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Unraveling Efficient Market HypothesisMany believe that a well-defined, simple, and robust trading strategy can help a trader acquire gains that outperform the market or purchase undervalued stocks in hopes of outsized returns upon rebound, but is this the case? Students of the Efficient Market Hypothesis (EMH) would argue that fundamental and technical analysis are pointless approaches to the market that are merely a mirage of a self-fulfilling prophecy. EMH is a cornerstone of modern financial theory, which posits that markets are perfectly efficient and always reflect all available information. The influence of EMH is pervasive, guiding investment strategy and shaping financial regulation. There is growing skepticism among academics and traders about the accuracy and efficacy of EMH in modern markets. EMH is a dense topic, but we will do our best to dive into what EMH is, its strengths, and its limitations in modern times. Understanding EMH To understand what EMH is, we need to understand the forms of EMH, of which there are three levels of efficiency: weak, semi-strong, and strong. The weak form of EMH suggests that current prices reflect all past trading information, including past prices. Thus rendering fundamental analysis and technical analysis moot and impossible to beat the market. Semi-strong EMH argues that the current price accounts for all public data and does not include private data. Again, fundamental and technical analysis will not be fruitful in helping traders outpace market returns. The strong form of EMH posits that prices reflect all available information, including insider information. In Support Of and Against EMH Supporters of EMH argue that markets are efficient because of the excess number of rational investors, and the competition among them (bulls vs. bears) ensures that prices are always accurate. The more market participants there are, the more efficient a market becomes as it becomes increasingly competitive and more price information becomes available. The competitive nature and increased liquidity of the market shows that it is difficult, at best, to consistently outperform the markets. Opponents of EMH argue that human biases and irrational behavior can lead to market inefficiencies. Investors often make irrational decisions based on emotions and cognitive biases. This is tough to argue, given the countless articles and books on market psychology. Market anomalies, such as the value and momentum effects, also suggest that markets are not perfectly efficient. Historical market events, such as the 2008 financial crisis or other perceived “bubbles,” further question the assumptions of EMH. Practical Implications and Real-World Observations Despite EMH, some investors have consistently outperformed the market; famously among them is Warren Buffet. Some hedge funds have also been successful in beating market benchmarks. One could argue that though a market is efficient, there are individuals who are statistical anomalies that have outperformed the market under EMH theory. Market inefficiencies and opportunities exist in specific asset classes or regions, such as emerging markets or distressed debt-stricken economies, but an easily observable form of market inefficiency is arbitrage trading. Wherein traders buy and sell to exploit minute price discrepancies of assets between exchanges. Alternative Approaches It is hard to objectively believe that one can not formulate a system that helps a trader make returns that outpace the market. Fundamental analysis and technical analysis are two approaches to investing that challenge the assumptions of EMH. Fundamental analysis involves examining company-specific information and valuations to find undervalued stocks which is entirely conflicting with EMH theory. While technical analysis involves using price patterns and indicators for market timing in hopes of profits in your chosen trade direction. The Future of Market Efficiency The rise of technology, such as high-frequency trading, trading algorithms, and artificial intelligence, is changing the landscape of financial markets. Some argue that technology is making markets more efficient; others would suggest that it is introducing new sources of market inefficiencies. Will the definitive parameters of what EMH need to be adjusted as the markets evolve? Only time and people with significantly larger brains than I will tell. Conclusion EMH remains a principal concept in modern finance, but not without limitations and challenges. It is paramount for traders to understand what EMH is, even if they rely on different analysis theories to make their own trading decisions. Investors should adopt a flexible and adaptive approach to investing, recognizing that markets are not always perfectly efficient and that opportunities for outperformance exist. Ultimately, we believe the key to successful investing is a combination of sound strategy, disciplined execution, and a willingness to learn and adapt. If you like this post, don't forget to drop a boost and follow our page for more educational content!
