Trading Archive

This article was originally published by Financial Sense at http://www.financialsense.com/fs-staff/hindenburg-omens-flashing-major-warning-signal-stock-market?utm_source=newsletter&utm_medium=email&utm_campaign=weekly

Today’s chart comes from Jason Goepfert at SentimentTrader.com. Last month, Jason told FS Insider that sentiment readings were reaching extremes, even surpassing 2000 tech bubble-levels of euphoria, which was a “very troubling sign” for the stock market (see Rydex Trader Bullishness Surpasses 2000 Tech Bubble).

This most recent data looks at the total number of Hindenburg omens for the S&P 500, Nasdaq, Dow Jones Industrial Average, and the Russell 2000. In sum, “we’re seeing a market that is split between winners and losers to a degree rarely seen in history,” Jason wrote in yesterday’s Sentiment Report.

hindenburg omens market tops
Source: SentimenTrader.com

You may be asking yourself, what is a Hindenburg omen? Here’s what Investopedia has to say:

DEFINITION of ‘Hindenburg Omen’
A technical indicator named after the famous crash of the German airship of the late 1930s. The Hindenburg omen was developed to predict the potential for a financial market crash. It is created by monitoring the number of securities that form new 52-week highs relative to the number of securities that form new 52-week lows – the number of securities must be abnormally large. This criteria is deemed to be met when both numbers are greater than 2.2% of the total number of issues that trade on the NYSE (for that specific day).

Additionally, they write:

Traders use an abnormally high number of 52-week highs/lows because it suggests that market participants are starting to become unsure of the market’s future direction and therefore could be due for a major correction. Proponents of this indicator argue that it has been very accurate in predicting sharp sell-offs in the past and that there are few indicators that can predict a market crash as accurately.

For regular updates on market sentiment and other technical measures, we encourage our readers to follow SentimenTrader’s daily reports and research. You can sign up for a free trial on their website (sentimentrader.com), follow them on Twitter @sentimentrader, or through their premium feed at $10/mo by clicking here.

Read next:

CLICK HERE to subscribe to the free weekly Best of Financial Sense Newsletter .

Point & Figure Diary

Posted July 20, 2017 By APTA.org.au

Artricle originally published at StockCharts.com by Bruce Fraser.

http://stockcharts.com/articles/wyckoff/2017/07/point–figure-diary.html

Regular readers have been following the epic saga dating back to 2011, when Dr. Hank Pruden published his Point and Figure (PnF) count for the new bull market. This count projected to a range of 17,600 to 19,200 for the Dow Jones Industrial Average ($INDU).  When this objective was met we said: ‘But wait, there is more’. Almost exactly a year ago, in this blog, we revisited the original Accumulation and found that an additional count could be added to the PnF price objective.

The 17,600 to 19,200 count was very useful as the $INDU was stopped in this range for more than two years. That range produced a Stepping Stone Reaccumulation PnF count.  The larger Accumulation count and the new Reaccumulation count approximately confirmed each other (click here to review these PnF charts). The cluster of count objectives target 22,000 to 24,500. As we move toward these price targets, new Reconfirming counts continue to be generated. This brief update is to illustrate a new count that arrived in the month of June since our last post on this topic (these PnF counts can form quickly).  Links to the prior posts are below.

We use 60-minute data and ATR (20) scaling to generate this PnF study.  In the month of June, a Reaccumulation formed matching the previous and larger PnF count. Recall that when the Reaccumulation count approximately matches the prior count the trend is often set to resume. This week $INDU jumped to a new high just as the most recent Reaccumulation equaled the prior objective. This is an obscure timing tool that often comes in handy (click here for more on this technique).

As the Dow Jones Industrials stair steps upward, it is appropriate to ask if the count generated from the chart above is the final high? Recall that our price objective window reaches to nearly 24,500.  We will continue to use our Wyckoff tool box of chart analysis, trendline studies and Point and Figure counts to light the way to the conclusion of this campaign, wherever it may take us.

