The MasterCharts: 2013
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Friday, November 29, 2013

Dennis Gartman's 19 Rules Of Trading

Dennis Gartman's 19 Rules Of Trading - Business Insider

2013 was great year for stocks and a crazy year for bonds.
But the amount of money you made depends on how you traded.
Dennis Gartman, editor and publisher of the Gartman Letter, has 19 rules of trading from 2013. But these hold true in general.
Here they are verbatim:
  1. NEVER, EVER, EVER ADD TO A LOSING POSITION: EVER!: Adding to a losing position eventually leads to ruin, remembering Enron, Long Term Capital Management, Nick Leeson and myriad others.
  2. TRADE LIKE A MERCENARY SOLDIER: As traders/investors we are to fight on the winning side of the trade, not on the side of the trade we may believe to be economically correct. We are pragmatists first, foremost and always.
  3. MENTAL CAPITAL TRUMPS REAL CAPITAL: Capital comes in two forms... mental and real... and defending losing positions diminishes one’s finite and measurable real capital and one’s infinite and immeasurable mental capital accordingly and alway.
  4. WE ARE NOT IN THE BUSINESS OF BUYING LOW AND SELLING HIGH: We are in the business of buying high and selling higher, or of selling low and buying lower. Strength begets strength; weakness more weakness.
  5. IN BULL MARKETS ONE MUST TRY ALWAYS TO BE LONG OR NEUTRAL: The corollary, obviously, is that in bear markets one must try always to be short or neutral. There are exceptions, but they are very, very rare.
  6. "MARKETS CAN REMAIN ILLOGICAL FAR LONGER THAN YOU OR I CAN REMAIN SOLVENT:" So said Lord Keynes many years ago and he was... and is... right, for illogic does often reign, despite what the academics would have us believe.
  7. BUY THAT WHICH SHOWS THE GREATEST STRENGTH; SELL THAT WHICH SHOWS THE GREATEST WEAKNESS: Metaphorically, the wettest paper sacks break most easily and the strongest winds carry ships the farthest,fastest.
  8. THINK LIKE A FUNDAMENTALIST; TRADE LIKE A TECHNICIAN: Be bullish... or bearish... only when the technicals and the fundamentals, as you understand them, run in tandem.
  9. TRADING RUNS IN CYCLES; SOME GOOD, MOST BAD: In the “Good Times” even one’s errors are profitable; in the inevitable “Bad Times” even the most well researched trade shall goes awry. This is the nature of trading; accept it and move on.
  10. KEEP YOUR SYSTEMS SIMPLE: Complication breeds confusion; simplicity breeds elegance and profitability.
  11. UNDERSTANDING MASS PSYCHOLOGY IS ALMOST ALWAYS MORE IMPORTANT THAN UNDERSTANDING ECONOMICS: Or more simply put, "When they’re cryin’ you should be buyin’ and when they’re yellin’ you should be sellin’!"
  12. REMEMBER, THERE IS NEVER JUST ONE COCKROACH: The lesson of bad news is that more shall follow... usually hard upon and always with worsening impact.
  13. BE PATIENT WITH WINNING TRADES; BE ENORMOUSLY IMPATIENT WITH LOSERS: Need we really say more?
  14. DO MORE OF THAT WHICH IS WORKING AND LESS OF THAT WHICH IS NOT: This works well in life as well as trading. If there is a “secret” to trading... and to life... this is it.
  15. CLEAN UP AFTER YOURSELF: Need we really say more? Errors only get worse.
  16. SOMEONE’S ALWAYS GOT A BIGGER JUNK YARD DOG: No matter how much “work” we do on a trade, someone knows more and is more prepared than are we... and has more capital!
  17. PAY ATTENTION: The market sends signals more often than not missed and/or disregarded... so pay attention!
  18. WHEN THE FACTS CHANGE, CHANGE! Lord Keynes... again... once said that “ When the facts change, I change; what do you do, Sir?” When the technicals or the fundamentals of a position change, change your position, or at least reduced your exposure and perhaps exit entirely.
  19. ALL RULES ARE MEANT TO BE BROKEN: But they are to be broken only rarely and true genius comes with knowing when, where and why!
Dennis Gartman's 19 Rules Of Trading - Business Insider


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Saturday, August 31, 2013

Monday, August 19, 2013

Indian #Rupee Collapses - Worst Day In 20 Years

Since May 2nd, holders of paper Rupee have lost 18% of their purchasing power while those that held gold instead have seen their 'wealth' appreciate 13% in local purchasing power.