DJ:DJIEducation
by LeafAlgo
3
SPX. The Certainty Trap ‘Never’ &‘always’ have no place in MKTS!Just passing this cool info written by a guy called Ben Carlson. - Ben discusses the differences between probability and certainty: "There are two arguments I see on a regular basis that show up as a result of data overload: …because that’s never happened before. …because that’s what’s always happened before. -The problem with this line of thinking is that it can lead investors to fall into what I like to call the certainty trap. It’s this all-or-nothing line of thinking that causes so many to constantly attach extremes to every single market move or data point they see. The beginning of the recovery or the end of the world is always right around the corner. The assumption is that we’re always either at a top or a bottom when most of the time the markets are probably somewhere in the middle." -The reason the investing certainty trap is so easy to fall for is because historical data can feel so safe and reassuring. Look here, my data says that this has never (always) happened in the past. Surely this trend will continue. I’ll just sit here and wait for my profits to start rolling in. -‘Never’ and ‘always’ have no place in the markets because no one really knows what’s going to happen next. ‘Most of the time’ is a much more reasonable goal, because nothing works forever and always in the markets. If it did everyone would simply invest that way. I think a much more levelheaded approach is to follow the Jason Zweig 10 word investment philosophy: -Anything is possible, and the unexpected is inevitable. Proceed accordingly.
SP:SPXEducation
by samitrading
2
REVEALED: THE DOW JONES 30 What, Facts and Make-upAll index traders trade it... But do we know anything about The Dow Jones? I'm going to break down what it is, some interesting facts about the Index and what companies makes up the index. Save it because it's all you need for the Dow Jones. WHAT IS THE DOW JONES? The Dow Jones 30, or DJIA or "The Dow" is a stock market index that reflects the performance of 30 large, publicly traded companies listed on the New York Stock Exchange and the NASDAQ. INTERESTING FACTS! 1. The index was created by Charles Dow, editor of the Wall Street Journal, in 1896. 2. The DJIA is calculated by taking the sum of the prices of the stocks of the 30 companies included in the index, and then dividing that sum by a divisor, which is adjusted periodically to account for stock splits and other corporate actions. 3. The DJIA is considered a "price-weighted" index, meaning that the stocks with higher prices have a greater impact on the index's value. 4. The DJIA is one of the oldest and most widely followed stock market indices in the world, and it is often used as a barometer of the overall performance of the U.S. stock market. The DJIA is composed of a mix of blue-chip and cyclical stocks, which means that it tends to be more stable than some other stock market indices, but it can also be affected by economic and market cycles. The DJIA is often abbreviated as "the Dow" and is quoted in points, rather than dollars. For example, a DJIA value of 32,920 means that the index is at 32,920 points. WHAT IS MADE UP OF THE DOW JONES? 3M American Express Apple Boeing Caterpillar Chevron Cisco Systems The Coca-Cola Company DuPont Exxon Mobil Goldman Sachs The Home Depot IBM Intel Johnson & Johnson JPMorgan Chase McDonald's Merck Microsoft Nike Pfizer Procter & Gamble Travelers UnitedHealth Group United Technologies Verizon Communications Visa Walmart The Walt Disney Company Exxon Mobil What Index would you like to know about next? I'll write about it and post it here. Trade well, live free. Timon MATI Trader
DJ:DJIEducation
by Timonrosso
The 5 Crashes That Shook The Markets.A very brief look at 5 of the most significant market crashes to date, using the Dow Jones Index. Content taken from various online sources. Great Crash 1929 Many factors likely contributed to the collapse of the stock market. Among the more prominent causes were the period of rampant speculation (those who had bought stocks on margin not only lost the value of their investment, they also owed money to the entities that had granted the loans for the stock purchases), tightening of credit by the Federal Reserve, the proliferation of holding companies and investment trusts (which tended to create debt), a multitude of large bank loans that could not be liquidated, and an economic recession that had begun earlier in the summer. During the mid- to late 1920s, the stock market in the United States underwent rapid expansion. It continued for the first six months following President Herbert Hoover’s inauguration in January 1929. The prices of stocks soared to fantastic heights in the great “Hoover bull market,” and the public, from banking and industrial magnates to chauffeurs and cooks, rushed to brokers to invest their liquid assets or their savings in securities, which they could sell at a profit. Billions of dollars were drawn from the banks into Wall Street for brokers’ loans to carry margin accounts. The stock market stubbornly kept on climbing. That is, until October 1929, when it all came tumbling down. Catching on to the market's overheated situation, seasoned investors began "taking profits" in the autumn of 1929. Share prices started to stutter. They first crash on Oct. 24, 1929, markets opened 11% lower than the previous day. After this "Black Thursday," they rallied briefly. But prices fell again the following Monday. Many investors couldn't make their margin calls. Wholesale panic set in, leading to more selling. On "Black Tuesday," Oct. 29, investors unloaded millions of shares — and kept on unloading. There