A Bear Fund Actually Prospering

A number of weeks ago, I noticed the triple-bullish-on-real-estate fund, shown below, was breaking out of a big base, only to reverse almost instantly. This failed bullish breakout confirmed my general suspicion that, even in this new-highs-every-day environment, real estate was at risk. Let’s face it, an industry dependent uon super-cheap money can’t thrive in […]
Slope of Hope

An Uptrending Gap to New Highs for Robotics and Automation Fund ROBO

Here’s a fun ETF you may not have heard discussed before – it’s ROBO, the Global Robotics and Automation Fund and it just accompanied the market to a new all-time high.

In the chart below we see the continuing uptrend and new high this morning:

If you think robots and automation is a big future trend, you may want to read the prospectus and study this fund.

Right now, shares are uptrending with the broader stock market and just gapped above the $ 34.50 per share level.

We’re seeing volume and momentum accompany (confirm) the price movement as the moving averages highlight a strongly rising trend.

Like any new or emerging technology, there can be bumps along the road higher.

It’s probably advised to wait for a pullback, as would be the strategy for entering any uptrending stock.

Nevertheless, if you’re looking for something interesting and new, take a look at this fund and follow along.

Afraid to Trade Premium Content and Membership

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Corey Rosenbloom, CMT

Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).”

Afraid to Trade.com Blog

Hedge fund for people who think refugees from Syria, Iraq, Afghanistan, etc. will be an economic boon?

My Facebook feed has turned into an all-vilification-of-Donald-Trump-all-the-time experience.

My friends’ current complaint is that Trump doesn’t recognize the massive economic boom that would result from accepting refugees from violence and poverty in Syria, Iraq, Afghanistan, etc.

It occurred to me that maybe there is an opportunity in the financial services industry here. For those who believe that the migrants Trump seeks to limit are an economic boon, why not offer them the ability to make infinite money by setting up a hedge fund? The “Refuboom Fund” will use maximum leverage to short the economies, such as Singapore, that won’t accept any of these folks while going long on the economies that accept the most (e.g., Sweden, Germany (at least get the dead cat bounce from VW)). (See Wikipedia then click “Natives per refugee” to sort; among countries with significant public equity markets and readily tradeable currencies, it looks as though China, Taiwan, South Korea, Japan, Mexico, and Chile should also be shorted.)

As there seems to be a difference of opinion regarding the long-term economic effects of growing a country’s population in this manner, the Refuboom Fund can also collect fees on the other side, offering the opposite position to people who think that migrants will be a net burden.

What do readers think? It is possible to invest based on this historic migration from Arab and Muslim countries?


Philip Greenspun’s Weblog

Mutual Fund Outflows Warn Of Another Major Leg Down in Equities

On the chart below, I plotted the month-end values of the S&P 500 against the Domestic (U.S.) Long-term Equity-Only Mutual Fund Flows. Although we don’t have the data for the October month end yet, the first two weekly reporting periods (Oct 7th & Oct 14th) for Domestic Equity Funds have seen net outflows of -$ 1.31 […]
Slope of Hope

Potential fly in the index fund ointment: special access for some investors

My basic investing article cheerleads for index funds, largely based on Burton Malkiel’s 1973 research (subsequently updated and currently available as A Random Walk Down Wall Street (11th Edition)). “How Some Investors Get Special Access to Companies” is a September 27, 2015 Wall Street Journal article that should encourage a little doubt among the indexing believers.

Public companies are allowed to meet with favored investors privately:

The result is a booming back channel through which facts and body language flow from public companies to handpicked recipients. Participants say they’ve detected hints about sales results and takeover leanings. More common are subtle shifts in emphasis or tone by a company.

Access usually is controlled by brokers and analysts at Wall Street securities firms, who lean on their relationships with companies to secure meetings with top executives. Invitations are doled out to money managers, hedge funds and other investors who steer trading business to the securities firms, which in turn provide the investors with a service called “corporate access.”

