Category: Asymmetric Risk Reward
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Fundamental Valuation: Is the Stock Market Cheap or Expensive?
For me, and everyone else even if they don’t realize it, the price trend is the final arbiter. For more than two decades, I’ve focused my efforts on developing systems to identify trends early in… Read More
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Does Trend Following Work on Stocks?
Some recent conversations prompted me to revisit some of the return capture and loss avoidance conclusions from the 2005 paper, Does Trend Following Work on Stocks? Conclusions:The evidence suggests that trend following can work well… Read More
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Stock Market Ahead of the Fed, and What’s Likely to Happen Next
In the last observation, I shared “Implied volatility is indicating another possible volatility expansion” I pointed out that Implied volatility is indicating another possible volatility expansion. The Volatility Index VIX was at 21, implying a range… Read More
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How We’ll Know if a Recession is Imminent
Recessions are officially announced long after they begin. It usually takes nine to twelve months before the National Bureau of Economic Research (NBER) to announce when a recession started. For example, on June 8, 2020, the… Read More
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The Smart Money Method: How to pick stocks like a hedge fund pro – on Asymmetric Payoffs
One of my recent reads is The Smart Money Method: How to pick stocks like a hedge fund pro (November 24, 2020) by Stephen Clapham. Naturally, when he mentioned “Asymmetric Pay-offs” I have to share the… Read More
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The weight of evidence is becoming increasingly bearish for the US stock market
“The trend is your friend, until the end when it bends.” Stock indexes making higher highs and higher lows is a good thing – until it isn’t. I run a combination of systems. Most of them… Read More
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What’s driving the stock market?
Q: What’s driving the stock market? A: Whereas, the black line is the S&P 500 stock index commonly used to represent the US stock market, and the red line is the Total Securities Held Outright… Read More
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The stock market tapped its prior high, then backed off
On Friday I suggested “If we’re going to see selling pressure become resistance, this is where it starts” and though this has been an incredibly resilience market, I’m seeing signs of weakness. I shared some of… Read More
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Point & Figure Charting the NASDAQ Trend
Point and Figure charting is one of the four primary forms of charting used to observe price trends. I started studying Point & Figure charting myself in the late 1990s when I was interested in… Read More
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If we’re going to see selling pressure become resistance, this is where it starts
Technical analysis is the study of financial market price trends. What’s funny is that technical analysis has evolved into now being called quantitative analysis. Technical analysis has long been a method of much debate, until… Read More