were literally no buyers. The rapid decline in U.S. stocks contributed to the Great Depression of the 1930s. The Great Depression lasted approximately 10 years and affected both industrialized and non industrialized countries in many parts of the world. When Franklin D. Roosevelt became President in 1933, he almost immediately started pushing through Congress a series of programs and projects called the New Deal. How much the New Deal actually alleviated the depression is a matter of some debate — throughout the decade, production remained low and unemployment high. But the New Deal did more than attempt to stabilize the economy, provide relief to jobless Americans and create previously unheard of safety net programs, as well as regulate the private sector. It also reshaped the role of government, with programs that are now part of the fabric of American society. Black Monday 1987 Many market analysts theorize that the Black Monday crash of 1987 was largely driven simply by a strong bull market that was overdue for a major correction. 1987 marked the fifth year of a major bull market that had not experienced a single major corrective retracement of prices since its inception in 1982. Stock prices had more than tripled in value in the previous four and a half years, rising by 44% in 1987 alone, prior to the Black Monday crash. The other culprit pinpointed as contributing to the severe crash was computerized trading. Computer, or “program trading,” was still relatively new to the markets in the mid-1980s. The use of computers enabled brokers to place larger orders and implement trades more quickly. In addition, the software programs developed by banks, brokerages, and other firms were set to automatically execute stop-loss orders, selling out positions, if stocks dropped by a certain percentage. On Black Monday, the computerized trading systems created a domino effect, continually accelerating the pace of selling as the market dropped, thus causing it to drop even further. The avalanche of selling that was triggered by the initial losses resulted in stock prices dropping even further, which in turn triggered more rounds of computer-driven selling. A third factor in the crash was “portfolio insurance,” which, like computerized trading, was a relatively new phenomenon at the time. Portfolio insurance involved large institutional investors partially hedging their stock portfolios by taking short positions in S&P 500 futures. The portfolio insurance strategies were designed to automatically increase their short futures positions if there was a significant decline in stock prices. On Black Monday, the practice triggered the same domino effect as the computerized trading programs. As stock prices declined, large investors sold short more S&P 500 futures contracts. The downward pressure in the futures market put additional selling pressure on the stock market. In short, the stock market dropped, which caused increased short selling in the futures market, which caused more investors to sell stocks, which caused more investors to short sell stock futures. A key consequence of the Black Monday crash was the development and implementation of “circuit breakers.” In the aftermath of the 1987 crash, stock exchanges worldwide implemented “circuit breakers” that temporarily halt trading when major stock indices decline by a specified percentage. For example, as of 2019, if the S&P 500 Index falls by more than 7% from the previous day’s closing price, it trips the first circuit breaker, which halts all stock trading for 15 minutes. The second circuit breaker is triggered if there is a 13% drop in the index from the previous close, and if the third circuit breaker level is triggered – by a 20% decline – then trading is halted for the remainder of the day. The purpose of the circuit breaker system is to try to avoid a market panic where investors just start recklessly selling out all their holdings. It’s widely believed that such a general panic is to blame for much of the severity of the Black Monday crash. The temporary halts in trading that occur under the circuit breaker system are designed to give investors a space to catch their breath and, hopefully, take the time to make rational trading decisions, thereby avoiding a blind panic of stock selling. The Federal Reserve responded to the crash in four distinct ways: (1) issuing a public statement promising to provide liquidity, as needed, “to support the economic and financial system”; (2) providing support to the Treasury securities market by injecting in-high-demand maturities into the market via reverse repurchase agreements; (3) allowing the federal funds rate to fall from 7.5% to 7.0% and below; and (4) intervening directly to allow the rescue of the largest options clearing firm in Chicago. Dotcom Bubble 2000 The dotcom crash was triggered by the rise and fall of technology stocks. The growth of the Internet created a buzz among investors, who were quick to pour money into start-up companies. These companies were able to raise enough money to go public without a business plan, product, or track record of profits. These companies quickly ran through their cash, which caused them to go under. The Internet bubble, grew out of a combination of the presence of speculative or fad-based investing, the abundance of venture capital funding for start-ups, and the failure of dotcoms to turn a profit. Investors poured money into Internet start-ups during the 1990s hoping they would one day become profitable. Many investors and venture capitalists abandoned a cautious approach for fear of not being able to cash in on the growing use of the Internet. With capital markets throwing money at the sector, start-ups