Weekends are my tinkering time, messing around with different ideas for analyzing the market. I have long been using a filter that sorts out performance for any watchlist in several different timeframes from 1 day (sorts all stocks from best performing to worst performing for the day), 10 days, 31 days, etc-all in all 11 different daily timeframes up to 250 days. I modified the code a bit and took the 126 day returns and extrapolated what the trend would be expected to return at 31 days if it continued. I went through industries and different investments and looked for large variations between the expected percentage for the 31 day trend and the actual percentage. I only noted those groups that had very large changes that really stood out.
I may try to set this up for a shorter timeframe as well, but this timeframe seemed appropriate as it looks at the QE period to the recent doubt over another round of QE and as it takes awhile to make big rotational sector changes, the 31 day trend comparison seemed appropriate.
Below are specific groups that showed either very bullish changes away from the median or very bearish changes (most changes are in the area of 30% to triple 100+%) . Most of these won't be surprises to you:
Bearish Changes:
Brazil , Base Metals, Emerging Markets, Energy Sector, Crude Oil, Financial Sector, Oil and Gas, Basic Materials, Commodity Indexes, Xinhua China 25, Small Caps, Russell 1-2 and 3k, Pacific economies/ equities Ex-Japan, Value Stocks, Growth Stocks, Dow 30, S&P-500, Industrials, Mid-Caps, Large Caps, Euro (FX), Semi-conductors, Developed Markets, Retail, Global Water, Home Builders, Internet, Technology, International Industrials, Information-Tech, Swedish Krona (FX), International Small Caps, Telecommunications, Global Technology, Environmental Services, High Yielding Equities, Europe, US Aerospace/Defense, Precious Metals, France, Grains, Philippines, Insurance, International Utilities, South Korea, Telecom Services, Agriculture, Software, Hong Kong, Clean Tech, Emerging Asia/Pacific, Coffee, Cocoa, International Financial Sector, Chinese Small Caps, Chinese Real Estate, Platinum, Rare Earth Metals, Nuclear Energy, Community Banks, Brazilian Equities, Chinese Technology, Africa, Australia Small Caps, US Regional Banks, Mexico, Emerging Markets Infrastructure, Wind Energy, Chinese Financials, Netherlands, Austria, Canada, MENA, Coal, Italy, Latin America, Progressive Energy, Spain, Natural Gas, Oil & Gas Exploration, Aluminum, Palladium, Oil & Gas Equipment/Services, South Africa, Timber and Forestry, Norway, Global Steel, BRIC Economies, Canadian Energy, Industrial Metals, Heating Oil, India, Copper Miners, Metals/Mining, Silver, Silver Miners, Gold Miners, Livestock, Turkey, Nickel, Eastern Europe, Sugar, Russia, Tin, Solar, Platinum, Vietnam, Cotton, Broadcasting-Radio, Drug Delivery, Credit Services, Communication Equipment, Music and Video Stores, Medical Appliances & Equipment, Textile Manufacturing, Personal Service, Rubber and Plastics, Scientific and Technical Instruments, Long Distance Carriers, Specialty Eateries, Diversified Entertainment, Specialized Semiconductors, Healthcare Information Service, Business Software and Services, Electronics Wholesale, Rental and Leasing Services, Auto Dealerships, Paper and Paper Products, Chemicals-Major Diversified, Diagnostic Substances, Industrial Electrical Equipment, Internet Software and Services *-Major Decline*, Auto Parts, Recreational Vehicles, Insurance Brokers, Machine Tools & Accessories, Meat Products, Trucking, Asset Management, Office Supplies, Home Healthcare, Home Improvement Stores, Computers-Wholesale, Regional Pacific Banks, Appliances, Regional Mid-west Banks, Money Center Banks, Investment Brokers, Independent Oil and Gas, Hospitals, Foreign Regional Banks, Major Oil and Integrated Gas, Metal Fabrication, Shipping, Oil/Gas Refining/Marketing, Heavy Construction, Regional Southeast Banks, Agricultural Chemicals, Semi Conductor-Memory Chips, Cement, Farm & Construction Machinery, Security & Protection Services, Non-Metallic Mineral Mining, Longterm Care Facilities, General Contractors, Manufactured Housing *Huge Plunge*,
Bullish Changes:
20-year treasury, 20+ year Treasuries, US Utilities, Airlines, 7-10 year Treasuries, C.A. Municipal Bond Fund, N.Y. Municipal Bond Fund, 7-15 year Treasuries, 3-7 year Treasuries, New Zealand Dollar, Build America Bond Funds, Mortgage Backed Securities, Japan, Emerging Market Bonds, MBS Bond Funds, Japanese Small Caps, U.S. Dollar (FX), Yen (FX), Healthcare, Major Airlines, Data Storage devices, Cigarettes, Tobacco, Apparel Footwear, Multimedia and Graphics software, Drug Manufacturers, Biotechnology, Personal Products, Restaurants, Generic Drugs, Electronic Stores, Wineries & Distilleries, Wholesale Food, Transportation, Toy & Hobby Sotres, Photographic Equipment & Supplies, Regional Airlines.