All the Best,

Bruce

Additional Reading:

Point and Figure Pie in the Sky? (click here for a link)

More Pie. Bigger Sky! (click here for a link)

A dangerous optimization assumption with Perry Kaufman

Posted July 17, 2017 By APTA.org.au

Click here to view on YouTube.

From Better System Trader:

“I was reading an article on a trading website and the author was making some assumptions based on the optimization results which may not have been entirely accurate. I think alot of traders can get caught up making this same assumption… I know I definitely have…

And it’s good to be reminded of these types of things so we don’t make the same mistakes.

Listen to Perry explaining what this assumption is, the danger in making it and how to overcome it.”

http://www.cnbc.com/2017/06/13/death-of-the-human-investor-just-10-percent-of-trading-is-regular-stock-picking-jpmorgan-estimates.html

  • “Fundamental discretionary traders” account for only about 10 percent of trading volume in stocks today, JPMorgan estimates.
  • “The majority of equity investors today don’t buy or sell stocks based on stock specific fundamentals,” said JPMorgan’s Marko Kolanovic.
  • JPMorgan believes the recent sell-off in technology stocks may have been related to quantitative and computer trading and not traditional fundamental investors.

by Evelyn Cheng | @chengevelyn
Tuesday, 13 Jun 2017 | 4:49 PM ET

Quantitative investing based on computer formulas and trading by machines directly are leaving the traditional stock picker in the dust and now dominating the equity markets, according to a new report from JPMorgan.

“While fundamental narratives explaining the price action abound, the majority of equity investors today don’t buy or sell stocks based on stock specific fundamentals,” Marko Kolanovic, global head of quantitative and derivatives research at JPMorgan, said in a Tuesday note to clients.

Kolanovic estimates “fundamental discretionary traders” account for only about 10 percent of trading volume in stocks. Passive and quantitative investing accounts for about 60 percent, more than double the share a decade ago, he said.

In fact, Kolanovic’s analysis attributes the sudden drop in big technology stocks between Friday and Monday to changing strategies by the quants, or the traders using computer algorithms.

In the weeks heading into May 17, Kolanovic said funds bought bonds and bond proxies, sending low volatility stocks and large growth stocks higher. Value, high beta and smaller stocks began falling in a rotation labeled “an unwind of the ‘Trump reflation’ trade,” Kolanovic said.

“Upward pressure on Low Vol and Growth, and downward pressure on Value and High Vol peaked in the first days of June (monthly rebalances), and then quickly snapped back, pulling down FANG stocks” — Facebook, Amazon.com, Netflix and Google parent Alphabet, the report said.

Along with Apple, the big tech-related names fell more than 3 percent each last Friday and dropped again Monday, sending the Nasdaq composite lower in its worst two-day decline since December.

However, “the contribution coming from quant rebalances to this snapback is now likely over,” Kolanovic said, noting that S&P derivatives have supported market gains at the beginning of this week.

“$1.3T of S&P 500 options expire on Friday, and this will change dealers’ positioning,” he said. “This can result in a modest increase of market volatility starting on Friday and into next week.”

Tech recovered Tuesday, helping U.S. stocks close higher with the Dow Jones industrial average at a record.

Derivatives, quant fund flows, central bank policy and political developments have contributed to low market volatility, Kolanovic said. Moreover, he said, “big data strategies are increasingly challenging traditional fundamental investing and will be a catalyst for changes in the years to come.”

Figures from market structure research firm Tabb Group point to similar gains in machine-driven trade volume, while the overall number of shares traded has declined.

A subset of quantitative trading known as high-frequency trading accounted for 52 percent of May’s average daily trading volume of about 6.73 billion shares, Tabb said. During the peak levels of high-frequency trading in 2009, about 61 percent of 9.8 billion of average daily shares traded were executed by high-frequency traders.

To be sure, not everyone on Wall Street is giving ground to the machines so easily.