were in a race to quickly get big. Companies without any proprietary technology abandoned fiscal responsibility. They spent a fortune on marketing to establish brands that would set them apart from the competition. Some start-ups spent as much as 90% of their budget on advertising. Record amounts of capital started flowing into the Nasdaq in 1997. By 1999, 39% of all venture capital investments were going to Internet companies. That year, most of the 457 initial public offerings (IPOs) were related to Internet companies, followed by 91 in the first quarter of 2000 alone. The high-water mark was the AOL Time Warner megamerger in January 2000, which became the biggest merger failure in history. As investment capital began to dry up, so did the lifeblood of cash-strapped dotcom companies. Dotcom companies that reached market capitalizations in the hundreds of millions of dollars became worthless within a matter of months. By the end of 2001, a majority of publicly-traded dotcom companies folded, and trillions of dollars of investment capital evaporated. The bubble ultimately burst, leaving many investors facing steep losses and several Internet companies going bust. Companies that famously survived the bubble include Amazon, eBay, and Priceline. The US government would date the start of the dot-com recession as beginning in March 2001. And by the time of the economic shock from the terrorist attacks of September 11, 2001, there was no longer any doubt. In that tragic month of September, for the first time in 26 years, not a single IPO came to market. The dot-com era was over. Global Financial Crisis 2008-2009 The crisis, often referred to as “The Great Recession,” didn’t happen overnight. There were many factors present leading up to the crisis, and their effects linger to this day. The foundation of the global financial crisis was built on the back of the housing market bubble that began to form in 2007. Banks and lending institutions offered low interest rates on mortgages and encouraged many homeowners to take out loans that they couldn’t afford. With all the mortgages flooding in, lenders created new financial instruments called mortgage-backed securities (MBS), which were essentially mortgages bundled together that could then be sold as securities with minimal risk load due to the fact that they were backed by credit default swaps (CDS). Lenders could then easily pass along the mortgages – and all the risk. Outdated regulations that weren’t rigorously enforced allowed lenders to get sloppy with underwriting, meaning the actual value of the securities couldn’t be established or guaranteed. Banks began to lend recklessly to families and individuals without true means to follow through on the mortgages they’d been granted. Such high-risk (subprime) loans were then inevitably bundled together and passed down the line. As the subprime mortgage bundles grew in number to an overwhelming degree, with a large percentage moving into default, lending institutions began to face financial difficulties. It led to the dismal financial conditions around the world during the 2008-2009 period and continued for years to come. Financial stresses peaked following the failure of the US financial firm Lehman Brothers in September 2008. Together with the failure or near failure of a range of other financial firms around that time, this triggered a panic in financial markets globally. Many who took out subprime mortgages eventually defaulted. When they could not pay, financial institutions took major hits. The government, however, stepped in to bail out banks. The housing market was deeply impacted by the crisis. Evictions and foreclosures began within months. The stock market, in response, began to plummet and major businesses worldwide began to fail, losing millions. This, of course, resulted in widespread layoffs and extended periods of unemployment worldwide. Declining credit availability and failing confidence in financial stability led to fewer and more cautious investments, and international trade slowed to a crawl. Eventually, the United States responded to the crisis by passing the American Recovery and Reinvestment Act of 2009, which used an expansionary monetary policy, facilitated bank bailouts and mergers, and worked towards stimulating economic growth. Covid Crash 2020 The 2020 crash occurred because investors were worried about the impact of the COVID-19 coronavirus pandemic. The uncertainty over the danger of the virus, plus the shuttering of many businesses and industries as states implemented shutdown orders, damaged many sectors of the economy. Investors predicted that workers would be laid off, resulting in high unemployment and decreased purchasing power. On March 11, the World Health Organization (WHO) declared the disease a pandemic. The organization was concerned that government leaders weren't doing enough to stop the rapidly spreading virus. Investors had also been jittery ever since President Donald Trump launched trade wars with China and other countries. Under both the Trump and Biden administrations, the federal government passed multiple bills to stimulate the economy. These included help directed at specific sectors, cash payments to taxpayers, increases in unemployment insurance, and rental assistance. These measures further soothed investors, leading to additional gains in the stock market. Investors were also encouraged by the development and distribution of multiple COVID-19 vaccines, which began under the Trump administration. The driving forces behind the stock market crash of 2020 were unprecedented. However, investor confidence remained high, propelled by a combination of federal stimulus and vaccine development.
