Friday, April 23, 2010

Unorthodox Indicators of Improvement

Here's two indicators you won't find on CNBC:

1. The number of IFR (instrument flight rules) flight plans was up over 3% through the end of last year over 2008. This means more people are flying. Since the number of airline flights doesn't change that much, this increase is largely attributable to general aviation, ie. business and private individuals. Private planes being as expensive as they are, it appears that people are more confident if they can spend money on this activity.

2. I recently got an email from my broker hawking their low low interest rates and suggesting that I buy stock on margin, collect the dividends and pocket the difference. Hey - isn't that how the Great Depression started?

New Reading

With the imminent departure of Dr. Steenbarger, we're left with a big hole to fill for getting good market views. I'm going to start collecting the sources he cites, since it looks like before long, that's where I'm going to have to go look myself for information.

In today's blog, he cites these sources:

(Don't know why the editor won't take these as actual links.)

Thursday, April 22, 2010

RIP, Dr. Steenbarger

Today, Dr. Brett Steenbarger dropped a bomb on his loyal following, telling them that he's ending his enormously popular TraderFeed blog here on Blogspot. I am, I'm sure, among many who are sorely disappointed over this development. However, I have to say it's not entirely unexpected. It seems that whenever a blog gets too popular, it ends up going subscription-only. And that's a shame.

But can you blame him? Hey, money is money. If my blog ever got as popular as TraderFeed did (like that will ever happen), I'd probably do exactly the same thing.

Still, you can't help but having that feeling of sadness... We'll miss you, Dr. S.

Tuesday, April 20, 2010

On Goals

It's important to have goals when trading so you can tell how well you're doing.

When I first started trading, my goal was simply "to make lots of money". In retrospect, that was a silly goal. It was both unreasonable and too vague. After losing money for a few years, I revised my goal to "Make at least $50 every day". At least this wasn't vague. But it was also unreasonable. It's just not possible to have every single day be a winner. I still lost money.

So then in disgust I finally set up a new goal: "To not lose money". This sounds like a pretty weak goal, sort of like saying your life's ambition is to not be a crackhead. Oddly enough though, once I set that as my goal, I did in fact stop losing money.

Once I wasn't losing money, I picked a new goal. This time I decided that I should be able to achieve at least a 7% annualized return. If I couldn't do that, then I might as well just buy high yield bonds and spend all day watching TV instead of the markets. So far so good. Last year I achieved a 40% return. Of course last year was quite extraordinary. But so far this year, I'm just about at the same level.

Now it's easy to perform well when the market is up. The question then becomes, am I good or just lucky? So I also have one final goal: to outperform the Dow. It doesn't matter if the Dow is up or down, as long as my gains are greater and my losses are smaller. So far, that's working out too. I'm outperforming the Dow by around 2 to 1 this year so far.

Monday, April 19, 2010

ES Forecast for 4/19/10

"May you live in interesting times"

- Ancient Chinese curse

Well last Friday's action was certainly interesting, with the SEC on the one hand taking on Goldman, to what should have been the surprise of absolutely no one, and that volcano in Iceland spewing more ash than its name has vowels.

As I write this (1:25 AM EDT), I note that the ES is now down to 1185, down 5 points from the last close. I'm a bit surprised to see this, since looking at the SPX daily charts, we note that more often than not in the last six months, we've not seen a big down day followed immediately by further significant decline.

In any event, we're now near the 20 day MA in ES at 1180.50. If I had to guess, I'd say we could see a decline to that point early on tomorrow and then a bounce. If we go right down through that level, I'll consider going short. But note that there is a support level right around where we are now extending back to the beginning of April. The crystal ball just isn't all that clear tonight.

Recent trades:
I took advantage of the sale on Friday to open small long positions in SLV at 17.38 and RFMD at 5.37. I'll consider adding to them tomorrow. In the meantime, I'm encouraged that my IRBT did not participate in the general chaos on Friday. I'm still waiting on that one to produce.