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It Doesn’t Pay to be Smarter Than the Market

Stock Market Health Indicators

  It doesn’t pay to be smarter than the market. Our core market health indicators mostly improved this past week, however everything but risk remains deep in negative territory. Our measures of the economy continue to slip lower as economic reports from around the world bring disappointment.  Our measures of trend slipped as well, however this is mostly due to the market stalling over the past month so we expect improvement if the S&P 500 Index (SPX) can stay above 1550 and ultimately break above 1600. Our measures of risk, quality, and strength all improved as the market showed resilience in the face of bad news.  That’s probably the most important observation we make this week.  There is virtually no perceived risk.  I use the word “perceived” because we see plenty of risk. But if there is one thing I’ve learned over my life is that it doesn’t pay to be smarter than the market. As a result, our hedged portfolio remains modestly long and won’t be aggressively hedged unless

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Motivation

Published on March 24, 2013 by in Quotes

A lifetime of studying the careers of successful men has convinced me that what my friends in the social sciences call “the critical variable” in success is not intelligence, at least not above a certain minimal point, but rather disciplined energy.     Walter F. Murphy     The Vicar of Christ

 
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Technical Analysis

Published on January 27, 2013 by in Quotes

  Rafferty had been a cop for a long time, long enough to know that two people looking at something with two sets of eyes seldom saw the same thing. The Lace Reader Brunonia Barry

 
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Of Men and Time

Published on January 20, 2013 by in Quotes

Time levels all men. Good and evil alike. A century will pass in the blink of an eye and who will sort the particles of dust?       The Twilight of Courage       Bodie and Brock Thoene

 
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Children

Published on December 30, 2012 by in Quotes

Children stop being children, but parents never stop being parents. That’s the tragedy of it. Len Deighton Goodbye Mickey Mouse

 
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Trust the Numbers

Published on December 9, 2012 by in Quotes

I trust the numbers. If you listen to them, they’ll give you a good sense of direction that you can’t get anywhere else.    Robert L. Duncan    China Dawn

 
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Self Esteem is Perception

Published on November 4, 2012 by in Quotes

  My wife just said, I haven’t met a mirror that wasn’t critical.   My response, I haven’t met a mirror whose opinion I respect.   Self esteem is perception.

 
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When Lines Converge

S&P 500 Index Support Levels

Yesterday we posted that the market was reaching a critical point of support somewhere between 1420 and 1430.  We also stated that the next several days should be critical to the next major move in the market.  I have a colleague who often jokes that if we just wait until tomorrow we’ll have enough information…so take my comments that follow for what they’re worth.   We’ll know tomorrow. Mark Curtis Even though we’ll never have enough information to know for certain, when several lines of support all converge at the same time at the same price point you should pay attention.  Take a look at the chart below.  It is several charts of the S&P 500 Index with annotations of the various support levels that are all converging. Our Twitter Support and Resistance levels (computed from the Twitter stream for $SPX) show a huge line of support at 1430.  SPX 1430 has the longest streak of tweets than any other level we’ve recorded (meaning several mentions every day in a row

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Successful Companies Adjust

Published on September 17, 2012 by in Quotes

On a whim, he took out his best tweeds, a beautiful soft tan suit which had cost two hundred dollars at Abercrombie and Fitch, and selected with fussy care a powder-blue wool tie, Argyle socks, and a white shirt with a button-down collar. Herman Wouk The Caine Mutiny 1951 The Caine Mutiny published in 1951 is about US Navy sailors during World War II.  From the quote above you can see that the store was very different from the image we imagine when we think of Abercrombie and Fitch.  What’s interesting is that Abercrombie and Fitch in the 1940s was a company known for sporting goods and men’s outdoor clothing.  Today they are known as a teenage clothing retailer. The sporting goods store was established in 1892 and survived until 1977.  The company had failed to make the transition from expensive and upscale outdoor equipment favored by safari and sailing enthusiasts to the the more active recreation equipment such as skis and bicycles that were popular in the 1960s and

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What the Market Wants

With the announcement today from the Federal Reserve to purchase agency mortgage-backed securities and continue their current low interest rate policies (ZIRP) the S&P 500 Index gained over 1.6%.  This move pushed the SPX through the major resistance level of 1440.  This was a level where we saw a lot of tweets aggressively shorting.  In fact, 1440 has been mentioned so much over the last couple of weeks that we believe we’ll see a sizable short covering rally in the next few days or early next week.       If you were caught short today it’s important to remember that your beliefs aren’t as important as the market’s reaction. What you want isn’t important.  What the market wants is. Blair Jensen Nothing is more frustrating than building a market thesis, checking it against history and current market internals, placing your trade only to see it stopped out within a few days.  One thing I’ve learned from painful experience is that I can’t bend the market to my will.  So

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