"America is the largest debtor nation in the history of the world..note, I said 'history' of the world, not just the world."
--Jim Rogers
--Jim Rogers
Wednesday, October 24, 2018
Monday, September 10, 2018
This Too is an Asset Bubble, but this time is different..lol.
https://www.zerohedge.com/news/2018-09-10/hedge-fund-cio-2000-and-2008-too-asset-bubble-it-differs-fundamental-way
I'm seeing more and more commentary like this (for both equities and real estate) that sound good, but they ultimately are fancy commentary that can be translated into the simple phrase "but this time is different." We heard it starting in 2006 about the fed's manufactured "soft landing" and if you read in the history books, every sell off in the past has similar commentary.
I believe we're just in the part of the cycle where debt is high, people and companies are loose, and vulnerable people/companies will get exposed when there is a significant pull back. The vulnerable folks that get hurt will then lead to a major sell off. Whether it's the 2-3 year interest only term notes that need to be refinanced on speculative commercial property (apartment and hotel acquisitions where the buyer paid a premium) or just the average Joe that is walking a fine line between his income and his increasing credit card debt, it will hurt. A pension that cannot meet its outgoing cash obligations will certainly start a panic, and there's some pretty smart people out there saying that's a major concern.
Ultimately, it doesn't matter what the cause is, it will play out the way they always play out.
TLT
I'm seeing more and more commentary like this (for both equities and real estate) that sound good, but they ultimately are fancy commentary that can be translated into the simple phrase "but this time is different." We heard it starting in 2006 about the fed's manufactured "soft landing" and if you read in the history books, every sell off in the past has similar commentary.
I believe we're just in the part of the cycle where debt is high, people and companies are loose, and vulnerable people/companies will get exposed when there is a significant pull back. The vulnerable folks that get hurt will then lead to a major sell off. Whether it's the 2-3 year interest only term notes that need to be refinanced on speculative commercial property (apartment and hotel acquisitions where the buyer paid a premium) or just the average Joe that is walking a fine line between his income and his increasing credit card debt, it will hurt. A pension that cannot meet its outgoing cash obligations will certainly start a panic, and there's some pretty smart people out there saying that's a major concern.
Ultimately, it doesn't matter what the cause is, it will play out the way they always play out.
TLT
Tuesday, May 22, 2018
Market is Looking Short Term Bullish..but I'm bearish over the next couple of years
Glancing at some charts today, the market is showing some short term bull signals. The bump in volatility early this year looked more like the beginning of a regime shift than a normal pullback but only time will tell. We've had quite the run in the indexes over the last few years and the market looks like it will give another push to new highs. Here's a weekly of the SPY:
You can see the dramatic shift in price action starting in late January of this year. Highs and lows are more extreme on each candle and the back and forth is very quick compared to the drawn out dips and slower climbs of the past 4 years.
Here's a very bullish chart. This is a pair chart of the Consumer Discretionary (XLY) over the Consumer Staples (XLP). If the chart goes up it is generally bullish because discretionary is outperforming the staples.
Of course, all of this is subject to change in about 5 seconds with something new hitting the market. This just tells me that more money is still being placed in discretionary(bullish) rather than staples(bearish). All things staying about the same, the market will likely try to push back up to the highs.
As for the long term, I still think we will be seeing some major volatility and a bear market coming out. Real estate prices across the country are in a bubble on almost all levels and some signs of a slow down are already showing. For all of the talk of lack of inventory, the real demand for housing for the lowest priced newer homes and those are the homes that builders have not been building. Why build a $250k home to make $35-45k in profit when you can build a $750k home and make $100k in profit? I expect this to be the last strong year in residential real estate and then for commercial to start slowing down too.
Still the most bearish yellow/red flag is the yield curve. Short term rates have gone up, which we new would happen and the FED has been pretty open about it. The problem is in the longer term rates that are flat. This is the beginning steps for an inverted yield curve.
With the real estate market looking fragile and developers continuing to finance new development projects with 1-2 year interest only bridge loans (happening a lot!), the stage is set for people to get burned and then the real wave of panic will hit the market. I'm not a big doom and gloomer but I like to be realistic. Being realistic also means respecting the market action that is currently occurring and not trying to push your views on the market. Just because I see the storms on the horizon doesn't mean I'm out shorting the market now..it just means I'm being defensive with longer term plays and gathering cash so that I'm ready for when things to get crazy.
Have a good week!
George
TLT
Here's a very bullish chart. This is a pair chart of the Consumer Discretionary (XLY) over the Consumer Staples (XLP). If the chart goes up it is generally bullish because discretionary is outperforming the staples.