AllianceBernstein analysts made the case in an April 28 note that artificial intelligence is unable to generate significantly different results — by the mere fact that analyzing more and more data results in increasingly similar strategies.

Evelyn Cheng CNBC

Learn the Benefits of Footprint® Charts

Posted June 12, 2017 By APTA.org.au

 

Click here to view on YouTube.

Trevor Harnett answers the question of why some traders always seem to have a better read on the market.
You will learn:
– What Footprints are
– How Footprints help traders
– Practical methods for using Footprints in various markets

Rookie Currency Traders Are Causing Trouble

Posted March 23, 2017 By APTA.org.au

It’s been something of a common lament among Wall Street veterans for a while now. And it goes, more or less, like this: All these darn twenty-something-year-olds around here have no idea what they’re doing.

Perhaps it’s just the typical grousing of community elders, but last week, the Bank for International Settlements said there may be something to the notion.

Tucked deep into a report on foreign-exchange market liquidity was a brief paragraph on how rookie traders could be partly to blame — along with falling volumes and the growing prevalence of electronic trading — for the flash crashes that have roiled the $5.1-trillion-a-day currency market over the past two years.

One case the BIS found particularly worrisome was the time last October that the pound plunged 9 percent in a matter of minutes during early trading hours in Asia. The organization concluded that “less experienced” traders handicapped by a limited knowledge of which algorithms to use at that moment “amplified” the rout.

For Keith Underwood, the report just confirmed what he’s known for a long time.

“If there’s a shortage of senior people, there’s a shortage of knowledge,” said Underwood, who runs his own foreign-exchange consulting firm after a 25-year trading career that included stints at Lloyds Banking Group Plc and Standard Chartered Plc. In his trading days, he said he was leery of handing off positions to junior staff in other regions overnight. “I’ve certainly adjusted my orders, and I’ve also adjusted my sleep.”

Younger, lower-paid employees make up a greater percentage of trading desks today than they have in years.

Part of banks’ broader effort to cut staff, boost electronic trading and lower costs following the global crisis, the “juniorization of Wall Street,” as some call it, has been especially acute in the foreign-exchange market. The world’s 12 largest global banks cut front-office staff by about 25 percent in Group-of-10 currency markets over the past four years, according to Coalition Development Ltd.

That’s coincided with a shift to automation, which slashed staffing needs and spawned a new, and small, generation of quantitative traders whose decisions are driven by mathematical models. For every managing director with about 10 years or more on the job, there are as many as seven less-experienced staffers on currency desks, Coalition said. The ratio was one-to-four just five years ago.

“The old hands who have seen crazy things happen, they’re gone,” said Michael Melvin, a professor at the Rady School of Management at the University of California San Diego and a former managing director at BlackRock Inc.

‘World Is Ending’

BIS’s write-up on the effects of juniorization, which stemmed from discussions with market participants, echoed conclusions put forth in an earlier study that BIS staffers did in tandem with the Bank of England.

Franz Gutwenger, a recruiter in New York, estimates that about 75 percent of recent job openings at banks’ currency desks were for candidates with three to five years of experience. The advertised roles are mainly for assistant vice presidents with base salaries of up to $150,000 a year, or vice presidents who earn about $200,000 a year. That kind of pay is a fraction of the salaries that top traders can make.

Having so many inexperienced people manning a trading desk is risky, Gutwenger said, and senior staff should be on hand in critical situations. Melvin said that many young traders can panic and think “the world is ending” when suddenly exposed to a market crisis.

Read Next: Currency Traders Race to Reform ‘Last Look’ After Bank Scandals

“For many of the jobs, day-to-day, it’s all good, there’s no issue,” he said. “But when extraordinary events happen, it really is useful to have some seasoned old hands around.”

How did 2016 treat you? How did your RBT treat 2016?

Posted February 7, 2017 By APTA.org.au

An article by Ivan Krastins

It is that time of year … again … to have a look at the performance of various RBT’s that have been designed by some students of my L.I.V.E.T.M. approach …

Click below to continue reading the article.

