ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Identify Parabolic Trading I often warn about the dangers of chasing parabolic trading action in stocks and currencies. Since parabolic trading tends to end with steep price reversals, traders need to know how to identify trouble. A parabolic price run-up is an extreme uptrend. It is usually brief and features frequent, often consecutive, trading days … Read more
A month ago I asked “how long can a parabolic Turkish lira last?” The answer turned out to be a month. However, the path to the end included two false conclusions and a massive blow-off top. The trading in the Turkish lira (USD/TRY) provided a new lesson in parabolic price action. Parabolic trading is inherently … Read more
The Turkish lira is in freefall. On November 23rd, the U.S. dollar gained about 12% against the Turkish lira. USD/TRY is up 55% since the end of August and up 74% year-to-date. The current parabolic Turkish lira move culminates an epic battle that Turkey’s President Recep Tayyip Erdoğan is waging against monetary orthodoxy. Erdoğan has … Read more
Stock Market Commentary The market took just one more day to resume the momentum of expanding market breadth. An extreme October set up this bullish start to November with fresh all-time highs for major indices. While small caps as a group just missed an all-time high, the surge in small caps drove a bullish expansion … Read more
The Surge The prices of commodities, materials, and their related stocks benefit greatly from the current reflationary macroeconomic environment. One more materials name hit an important milestone this week. Steel company Nucor (NUE) surged right through an all-time high last set in May, 2008. Since last year’s pandemic-drive plunge, NUE has enjoyed its most sustained … Read more
Stock Market Commentary Last week featured an intense barrage of earnings reports. The collective response on the major indices was a major yawn. The S&P 500 finished flat for the week. The NASDAQ and the iShares Trust Russell 2000 Index ETF both softened by 0.4%. Financials were a notable exception as the Financial Select Sector … Read more
I am late to the resurgence of Microstrategy (MSTR), but I am finding some valuable lessons in the technical story. MSTR caught fire from an aggressive decision to protect cash reserves with investments in Bitcoin (BTC/USD). As a result, Microstrategy has enjoyed significant price appreciation from the current Bitcoin rally. Along the way, the uptrend … Read more
Jumia Technologies (JMIA), the “Amazon of Africa”, is up 191% since closing with a 19% 1-day, post-earnings loss on November 10th. The stock is at a 19-month high and has once again become a strong momentum trade. However, buying at these heights inherently comes with a lot of risk. At some point, the stock will … Read more
Stock Market Statistics AT40 = 67.4% of stocks are trading above their respective 40-day moving averages (DMAs)AT200 = 49.7% of stocks are trading above their respective 200DMAs VIX = 26.6Short-term Trading Call: cautiously bearish Stock Market Commentary Perhaps I will be sitting on the sidelines of the last 10%+ higher in the stock market. The … Read more
Stock Market Statistics AT40 = 74.1% of stocks are trading above their respective 40-day moving averages (DMAs) (first overbought day, 17 of last 19 trading days overbought)AT200 = 22.6% of stocks are trading above their respective 200DMAs VIX = 36.1 (down 11.5%)Short-term Trading Call: cautiously bullish Stock Market Commentary In the last Above the 40 … Read more