As for the long term, I still think we will be seeing some major volatility and a bear market coming out. Real estate prices across the country are in a bubble on almost all levels and some signs of a slow down are already showing. For all of the talk of lack of inventory, the real demand for housing for the lowest priced newer homes and those are the homes that builders have not been building. Why build a $250k home to make $35-45k in profit when you can build a $750k home and make $100k in profit? I expect this to be the last strong year in residential real estate and then for commercial to start slowing down too.
Still the most bearish yellow/red flag is the yield curve. Short term rates have gone up, which we new would happen and the FED has been pretty open about it. The problem is in the longer term rates that are flat. This is the beginning steps for an inverted yield curve.
Have a good week!
George
TLT
Monday, April 9, 2018
David Solomon is the man..
The most awesome wall street exec. by far..do what you love!
https://ca.news.yahoo.com/goldman-ceos-deputy-cant-stop-wont-stop-spinning-184220506--sector.html
https://ca.news.yahoo.com/goldman-ceos-deputy-cant-stop-wont-stop-spinning-184220506--sector.html
Tuesday, April 3, 2018
Think or Swim Indicator -- Fisher Scalper Color Bars with Thinkscript
I've got a whole bank of indicators and strategies that I've coded over the years for think or swim and have decided to start randomly posting them along with the codes. They'll be posted weekly for the next month or two..depends how many good ones I decide are worth posting.
Here's the first and it's an indicator. The Fisher Scalper Color Bars. Based on the fisher transform, this indicator is pretty easy to comprehend. The bars are colored Green (bullish), Yellow (transition from bull to bear), Red (bearish), Blue (bearish transitioning to bullish).
I've played around with this indicator by using it on a higher time frame, like a one hour chart, as seen below, and then taking signals on a lower time frame chart (5m or 15m) in the direction of the trend based on the indicator.
Here's a chart:
Enjoy!
George
(TLT)
Here's the thinkscript code.
***delete this line***
declare lower;
input price = hl2;
input length = 10;
def maxHigh = Highest(price, length);
def minLow = Lowest(price, length);
def range = maxHigh - minLow;
rec value = if IsNaN(price)
then Double.NaN
else if IsNaN(range)
then value[1]
else if range == 0
then 0
else 0.66 * ((price - minLow) / range - 0.5) + 0.67 * value[1];
def truncValue = if value > 0.99 then 0.999 else if value < -0.99 then -0.999 else value;
rec fish = 0.5 * (log((1 + truncValue) / (1 - truncValue)) + fish[1]);
plot FTOneBarBack = fish[1];
plot FT = fish;
plot ZeroLine = 0;
input emalength = 50;
plot ema2 = expAverage(fish, emalength);
FTOneBarBack.SetDefaultColor(GetColor(1));
FT.SetDefaultColor(GetColor(8));
ZeroLine.SetDefaultColor(GetColor(5));
def bullish = if ft > ema2 then 1 else 0;
def bearish = if ft < ema2 then 1 else 0;
assignpriceColor(if ft>ftonebarback and bullish then color.green else if ft>ftoneBarBack and bearish then color.blue else if ft<ftoneBarBack and bearish then color.red else if ft<ftOneBarBack and bullish then color.yellow else color.gray);
***delete this line***
Here's the first and it's an indicator. The Fisher Scalper Color Bars. Based on the fisher transform, this indicator is pretty easy to comprehend. The bars are colored Green (bullish), Yellow (transition from bull to bear), Red (bearish), Blue (bearish transitioning to bullish).
I've played around with this indicator by using it on a higher time frame, like a one hour chart, as seen below, and then taking signals on a lower time frame chart (5m or 15m) in the direction of the trend based on the indicator.
Here's a chart:
Enjoy!
George
(TLT)
Here's the thinkscript code.
