Friday, November 13, 2009

A review of my book

Here is a very kind review of my book by someone I don't know and have never met. You can check out the rest of the Amazon reviews by clicking on this link.


1 of 1 people found the following review helpful:
5.0 out of 5 stars A Grateful Reader, November 12, 2009
By Trading Truth Seeker "K" (Wesley Chapel, FL) - See all my reviews
Back in 1990 I read an article in the July/Aug issue of the Commodity Traders Consumer Report(CTCR)that forever turned my trading mindset around. Carl Futia wrote the article. And no, I don't personally know Mr. Futia, and I have no interests financial or otherwise in his world. But in my 25 years of trading, I can honestly say that this article helped to shape my trading mindset forever. To make a long story short, I'll quote and explain to you the two concepts from that 1990 article that engendered the changes in my trading mind.

Concept #1: Quote: "I had seen clearly that if I relied on oscillators and trend-following techniques, I was always getting into the trend too late. It struck me that I should try to "Anticipate" the beginning of trends rather than waiting to enter in the middle after they had started".

Concept #2: This concept was the idea of "Free Exposure" which Mr. Futia was taught from a seminar by the legendary trader Peter J. Steidlmayer. In essence Free Exposure meant; To enter the market where the risk is the least and the reward is the greatest, one must find, and be able to read where "Value" lies in the market. All entries made at "Value" are essentially tantamount to a "Free" ride in the market, with very little risk "Exposure".

These two concepts started me on my mental journey into what I now call "Anticipating Value" in the market. In any case, back then, after doing months of research and extensive reading on these two concepts my trading was completely turned around for the better. Today, both concepts have melded in one technique, and now form the foundational element of my trading strategy and methodology. Further, since reading this new book, I can see that most of his ideas have since matured into a cohesive philosophy, worthy of anyone's personal library. And by the way, my personal library once numbered over 800 books, so I believe I know a good one when I see it.

Thankfully, I too arrived at some of those same conclusions in his book a long time ago. This is because they were the natural and logical progression from his initial concepts in the 90's. Do yourself a favor and at least read this book, even though you may not agree with it now. Some time in the future, after you have been "sorely tested" in the market for a while, you may be truly thankful that you did. It might just spark a new way of looking at the market for you.

Monday, November 9, 2009

More bearish than at 866

Here is a chart showing the weekly sentiment survey conducted by the American Association of Individual Investors (chart courtesy of The red bars represent the percentage of responses that were bearish, the green bars represent the bullish percentage, while the purple bars at the bottom express the ratio of bulls to bears.

Notice that the bearish percentage is currently higher than it was at the July low of 866 while the bull/bear ratio is lower than it was then. This is one piece of evidence that makes me think the November 2 low is comparable in importance to the July 8 low. If I am right about this then the market has probably started a rally that will carry well past the 1120 level I have been mentioning. How far past 1120? The most optimistic projection would be to the 1240 level. This would put the next top as far above the 1099 top as the 1099 top was above the June 2009 top of 957. Cutting that 140 point difference in half still projects to 1170.

Main Street Hates Wall Street

At the top of this post is an image of the cover of the current issue of Time Magazine. The sentiment it conveys should be no surprise. But ask yourself: is it likely that stock prices will begin a new bear market and drop substantially from current levels when the public hates Wall Street and the stock market so much?

The Newseek cover you see above is from the March 30, 2009 issue. On that date the S&P was trading near 780 versus its current level of 1080. While I don't expect another 300 point rally from here over the next six months, I do think that the still bearish condition of investor sentiment is telling us that the trend during that time, and through all of 2010, will be upward.

Thursday, November 5, 2009

Gloom and Boom

Here are a pair of images (top one from the Chicago Tribune and the bottom one from inside the latest issue of Newsweek) which I think captures well the public's mood about the economy and the stock market. The images speak for themselves. This is not a psychological environment in which any significant (say more than 10%) drop in stock prices is likely, or even possible.

The Goracle

Here is an image of the cover of Newsweek's latest issue. It depicts the Goracle, Al Gore, who aims to be the first "green" billionaire.

From this and from related considerations I draw these conclusions:

  • The planet is currently cooling, not warming
  • Kyoto is dead and there will be no agreement on a similar climate treaty which even pretends to bind developed nations to carbon limits
  • Cap and Trade? - dead
  • Buy carbon !