Indian Rupee Collapses - Worst Day In 20 Years 
Presented with little comment (over our earlier detail) but just to note that around the world there are significant events occurring (even as the US equity market slumbers). So much for the gold coin ban - gold now trades at 4 month highs in Rupee terms. Today's 1.46 Rupee slump is the largest in absolute terms since 1993... (the largest single-day percentage depreciation since 9/22/2011)... and the last 4 weeks' move is the largest since 1991... And just for fun, since May 2nd, holders of paper Rupee have lost 18% of their purchasing power while those that held gold instead have seen their 'wealth' appreciate 13% in local purchasing power. Charts: Bloomberg
 
 
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Indian Rupee Collapses - Worst Day In 20 Years

Presented with little comment (over our earlier detail) but just to note that around the world there are significant events occurring (even as the US equity market slumbers). So much for the gold coin ban - gold now trades at 4 month highs in Rupee terms.

 

Today's 1.46 Rupee slump is the largest in absolute terms since 1993... (the largest single-day percentage depreciation since 9/22/2011)...

 

and the last 4 weeks' move is the largest since 1991...

 

And just for fun, since May 2nd, holders of paper Rupee have lost 18% of their purchasing power while those that held gold instead have seen their 'wealth' appreciate 13% in local purchasing power.

 

Charts: Bloomberg



Tuesday, August 13, 2013

Monday, August 12, 2013

With today's move in #gold we thought it appropriate to show our readers these two #charts on Gold from Peter Degraaaf

With today's move in gold we thought it appropriate to show our readers these two charts on Gold from Peter Degraaaf.


Featured is the weekly gold chart, with the US dollar at the top.The rising dotted lines in the gold chart coincide with falling dotted lines in the US dollar index chart.The long uptrend line supporting the dollar coincides with the latest correction in the gold price.The arrow in the dollar chart points to a possible breakdown below the rising trend-line in the dollar (once price drops below the arrow).In the event that this occurs, it is very likely to coincide with the gold price rising above the arrow in the gold chart.The supporting indicators at the bottom of the chart are turning positive.(Chart courtesy Stockcharts.com)
This chart courtesy 24hgold.com shows the amount of gold bullion at the COMEX that is registered and available for delivery, currently 935,000 ounces - the lowest amount in at least five years. Notice how the previous low in this chart in mid- 2011 (single dot), coincided with the gold price bottoming at $1500 and subsequently rising to $1915. The high point in this chart at the end of 2011 (two dots), coincided with the gold price topping out at $1915. "History does not always repeat, but it often rhymes"..Mark Twain.
Disclaimer:Please do your own due diligence.I am not responsible for your trading decisions.Investing involves risk.


The two most important charts you're likely to see all day by Peter Degraaf


Tuesday, July 30, 2013

#Infographic: Rise of the #Yen #FX Contracts | OpenMarkets


In terms of currencies, 2013 has been the year of the yen.  Japan’s Prime Minister Shinzo Abe took office in December 2012 with the promise to devalue the currency, and make the country more competitive in global trade. He’s delivered, and markets have followed with great interest, causing many to declare “currency wars” as other economies have raced to adjust the value of their currencies in response.
Abenomics, as it’s been called, has taken hold, and CME Group’s FX markets have responded, breaking several yen trading records, including the monthly average daily volume record in June. At the same time, we’ve seen that Fed officials have indicated that the end of QE is near, so long as the unemployment rate appears on a path toward 6.5 percent in 2014. Both central bank actions seem to have un-pegged the dollar and yen in recent months.
We created this infographic to trace the economic events this year with the growth in JPY/USD trading.

Infographic: Rise of the Yen FX Contracts | OpenMarkets


Sunday, July 28, 2013

Is #Gold forming an Inverse Head & Shouldern Pattern?

Is #Gold forming an Inverse Head & Shouldern Pattern?



Head and Shoulders Bottom (Reversal)

The Head and Shoulders Bottom, sometimes referred to as an Inverse Head and Shoulders, is a pattern that shares many common characteristics with its comparable partner, but relies more heavily on volume patterns for confirmation.
As a major reversal pattern, the Head and Shoulders Bottom forms after a downtrend, and its completion marks a change in trend. The pattern contains three successive troughs with the middle trough (head) being the deepest and the two outside troughs (shoulders) being shallower. Ideally, the two shoulders would be equal in height and width. The reaction highs in the middle of the pattern can be connected to form resistance, or a neckline.




$GOLD - SharpCharts Workbench - StockCharts.com

Thursday, June 06, 2013

Are #commodities warning of a slowdown, or reflecting the oncoming Fed #tapering?

commodities vs. DM equities



commodities vs. DM equities, Morgan Stanley

Why Markets Have Been Rallying While Commodities Have Been Tanking
Joe Weisenthal

For much of the early part of this century, we've been used to seeing commodity prices rally on "good" news. If the stock market were accelerating, then oil would be rising too. When markets fell, commodities would also be in decline.

