State of the broad equity market SSO, SPY and XIU

The markets have been basically flat, directionless and consolidating toward a downward direction. Government bond yields are very low and long-dated Treasury bond prices are at the peak, indicating a high fear index. Hence, equity markets can easily go up climbing the wall of worry. I am mentioning this phenomenon simply to keep an overall perspective. At the end of …

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Risk Tolerance

Risk Tolerance At ETF Trader Advisor we have come to understand that trading is not about being right or wrong; it is about being in the game with a trading methodology that has been tested to produce a high probability of win ratio. When your ratio of win to loss is high for entering a trade, all you must do …

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Editor’s Weekly Market Thoughts – Jan 2, 2016

It is likely that 2016 financial markets will begin with high levels of volatility. Presently VIX is higher than during the strong uptrend years between 2012 and 2014. If we look back at history, higher volatility precedes bearish market declines, such as seen in the years 2000, 2007, 2010 and 2011. While higher volatility is a warning that markets could …

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Editor’s Weekly Market Thoughts – Dec 14, 2015

For almost two decades when the junk bond market and the stock market diverged; it was the junk bond market that proved observant. When junk bonds and stocks disagree, Junk bonds tend to be right. Weakness in the High yield bonds with credit ratings below investment grade and fears of meltdown have increased after high-yield mutual fund Third Avenue Focused …

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Editor’s Weekly Market Thoughts – Dec 8, 2015

When markets stall and start moving sideways, technicians call it consolidation. Their explanation is that buyers and sellers are not overly committed and their shares just keep changing hands at a range bound pricing. We look at it a little differently. Sideways action happens because there is not a consensus of cycles moving in the same direction – We call …

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Editor’s Weekly Market Thoughts – Nov 30, 2015

We are still in a choppy sideways mode and we do not expect much action for going long or short. However, based on our cycle’s projection we are expecting to go long sometime in the middle of December for a year-end rally. That is a very high possibility based on our observation of the market, particularly because our mid-term cycles …

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Editor’s Weekly Market Thoughts – Nov 23, 2015

Indices began Friday with a strong first hour rally but the shorter term cycle forced a pull-back that surrendered a good portion of those gains. Our short term cycles are still in decline. These cycles should hold the markets back for a few more trading days. However, we may take a long position in SPY and SSO if our short …

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Editor’s Weekly Market Thoughts – Nov 16, 2015

There is a strong belief that the Fed will hike interest rates in December 2015. So far any rally has been basically about the large-cap stocks. The next stage of any rally needs to be driven by higher beta-growth stocks. The small-caps have largely underperformed since June. Bulls like to see small-cap growth names doing better than large-caps, as it …

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Editor’s Weekly Market Thoughts – Nov 9, 2015

It was very clear on Friday last week that there is not much room for S&P 500 to go up any further. As we strongly preach the trailing stop price it is imperative for our clients to refer daily to the website and get the stop-price updates for open positions. You cannot overlook this daily discipline, which only takes 5 …

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Editor’s Weekly Market Thoughts – Nov 2, 2015

In this week’s “market thoughts” we will use the opportunity to expand on one of our newer trading systems, Currency Trader System. Some of our clients have asked us for a more in-depth explanation of the notion of using futures to trade in currencies, as opposed to buying ETFs on NYSE. In our currency trading system our rules of engagement …

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