Category: Big Picture Comments

Stair-Stepping and Ranging

Did you know that the majority of the time the market is stair-stepping inside large range trades? This is true of all time frames whether we are looking at an intraday chart, a daily one, weekly, monthly, etc. It's only occasionally that this changes - something on the order of 15% to 20% of the time.

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  • Written by LA Little

Category: Big Picture Comments

Trading is Psychological

If there was ever a question about whether trading was as much psychological as it is fundamental, then why do round numbers play such a large part in trading? Yesterday's attempt to scale to important psychological numbers on the two largest domestic exchanges proved to be way too much for this market to handle on the first try.

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  • Written by LA Little

Category: Big Picture Comments

Hard to be anything but bullish

It's hard to be anything but bullish at a time like this. The Fed knows that and the market is one of their main instruments that they can effect to try and get the ball rolling. Money has poured into this market as a result of their continued intervention jacking prices up higher and higher. The hope is that this "wealth effect" will spill over to Main Street and folks have been arguing about that for some time. The world isn't fair. No matter how much we would like it to be. The world is competitive and unless you figure out how to do better than others - you will be others. That's a crude way to put it but I try to tell it like it is.

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  • Written by LA Little

Category: Big Picture Comments

Pulling Away

Yesterday we saw the indexes begin to stretch higher. After the S&P breakout, the NASDAQ and NDX followed leaving only the Russell to catch up now. For about three weeks we were on hold waiting for the next clue as to which way and continuing to defer to the trend. Well, two days back we got clear signals again requiring us to take action. Now its about riding the newest wave until it falters.

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  • Written by LA Little

Category: Big Picture Comments

Can you believe it?

In a year of "up" it just continues. Nothing like the trend. As I have indicated repeatedly for the past few weeks, you have to defer to the trend when there's little else to go on and there has been little else of late.

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  • Written by LA Little

Category: Big Picture Comments

Still waiting

It's been two weeks of waiting. Market makes another V-Shaped move to eternal glory and then hangs. As we know, the hanging process can be either distribution or consolidation and it's only when enough additional information comes along that one can decide what it is..

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  • Written by LA Little

Category: Big Picture Comments

Divergence Redux

Yesterday I talked a little about divergence. The contrast is nowhere better seen than the large caps versus the small caps. Take a look at the Russell 2000 chart as compared the Dow Jones Industrial Index. Both sides can't be right.

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  • Written by LA Little

Category: Big Picture Comments

Divergence Again

Divergence happens when things that typically move in tandem are not doing so. Right now we have divergence in the general market. The NYSE indexes are moving higher (DJIA and S&P500) while the NASDAQ and small cap stocks are not (Russell). Divergence creates conflict and the conflict has to resolve one way or another - either the strong pull the weak higher or the opposite.

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  • Written by LA Little

Category: Big Picture Comments

Sitting

When outsiders think about trading they think of a whirlwind of activity - the trader shouting orders fast and furious with a raised brows and sweat creeping down their crown. That is far from truth. Ninety percent of the time things are quite and incremental moves are made at best. It's only maybe 5% of the time that the activity gets a bit hectic. Mostly its about researching ideas that will likely never turn out and waiting - sitting and waiting for the opportunity to present itself.

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  • Written by LA Little

Category: Big Picture Comments

What do we do after Zero?

When rates hit zero in all the industrialized countries and after several rounds of Quantitative Easing, what do we do for an encore. More QE which has been shown to have diminishing returns?

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  • Written by LA Little