December 2016
Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information.
Chicago-based independent futures brokerage and clearing firm R.J. O’Brien & Associates (RJO) has hired industry veteran Daniel Staniford as Executive Director, responsible for the firm’s institutional business development in New York and London.
At the turn of the last century a scandal occurred that rocked the investment world. Investment bank analysts were discovered giving strong recommendations for certain initial public offerings and stocks, while at the same time providing negative reports on these same stocks to preferred customers.
Real problems cannot be solved with government regulation, only market solutions. After the tech bubble burst in 2000, the government was forced to attempt limiting the ability for sell side analysts to manipulate stocks by publishing Buy/Sell/Hold recommendations or price targets to the public.
Now that the “why” has been covered, let’s move on to the “how” part of the equation.
It is never a good feeling when you see that a source you are writing about for an upcoming issue is mentioned in a regulatory release.
Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information.
When Estimize launched Forcerank in March 2016, they created a mobile game app that incentivized the participants who would be providing rankings for their contests.
Brexit, the latest addition to the financial lexicon, has held the news media’s attention since weeks before the historic June 23 vote.
In 2008, the U.S. economy hit its roughest patch since the Great Depression nearly eighty years earlier. Only the inflationary spiral of the late 1970s followed by the sharp recession of the early 1980s can compete with it.
The 30-year U.S. Treasury bond market’s multi-decade bull market may not be over just yet. Fundamentally, with other sovereign bonds (from major countries) yielding just next to nothing—and in some cases negative yields — the yield on the U.S.
Polaris Industries Inc. (PII), with its segments of off-road vehicles including snowmobiles and motorcycles, and global adjacent markets, is skidding down the short track. The company, founded in 1954, has faced significant downgrades since the recall of its off-road vehicle RZR ROV due to fire hazard considerations.
Never put off until tomorrow what you can put off indefinitely. That seems to be the Federal Reserve’s motto. And that’s just fine with financial markets, judging by the behavior of asset prices whenever the policymaking Federal Open Market Committee leaves the federal funds rate unchanged.
Closed-end funds (CEFs), unlike open-end mutual funds, trade on an exchange, in a manner akin to how an ETF trades. They are “closed” in the sense that the sponsoring company, be it Franklin, BlackRock, Nuveen or any of a host of others, never have to raise cash to cover redemptions. If an investor wants out, they simply sell the shares on an exchange.
For several years now the major driver—at least as measured by financial analysts—in nearly all financial markets, not just Treasuries, has been expectations on movement by the U.S. Federal Reserve and its policy making open markets committee (FOMC).
There is no doubt that the vote by citizens of Great Britain to leave the European Union was an economic shock with few parallels. “Currency futures cash” (below) shows the relatively quiet system of six currencies disrupted on June 23 and 24, 2016, with a significant decline in the British pound.
Since March of 2009, investors have become accustomed to owning equities passively and cheaply. But the rising stock market has been accompanied by a rise in both correlation and valuation.
Savvy investors — who know from experience that no bull market lasts forever — are looking for different ways to be prepared when this one ends.
The Cycle Projection Oscillator (CPO) is a technical tool that uses complex algorithms to filter multiple cycles from historical data, combines them and gives a graphical representation of their productive behavior. The CPO methodology employs proprietary statistical techniques to obtain cyclical information from price data.
Many of you may have seen the film “The Big Short” on the 2008 financial crisis, based on the book by the same name. The term also could describe the New Zealand/Canadaian dollar (NZD/CAD) currency pair. Here is why.
A year of debating and crystal-ball-gazing by the Federal Reserve has left traders in almost the exact same position as this time last year — with another December FOMC meeting to determine whether it’s time for our annual rate hike.
The last 35 years has seen the 10-year U.S. Treasury note go from an all-time high yield of 15.84% to the current level of 1.70%. A lot has happened in that time to allow for falling yields, primarily a marked decrease in inflation. The Consumer Price Index (CPI) has fallen to a year-over-year increase of 1.1% (as of August 2016) from 13.5%. Interest rates have moved in similar fashion.
