ASYMMETRY® Observations
ASYMMETRY® Observations are Mike Shell’s observations of all things asymmetry, asymmetric risk/reward, asymmetric payoffs, and asymmetric investment returns.
Original thinking on markets, risk, and asymmetric investing — delivered the moment it publishes.
Read the latest.
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How is trend following with a stop loss optionality similar to a call option?
In What is Trend Following? , I said, Trend following is a directional trading strategy that uses price-based “technical” indicators to identify trends with the objective of gaining exposure to the…
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What is Trend Following?
Someone on Twitter asked, “How do you define trend following?” My official answer: Trend following is a directional trading strategy that uses price-based “technical” indicators to identify trends with the…
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The Direction of the Stock Market Trend and its Potential to Strengthen
When I started testing and developing trading systems two decades ago, I didn’t approach it as the typical data-mining Quant, but instead as a trading practitioner. I was already a…
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The 10 Year US Treasury Interest Rate
There are a few key return drivers for stocks and bonds, and the level, rate of change, and direction of interest rates is one of them. Rising rates decrease the…
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This Measure of the Market’s Expectations for an Extreme Event, Tail Event, or Black Swan, Indicates Complacent Investors
As investment risk managers, measuring risk involves many dimensions of risk of loss. Volatility indexes, for example, provide us with valuable insight into investors’ expectations to big moves up or down. …
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Why Did VXX and VIXY Diverge in 2022?
Tactical traders and hedge fund managers seeking asymmetric hedging opportunities can use VXX and VIXY to capitalize on volatility spikes while maintaining limited downside risk. Since both ETFs track short-term…
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The U.S. Dollar Trend is Changing Direction
The U.S. Dollar Index ( the “Dixie”) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as…
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Jesse Livermore Learned the Hard Way to be a Trend Follower
Few books have been as influential to the mindset of the tactical trader than Reminiscences of a Stock Operator, a 1923 roman à clef by American author Edwin Lefèvre. Reminiscences of a…
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Why investment risk management? Financial crises occur about once a decade, with each one getting larger than the last.
Why investment risk management? Why now? Most investment advisors will tell you passive asset allocation is the way to achieve your investment objectives, but we couldn’t disagree more. I believe…
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Trend analysis of the U.S. stock market trend using the S&P 500 Equal Weight Index
For this trend analysis of the U.S. stock market trend, I’ll use the S&P 500 Equal Weight Index as a proxy. 1. So far support at around 5650 as held,…
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Pending home sales collapsed 38.60%, the largest annual drop ever.
Pending home sales collapsed 38.60%, the largest annual drop ever. Source: Bloomberg via ZeroHedge That is the 6th straight month of pending home sales declines (and 12th of the last…
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The stock market needs to hold this line
A quick follow-up from my last observation when I said about the S&P 500; “If it breaks below 3,900 and fills the gap below that, then we’ll likely see more…