| Do you think about probabilities on each and every investment/trade you make? You should.
A football analyst can tell you the probability that a team scores after entering the red zone.
Why? Because these probabilities matter and they are easy to figure out. They simply look at the data that is presented to them.
So, why is it that when I read a research report from a financial analyst they can't just simply tell me the likelihood that a stock will meet their expected price targets?
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Slope of Hope Blog Posts
Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.
Short-Term Overbought – The Decline Begins Now
The rally has been furious and fast. In less than four weeks, the Dow has risen 14.8 percent from its 2011 low, reached on Oct. 3. The S&P has gained 17 percent. The rally has been historic. If tomorrow holds 3% on the S&P, the major market benchmark will set the performance record for a one-month time frame.
While I mentioned that the market was short-term oversold towards the beginning of the month I never thought the market would rally this far, this fast. The S&P pushed through 1200, then 1220, followed by 1250 and now it sits at 1285. Amazing!
The Key Ingredient to Success
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I came across some interesting information about the Kelly Formula that I think will be useful to those of you who struggle with the concept of position sizing. I will continue to include position sizing articles each month as it one of the most important aspects of any investment strategy, particularly the trading strategies that we follow. In my opinion, this is the most critical concept you need to tackle as a trader or investor.
Why is it critical? It is critical because the question of "How much should I allocate" determines your risk and your profit potential.
Some of you might find the Kelly criterion/strategy as a helpful guide to deciding what position size fits your investment goals. |
All Signs Point to a Short -Term Reprieve (by Andy Crowder)
Seriously?
In nine trading sessions the S&P 500 (SPY) has advanced over 14%. The tech-heavy QQQ – over 16%.
The market’s performance heading into this past week was impressive; now it's historic. Just when everyone thought the market was about to break support last Tuesday (10/4) the market proceeded to bounce off those levels and hasn’t looked back. Indeed it has been one of the strongest two week rallies in market history. In fact, we have only seen this type of move 5 other times since 1928.
Short-Term Reprieve Looks Imminent (by Andy Crowder)
It was another day of sideways trading. The market was able to hold gains for yet another day which was impressive given the short-term overbought extremes, strong overhead resistance and yesterday’s huge upside gap.
I am still leaning towards a close of the upside from yesterday which would bring SPY down to $117.25, DIA down to $112.21 and QQQ down to $54.66. I would expect that this occurs over the next 2-3 days, but Mr. Market always has a way of playing games with what should be obvious price levels.