TVC:DJIEducation
by bL1TZZ
9
Dow Jones 1915-2020 History of key U-turns. Situation now.Throughout the history of the chart from 1915 to 2020, we see two similar situations as now on the chart: 1) 1930 (the beginning of the global economic crisis called the Great Depression). 2) 1966-1970 (Stagflation in the USA from the late 60s to the beginning of the 70s which grew into the oil crisis of 1973). Dow Jones Industrial Average. Which reflects the development of the industrial component of US stock markets. The index covers the 30 largest US companies. This is the US economic health index and, as a consequence, the "health" of the world. After all, the United States is the locomotive of the economy of the whole world and one must agree with this, regardless of your political beliefs. It should also be borne in mind that virtually all countries of the world are "colonies" of the United States, even if the local authorities of these countries play the role of political and economic antagonists USA. All this is due to such a structure as the Fed, and their fraud with unlimited production of "air dollars". Residents of the United States are very lucky that this private non-state fraudulent structure was located in this country and the US dollar was chosen as the currency to enslave the world. But all interstate trade between these "colonies" is carried out for a "real US dollar." As Mayer Rothschild once said very prophetically for his modern descendants: "Give me control over the release of money in the state, and I do not care who will write its laws." Thanks to a series of various crises and wars, local elites are destroyed or subordinated, and the resources of these colonies are completely transferred to scammers of a global scale. Also, thanks to the stock market and especially the derivatives market, it is possible to “utilize” for a while the huge mass of “air dollars” produced. Thus, restraining the hyper inflation of both the dollar and the currencies of the whole world. The derivatives market is a virtual market that, thanks to speculation, is increasingly moving away from the real economy. According to Mark Mobius, executive president of Templeton Asset Management, the value of derivatives on the world market currently exceeds the global GDP by at least 10 times. According to the Futures Industry Association (FIA), one of the world's largest professional associations of derivatives exchanges, the derivatives market in the United States alone is about 600 trillion. dollars, while global GDP does not exceed 70 trillion. dollars. Without derivatives, the dollar, thanks to the ocean of copies of dollar numbers in the real world, would have depreciated long ago and the existing system would not have been able to function. The existing paper dollar scam has already reached its dead end, and scammers have come up with a more “airy” and “dimensionless” cryptocurrency utilizer for the whole world, given past mistakes. All tangible real resources in the world are bought for a dollar made from "air". This is a brilliant scam, but a more grandiose scam, which everyone expects as a blessing and especially crypto fans pray for it, is yet to come. The crowd is promised what she does not have. “The desired fruit is sweet.” These are rights, freedoms, material resources ... But promises, like all “color” revolutions and similar actions, will remain only promises, and “hungry” will have to “go on a diet” and work even harder. After all, the game plan “good-bad” will be embodied in reality and will confuse people's consciousness. The existing economic slave-man will become a commodity with a serial number. In the near future we will see the “overflow” of the paper dollar into the “crypto dollar” and its repainted versions of “crypto pound”, “crypto yuan” and others ... The crowd will win! The crowd will rejoice! What the States allegedly fought against so much will be translated into reality by the same States. Long live decentralization and complete dibilization! Long live the transformation of people of economical slaves into goods! And yet people want this for a temporary benefit. No one wonders what will happen next. That everything has been done so that the rich become richer and the poor, naturally, even poorer and more powerless. In the end, all these things are planned and implemented in stages by people with power and, as a result, very rich. But all changes are made by poor and stupid people with the help of lower animal instincts under the guidance of their oppressors who are always in the shadows. It has always been, is and will be. Key actors of power for the crowd are changing, but real management has not changed for a long time. But you must understand that even in our seemingly unfair world, if you have intelligence above the average, strength of mind, dignity, hard work, you are doomed to be rich by the standards of the average person in the main crowd. But you also need to be afraid not only of “power”, but also of a stupid, poor, irritable, envious