P 500 positions don’t typically buy average houses. What about that condo in Manhattan? This source says the cost was $ 522 per square foot in 2000 and it is now $ 1,178. So the S&P 500 has gone from being worth 3 square feet of space in Manhattan to 1.55.

People talked about schools. A father talked about how Cambridge Public Schools (among the world’s most lavishly funded) had by accident managed to create a good Montessori school (Tobin).  Children from Caucasian and Asian families, who could not take advantage of the city’s race-based preference system, had only about a 1 in 4 chance of being assigned to this school, according to this father. But recently the central bureaucrats had removed the principal, who had been beloved by both teachers and parents, and substituted a mediocre replacement. The school was now on a downward slide. A homeowner in Brookline talked about how it was unfair that people were crowding into the Brookline schools: “They used to be great. Now they’re just okay. These people are wrecking it for those of us who have been here for 20 years. There should be a 6-12 month waiting period before you can send a kid into our schools.” A passionate supporter of bigger government and higher taxes on “the rich” to pay for it, this owner of a $ 2 million home in Brookline spoke bitterly about his opposition to “the town considering a property tax override so that they can build a new school.” [Thus proving that most Americans can agree that the fairest tax system is a progressive one where rates are 0% up through whatever their income happened to be in any given year and then 100% above that!]

Despite the trepidation about schools nearly everyone seemed to be happy with how his or her children had turned out. And the kids who were present at these parties were all ones that any parent would be proud to call his/her own. Can our schools really be as bad as the statistics show if the children are turning out so well? [I do realize that this is a biased sample since the parents of these children generally have above-average educations, incomes, etc.]

My friends are mostly getting to the stage of life where they talk about health care for their aging parents. Despite the fact that Medicare was paying all of the bills and no expense or procedure was being spared, they were appalled at what they plainly perceived as disorganization, incompetence, and mismanagement at Boston’s top hospitals, e.g., Mass General. As these friends are mostly not doctors it is tough to know whether the problem is simply one of perception due to the large number of providers involved and the lack of clear communication to the patient and family.

A gathering of pilots and aircraft owners from Hanscom Field was notable for the enthusiasm that everyone displayed for helping young people (some of whom were present) progress towards personal and professional aviation goals. For example, all of the aircraft owners were offering the younger career-building pilots the opportunity to fly their airplanes. It is something that one doesn’t see as much in engineering and I’m not sure why.

[Another notable fact from the pilot dinner was that every man at one table who had been a father in Massachusetts had been sued for child support and, as part of the child support lawsuit, the plaintiff had ratted him out to the state’s Department of Children and Families as a child molester. We learned that this is no longer the default level of pressure applied, however, from a soft-spoken even-tempered guy that we’ve known for years. He was currently going through hearings as a criminal defendant: “The prosecutors around Worcester got a grant from the federal government to prosecute violence against women,” he noted [maybe this program?], “which means that they now go after every man who is accused because they get paid for it. So now all of the child support plaintiffs in Worcester are going to the police saying that they have been beaten up.” The mother of his 11-month-old son alleged that he had grabbed her wrist. “She has no evidence other than her own statement. She doesn’t have any witness to say that I ever yelled at her, threatened her, or touched her. She has no marks on her skin. But anyway my lawyers say that I will still have to go through at least four court appearances as an accused criminal. My plaintiff offered to drop the charges if I would pay her what she is demanding, but it works out to more than 100 percent of my after-tax income.”]

This is the time of year when I have the most contact with MIT Media Lab faculty. The lab seems to have settled into a moderately comfortable middle age (the lab, not the people!), with lots of fairly young faculty who are excited about the work that they are doing. I would say that the success proves the wisdom of Nicholas Negroponte, the founder, who invested heavily in a fancy building that seemed ridiculous at the time. Why did people still searching for a problem to solve deserve a better building than the drawers full of Nobel-prize winners in the Physics and Biology departments? At first glance it might seem that it would be more important to gather the best researchers doing the most important stuff. But it turns out that people are unreliable. Their ideas might not pan out. Their ideas might pan out so well that they get hired away by other institutions. What can be relied upon, however, is the persistence of a massive and deluxe building near the heart of the MIT campus. If you have a nice building at a good university you can always hire creative people to fill it.

Hardly anyone was worried about economic security. Each couple [couples with kids hardly ever seem to invite anyone who isn’t part of a couple] had at least one person with a reasonably well-paid job and usually both adults in a household were doing well in a career. The folks who seemed to have the toughest time finding a rewarding new job when necessary were older (50+) software engineers with no management experience. Their technical skills were excellent but despite the shortage of capable programmers, employers were more interested in hiring managers that age, not individual programmers.

Some people talked about books that they were writing but I don’t remember anyone talking about a book that he or she was reading. People who had been passionate 25-year-old consumers and then discussers of books, movies, theater, concerts, etc. are either no longer reading or no longer bothering to talk about what they read. (Right now I am reading a biography of Calvin Coolidge so maybe it is a good thing that people my age apparently don’t talk about what they are reading!)

