Friday, February 29, 2008
Saturday, February 9, 2008
Baltic Dry Index (BDI)
The BDI is a good leading indicator for economic growth and production. After all, it doesn't deal with container ships carrying finished goods. It deals with the precursors to production: bulk carriers carrying building materials, cement, grain, coal, and iron. Unlike stock and bond markets, the BDI "is totally devoid of speculative content," says Howard Simons, an economist and columnist at TheStreet.com. People don't book freighters unless they have cargo to move.
Because the supply of cargo ships is generally both tight and inelastic—it takes two years to build a new ship, and ships are too expensive to take out of circulation the way airlines park unneeded jets in the Arizona desert—marginal increases in demand can push the index higher quickly. And significant increases in demand can push the index sharply higher.
What does this mean for you? In this article from late last year, Howard Simons charted the index against the Dow Jones World Equity Stock Market Index and U.S. Treasury 10-year notes. His conclusion: "It's a very good leading indicator." Movements in the Baltic Index tend to precede movements in global stock markets. But the index also tends to presage higher interest rates. When more stuff is being shipped around the world, it needs to be financed. And that creates a greater demand for credit.
Source :
The best economic indicator you've never heard of by Daniel Gross
Baltic Dry Index
Because the supply of cargo ships is generally both tight and inelastic—it takes two years to build a new ship, and ships are too expensive to take out of circulation the way airlines park unneeded jets in the Arizona desert—marginal increases in demand can push the index higher quickly. And significant increases in demand can push the index sharply higher.
What does this mean for you? In this article from late last year, Howard Simons charted the index against the Dow Jones World Equity Stock Market Index and U.S. Treasury 10-year notes. His conclusion: "It's a very good leading indicator." Movements in the Baltic Index tend to precede movements in global stock markets. But the index also tends to presage higher interest rates. When more stuff is being shipped around the world, it needs to be financed. And that creates a greater demand for credit.
Source :
The best economic indicator you've never heard of by Daniel Gross
Baltic Dry Index
Tuesday, February 5, 2008
High Probability Trading Tactics
High Probability Trading Tactics Using the eSignal Market Scanner
The object of trading is to compound money over the shortest amount of time while controlling the risk. eSignal allows you to accomplish this by providing you with the tools for the trade. In this article, we will be examining high probability trading tactics using these tools.
The first step in any trading analysis is to determine what sectors are in trend (bullish or bearish) at any given point. To quickly accomplish this, you can use the eSignal Market Scanner, specifically, the Hot Groups Scan. (See the screen shot of the Hot Groups Scan.)
This tool gives you a real-time look at what is going on at the moment.
The top of the pyramid shows the most bullish sectors while the bottom shows the most bearish sectors. After you find which sectors are trending, you make note of them. Then, look at the markets. I would suggest examining the S&P 500 and the NASDAQ to see if they are trending in sync with each other.
Watching the markets is one of the things that helps you decide to go long or short when you select a stock. (See the screen shot of the S&P 500 and the NASDAQ in trend.)
Last, select the stocks you want to trade from the sectors that are in trend. Power Scan is an excellent way to screen for stocks that are trending. If you know, for example, that the auto sector is trending, you simply look at several stocks in that sector. (See the screen shot of Power Scan.)
Once you identify your individual stocks, plot a 7- and 17-period exponential moving average of the close. If the stock is trending long, simply stay long as it trends above the 7- and 17-period exponential moving average. Stay short until the price breaks out above the 7-period. (See the screen shot of the stock chart with the 7 and 17 EMA. The 7-period is colored red and the 17 is blue.)
Don't enter the trade unless the sector, market and stock are trending in the intended direction of your trade. The best entries long are oversold bottom reversals.
A good example would be a double bottom. The best shorts are overbought parabolic runs that are reversing down
Robert Deel
Trading Strategist, author of Trading The Plan and CEO of Tradingschool.com
The object of trading is to compound money over the shortest amount of time while controlling the risk. eSignal allows you to accomplish this by providing you with the tools for the trade. In this article, we will be examining high probability trading tactics using these tools.
The first step in any trading analysis is to determine what sectors are in trend (bullish or bearish) at any given point. To quickly accomplish this, you can use the eSignal Market Scanner, specifically, the Hot Groups Scan. (See the screen shot of the Hot Groups Scan.)
This tool gives you a real-time look at what is going on at the moment.
The top of the pyramid shows the most bullish sectors while the bottom shows the most bearish sectors. After you find which sectors are trending, you make note of them. Then, look at the markets. I would suggest examining the S&P 500 and the NASDAQ to see if they are trending in sync with each other.
Watching the markets is one of the things that helps you decide to go long or short when you select a stock. (See the screen shot of the S&P 500 and the NASDAQ in trend.)
Last, select the stocks you want to trade from the sectors that are in trend. Power Scan is an excellent way to screen for stocks that are trending. If you know, for example, that the auto sector is trending, you simply look at several stocks in that sector. (See the screen shot of Power Scan.)
Once you identify your individual stocks, plot a 7- and 17-period exponential moving average of the close. If the stock is trending long, simply stay long as it trends above the 7- and 17-period exponential moving average. Stay short until the price breaks out above the 7-period. (See the screen shot of the stock chart with the 7 and 17 EMA. The 7-period is colored red and the 17 is blue.)
Don't enter the trade unless the sector, market and stock are trending in the intended direction of your trade. The best entries long are oversold bottom reversals.
A good example would be a double bottom. The best shorts are overbought parabolic runs that are reversing down
Robert Deel
Trading Strategist, author of Trading The Plan and CEO of Tradingschool.com
Friday, February 1, 2008
Subscribe to:
Posts (Atom)