***delete this line***
declare lower;
input price = hl2;
input length = 10;
def maxHigh = Highest(price, length);
def minLow = Lowest(price, length);
def range = maxHigh - minLow;
rec value = if IsNaN(price)
then Double.NaN
else if IsNaN(range)
then value[1]
else if range == 0
then 0
else 0.66 * ((price - minLow) / range - 0.5) + 0.67 * value[1];
def truncValue = if value > 0.99 then 0.999 else if value < -0.99 then -0.999 else value;
rec fish = 0.5 * (log((1 + truncValue) / (1 - truncValue)) + fish[1]);
plot FTOneBarBack = fish[1];
plot FT = fish;
plot ZeroLine = 0;
input emalength = 50;
plot ema2 = expAverage(fish, emalength);
FTOneBarBack.SetDefaultColor(GetColor(1));
FT.SetDefaultColor(GetColor(8));
ZeroLine.SetDefaultColor(GetColor(5));
def bullish = if ft > ema2 then 1 else 0;
def bearish = if ft < ema2 then 1 else 0;
assignpriceColor(if ft>ftonebarback and bullish then color.green else if ft>ftoneBarBack and bearish then color.blue else if ft<ftoneBarBack and bearish then color.red else if ft<ftOneBarBack and bullish then color.yellow else color.gray);
***delete this line***
Sunday, March 18, 2018
Equity Day Trading List for Monday March 19th
Above is the list copied from my spreadsheet. These are the stocks that I'll be trading tomorrow. I recently started testing some day trading systems on baskets of stocks and now I'm in the testing with real money phase. I will not be trading ZSAN or NETE..those are very small cap stocks and the intra day spreads have been too high to trade.
Note that most of these stocks are what I'd consider turds that have run up or started falling after a run up..generally penny stocks that have traded their way up above $5 or $10..with the exception of overstock (ostk)..that one's just a turd..lol.
If I keep up the day trading equities, which I'm pretty sure I will, I'll start posting more on it. Basically, I trade around 10 stocks with 2 automated systems..nothing super fancy. Then the real work is working on the scans the night before or the morning of. I scan for volatility and volume with Finviz and build a list. Actually, I build several lists and keep track of the trading performance on all of the lists and then narrow down the list for the actual trading. The key is to save the daily screens to build data and then I can go back and test ideas.
Hope everyone had a great weekend.
George
(TLT)
Saturday, March 3, 2018
Wisdom Quote
"Better to not be in a trade and wishing you were in one than to be in a trade and wishing you were out"
--Unknown
--Unknown
Thursday, March 1, 2018
Tools of the Trade
Every now and again someone asks me about software, charts, tools, etc. that I use to trade. Here's a quick list. I'm considering doing a series of reviews of some of the different services sometime soon.
Broker: Interactive Brokers
Great executions and low commissions. Bells and whistles are missing..I'm not a big fan of their charts and various tools. Just use them for trade execution. Their customer service has been helpful when I've needed it but can't really speak to most of the technical tools or research they offer.
Trading Software: Ninja Trader
Ninja Trader is the main software that I use to trade. Currently trading on Ninja Trader 7. I've played with NT8 and like it a lot..just easing into the new platform before I start actually using NT8 to trade live. Charts are friendly and everything is very customizable. There's a script editor based in C#, so custom programming is available. Moreover, there's a pretty robust strategy wizard that makes it easy to program and test strategies without even knowing how to code. Most importantly, you can implement your automated strategy and have ninja trader implement the trades through Interactive Brokers via an API connection..this is the main reason that I started trading with Ninja Trader.
Server: Speedy Trading Servers
I run all my trading software and brokerage software on a server with speedytradingservers.com. They are very reliable, reasonably priced, and have had great customer service. Highly recommend them if you're running automated strategies.
Others:
Bloodhound by Shark Indicators
An add in to Ninja Trader. Pretty nice tool that allows you to develop indicators and strategies within Ninja Trader.
Meta Trader 4
I use MT4 some for currency trading. There are just some features with this platform that I like, especially on the automated side. It's not as robust as Ninja Trader but it works well if you're focused on trading currencies.
Amibroker
Same as MT4 but for other reasons. There are features in Amibroker that are cool for strategy testing and development that you don't find on other platforms. I don't use this one that much but have found it to be useful at times.
ThinkorSwim by TD Ameritrade
I do a little bit of trading on TOS but not much over the last 4-5 years. I still like some of the features in TOS and really like the ease of programming indicators and strategies. Unfortunately, there's no way to actually automate any of the strategies which is why I made the jump to Ninja Trader. Still, it has some nice features, especially for collecting data on multiple instruments or for options. If I were sitting in front of the screens and discretionary trading all day, I'd have a screen with TOS open.
Futures.io
A great site. The Admin and big dog, Big Mike, really did the trading community a service by getting this up and keeping it going over the years. I've mostly been a lurker on this site but have found the members area to be very helpful for getting indicators and trading ideas. It's a nominal subscription fee and is worth every penny.
IQ Feed
While I currently am not using IQ Feed, I have used them in the past. I pay for the direct stream data from the exchanges for trading but have used IQ Feed for historical data for testing purposes. It's very good and reasonably priced.
Tick Data Suite by EAReview
This is a must if you are testing strategies in MT4 or MT5. The tick data is high quality and allows you to test strategies with a very high quality tick modelling rate. Essential if you are testing strategies and want to have an idea of what they will actually trade like when you go live. Very reasonably priced as well.