It was in shopping for bagels to serve to my own guests that I met my personal hero for 2014. The trim man of about 40 behind the counter at the Harvard Square Dunkin’ Donuts filled a bag with 18 bagels then asked “Is there anything else that you want?” I began mentally going through the list of all of the donuts on display, starting with “Boston Kreme”. This led to a conversation on the subject of temptation versus willpower and he mentioned that he had once weighed 300 lbs. If he can lose 150 lbs. and keep it off while standing right next to 20 baskets of donuts, shouldn’t it be possible for me to keep a single New Year’s resolution?

A belated Merry Christmas and Happy New Year to all of my readers!

 

Philip Greenspun’s Weblog

STTG Market Recap January 13, 2014

The markets ho hum attitude took a bit of a hit today; Friday we wrote “Technically until we see some sort of high volume selloff that breaks the current trend there is no change in the outlook.”  Today was one of those days that one should at least recognize as potentially important.  It actually started as a very quiet session until a heavy bout of selling hit in mid afternoon on “Fed talk”; the S&P 500 fell 1.26% and the NASDAQ 1.47%.  So thus far 2014 has been a bit of a dud.

Stocks declined to session lows after a speech Monday afternoon by Atlanta Federal Reserve President Dennis Lockhart, in which he said that if all goes as expected, the central bank would continue to taper its monthly bond purchases.

Both indexes are now back to their 20 day moving averages; the last time they were here they were rocketing upwards through them the afternoon the Fed surprised with its $ 10B reduction in quantitative easing.

spx

nasdaq

Ten year yields continued to falter, as the jobs data continued to weigh.

tnx

While the indexes didn’t have what we call a “bearish engulfing” day – one where a stock or ETF goes over the previous day’s high but closes below the previous day’s low, this did occur in the transportation sector which has been super hot of late.

tran

Energy and consumer discretionary sectors were also notable in their weakness.  The former broke below its 50 day moving average in a convincing manner, while the latter broke through its 20 day moving average to come within spitting distance of its 50 day.

xle

xly

One name that stood out today was mega drug firm Merck (MRK). A preliminary review posted on the U.S. Food and Drug Administration’s web site had the agency citing “robustly positive” clinical trial results in saying its blood clot preventing drug vorapaxar should be approved.

mrk

 

Original post: STTG Market Recap January 13, 2014


Stock Trading To Go

Still Ford Tough

Written By: DragonFly Capital

Back at the end of September I talked about Ford, $ F, as a long term play here: Are You Ford Tough. One thing I noted as a potential short term issue was the bearish Shark harmonic that was completing. The pattern did complete and since October the stock has pulled back. In fact it retraced to the 38.2% Fibonacci retracement of the Shark pattern and is now moving higher again. You can see this on the weekly chart below. A move back above the 20 week Simple Moving Average (SMA), also roughly the 100 day SMA, will signal for me that the long term trade idea is back on the table.

f w

If you want an intermediate target 18.96 is back to the prior high and 20.05 is the Measured Move above.

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Feel better about your humanities degree: Glenn Beck’s bestselling history book

Back in 2010 I wrote about Glenn Beck’s salary in comparison with his educational spending (never enrolled in college).

This evening it was pointed out to me that Glenn Beck, high school graduate, is the author of a New York Times bestseller on American history: Miracles and Massacres: True and Untold Stories of the Making of America. The book gets 4.5 stars from Amazon reviewers, narrowly beating out Pauline Maier’s American Scripture: Making the Declaration of Independence (Vintage) (Maier is a professor at MIT with a PhD in history) and crushing Drew Gilpin Faust’s The Creation of Confederate Nationalism (Faust, possessed of an Ivy League PhD, is now president of Harvard University!).

Philip Greenspun’s Weblog

SMB DNA Will Reopen This Week

Finally, after four months of waiting… SMB DNA will be reopen this week for a limited time—and for a limited number of students.
SMB DNA 2013 sold out, and this new DNA session will as well. In fact, almost all of the spots from SMB DNA 2013 were filled during our Private Sale to the SMB Trading Community and in less than 72 hours. As a heads up to our SMBU community, there is a substantial waiting list and only 35 spots left in the class. Enrollment is on a first-come, first-serve basis. The course begins on January 28, and as before, it will run for 10 consecutive weeks (archived recordings will be made available for any missed weeks or classes).
Get your free access to HD videos from Read more […]
SMB Capital – Day Trading Blog

Will de Blasio’s new income tax for New Yorkers actually increase income inequality?

A friend here in Massachusetts was singing the praises of New York’s Mayor de Blasio for adding taxes on high-earners in order to reduce income inequality. It sounds reasonable on its face, but then I remembered my helicopter student, age 39 and about to retire from NYPD on a 100% pension. He was up in Boston attending Harvard’s Kennedy School of Government, courtesy of New York City taxpayers and, once done he was planning to retire to his native Philippines and have New Yorkers wire him money every month.

Since government workers are paid, on average, more than private sector workers, mightn’t extra taxes that actually increase income inequality? State and local governments overwhelmingly spend money on salaries, health care, and pension benefits for government employees. (See http://seethroughny.net/payrolls/city-of-ny and http://seethroughny.net/index.php?cID=189 for some public-employee salary and pension data.)