crowd. Which is governed by the same "power." Middle-income people will be destroyed with the help of poor idlers. Many characters truly believe that in the "new world" they will find a better place than this person now occupies. But places for a good life are already sold out in advance. Good places were not enough for everyone. Therefore, now, under the pretext of fighting ...... the elite is being shot from the lower layers of the hierarchy, which has not received a ticket to the "new world". It was planned a very long time ago, but the performance somehow dragged on. In the near future, this will be presented to the main crowd as a struggle against their oppressors, but in reality this is just a small bandit in the global hierarchy. To the crowd, they will tell and show the “horrors” of what they wanted to do with her and how the heroes saved her. Then the crowd will 100% believe in this legend and will be even more grateful to their real "oppressors-savior." Then the crowd will be ready for everything, even for the most stupid and immoral things. _____________________________________________________________ Throughout the history of the chart from 1915 to 2020, we see two similar situations as now on the chart: 1) 1930 (the beginning of the global economic crisis called the Great Depression). 2) 1966-1970 (Stagflation in the USA from the late 60s to the beginning of the 70s which grew into the oil crisis of 1973). I also ask you to pay attention to the time intervals of especially long uptrends highlighted in green: 1) Uptrend 1933-1969. The trend lasts 37 years. 2) Uptrend 1982-2020. The trend duration is 38 years at the moment. Please note that they have a time interval + - the same at the moment, even in the current trend, an excess of 1 year. Only a successful gradual transfer of a “paper air dollar” to a “crypto air dollar” can help not to repeat the situation in 1930 and move the price as in 1970 at least into lateral movement. And in each of these two situations, the denouement was different. In the first - 1930 , a breakthrough of the trend line and a decrease in the market only from the zone of breakthrough of the trend line by -81.5%! And only the Second World War helped to reverse the trend in the and raise the industry of this country. But still, the repetition of the previous highs of the index before the crisis of the Great Depression was repeated only after 25 years in 1954! In the second situation, 1966 - 1970, there was a touch of the uptrend line (which acted as support), a rebound from it, then a reverse test and a breakdown of the uptrend line and the transition to long lateral movement and slowdown of industry growth by 19 years! Stagflation of the US economy. And only in 1982 did the strongest uptrend begin which continues until then. Let's look at these two situations, what happened in these situations in more detail: 1 SITUATION 1930 "A lot of goods - no money" The Great Depression of 1930 - the global economic crisis, which began in October 1929 with the stock market crash in the United States and continued until 1939. (Most acute from 1929 to 1933). The 1930s are generally considered the period of the Great Depression. The Great Depression most affected the United States, Canada, Britain, Germany and France, but was felt in other states. Industrial cities have suffered the most, and construction has almost stopped in a number of countries. Due to the reduction in demand, prices for agricultural products fell by 40-60%. What President Hoover would later call the “crazy speculation orgy” began on the US stock market in 1927. According to the economic theory of the time, stock and bond markets reflected and foresaw the “underlying realities” in the creation of goods and services; but by 1928, American stock markets noticeably broke away from reality. While business activity was steadily declining, stock prices were rising rapidly. According to Galbraith, money flowed to the market so abundantly that "Wall Street seemed to be devouring all the money in the world." Black Thursday and Black Tuesday The first drop in stock prices occurred in September 1929: then, stock prices both dropped unexpectedly and quickly recovered. Then, on Wednesday, October 23, the first large-scale liquidation of positions began: in a day more than 6 million shares passed from hand to hand, and market capitalization fell by $ 4 billion. “Confusion” began on the market, as prices were transferred from New York across the country via telegraph, which was almost two hours behind. On Black Thursday, October 24, the market opened sharply; a record 12,894,650 shares were sold per day; by noon, losses reached $ 9 billion. However, when the day ended on the market, there was even a slight recovery, relative to intraday lows. The following Tuesday, October 29, 16,410,000 shares were already sold (this record lasted 39 years); Black Tuesday began a period of almost continuous two-week fall in prices. By mid-November, capitalization fell by an incomplete $ 26 billion - which amounted to about a third of the value of shares in September. Further development of the recession. A full-scale recession in the United States began in August 1929, two months before the stock market crash (construction volume began to decline back in 1926). In February 1930, the Fed reacted to the onset of the crisis, reducing the prime rate from 6% to 4%. In addition, government bonds were redeemed from the market to maintain liquidity. In June 1930, the so-called Smoot-Hawley tariff was adopted in the United States, introducing a 40% duty on imports to protect the domestic market. This measure has become one of the main channels for transferring the crisis to Europe, as sales of European products in the United States were difficult. Does this remind you of anything? A game of Trump and the Chinese leader with duties in the recent past? At the end of 1930, bank depositors began a massive withdrawal of deposits, which led to a wave of bank failures. As a result, the absolute contraction of the money supply began. The second banking panic occurs in the spring of 1931. All these months, the authorities have not reacted to the growing economic tsunami. GDP in 1930-1931 falls by 9.4 and 8.5%, respectively, and the unemployment rate rises from 3.2% at the beginning of 1930 to 15.9% by the end of 1931. In 1932, GDP fell by 13.4, and only since 1929 - by 31%. The unemployment rate in 1932 increased to 23.6%. For more than three years since the crisis began, more than 13 million Americans have lost their jobs. Agricultural prices have fallen by 53% since 1929. For three years, two out of every five banks went bankrupt, their depositors lost $ 2 billion in deposits. Money supply since 1929 has declined at face value by 31%. In the 1930s, mass famine erupted across America, leading to massive marches and strikes. In 1932, crowds of starving Bonus Army veterans from all over America arrived in Washington. The US government crushed the march with tanks and terror. The consequences of the Great Depression in the world. 1) the level of industrial production was dropped to the level of the beginning of the XX century, that is, 30 years ago; 2) in industrialized countries with developed market economies, there were about 30 million unemployed; 3) the situation of farmers, small traders, and the middle class worsened. Many are below the poverty line; 4) the birth rate has sharply decreased. According to social workers, in 1933, in some districts, between 25 and 90% of school-age children suffered from malnutrition. 5) the number of supporters of both communist and nationalist parties has increased (for example, in Germany the National Socialist German Workers' Party came to power). The way out of the great depression. The most important anti-crisis measure that was adopted was the start of World War II with the help of Germany in the foreign territories of countries of economic competition. This action helped to finally reverse the trend and raise the US industry. To eliminate the oversupply of goods and services by eliminating the economies of other countries due to war. Expand the US product market. Due to the decline of other competitor countries, the United States has become a monopolist in various industries. But still, the repetition of the previous highs of the index before the crisis of the Great Depression was repeated only after 25 years in 1954! A positive incentive to continue the upward trend was the character such as the First Secretary of the CPSU Central Committee from 1953 to 1964, Nikita Khrushchev . In view of Khrushchev’s socio-economic and political adventures, the “Stalin gold ruble” (10 times) had to be greatly devalued and its gold content reduced. In the late 1970s, the gold content of the Soviet ruble was de facto eliminated altogether. Since the time of Khrushchev, foreign Soviet trade with most countries began to be carried out in US dollars. In addition, the Soviet Union became a "donor" of developing countries and began to supply the Western world with cheap energy and industrial raw materials. And the gold reserves that were created under Stalin began to rapidly lose. So, there is a cold war show for the people between the USSR and the USA, but in fact, the USSR economy has long been working for the USA. After all, everything that the USSR bought / sold outside its borders was supposed to make settlements only in dollars (the currency of its "enemy"). And all thanks to Uncle X and those who stood behind him. The second positive stimulus for the growth of US industry at highs was the war in Vietnam . I will not dwell on this, as everything is clear here, how this is connected with the stimulation of industry. The end of the war served as a recession of this growth and stagflation of the US economy, and so we got to the second similar situation No. 2. A scam of 1933 for the confiscation of gold in the population (a fine of up to $ 10,000 and / or imprisonment of up to 10 years). Also, who is not in the know during the Great Depression