The Dollar and Manipulation Control the Market Over the weekend I had an interesting conversation with a local trader. We typically meet a few times a year to share our market outlooks, new trading tools and techniques, and usually finish our session off in a debate about the US market manipulation and how to trade around it. Talking about market...
Magazines' rosy outlooks often followed by market downturn When United-ICAP analyst Walter Zimmermann set eyes on the big, boldface, tabloid-esque headline "DOW 15,000" on the Feb. 13 cover of Barron's, it was akin, he says, to a black cat crossing the path of stock investors. The next day, he e-mailed a report to clients warning that the respected financial weekly's...
Secular Bull and Bear Markets Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? Without a crystal ball, we simply don't know. One thing we can do is examine the past to broaden our understanding of the range of possibilities. An obvious feature of this inflation-adjusted is the pattern...
Option Trading: A Basic Explanation of Debit Spreads Welcome to the expansive world of options. The option trading reality exists in three dimensions and far more combinations of potential positions than does the one-dimensional world of the stock trader. The view from my turret is ruled by the three primal forces of options — time to expiration, price of the underlying,...
Why BATS is a Black Swan Precursor and VIX a Strong Antidote "People who say they don't care what people think are usually desperate to have people think they don't care what people think." — George Carlin Way back in the day, oh, somewhere around May of 2010, a reputed "fat finger" leaned a bit too heavily on the sell...
[The original Market Wizards: Interview with Top Traders by Jack Schwager is a timeless classic that traders and investors would all benefit to read. That Schwager book was published in 1989 and he subsequently has written several others such as Stock Market Wizards, The New Market Wizards and the forthcoming Hedge Fund Market Wizards. Here is a recent interview done with...
Here is some introductory material on the VIX, based on common questions from investors: Q: What is the VIX? A: In brief, the VIX is the ticker symbol for the volatility index that the Chicago Board Options Exchange (CBOE) created to calculate the implied volatility of options on the S&P 500 index (SPX) for the next 30 calendar days. The...
UNDERSTANDING THE BASIC LANGUAGE OF OPTION TRADING "Anticipate the difficult by managing the easy." ~ Lao Tzu ~ The peculiar vocabulary and concepts inhabiting an options trader's thoughts are often the source of confusion to visitors to my world. I have often pondered that learning to understand options is a lot like learning a foreign language. When you arrive in...
We often like to refer back to one of the all-time greatest books about trading, Reminscences of a Stock Operator by Edwin Lefevre. This book was originally published in 1923 and is basically a biography of the famous trader Jesse Livermore. There are also other Livermore books out there if you are so inclined. If you are utilizing active investing and rules-based...
Bubbles Come, Bubbles Go. The chart below shows us the "classic bubble pattern". [BigTrends Editor's Note: You may be familar with this chart and our recent discussions of these types of 'burst bubble' patterns. But remember that bubbles don't occur in every security or index, only occasionally, and that this exact pattern does not necessarily occur at any given time...
