February 4, 2013
Investing to Win in Bull and Bear Markets
 For most average investors, determining the right time to get into the market–or any investment–is the only thing that matters. Often times, however, the importance of knowing when to get out is just as critical to protecting profits. While excessive trading can be a major detriment to any portfolio, the ability to capitalize on the market’s normal ups and downs is key to harnessing a successful investment strategy. In their latest book, Invest to Win: Earn & Keep Profits in Bull & Bear Markets with the GainsMaster Approach, financial educators Toni Turner and Gordon Scott combine their deep understanding and experience in the market to help everyday investors to build effective strategies to maximize returns. Whether the goal is for longer-term planning such as in a retirement account, or something with a shorter horizon, Turner and Scott have laid down (more)…
June 12, 2012
How to Statistically Buy Low
 When John Bollinger developed the indicator that currently bears his name, his intent was to use statistics to identify the extreme ranges of trading. The tool known as Bollinger Bands does an excellent job at determining the relative position of a price when comparing it to recent previous price action. Many traders find that it has reduced value as a prediction tool, but as a preparation tool it is excellent. With this in mind I want to demonstrate a new way to use the Bollinger bands. It is a bit unusual, but if you use Bollinger bands in this way it can help you determine whether a price is inexpensive compared to recent prices. In effect, you will have a gauge for how to, statistically speaking, buy low. Normal Band Measures Bollinger Bands are a good tool for assessing performance of (more)…
May 10, 2012
Asian Road Sign: Bullish Week Ahead
 The major market indexes may be set to rebound for a week or so. Why? Because the carry trade is oversold. The carry trade is a mechanism large banks use to earn interest on sitting money. It is conducted between the Australian Dollar (which still pays the highest interest of a major currency) and the Japanese Yen (which charges virtually nothing). Large money holders make money by parking their funds in this trade as it collects interest on a daily basis. When money goes into this trade (and the Australian Dollar rises in value compared to the Japanese Yen), it means that investors prefer to be taking on risk. But when investors feel like they need to reduce exposure to risk, they come out of this trade, weakening the Australian Dollar and strengthening the Japanese Yen. This trade correlates very (more)…
April 27, 2012
Earnings on the Rise, But Can Stocks Go Higher?
 The late Benjamin Graham, the author and economist whose writings are probably the most influential on the subject of value investing, thought any stock with a P/E ratio above 16 had a price that was considered “speculative,” meaning too high a price to pay for value-minded investors. Here’s the problem: it has been almost 25 years since the S&P 500 average P/E ratio was lower than that for any length of time. For whatever reason, in the current environment, P/E Ratios of 15 are relatively low. If the market then drops to those levels is time to buy or a signal of trouble? In today’s economy, if a P/E ratio of 15 is low enough to make investors take notice, then a P/E ratio of 14 might be low enough to make them take action; if so, now is the (more)…
April 13, 2012
Look East for Western Market Clues
 The major market indexes’ 3-month upward surge stumbled over the past seven trading sessions, but that was a foregone conclusion to people in Australia and Japan. Well perhaps not all who live in those countries knew this, but those who closely trade the currencies of those countries probably knew. Granted they are a microcosmic segment of the populations there, but given how important such signals appear to be, a greater percentage of equities traders around the world ought to pay attention the correlation. See for yourself in the following figure. This figure represents a comparison between the S&P 500 cash index and the relative price of the Australian dollar compared to the Japanese Yen. As you can see from the chart, the directional movements of these instruments (if not the exact degree of those movements) track very closely. Each of (more)…
March 30, 2012
Market Declares Obamacare No Good for the Healthcare Industry
 Though the major market indexes showed lackluster moves throughout the week, the price action of one sector sent a loud and clear message in response to the hearings being held by the U.S. Supreme Court. The Healthcare sector improved, as measured by the SPDR Select Healthcare Index Fund (XLV). In doing so it outperformed all other sectors as shown in the following chart. The healthy 3.5 percent gain capped off a week’s price action that opened near its low and closed near its high for the week. Considering that the rest of the market’s performance was so muted, it is hard to miss the significance of this sector’s action in connection with the Supreme Court hearings on the Affordable Healthcare Act. The message from the markets is clear: without this legislation, companies in the healthcare sector stand a much better (more)…
March 16, 2012
Higher Oil Prices on Horizon
 It doesn’t take much to guess that oil prices will rise. But if you look ahead in time from the current point in time on a chart, you can seem something bubbling up on the right edge of the chart. The price pattern of oil suggests that it could rise further. The ides of March saw a flag pattern nearly complete. A breakout from this pattern will implies that crude oil has completed its consolidation and is set to rise for the next six weeks or so. When this kind of pattern is predictive, it usually has higher volume at the peak of its rise, and then declining volume through its consolidation. That’s what appears to be happening now (see figure below). Should the price of iPath S&P GSCI Crude Oil Total Return (OIL), the ETF that roughly tracks changes (more)…
February 7, 2012
Free Market Webinar: Why Mr. Quiggly Wins the Race
 Tonight’s free webinar will explain why the bull market for stocks is racing higher and why it is not likely to stop any time soon. If it does make a sudden reversal, it will give out a signal as obvious as the moon-walking pooch from Skechers (SKX) popular Super Bowl commercial. The current market condition is the subject of the free webinar I’ll be hosting today. Now to many investors it might look like the market is irrationally moving higher and must fall back into a serious correction very soon. I admit that there is good reason to expect such a pull back. Negotiations over Greek’s effective bankruptcy are still on the brink and a deal may not be reached in time. Certainly a Greek default would be alarming news to the market, would it not? Actually, no it wouldn’t. Not now. Six (more)…
January 26, 2012
A New Era or End of Line?
 Because Apple (AAPL) jumped eight percent in share price after announcing its stellar earnings, the new closing price made it the largest publically-traded company in the world by market capitalization. It surpassed Exxon Mobile Corporation (XOM), the company which held that spot for five years before. It is unlikely that Apple will need to advertise iPhones during the Super Bowl since Samsung’s commercials unwittingly do that anyway; but if they did it would be no less timely than the award-winning “1984” spot that put Apple in pop culture to stay. It is interesting after all how Apple has accomplished this over the last four years. AAPL share prices have tripled while XOM has managed no more than a 10% net gain and the S&P 500 has virtually broken even. With iPhone sales accelerating, and profit margins widening, some are of (more)…
January 18, 2012
What Investors Want
 Has anyone yet forwarded you the email about King Arthur’s quest to find out what women want? Investors understandably have a growing distrust of sovereign debt and the Fed’s decision to keep rates artificially low for an extended period has put yields quite low. Control-minded investors have begun looking for alternatives to U.S. Treasury bonds for investment income. They appear to have found it in dividend stocks. But it remains to be seen whether that trend will continue through 2012. Since the beginning of the year the major indexes have outperformed DVY rather significantly (see below). Stocks Aren’t Trailing Behind Right Now Led by technology stocks the market is pacing its way through new highs. As of Thursday, January 18, the Nasdaq is up more than 4%. Can this continue? Quite possibly. Remember that operation twist, the Fed’s action to (more)…
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