Suppose that the tax rates are left unchanged. The high-income New York City resident now has the money to go out for some additional restaurant meals. for example.  Many restaurant workers earn less than average and probably nearly all earn less than city employees.

What do readers think? Will inequality of income go up or down in New York City with this new tax?

[Personally I think that the new tax might not result in much additional cash being collected. A certain number of New Yorkers who currently spend 140 days per year in (potentially tax-free) places other than New York  City might decide to start spending 183 days in those places (see this article on what people are doing already). A handful of businesses will move to places with lower tax rates. So more money will be collected from those who stay for at least 183 days but there will be fewer people from whom to collect tax. This could be a positive for helicopter charter operators as more people try to get out to the Hamptons before midnight (which would tend to reduce income inequality, since helicopter pilots make a lot less than school teachers or police officers!).]

[There is no question that New York’s government needs the money. The Tax Foundation says that New York needs to collect 12.77 percent of state residents’ income in order to function (probably higher in the city). This compares to 7.9 percent in Texas, 8.1 percent in New Hampshire, and 10.4 percent in Massachusetts.]

Philip Greenspun’s Weblog

Will more of the YouTube generation be vegetarians?

I served lunch to a four-year-old girl today.

  • Child: “What’s on the plate?”
  • Grown-Up: “Cod.”
  • Child: “What’s that?”
  • Grown-Up: “A big fish that lives on the bottom of the ocean. Though unfortunately this one had to die so that we could have our lunch.”
  • Child: “How do they catch them?”
  • Grown-Up: “Sometimes with lines and hooks but commercial fishermen usually drag nets behind a boat.”
  • Child: “I want to see it.”
  • Grown-Up [pulling phone out of pocket]: “Here’s a video on YouTube showing a boat near Iceland catching cod.”

When I was growing up it wasn’t practical to watch a video of commercial harvesting of the animal that was simultaneously being consumed. Will this Brave New World of knowledge turn more of the next generation into vegetarians?

Philip Greenspun’s Weblog

A Violent Tale of Three Trends of Commodities Corn Oats and Wheat

One of the main principles of Technical Analysis is tha t”trends, once established, have greater odds of continuing than of reversing.”

Recent price activity in Corn, Oat, and Wheat provide evidence of this concept, and even if you don’t trade these markets, it’s a good idea to take a look at the recent “violent” price action in the context of ongoing major trends in these commodity markets.

Let’s start with a brief overview of their Daily Charts before putting today’s volatile action in context:

Downtrending WHEAT (@W):

Wheat @W Wheat Futures Technical Analysis Trend

Downtrending CORN (@C):

Corn @C Commodity Charting Technical Analysis Trends Daily Chart

Uptrending OATS (@O):

Oats @O Oat Futures Oats Futures Daily Chart Uptrend Breakout Bull Market Technical Analysis lesson

The main idea from these three charts is to study the prevailing trend structure (compare highs and lows) and note the recent price action.

Particularly in commodity markets, trends tend to be salient (lasting) events which give traders opportunities to join the trends on pullbacks (retracements) or breakouts (as was the case in Oats recently).

We compare price with a momentum oscillator along with volume (paying close attention to strength or divergences with price and the indicators).  Pay close attention to the mini-divergence and reversal examples I highlighted in Oats (@O).

With the trend structure established, let’s now turn our attention to today’s ‘violent’ or volatile one-day moves that draw our attention.

Wheat continued the trend (failed reversal) with a power-sell day; Corn fought the trend with a big upside session; and Oats took a well-deserved pause after a stellar three-day impulse from a breakout.

Here’s the closer-view of the short-term structure as seen from the 30-min comparison charts (click “Continue Reading” to view the intraday charts):

Downtrending WHEAT (@W):

Wheat @W Wheat Futures Technical Analysis Trend

Downtrending CORN (@C):

Corn @C Commodity Charting Technical Analysis Trends Daily Chart

Uptrending OATS (@O):

Oats @O Oat Futures Oats Futures Daily Chart Uptrend Breakout Bull Market Technical Analysis lesson

Taken together, we can see how the intraday power-buy (or sell) impulses fall within the broader picture of the three Daily Chart trends.

For Wheat (@W), price continued to fall or “collapse” after a failed bullish intraday reversal.

The big surprise – and powerful impulse up via a short-squeeze – took place in Corn (@C) after a trendline breakdown into “Bear Trap” scenario unfolded.

Price rocketed from the lower trendline all the way to a new breakout above a falling trendline structure.  Continue watching Corn relative to these intraday trendline barriers.

Finally, Oats (@O) reversed lower down away from 392 on a dual negative divergence development (momentum and volume).

I highlighted the sideways consolidation range along with the recent Bear Trap which was slightly smaller in scope than Corn’s recent trap.

While there are plenty of educational examples on these three charts, continue to focus on trend structure (with momentum and volume) and ‘traps’ along with how the intraday (lower frame) relates to the broader (daily chart) trend structure in motion.

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