Jul 17, 2007: 9:21 AM CST
For those of you interested in Behavioral Finance or the Psychology of Trading, this month’s edition of Stocks, Futures, and Options Magazine contains plenty of information regarding these topics and more.
The cover article is entitled “Build Your Trading Brain,” and other articles in the magazine include the following:
“This is your brain on trading,”
“On the Hunt for Market Moods…,”
“Behavior Economics: Most Take High-Risk Gamble to Avoid a Sure Loss,”
“Tech Take: Crowd Psychology and Market Turns,”
“Building Your Trading Brain – A Framework to Manage Thoughts, Emotions, and Actions”
Other articles address option strategies and commodity trading tips.
As a bonus, there is a great book review of Brett Steenbarger’s Enhancing Trader Performance. If you have not read this book at least twice yet, I strongly recommend you do so.
You can subscribe online at SFO Mag.com and receive the hardcopy, or go to your local newsstand/bookstore, or you can view each of these articles free online this month with registration.
Jul 16, 2007: 8:18 PM CST
The Dow Jones set another new all-time closing high today, but it was the only major US index to show an advance on the day.Â The largest index decline came from the Russell 2000, which has lagged the S&P, Nasdaq, and Dow in terms of making new highs and its technical pattern (it remains rangebound).
The Dow made new price highs and a new (relative) momentum high, suggesting higher prices are yet to come (likely following a pullback correction).
The Nasdaq is reconfirming its uptrend and recently made new price and new (relative) momentum highs.Â A ’sell swing’ down to test the rising 20 period moving average is more likely than immediate upside continuation.
The Russell 2000 index is experiencing a swing sell, with odds favoring a test of the rising 50 period moving average.Â The largest major index decline today was experienced by the Russell – note that it failed to make new highs with the other indexes.Â Buyers are not pouring money into small cap stocks relative to the large caps of the Dow 30 stocks.
Jul 16, 2007: 9:36 AM CST
I know the headline gives it away, but a positive momentum divergence is clearly forming on the US Dollar Index, as evidenced by the 3/10 momentum oscillator and a “Swing Chart” reading.
The dollar index recently made new lows, which hit the newswaves rapidly, but from a technical perspective, we have at least three bullish factors working:
- A positive momentum divergence
- A possible double bottom… or at least a successful test of previous lows established near the start of 2005
- Selling momentum decreasing (evidenced by shallower ’swings’)
Of course, the index must still overcome established resistance at the 20 and 50 period moving averages, as well as the ominous 200 MA just above it. Should price break these barriers, momentum should carry price markedly higher.
A “weak” dollar is actually not a horrible thing – in fact, for some businesses, their profits are much higher due to favorable exchange rates (especially for US companies that do significant sales overseas and then convert their profits in the foreign currency to US dollars to report overinflated earnings due to exchange rates).
You can find much deeper fundamental analysis from other websites, news sites, and blogs if you are interested in the deeper picture of what a weak dollar means for stocks, companies, and the US Economy as a whole.
Jul 15, 2007: 9:49 AM CST
Jul 14, 2007: 9:45 PM CST
The Author at Simply Options Trading recently provided five professional links and two blog links regarding Sector Rotation Theory and I wanted to direct you toÂ the site to check out those resources.Â
I won’t stealÂ the thunder by reposting the links, but will advocate you to visit the site and glance over a few other posts as well.Â Although the site is themed towards options traders, many traders of various levels can benefit from the analysis and links on the site.
I wanted to add a thank you to the author for providing a link to Afraid to Trade – I indeed frequently discuss various perspectives from the Sector Rotation Model and hold it to be a major core of my trading philosophy.Â I have recommended a few books on the subject and have provided a brief overview of the theory and have attempted to show readers how to put it into practice.
Please learn more about the subject if the concept is new to you, and Simply Options Trading provides a great source for you to get started finding out where the “big money” is flowing (trending) at this moment and where it is likely to continue.