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Resistance Is Futile

“Resistance is futile.” Don’t go there! I am not a Trekkie, but I have seen all the TV episodes and all the movies (I think), so I am familiar with the Borg, the space folk who take over the collective minds of other civilizations. Watching the market this morning, the Borg and their motto popped into my head (Could it be? No, no way!). Anyway, it struck me that the market can go here and go...

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Your Brain on Trading

Your Brain on Trading

Traders are often advised to approach trading as a business. That’s a “good idea” but difficult to achieve in practice. Why so? The cerebral cortex is the “smart “ part of the brain. All mammals have a cerebral cortex, but the size, in percentage terms, varies. Your cat’s brain is about 3% cortex. Your dog’s brain is about 6% cortex. The human brain, on the other hand, is 83% cortex. That’s...

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Slow Down and Chew More Carefully

Again, I would caution the market to take small bites and chew carefully before swallowing. Yesterday’s gulp chomped off another chunk of the big losses recently seen. Heck, the Dow is back above 17,000 and the S&P 500 crushed its most recent ceiling at 1967, finishing up 18 points higher at 1985. My guess is the market will heed my advice today, even though the economic data coming out...

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Yup, It Is Simple, Uh-huh.

Let’s keep it simple today. Okay, so I always keep it simple, but there is a reason for that. It is simple, at least in my mind. The market moves up and down in the near term on economic data, news, rumor (sometimes the same as news), and perception. Now, if all is right with the world and the market system operates on its own energy, in the longer term, it is the trend that powers the...

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This Is a Scary Week

First thing on this Monday morning of this Halloween week, the market goes all “fraidy cat.” It opened as if it were watching the latest hit movie, Nightmare on Wall St, playing in theatres all over the place as of late. The plot goes like this. The bulls fall asleep and the horrible bears take over the dream world just to make life miserable for the bulls. Eventually, the bulls wake up,...

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High-Speed Panic Does Not Negate Earnings

Canada, New York, and Mali all are making the market news cycle. Ebola and terrorism, or, rather, what many are thinking is terrorism, but what just me a local nutcase.   The market did react when the news of the Canadian parliament shooting came across the wire on Wednesday and it reacted this morning to the news that both New York and Mali had their firs Ebola victims. To some degree, all...

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Options 101: How To Construct A Directional Play

Options 101: How To Construct A Directional Play

When I identify an opportunity for a directional play, how do I decide: a) what type of trade I want to do and b) what strikes do I want to use?  Typically, with a directional play, I look for some sort of vertical.  This lowers my cost basis (granted it caps my potential profit).  But most importantly, I attempt to "target" a specific strike.  I do this by "triangulating" a few...

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Skew: Did Option Players Get The Sell-Off Right This Time?

Skew: Did Option Players Get The Sell-Off Right This Time?

If you want to figure out the next move the markets will make, I have a secret to tell you about. Option traders have a trick that most investors and traders have never heard of, let alone understand. It is a little thing called skew, which is a real time view of where money is being bet. (In technical terms, skew is "the risk associated with an increase in the probability of outlier...

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More of the Same But Different?

Let’s start today by going back to yesterday, another in a series of volatile days. I think the market took my advice a bit too seriously, as all the major indices dropped with gusto. I am not sure why, but it seems the buyers simply ran out of gas. Stocks took on some water today, but it can't be a complete surprise. I think it was yesterday we pointed out the S&P 500 had rallied more...

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Remember Our Lessons Already Learned

Ahhhh …. Life is normal again, and it feels right. In today’s sense of normalcy, a learned lesson or two in life resides. One of those is familiar to me from repetition in my childhood and the other I am just starting to learn through repetition. Yesterday, I just “relearned” the latter. My computer is working. Yup, the same one I gave up on yesterday is the same one I fixed yesterday. I...

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Trading Psychology: Stay Calm When The Fastballs Fly

Trading Psychology: Stay Calm When The Fastballs Fly

A client of mine sent me a bio yesterday on Rod Dedeaux, who was the baseball coach for USC for 45 seasons. Dedeaux was a legendary leader, chalking up more national titles and wins (1332) than any other coach of his day. 200 of his players went on to play professional ball. Dedeaux neither lost his temper nor disrespected or denigrated anyone. He cultivated the ability to befriend,...

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Is This Back to the Future?

My computer world is not any better today than it was yesterday, but I feel better. I did what I could do for my laptop, but it is in a coma. It will require equipment and knowledge beyond my scope to bring it around. Given that I am away from my hometown, I will keep it on life-support until I return. No worries; it is stable enough to wait three more days. In the meantime, I said I feel...

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Not A Good Monday, For Me …

Today is not starting out well for me. Two words sum it up – computer problems. First, my normal work computer gave me the “blue screen of death” this morning, and for those who know Microsoft Windows, well, you know that this is as bad as it gets with Windows. The reason I am even writing about my computer problems is that just two minutes ago I was closing out my sagacious thinking for the...

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It’s Getting Easier To Say, Hang In There

Is this it? Is the panic over? Have the sellers become exhausted and have the buyers stepped back into the breach? Is this, after weeks of churning, the bottom? U.S. stocks were higher at the open on Friday, following a batch of solid earnings reports that eased concerns about the impact of weak global demand on U.S. growth and businesses. Strong right out of the gate and holding steady the...

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It’s The Economy, The Fed, And a Bit Of Europe

Well, well, well … The last hour in yesterday’s market was quite interesting, just as the last hour, half hour, and five minutes of the market has been this week. It appears the battle of the bulls and “da bears” is back on. Although “da bears’ have had the upper hand, it seems that the tide might be turning. As always, we will see, but in the meantime, here are some considerations for your...

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