Strategy Quant
A very cool strategy development tool. It uses random generation and genetic optimization to test thousand upon thousands of combinations of signals to develop strategies and then it lets you export the strategies into a code for Ninja Trader, Meta Trader, TradeStation. The exported strategies are pre-coded with nice money management and profit target/stop loss features. Overall its a cool program, however, it is major curve fitting and there are some frustrating aspects to the program itself. I've heard the customer support is not very good..I've never tried contacting them. Needless to say, it's a decent program and I've pulled 2 strategies from it that I've live traded.
Build Alpha
Build Alpha offers the Traders Tool Box and I've only recently purchased it and started playing with it. So far, I'm very impressed. It's similar to Strategy Quant, in that you can use optimization to test thousands of entry and exit signals to develop strategies and then export trading code to some of the main trading platforms on the market. David, the founder/owner is very helpful and responsive and he posts a bunch of helpful videos on the website that walk you through the whole program. The main features that jump out at me so far are the various built in statistical tests for validating strategies and the ability to save multiple strategies into a portfolio and test the portfolio as a whole. Very unique and very cool. I'll be spending a lot of time on this one in the near future.
I'm sure there are a few things that I'm forgetting and I'll update this post later if I think of anything. There are definitely plenty of tools readily available today that are mind blowing compared to what was available just 10 years ago. There's no perfect software or tool, they all have their pros and cons but this is just a list of some of the resources that I have found useful. FYI, I was not asked to post any reviews and I have paid regular prices for all of the services (I'm not big enough for people to give me free stuff in return for reviews..lol(although I was asked years ago to review a Harry Dent book in exchange for a review..I declined..lol)).
Happy Trading.
TheLawyerTrader
George
Broker: Interactive Brokers
Great executions and low commissions. Bells and whistles are missing..I'm not a big fan of their charts and various tools. Just use them for trade execution. Their customer service has been helpful when I've needed it but can't really speak to most of the technical tools or research they offer.
Trading Software: Ninja Trader
Ninja Trader is the main software that I use to trade. Currently trading on Ninja Trader 7. I've played with NT8 and like it a lot..just easing into the new platform before I start actually using NT8 to trade live. Charts are friendly and everything is very customizable. There's a script editor based in C#, so custom programming is available. Moreover, there's a pretty robust strategy wizard that makes it easy to program and test strategies without even knowing how to code. Most importantly, you can implement your automated strategy and have ninja trader implement the trades through Interactive Brokers via an API connection..this is the main reason that I started trading with Ninja Trader.
Server: Speedy Trading Servers
I run all my trading software and brokerage software on a server with speedytradingservers.com. They are very reliable, reasonably priced, and have had great customer service. Highly recommend them if you're running automated strategies.
Others:
Bloodhound by Shark Indicators
An add in to Ninja Trader. Pretty nice tool that allows you to develop indicators and strategies within Ninja Trader.
Meta Trader 4
I use MT4 some for currency trading. There are just some features with this platform that I like, especially on the automated side. It's not as robust as Ninja Trader but it works well if you're focused on trading currencies.
Amibroker
Same as MT4 but for other reasons. There are features in Amibroker that are cool for strategy testing and development that you don't find on other platforms. I don't use this one that much but have found it to be useful at times.
ThinkorSwim by TD Ameritrade
I do a little bit of trading on TOS but not much over the last 4-5 years. I still like some of the features in TOS and really like the ease of programming indicators and strategies. Unfortunately, there's no way to actually automate any of the strategies which is why I made the jump to Ninja Trader. Still, it has some nice features, especially for collecting data on multiple instruments or for options. If I were sitting in front of the screens and discretionary trading all day, I'd have a screen with TOS open.
Futures.io
A great site. The Admin and big dog, Big Mike, really did the trading community a service by getting this up and keeping it going over the years. I've mostly been a lurker on this site but have found the members area to be very helpful for getting indicators and trading ideas. It's a nominal subscription fee and is worth every penny.
IQ Feed
While I currently am not using IQ Feed, I have used them in the past. I pay for the direct stream data from the exchanges for trading but have used IQ Feed for historical data for testing purposes. It's very good and reasonably priced.
Tick Data Suite by EAReview
This is a must if you are testing strategies in MT4 or MT5. The tick data is high quality and allows you to test strategies with a very high quality tick modelling rate. Essential if you are testing strategies and want to have an idea of what they will actually trade like when you go live. Very reasonably priced as well.
