After a nice rebound the last two days, the market has once again come under pressure from Greece. Stocks opened lower today as negative news out of Greece is weighing on sentiment. The standoff between Greece and its creditors took a turn for the worse on Thursday, with both sides citing "major differences" over how to save the country from bankruptcy. This news has put pressure on the European and U.S. equities markets.
That begs the question....
Loading ...As always, I would love to hear from you. Take a moment to vote and leave a comment about the markets.
Every success with MarketClub,
Adam Hewison
President, INO.com
Co-Creator, MarketClub
The practice of trading shows that any trend or flat are determined by Market Makers algos. The volume and price action give evidence of the market sentiment and the decisions made by the algos.
Just take a look at the last strong NFP dollar gains on June, 5 were completely erased next working day on Monday.
The mentioned algos very often use the economic data releases to trigger the up-thrusts and shake-out of prices to pick the money from weak-hands of the retail traders. Nevertheless Stocks, FX or bonds are being traded.
A pro should look at the underlying sentiment but at the news releases. Any positive or negative outcome of Greece negotiations can produce temporary shake-out but not change of the trend.
Is a pro someone who believes they're up against imaginary algo pixies under the guise of the practice of trading?
Unfortunately, the algos of market makers, they are quite real at the stocks, bonds and fx marketplaces.
Please, take a look at the volume spread analysis (VSA) .
Must read for any pro: Tom Williams - The Undeclared Secrets That Drive The Stock Market.
Dan, Do you still naively believe that news from Greece can make new trend of US Stocks?
There are infinite discussions among "experts" and journalist of CNBC.
Let's allow them for earning their bread with butter.
Do you know how the price of a security is discovered?
Then below I state the Invitation to
the most genial invention of the human mind - THE DISCOVERY OF PRICE .
Invitation: The second book
Daemon Goldsmith - Order Flow Trading for Fun and Profit
P.S. Also as a practice exercise try to carry out the fundamental analysis of EURUSD on June, 5 and June, 8.
Where is that strong NFP +80k above expected value evaporated ?
I don't believe in experts. There are none.
I don't believe in pros. There are none.
I don't believe in technical analysis. It is a figment of everyone's imagination.
I don't believe algos are relevant to anyone who practices the art of value investing, buys companies with discernable moats &/or franchises, buys with a substantial margin of safety, puts down the trading books, stops trading, and looks to build and compound wealth over decades by investing at regular intervals over time. Not speculating, not trading. Investing. This means buying with a view to avoid permanent loss of capital. The buy decision should be the culmination of extensive research whereby and investor looks to buy $1 for $.67 or less. And guess what, none of this involves trading! All the work is done at the research stage. The buy decision is an afterthought after uncovering value that the market doesn't want to or can't see.
I am not throwing these terms around haphazardly either. I build my own fundamental models patterned after the strict teachings of Graham, Buffett and Greenwald, and I can say with certainty that the terms, algos, NFP's, techincal analysis, indicators, etc., are completely irrelevant to me over time.
Guess what again, the universe of stocks eligible for true investment candidacy does not involve Netlfix, Amazon, Shopify, Ambarella, Valeant Skyworks, IBB, Tesla, Facebook, Twitter or any other company that doesn't produce a annuity type product that can be valued using a zero growth model at t = 0.
No thanks on the book suggestions, I'll stick to the Intelligent Investor, Security Analysis, Buffett's collected shareholder letters, and Value Investing from Graham to Buffett and Beyond.
Dan, thankful to you for the great discussion.
We are talking about different professions.
I see your activity and math models as an investor attempt to place a successful long-term investment.
As for me, I am a positional and directional hedge fund manager whose performance is minimal risk(drawdown)/reward ratio and I have to deliver the great results to the investors monthly.
The investors don't care about math models BUT they don't like large drawdowns.
The drawdown of 1.5% is not feasible using math, statistical tools.
Dan, Could you suggest your worst drawdown?
Thanks!
P.S. I still argue that Greece news influence on the long-term investment in equity is negligibly small.
Should have more frequent surveys. It's interesting to know non-pro's opinions.
The "historical" 2% CPI inflation critieria has already been a surety as "real" inflation rate has already been "induced" by asset bubble.
McDonlad employees have got a substantial raise and the big mac has been getting much smaller ;
and rent has jumped and will increase at a much faster speed than most people think due to (or "induced by"
increasing real estate price everywhere in the real world.
Both the real inflation rate and asset bubble rate will be re-balanced in the wake of price recognaissance and reality.
What is price recognaissance? Is that a state of events whereby toilet paper like Alibaba doesn't command a market cap in excess of Coca Cola?
Too much uncertainty with Greece until the end of the month. If that's gets resolved, then we should see which way the markets are headed. But for now exercise caution, but be optimistic.
Actually it is the on and off positive outcome for Greece that has kept the market up. Bonds are being vomited in Europe - even negative rates. Same here in the US. The pitiful thing about interest rates, they cant go lower than 0. Whoa, I'm wrong. They went negative in Europe.
Market is range bound. Need sell rallys and buy dips. Maybe we will get a direction when everyone starts talking second quarter earnings?
It is odd to me that the whole world markets revolve around one little country called Greece that lately can not even make their interest payments on their debt not alone their overall debt payments. If one has to make their investment decisions on this one little country. Then it tells me just how fragile the whole financial world system has become. How foolish and unstable this has all become.