Search Results for: palo alto

Frequency Modulation

By -

I am back in Palo Alto, having been away in the mountains for the past week. I would like to say it was a relaxing and enjoyable vacation, but it wasn't – – not because I didn't enjoy the skiing and time with my family, but because my mind was haunted by the topic I'm going to discuss below.

On January 19th, my portfolio had reached a nadir for the year (down about 2%). Over the next 13 trading sessions, little by little, I completely turned that around, and by February 5th, my portfolio was at a new high. I felt fantastic, and I had just had the biggest cash gain intraday of my entire life.

In the subsequent nine sessions, by February 19th, I was right back to where I was before. From the 19th to the 19th, I had come full circle.

I worked very, very hard to get absolutely nowhere. Worse than that is the knowledge that, had I simply covered everything on the 5th, I frankly could have taken the rest of the month off, doing absolutely no trading, and been in great shape. But instead, I face the same challenge, all the while equipped with the same knowledge of what the market is going to do next that all of us have (which is: no knowledge at all).

Now, the whole woulda/shoulda/coulda thing is the hallmark of amateurs, and I rarely indulge in it. The simple truth is that, the entire time, I followed my rules and I acted rationally. On February 5th, none of us knew what was next. What if, on the 5th, I had indulged myself in profit taking, covered everything, and the market plunged 10% the following Monday? I would have been furious with myself, because I would have blatantly broken all the rules of discipline that I choose to follow. That would have been a far worse error.

Still, it stings. I don't like busting my butt for nothing, and the problem I'm facing is one of frequency. That is, I'm at my best as a swing trader (metaphorically represented by the lower portion of the image below), whereas the market is currently behaving optimally for day traders (represented by the top portion of the image). I am badly "out of phase" with the market's speed right now.

0219-waves 

 
So what do I do about this? Become a day trader? No; I think that would be reckless on my part. I suppose I could try to augment my present trading with elements of a few large positions that are more in tune with a day trader's market. But in my heart I think what I need the most of right now is patience. Past experience has shown me that, in the end, technical analysis works, and as frustrating as the market's recent gyrations have been, I believe that utterly changing how I trade would be little different than trading randomly.

Just to add to my gloom, I think bears still have about 20 points on the ES points "at risk"; the wall of resistance is much stronger at about 1125 than it is at the present 1105.

0219-es 

But, for me, it all returns to the chart below of the Russell 2000. I've been trading for a long time, and I've never seen a chart like this before. In my opinion, it spells one thing for market: doomed. And I am fervently hopeful that all my hard work and discipline will finally pay off when what I surmise will materialize finally comes to fruition.

0220-russell

Plane Crash and FXI

By -

It's sad to say, but one of my great pleasures in life is reading the comments on Slope. It's great to pick up ideas, learn new methods, and feel the "vibe" of the market via Slopers. My week-long ski vacation has made it impractical to read any comments, let alone be part of the stream. (This has led to moments of mayhem, I realize, such as when people decided to change their avatars to twisted versions of your bedraggled host).

I imagine that within comments people mentioned the plane crash in Palo Alto, which killed three Tesla executives (one of whom was piloting the plane) and shut down power to all 28,000 residents and businesses of my fair city. The pilot was actually a decade-long employee of Ideo before Telsla; Ideo has been the next-door neighbor of Prophet for many years.

It really goes to show you how fragile life can be. One day you're an executive for one of the coolest companies in America, about to get rich off a pending IPO, and in a split second, your life is over. It also reinforces my refusal to go on small planes (let alone doing so in fog). It's especially ironic that, had I been in Palo Alto, the epicenter of technology of the planet, I would have been out of commission for the entire day, whereas up here in the mountains, I've got reliable power and connectivity.

I remain entirely short, which means the run from February 7th to today has alternately either stunk or been neutral, depending on the day. Today is one of the more neutral days, although we're edging down a skosh. I'm heartened that FXI is shaping up as I had hoped, as it is one of my bigger shorts.

0218-fxi 

I want to once again fall to my knees and thank my guest writers for stepping up to the plate and creating content for the blog. This little corner of the Internet means a lot to me, and I want to keep it lively. Thank you, everyone. 

Move Your Money!

By -

Today, I put my money where my mouth is. Literally. No, no, wait – figuratively. Well, my point is that I took action based on a principle. Specifically, that big banks are evil and should be avoided.

Some of you may have heard of MoveYourMoney – – I was told about it a few weeks ago. The basic premise is that, between the bailout and the risk they entail, big banks are bad news for citizens of Earth, like us Slopers here, and it's time to move your money out of your big bank and into your local community bank.

Now, I've been with Bank of America for decades, and although I liked the idea of MoveYourMoney, my initial reaction was that it sounded like a bit of a pain. I mean…….new checks, new ATM card, changing auto-pays, and all the rest of it. But it kept gnawing at me, because I felt it was the right thing to do, and today I took the plunge………..

0126-borel

Now, the fine chap on your left is your humble narrator, and the fellow on your right is Tom Fehrenbach of Borel Bank. So for my fellow Bay Area citizens, Borel Bank – which received really high ratings from the research I did – has branches in Burlingame, Palo Alto, Los Altos, and San Francisco. Please call Tom at 650-463-8717 or email him at thomasf@borel.com if you're interested (and, no, I'm not getting anything for referring folks his way; come on!)

For those not in the Bay Area, MoveYourMoney has a handy Find a Bank link. This will help you find a bank in your own community.

The bottom line is this – there's no shortage of huffing and puffing on Slope about the banks. If you're serious, then do something about it! My account isn't going to mean that much to Bank of America, but it's six-figures large, and that means there's a seven-figure amount that they can no longer lend out (ahem, not that they're lending much anyway these days). Take action! Leave your big bank! Take a stand! Move Your Money!

Something’s Gotta Give

By -

Good morning, everyone, and a happy new week to you. It's cold and wet here in Palo Alto, and as I glance at my various screens this morning, I am struck by how relatively strong the /ES is compared to the Euro and Gold.

After all, isn't this what we've been waiting for? The Euro is plunging, Gold is strong, and the Dollar is pushing higher – – – and yet /ES is down a mere 3 points? What gives? After all, gold has lost nearly eighty dollars in just a couple of days, and the /ES isn't but a few points away from its 52-week high!

This suggests to me that when the Euro and Gold push higher, even if it's just a temporary bout of resiliency, that the /ES will push to new yearly highs. The equity market seems way too robust now in the light of what were supposed to be the "levers" that cause it to fall. Unless the /ES suddenly "catches up" by falling quickly today, I'm afraid that's what's in store.