Ivan How was 2016 for you

Next APTA Meeting – Tues 4th Oct 2016

Posted September 29, 2016 By APTA.org.au

Tues 4th October 2016

The next meeting of the Australian Professional Technical Analysts (APTA) Incorporated will be held at the City Tattersalls Club, 194 – 204 Pitt St, Sydney, at 6pm on Tuesday 4th October  2016.

* Please note that APTA and MTA members receive 3 Continuing Education (CE) Credits for the CMT and AMT qualifications for attending the meeting.

Speaker:

Gary Burton

gary-burton

Topic:

From the Work of Ivan Krastins

Gary will examine valid price Spike Highs and Spike Lows and the following price movement into pivot point turns. The text book “ price event” observations, outside periods and inside periods can provide a set a usable statistics with a tradeable outcome in all time frames.

Biography:

Member of The Australian Technical Analysts association. (13 years) and is the current President of the Sydney chapter.
Member of the, Australian Professional Technical Analysts Association. (APTA)
PS 146  Compliance with ADA 1 & 2 in securities and derivatives.
Dip TA in 2004  / CFTe
Technical Analyst and Stock Broker with Alpine Asset Management.
Private client advisor with Macquarie Bank Sydney.
Senior client advisor with RBS Morgan’s.
Senior Client advisor with Investor First, transitioned to Wilson HTM  Sydney
Technical Analyst with FP Markets.

Current student of Ivan Krastins.

A contributor to the Marcus Today stock Market letter.
June 2006 – June 2008 Daily Technical section.
(2008, Marcus won stock picker of the year.)

Presented for the Trading and Investing Expo in Sydney Brisbane and Melbourne.
Contributor to “Your trading Edge” publication and Stock and Commodities magazine.
Regular guest on Sky business “your money your call”
Regular guest on sky business “Lunch money”
Sky Business “ Monday Technical analysis” contributor.
Weekly Contributor to Thomson Reuters Technical Analysis. ( NAB Trade ).

Cost:

APTA and MTA Members $FREE

Non-members $30

All non-members must register and pay prior to the event. Late registration will not be accepted.

Members and non-members WILL NOT be admitted without prior registration and payment.

Payment WILL NOT be accepted at the event.

APTA and MTA members are not required to register.

Eventbrite - Australian Professional Technical Analysts (APTA) 4th October 2016 Meeting

MTA Members:

Following a collaborative agreement between the Australian Professional Technical Analysts (APTA) Inc and the Market Technicians Association (MTA), members of the MTA receive honorary APTA membership and are entitled to attend all APTA meetings. The APTA Management Committee extend a warm welcome to our MTA colleagues.

APTA Meeting FAQs:

How can I attend APTA meetings?

APTA and MTA members may attend normal meetings at no charge. APTA and MTA members may attend the Annual APTA Luncheon and Christmas Party at a discounted price. 
Non APTA and MTA members may also attend normal APTA meetings but must register and pay $30 on-line prior to the event. Registration for the Annual APTA Annual Luncheon is more expensive and will be announced in a timely manner by the Committee.

Can I pay APTA at the door to attend a normal meeting?

No. Unfortunately, all guests must register and pay online at least 2 hours prior to the meeting. Payments can not taken at the meeting and any non member who has failed to register and pay will not gain admittance.

Can I pay APTA at the door to attend the Annual APTA Luncheon?

No. Unfortunately, ALL attendees (including APTA and MTA members) must register and pay online at least 2 days prior to the luncheon. Payments can not taken at the luncheon and any person who has failed to register and pay will not gain admittance.

How can I get the details of the event ?

Details are available at the APTA website at www.apta.org.au .

How can I be notified of upcoming meetings ?

Join the APTA Newsletter mailing list at www.apta.org.au .

Could I invite a friend / colleague to come along to an APTA meeting ?

Of course. If you have any friend / colleague that may be interested in attending as well, feel free to invite them, but please remember that they must register and pay prior to the event.

Comments or questions are welcome.

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