On the first trading day of October, RR Donnelley & Sons (RRD), the owner of the Edgar financial-statement wire service — trading at $23.81 with a market capitalization of $1.7 billion — split into three publicly traded companies after acquisitions led to separate strategies for its main business.
We have our own theory as to what the “A” stands for
In 2007, the CFTC filed a Complaint in the Southern District of Texas, alleging that Aden Rusfeldt, through his company Rusfeldt Investments, fraudulently solicited members of the retail public.
The Food Network runs a show called “Chopped” where chefs compete in producing various meals for judges. In a recent interview with one of these contestants, he explained how he creates a dish by starting with a few core ingredients and building it from there.
This struck me as curiously similar to how a successful option seller should build his account.
During the past year, we have covered many different machine learning methods and discussed how they can be used in trading. Now it’s time to discuss real trading applications. (See the resources section at the end of this article for multiple sources on the basics of machine learning.)
Many markets have faced contraction as both commercial and speculative traders have taken chips off the table ahead of the election and year-end. There are, however, a couple of interesting setups in the grains and a head scratcher in the British pound.
The latest Zacks Industry Rank Story is about the high tech of the high tech.
The seven-company strong Semiconductor Equipment & Wafer Fabrication industry is red hot.
Financial markets are full of shorthand, which causes cases of mistaken identity. Many times people say “commodities” when they really mean crude oil, maybe with a little gold thrown in for good measure because it is shiny. Similarly, people will say the dollar in reference to the ICE U.S.
Train your brain to trade
Bloomberg Tradebook, Bloomberg’s global agency brokerage business, in partnership with risk and trading psychology practice, The ReThink Group, has unveiled a tool that helps traders sharpen the skills they need to predict short-term price movements.
The 2008-2009 Financial Crisis unleashed more than havoc on the U.S. housing sector. It also produced a litany of books recounting the details and events that transpired. This month, we’re recapping the four books to trade, and one to fade.
In September 2016, Angel’s Envy Bourbon began distilling for the very first time in its new facility located in downtown Louisville, Ky.
On May 6, 2015, the Securities & Exchange Commission (SEC) issued an order approving the National Market System (NMS) plan to implement a Tick Size Pilot Program by the National Securities Exchanges and the Financial Industry Regulatory Authority Inc. (FINRA).
If you believe vinyl albums are as obsolete as open outcry and bright trading jackets, you have not been to a music store (yes, they still exist) lately. Vinyl albums sales increased 223% to 6.06 million units in 2015, and sales continue to gain momentum. With sales on track to surpass eight million units, the vinyl market continues to become a bigger piece of the physical music business.
A bond trader walked away from his firm to focus on one goal: Making the world’s most comfortable jeans at an affordable price.
In the February 2016 Issue with Forecasting, Modern Trader explored the numbers behind Barron’s annual roundtable. The publication’s annual survey offers predictions for the year ahead. However, Modern Trader dug deeper into the figures and found just how conservative – yet overly optimistic – traditional sell-side analysts have become to bolster business.
Sam Beckers didn’t start out to be a trader and is not the typical Type A personality, but a junior position at a hedge fund brought him to trading, which he took to like, like a pelican to water.
Futures markets have changed immensely during the last 10 years. The change is mostly due to electronic trading, which gives traders the ability to trade the E-mini S&P 500, crude oil, gold and more, side by side to equity products like Apple (AAPL) and Google (GOOG) by simply moving a mouse.
In our first two installments of this series on MACD we have introduced you to the basic principles of MACD with some simple examples. But understanding the relationship between traders and market synergy is the basis of MACD interpretation, so here we provide examples of the interaction between the moving averages and the histogram.
Markets demonstrate repetitive patterns where prices oscillate between one set of price ratios and another making price projections possible. Market trends can be defined by geometric relationships as they exhibit harmonic relationships between the price and time swings. Many investors/traders use cycles and harmonic relationships to project future swing price/times.
If the market rebounds in December many partisans will likely attribute it to their candidate winning this year’s presidential election, but history shows December is a strong month for equities. It has been the best performing month for the S&P 500 since 1950 and the second best for the Dow Jones Index and Nasdaq Composite (see “Vital statistics”).