Strategy Quant
A very cool strategy development tool. It uses random generation and genetic optimization to test thousand upon thousands of combinations of signals to develop strategies and then it lets you export the strategies into a code for Ninja Trader, Meta Trader, TradeStation. The exported strategies are pre-coded with nice money management and profit target/stop loss features. Overall its a cool program, however, it is major curve fitting and there are some frustrating aspects to the program itself. I've heard the customer support is not very good..I've never tried contacting them. Needless to say, it's a decent program and I've pulled 2 strategies from it that I've live traded.
Build Alpha
Build Alpha offers the Traders Tool Box and I've only recently purchased it and started playing with it. So far, I'm very impressed. It's similar to Strategy Quant, in that you can use optimization to test thousands of entry and exit signals to develop strategies and then export trading code to some of the main trading platforms on the market. David, the founder/owner is very helpful and responsive and he posts a bunch of helpful videos on the website that walk you through the whole program. The main features that jump out at me so far are the various built in statistical tests for validating strategies and the ability to save multiple strategies into a portfolio and test the portfolio as a whole. Very unique and very cool. I'll be spending a lot of time on this one in the near future.
I'm sure there are a few things that I'm forgetting and I'll update this post later if I think of anything. There are definitely plenty of tools readily available today that are mind blowing compared to what was available just 10 years ago. There's no perfect software or tool, they all have their pros and cons but this is just a list of some of the resources that I have found useful. FYI, I was not asked to post any reviews and I have paid regular prices for all of the services (I'm not big enough for people to give me free stuff in return for reviews..lol(although I was asked years ago to review a Harry Dent book in exchange for a review..I declined..lol)).
Happy Trading.
TheLawyerTrader
George
Tuesday, February 13, 2018
Almost 2 Years Since I've Posted...
Two years flew by. Can't believe I didn't post anything in 2017..oh well back at it now. Ironically, the last post from April 2016 was that the market was still where it had been for quite a while. Obviously, its moved quite a bit since then..
After a two year bull market with a few blips of volatility, things are finally getting interesting. I'm not usually too bearish, certainly not a doom and gloomer, but I'm getting a major 2007 early 2008 vibe right now. Real estate is too hot, volatility is non existent (except for the last week), interest rates still have to rise at some point (don't they?) and we are due for at least a good hard pull back. Here's the chart that I'm watching on a quarterly basis..
Yep, the yield curve. I've heard opinions from people that I respect about how the Trump tax cuts are going to propel this market much farther..blah, blah. And they may be right but I still think it's interest rates. I'll post again soon with a more in depth look at what I'm talking about but for the time being, here's the short of it. The yield curve is flattening. Short rates have been going up and long rates are not going up much in response. This is the first time we've seen this in the yield curve in 10 years. It's the interest rates..stupid.
So what am I doing in response to this? Raising cash. I've sold off most broad exposure to the markets and am just day trading and swing trading. I've got a rent house that is way over valued based on the rental rates that the market gets..so I'm selling it in July when the tenant's lease is up. Is this a run for the hills scenario. No, probably not yet. But I want to have ample cash when things do start moving so that I can a) not get hurt by a sudden sell off and b) have cash on hand to take advantage of deals and trading opportunities.
One other thing that I want to expand on soon is the blow up in XIV and the sudden scrutiny in the "risky" volatility products. It's such a bummer that the etn is going away and I'm worried that regulators are going to screw up VXX, TVIX and SVXY. Those have been my cash cows for the last 5 years and what stinks is that there's not a good replacement for XIV. More to come soon on that.
Trade well.
George
TLT
After a two year bull market with a few blips of volatility, things are finally getting interesting. I'm not usually too bearish, certainly not a doom and gloomer, but I'm getting a major 2007 early 2008 vibe right now. Real estate is too hot, volatility is non existent (except for the last week), interest rates still have to rise at some point (don't they?) and we are due for at least a good hard pull back. Here's the chart that I'm watching on a quarterly basis..
So what am I doing in response to this? Raising cash. I've sold off most broad exposure to the markets and am just day trading and swing trading. I've got a rent house that is way over valued based on the rental rates that the market gets..so I'm selling it in July when the tenant's lease is up. Is this a run for the hills scenario. No, probably not yet. But I want to have ample cash when things do start moving so that I can a) not get hurt by a sudden sell off and b) have cash on hand to take advantage of deals and trading opportunities.
One other thing that I want to expand on soon is the blow up in XIV and the sudden scrutiny in the "risky" volatility products. It's such a bummer that the etn is going away and I'm worried that regulators are going to screw up VXX, TVIX and SVXY. Those have been my cash cows for the last 5 years and what stinks is that there's not a good replacement for XIV. More to come soon on that.
Trade well.
George
TLT
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