Investors pay $ 1.4 billion a year for face time with executives, consulting firm Greenwich Associates estimates based on its surveys of money managers. The figure represents commissions allocated by investors for corporate access when they steer trades to securities firms.

A recently published paper in the Journal of Law and Economics analyzed the trading behavior of dozens of investors who met during a 5½-year period with senior management of a company listed on the New York Stock Exchange.

While the paper doesn’t identify the company or investors, researchers concluded that the investors who got face time with management made better trading decisions. Several large hedge funds met the company as frequently as once a quarter.

Brian Bushee of the University of Pennsylvania’s Wharton School and two other academic researchers concluded that trading volume picked up around the time of the private meetings. Trades made then were more likely to be profitable than trades made at other times.

Along the same lines, but not obviously actionable for the typical investor… “Insiders Beat Market Before Event Disclosure: Study” (WSJ, September 14, 2015):

Corporate executives and board members regularly make market-beating returns from buying and selling their companies’ stock in the days before disclosing a significant event, according to a study that says it has found a link between insider knowledge and investment profits.

On average, the officials netted about 0.4 percentage point over a broad market index between the time of their trades and the market close after the disclosure. These gains, realized over the span of a few days, would be much larger on an annualized basis.

When officials bought shares outright—rather than by exercising options received as compensation—the gains were even better, at about 1.6 percentage points over the index.

The longer companies waited to make disclosures, the better the returns, according to the study. When companies used the full four-business-day window, the average excess profit rose to 1.95 percentage points.

What does it look like in practice? “Towers Watson CEO Sold Stock Before Big Deal:
John Haley netted nearly $ 10 million on preannouncement sales” (WSJ, September 23, 2015):

In early March, when merger talks were under way between Towers Watson and insurance broker Willis Group Holdings PLC, Mr. Haley exercised 106,933 stock options and sold the underlying shares for a $ 9.7 million profit, according to regulatory filings. The sale was Mr. Haley’s first in more than a year and shed 55% of his stake in Towers Watson…

When the roughly $ 9 billion deal was announced on June 30, Towers Watson shareholders criticized it, sending the Arlington, Va., company’s stock down nearly 9% that day. Their beef: the deal’s price tag, which valued Towers Watson at $ 125.13 a share, or about 9% less than the prior day’s close.

Maybe the future of efficient investing has to include some managed funds that are big enough to pay for and acquire access to inside information?

Philip Greenspun’s Weblog

Wednesday Webinar: Five Step Checklist for Finding the Next Hedge Fund Darling Stocks

This should be an interesting, can’t miss webinar!

John Carter is providing for us a free webinar entitled “The Five Step Checklist to Find the Next Hedge Fund Darlings!

I’ve seen a preview of the webinar and I’m a big fan of my colleague John’s work so I’ll be attending this one as well!

John will be sharing a formula for scanning and finding key stocks that are about to break onto the radars of Hedge Fund managers – remember most can’t buy stocks under $ 10.00 – and how to buy stocks under accumulation from these larger funds.

He’ll outline a specific checklist you can start using right away and when to add these potential big winners to your growing portfolio.

It’s free and just requires an email registration – hop on over now and get ready for this exciting webinar!

Thanks to John and his team for making these events available to us in the trading community.


Afraid to Trade.com Blog

Teaming with The One Fund to Help Victims of the Boston Marathon Bombings

In our continuing win-win spirit of providing trader education at minimal cost while benefiting worthwhile causes, I’m pleased to announce that a portion of all Jellie educational proceeds over the next few months will be directed to The One Fund, a charitable fund established to support victims of the tragic events Boston Marathon on April 15.

Charities benefiting from past proceeds of the Jellie Video Series include the American Diabetes Association, GrowUganda.org, and Commodity Customer Coalition to support efforts arising from the MF Global and PFG Best fiascos. To date, we’ve contributed over $ 23,000!

In addition, readers of “Chronicles …” are eligible for a $ 250 discount off the course set. Please refer to the educational site for more details.