That's not been the case over the last two years, as this chart from Morgan Stanley makes clear.


So what's the story?

Are commodities warning of a slowdown, or reflecting the oncoming Fed "tapering" in some way?

In Morgan Stanley's note, titled The Message From Commodity Markets, strategist Manoj Pradhan argues that cyclical factors are not sufficient to explain the divergence, and that the real story is one of an actual structural shift in the commodity markets.

The common structural story is composed of two halves. One is that a lot of supply has been built up during the boom. The other half is that emerging market growth has downshifted.

-- Supply side: The physical capacity built in the ‘up’ phase of the commodity cycle was likely based on inflated expectations of real commodity demand. High commodity prices created a terms of trade shock that made investments in commodity capacity hard to ignore. Australia, Russia and Brazil have succumbed to the Dutch Disease, while Malaysia and Indonesia contracted a milder version. Even Brazil, where the export basket is far less commodity-oriented and far more diversified in commodity exports than its Latin American neighbours, around 50-60% of private investment and the bulk of FDI in 2011 were directed towards the commodity sector. As the global balance of growth has changed in the way we describe below, those expectations have proved to be difficult for reality to measure up to.

-- Demand side: EM growth is at risk and the transition to more sustainable models of growth has been difficult. To boot, China’s new administration appears to be accepting both lower growth and a move away from investment to improve the quality of its growth. Both aspects of this change reflect lower structural demand for commodities. The investment-driven phase of China’s explosive growth involved a surge in infrastructure investment to support the re-export model of growth. Growth, if driven by households, is unlikely to generate the same demand for hard commodities. It could certainly drive demand for soft commodities, but consumption has not yet become the main driver of China’s growth and is unlikely to do so in the near future. Why? The associated fall in household savings would remove the implicit subsidy given to investment and hurt growth more than it would stabilize it (see again The Global Macro Analyst: Why Is EM Under Fire?). Moreover, China’s innovations in extracting more out of its domestic resources and also from lower-quality resources in the last 3-5 years are putting further strain on commodity prices.

But Pradhan doesn't think these stories explain the whole thing. He's more intrigued by the idea of a re-industrializing United States, that will provide manufactured output, but at a much more commodity efficient clip than the emerging world. That's the real story, he says, which explains both commodity weakness and the strength in developed market equities.

Read more:  Why Markets Have Been Rallying While Commodities Have Been Tanking - Business Insider


Monday, June 03, 2013

It costs #Japan 24% of its revenues to pay the interest on its #debt, if rates rise to just 2.2% it will take 80%


It costs the Japanese government 24% of its revenues just to pay the interest on its debt at current rates. According to my friend Grant Williams (author of Things That Make You Go Hmmm...), if rates rise to just 2.2%, then it will take 80% of revenues to pay the interest. Even at the low current rates, the explosion in Japanese debt has meant that interest rate expense has risen from Y7 trillion to over Y10 trillion. Note in the chart below (also from Kyle) that the Japanese government is now issuing more in bonds than it pays in interest. Somewhere, Charles Ponzi is smiling.

Just for fun, here is a picture of Mr. Ponzi writing a check (courtesy of Geert Noels).


Central Bankers Gone Wild | Thoughts from the Frontline Investment Newsletter | Mauldin Economics


Wednesday, May 29, 2013

The Utility Average $DJU has crashed since its recent high

The Utility Average has a history of topping out simultaneously or with a few month's lead over the whole market.  Look at the chart


Wednesday, April 24, 2013

A #chart says it all #Apple Earnings - The Hangover #MasterTech $AAPL


 
 
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Apple Earnings - The Hangover

While immediately after earnings, we were treated to a plethora of self-justifying talking heads exclaiming how wonderful the worst news was, how positive the future looked, how leveraged dividends were great, and how awesome iPhones 5S sales will be inevitably; it seems the market (which one bright chap noted 'must know something' when the stock was soaring) is now testing its recent lows... The selling appears to have started once Tim Cook began pitching the future as opposed to discussing the current state of affairs. AAPL has dropped almost 9% from its overnight highs and is near 17 month lows.

 


Wednesday, January 23, 2013

#China Narrowly Averts #Credit Bubble Pop With Latest Government Bailout Of First Domestic #Bond #Default | Zero Hedge






See the whole article here:  China Narrowly Averts Credit Bubble Pop With Latest Government Bailout Of First Domestic Bond Default | Zero Hedge


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