One of the frustrating things about being a trend follower is that it takes time to overcome the inertia of a new system, particularly if that system is based upon slightly longer time periods such as weekly data. Part of the frustration that traders encounter is based upon the simple mechanics of how systems work.…
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Sometimes I feel sorry for traders/investors who need to construct a narrative as part of their investment process. Whilst you are cocooned inside your own delusional story you would never know whether your story is the right one and is the one the market has chosen. As an example consider the year to date moves…
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One of the intriguing quirks of financial history is that the Dow Jones Index has become the benchmark of the health of the US stockmarket and by extension a metric everyone else is fascinated in.It is interesting that the Dow has become this because of its strange mechanism of calculation and is somewhat anachronistic view…
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In line with the notion of January predicts the direction if the not the quanta of the year ahead here is a rundown of the January gains or losses for various markets. Make of it what you will….if anything….. What is more interesting to me is what I perceive to be a dislocation between perception…
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I recently posted this table of index price correlations. Its a fairly simple table that looks at the degree to which indices follow one another in their general pattern of movement. As you would expect indices that are closely related share a very high correlation. For example the Dow and the S&P500 share a price…
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For my own curiosity I decided to have a quick look at the price correlations of a handful of world indices. Those correlations that are below 0.5 I have coloured red. As expected most share a positive correlation with the only true diversification coming from the Shanghai Composite. This does pose a conundrum for index…
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So said John Donne and the same is true of markets. One of the most fascinating features of trading is that markets at times they display interesting interrelationships and that these relationships tell you something about the underlying emotional state of the market. Below are three markets I am currently involved in and all seem…
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This piece got sent to me yesterday and I have to admit I have only scanned it. But my take way from it is the belief that momentum investing in Australia is rife because stocks can move by very large amounts. My off the top of my head feeling might be that this is a…
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It is that time of the year when everyone involved in this business looks in the rear vision mirror and attempts to make sense of what happened. And of course to everyone involved everything is so obvious and predictable. What is worse is that they take this data and attempt to make some form of…
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