Don Miller’s S&P Trading Tank

The Large Number of Hedge Fund Managers Near Fort Rucker, Ala. (A Suggested Response to the Republicans’ Simple Response(s).)

It’s unconscionable to use our military men and women in uniform as a bargaining chip to raise our taxes.

— Rep. Martha Roby, (R. Ala.)

Our taxes, huh?  
Ours!  This actually is unexpectedly good financial news for most of, um, us. Not to mention very surprising news.

According to The New York Times today, Roby made the comment in an interview yesterday after a visit to the town just outside the Army’s Fort Rucker.  And presumably, she, and her family (thus, the “our” rather than a “my”), have substantial income from capital gains and dividends. Or maybe she or her husband is a hedge fund manager and would lose the “carried-interest” tax deduction, because the tax loopholes that Obama and the congressional Dems are proposing to close are those and similar ones. And she did say “raise our taxes.”  

Maybe both are hedge fund managers. She part-time, of course.  

Maybe not, though, since, by using that phrase, she intended to convey, falsely, that Obama was using our military men and women in uniform as a bargaining chip to raise the taxes of the our military men and women in uniform, most of whom have spouses who are hedge fund managers, and of the residents of the town just outside of Fort Rucker, most of whom live off of their capital gains and dividends, and none of whom, whether working or unemployed, receive assistance from the the federal food-assistance program.  

I know that latter fact to be true because the New York Times article says that House Republicans say they believe that the have “politically inoculated themselves against claims they are responsible for the cuts by approving measures last year that would have substituted reductions in government programs like food stamps for the lower Pentagon spending.”

Which itself undoubtedly is true.  Especially since Mitt Romney and Paul Ryan ran on just such a proposal last fall, and won.  I mean, lost.  By about 5 million votes.  

The Republicans must have received their inoculation serum through the Web. From a company in Afghanistan, maybe. 

Roby also said in that interview referenced in the Times article:

The president says he has to have tax increases to head off the sequester. Well, he already got his tax increase.

Indeed, he did.  He got a tax increase on individuals with non-investment income of at least $ 400,000, and on couples with non-investment income of at least $ 450,000, to Clinton-era rates, and slight raises on some investment income, to less than Clinton-era rates.  Clinton-era rates being rates at which we were able to have a budget surplus, without using our military men and women in uniform as a bargaining chip  for anything, and without cutting food assistance programs, including the assistance that goes to Alabamans, a few of whom may live in that town near Fort Rucker.  

So, I have two suggestions for Obama. Serious ones.  


One is that he travel to that town near Fort Rucker and explain, among other things, that salaries for our men and women in uniform are exempt from the sequester, and that, while we’re on the subject, of unconscionable political conduct, it’s probably a good idea to include the dispensing of false information to the contrary as fitting comfortably within that category.  He also should explain to the group assembled in the audience at the high school gym, or wherever, who it is exactly that will have their taxes raised by the tax raises included in the “fiscal cliff” agreement, and, especially, who it is exactly–exactly–that would have their taxes raised under Obama’s proposal to replace the sequester.  

Then he should ask for a show of hands, first, by those in the audience who will have their taxes raised under the “fiscal cliff” deal, and then by those who would have their taxes raised under a current proposal to replace the sequester.  His own proposal or the Senate Democrats’ or the House Democrats’.  In other words, a show of hands by “us”–as in “raise our taxes.”  

He also could, and should, explain how, and why, the sequester law came about–and what would have happened to this country’s credit rating and the financial system and the economy beginning in August 2011 without it.  I.e., explain again, as he did at his successful press conference in mid-January, what the debt ceiling, and raising it, are.

Obama of course instead could make these points in a short primetime TV address, one advantage of which would be a national audience.  That’s my other suggestion. He could do this in an address of under 10 minutes.  

If he took that avenue, he could even take advantage of the national audience to point out, within that under-10-minute address, that John Boehner wasn’t quite accurate when he said in a Wall Street Journal op-ed yesterday that:

[A]s the president’s outrage about the sequester grows in coming days, Republicans have a simple response: Mr. President, we agree that your sequester is bad policy. What spending are you willing to cut to replace it?