Perhaps by looking at these lists, you'll get a feel for underlying currents in the economy.
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Risk Management
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3C Quick Start
Many of the charts you see here at WOWS are my proprietary indicator 3C which reveals underlying institutional money movements and often contradicts price. To understand the annotations made on charts, you must first understand that 3C has no numerical value, it is a pure divergence indicator. Positive divergences represent accumulation by smart money, negative divergences represent distribution by smart money and when 3C trades with price, that is trend confirmation.
The chart annotation system is simple; white arrows represent relative positive divergences, red arrows represent relative negative divergences and green arrows represent trend confirmation. When 3C is in a white or red box, that represents a leading positive or negative divergence, leading divergences are the most powerful.
We analyse 3C in multiple timeframes, the longer the timeframe the stronger the accumulation. 1-2 min timeframes represent intraday moves, a 5 min timeframe can represent a day or two and 15 min timeframes average trends of a swing trade nature. 30 and 60 min charts can move the market for a month or more and daily charts can be over a year.
You'll get use to seeing the charts and understanding how the multiple timeframe analysis works and works well.
Welcome to Wolf on Wall Street.
The trades featured here are meant to maximize returns with the least risk and highest probabilities. Unless otherwise mentioned, all trades are meant to be executed at market. I prefer long-term trending trades which perform well in rising markets, but really stand out in declining markets. However, we get occasional one day gifts 30,40,60% 1-day gains. I'd urge you to consider taking some or all off the table in such cases, the markets don't give gifts like that often or for very long. Most of the returns that make the system outperform so well come in short-entry trades. If you are opposed to short trades, this is not the system for you, unless you are ok with buying an inverse ETF. If you would like more information about the truth about shorting stocks, just email me.
Risk management. I recommend a specific and consistent risk management approach to all positions. In most cases we try for 2% risk money (2% of portfolio) unless such a position size exceeds 15-20% of overall portfolio in actual position size. Each trader is different and each has a different allowance of open trades. I like to keep the overall money in the trade around 10-15% of portfolio per position in case of gaps against you. Stops are generally executed at the end of day and I personally never place a stop order, all my stops are mental; remember, the middle man gets to see everyone's cards. When you are not in tune with the market or opportunities just aren't that spectacular, I take my risk per position down to 1% or even half a percent of portfolio value.
Each trader is different and must determine their own level of comfort with risk. I do have a channel stop which I provide to TeleChart/StockFinder users for automated stops, I appreciate you using my links to sign up if you do. The Trend Channel catches trends and works well as it automatically adjusts for each stock's volatility. Arbitrary exits based on nervousness about the markets WILL decrease the portfolio performance dramatically. This system will not ever get you in at market bottoms or tops. The recent 1 year performance against the Russell 2k buy and hold had the system beating it by 3:1. Ultimately it is up to you as to how you proceed, but I'm always available to help you determine what might work best for you.
Risk management. I recommend a specific and consistent risk management approach to all positions. In most cases we try for 2% risk money (2% of portfolio) unless such a position size exceeds 15-20% of overall portfolio in actual position size. Each trader is different and each has a different allowance of open trades. I like to keep the overall money in the trade around 10-15% of portfolio per position in case of gaps against you. Stops are generally executed at the end of day and I personally never place a stop order, all my stops are mental; remember, the middle man gets to see everyone's cards. When you are not in tune with the market or opportunities just aren't that spectacular, I take my risk per position down to 1% or even half a percent of portfolio value.
Each trader is different and must determine their own level of comfort with risk. I do have a channel stop which I provide to TeleChart/StockFinder users for automated stops, I appreciate you using my links to sign up if you do. The Trend Channel catches trends and works well as it automatically adjusts for each stock's volatility. Arbitrary exits based on nervousness about the markets WILL decrease the portfolio performance dramatically. This system will not ever get you in at market bottoms or tops. The recent 1 year performance against the Russell 2k buy and hold had the system beating it by 3:1. Ultimately it is up to you as to how you proceed, but I'm always available to help you determine what might work best for you.
I do use other scans and systems when market conditions warrant their use and may change strategy with market conditions.
The MOST IMPORTANT tool you have to bring you long term success is RISK MANAGEMENT. There are plenty of articles linked at Trade-Guild.net on Risk Management. We can be wrong 75% of the time and still outperform the market with solid, consistent risk management.
Position Sizing
The position sizes noted in the positions @ 2% risk of portfolio are based on a $20,000 portfolio-adjust as needed. Due to tight stops, there is the possibility, even probability that one position could take up the entire portfolio. You need to decide how many positions you want to trade and reduce the position size according to that. For instance, if you want to trade 5 positions in a $20,000 portfolio, no one position should be valued at more than $4,000-not risk money or 2% rule, but share price entry x shares.
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Futures Update BR-EXIT Edition - So the conventional wisdom couldn't have been more wrong. Those chasing risk and closing hedges couldn't be in a worse place right now. I would still remin...8 years ago
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