Macro Viewpoints

Georgia and Iraq – New President’s Nightmare

The following is from a weekly newsletter I read. I think they do a wonderful job of taking the “spin” off of the media’s issue of the moment. They also provide possible strategic reasons for actions taken around the world. This article has nothing to do with trading. However, it does provide some context for the issues our next President is going to face.

Macro Viewpoints

National City, Key or, Iraqi Govt. Bonds?

As it relates to continually tightening credit, we need only look at the current credit spreads to see just how tough it is to procure operating cash in corporate America. Currently, according to the Merrill Lynch US Financial Index, the typical cost to borrow money has increased from 70 basis points over Treasuries to over 390 basis points over Treasuries. A 500% increase in borrowing costs will put the clamps on any new business spending. Now, to put this into perspective, please note the following from John Mauldin.

Macro Viewpoints

When it looks too cheap……(stocks)

The following article is by Bennet Sedacca of Atlantic Advisors in Winterpark Florida. Some companies within the banking sector have been beaten up to the point of attractive yields. However, those yields are only attractive if the entity is around to pay them. Just as I believe there is a place for direct commodity investment in one’s portfolio, so too is there a aproper allocation to dividend yielding stocks. The point is a stock that has declined from $70 to $15 is no better a deal than a barrell of oil declining from $145 to $110 if the fundamentals call for …

Trading Strategies

Fear & Greed vs. Panic

Several years ago I designed a day trading system for the stock indexes based on the following assumptions:1) Bulls favor an orderly, steady march higher.          This can be seen in               a. Smaller daily ranges as the market climbs.               b. Declining volatility. (less daily variance).               c. Declining put/call ratio. (less desire to purchase downside insurance)

As this story builds, complacency shifts to greed. Bulls are less likely to buy put options for fear of giving up top end growth. The television’s pundits tell us why “This bull is different.” John Doe …

Trading Strategies

Volume & Open Interest 101

The following is reprinted from the Chicago Board of Trade

Volume and Open Interest

Next to price, volume is the most frequentlycited statistic in reference to a futurescontract’s trading activity. Each unit of volumerepresents a contract traded. When a traderbuys a contract and another trader sells thatsame contract, that transaction is recordedas one contract being traded. Therefore,the volume is the total number of long orshort positions.Open interest, on the other hand, refers to thenumber of futures positions that have not beenclosed out either through offset or delivery. Inother words, the futures contracts that remainopen, or unliquidated, at the close of eachtrading session.To …

Macro Viewpoints

The Epitome of Fair Trade

The CME Group has modified their allocation method for distributing electronic order executions. This is simply the most fair and equitable marketplace in the world.

How many times have you bought the high or, sold the low on a stop or market order? My guess is that it’s happened to you far more often than you’ve been able to buy the low or, sell the high. In the past, the reason for this has been the manual execution of orders in the open outcry markets on the trading floors of the various exchanges. Here’s the way this process used to work:1) …

Currencies Trading Strategies

Mass Commodity Liquidation

The past week’s action has seen a large decline in many ofthe commodity markets. We’ve seen declines in oil, platinum, copper, corn,wheat, sugar, oj and others. Therefore, one has to ask, “What is thejustification for such a broad based selloff?” The answer, in short form, canbe found in the Commitment of Traders report. I track the commercials and largeand small speculators every week. However, Steve Briese, author of CommodityTrading Bible, also tracks the Commodity Index Traders. This group makes upthe long only index funds that have been at the center of the Capitol Hillrhetoric as it relates to high …

Currencies Macro Economics Trading Strategies

Multiple Confirmations

Chart traders often find themselves with conflicting signals. On the same chart, one man’s failing rally is another man’s bull flag. While looking at multiple time frames of the same chart can yield drastically different projections. How often has a daily chart given a strong indication one way, only to have the weekly chart totally counteract it in the context of the bigger picture?

One analysis technique I like to use when individual charts are yielding conflicting signals, is correlated chart analysis. For example, while the Dollar Index may yield mixed signals, I can use the Euro, Yen, Pound and Canadian …