Yes, some–but not all–Republicans’ simple response is to fail to acknowledge that Obama is proposing replacing some of the sequester’s cuts with increased tax revenues achieved by closing tax loopholes on wealthy individuals and corporations.  Martha Roby is a Republican who does acknowledge this.  Her simple response is, rather than pretending that this is not so–that Obama has not proposed an offset by raising more revenue in the manner that he and the congressional Dems in fact have proposed–is to misrepresent to all or most of her constituents that their (“our”) taxes would go up, a statement either unconscionably deliberately deceptive or instead reflecting dismaying ignorance of the sources and amounts of income of at least some, probably most, of her constituents, unless her district is among the wealthier ones in this country.  

Which, for all I know, it may be.  But if so, most of the residents of the town close to the Army base probably are not among the hedge fund managers in her district.  Nor even among Apple’s shareholders.

Obama could of course both travel to the town near Fort Rucker and address the nation on primetime TV.  But only if the matter is really important.  Really important.  Which Obama may or may not think it is.  I mean … to each his own.

What I don’t understand about this White House is its failure to grasp that what matters is actual explanations and refutations of the Republicans’ incessant misrepresentations of fact–the Repubs’ constant representation of cliché  and generic slogans as facts–rather than silly Twitter tweets, attractive photos of Obama at work or play, or appearances on The View or interviews on 60 Minutes that do not explain substance and do not refute the opposition on issues of substance.

Actually, this one’s pretty easy to explain.  Raise our taxes?  Then the tax raise must also be on our income.  I guess we’re all hedge fund managers now.  (Seeee?? I told you this was good financial news for us. Not to mention surprising financial news for us. And surprising employment news for, well, at least those of us whose tax raise will come from the elimination of the “carried-interest” deduction.)

Of course, now that I think about it, that little explanation in that last paragraph would fit in a Twitter post.  So maybe Twitter’s the way to explain and refute, after all.  At least when you’re camera shy.  Or just shy.

Angry Bear

A Rounded Reversal and Support Level to Watch in Bond Fund TLT

TLT is a popular proxy for traders and investors to watch for bond prices, or to use as a hedging or trading vehicle.

Let’s take a look at the recent “Rounded Reversal Arc” in price which now challenges its first potential support target on this week’s recent breakdown.

Here’s the Daily Chart “Arc” Pattern into Support:

“Rounded Reversal” or “Rounded Arc” patterns are a type of Distribution pattern that represents an orderly transfer from demand (buyers) to supply (sellers).

The alternate way for price to reverse is a more violent “spike” which we often call a “V-Spike Reversal.”

Anyway, you can see how the lengthy negative divergences developed during the agonizing flat or “consolidation” period from November 2011 to present which culminated in this week’s strong support breakdown.

At the moment, the TLT chart is challenging its first/initial downside target near $ 110, which is the overlap of the rising 200d SMA (important) and 38.2% Fibonacci Retracement as drawn.

The weekly chart also shows a similar confluence with the rising 50w EMA:

The rising 50w EMA also comes in at the $ 110 level ($ 109.15 now) which makes the $ 110 region the critical potential support price level to watch.

As with all confluence or price pivot levels, we often drop to lower timeframes to assess the chart picture/signals there.

At these critical chart junctures, price can either support/bounce off of them (an aggressive trade for short-term bullish traders) or else break sharply through them (a breakdown entry for bearish traders).

Generally, when price firmly breaks under a confluence support level, it continues on to lower respective targets which would immediately expand to $ 107.50, $ 103, and perhaps even as low as $ 100 again.

But don’t get ahead of the price until we get official signals via breakdowns of these levels.

For now, watch how price trades relative to the $ 100 confluence in TLT – either retracing up off it for the moment… or crashing down through it to lower levels.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available!

Afraid to Trade.com Blog