in the USA, a grandiose scam was conducted under the guise of anti-crisis measures - this is confiscation of gold from the population. First, voluntarily, and then forcibly, on pain of a prison term of 10 years. Therefore, do not hesitate a little later, all of your savings and assets will be taken away from you in the name of the law. Very poor, lazy, envious, bile people will support this. Everything, as always, is nothing new. It is not customary in society to talk about forcibly confiscating gold from a population in the most “democratic” country in the world. Although most people do not even know about it. During the Great Depression, on April 5, 1933, US President Franklin Roosevelt issued Decree No. 6102 on the actual confiscation of gold bullion and coins from the public and organizations . All individuals and legal entities located in the United States (including foreign nationals and companies storing gold in the United States), with rare exceptions, were obliged to exchange gold for paper money at the price of $ 20.66 per troy until May 1, 1933 an ounce at any bank in the United States that has the right to accept gold. Any contracts and securities nominated in gold were also declared illegal, payments on them were prescribed to be made in paper money in accordance with the specified exchange rate. Subsequently, the gold was sent to the Fort Knox National Kentucky Gold Depository of the Federal Reserve (Federal Reserve System), the construction of which was completed by the end of 1936. After the collection of gold was completed, its official price was sharply raised to $ 35 per ounce. That's how they all cheated. Roosevelt called the legend of the Decree the relief of a critical situation in the banking industry, as well as the prevention of panic export of gold abroad. Gold was not subject to confiscation in the United States, owned by foreign state banks and foreign states, and also intended for international trade. Individuals could keep their gold no more than $ 100, as well as rare and collectible coins. Also insignificant gold reserves for professional activities were separately regulated. For evasion of gold, repressive measures were established: a fine of up to $ 10,000 and / or imprisonment of up to 10 years. Based on the law on the gold reserve, adopted in January 1934, Roosevelt issued a proclamation on January 31, 1934, which reduced the gold content of the dollar from 25.8 to 15 5/21 grains and set the official price of gold at $ 35 per ounce. In other words, the dollar was devalued by 41%. 2 SITUATION 1966 - 1970 In this period, as it was now, the touch of the uptrend line (which acted as a support), a rebound from it, then a reverse test and a breakdown of the uptrend line and the transition to long lateral movement and deceleration of industry growth for 19 years! Stagflation of the US economy. And only in 1982 did the strongest uptrend begin which continues now. Until the second half of the 1960s, a cyclically developing economy was characterized by the fact that a decline in production and depression caused, as a rule, lower prices (deflation) or, at least, hindered their increase. The phenomenon of stagflation was first clearly defined in the late 1960s. So, in 1970, unemployment and inflation in the USA reached a record level of 6% and 5.5% in the post-war period (until the mid-1960s, inflation did not exceed 1–1.5%, and unemployment - 2–2.5%) . The second surge in stagflation occurred in 1974-1976, when the rate of increase in prices in the United States was more than 10%, and unemployment reached 7.6%. In general, over the 16 years from 1949 to 1965, retail prices in the United States grew by 29%, and over the next 17 years from 1965 to 1982 - by 100%, that is, the average inflation rate in the indicated period grew 3-4 times, the unemployment rate rose at least 2-3 times. When President Johnson urged Congress to cut taxes in 1964, he allocated large sums from the state budget to finance both social programs and the Vietnam War. Although, according to Keynes's doctrine, a small deficit in the state budget and a gradual depreciation of the national currency are beneficial for the economy, inflation under Johnson began a sharp acceleration. At the same time, the US superiority in world trade began to fade, as did its global superiority in economics, geopolitics, commerce, technology and culture, which was established after World War II. Since 1945, America has had unlimited access to sources of raw materials and markets for its products worldwide. Due to the ruin of Europe during this era, about one third of all industrial goods in the world were produced in the USA. But by the 1960s, not only developed, but also developing third world countries began to compete with the United States in the economy and raise prices for their raw materials. Japanese and European automobiles, steel, electronics and other high-tech products successfully competed with American ones not only abroad, but also in the US domestic market. This gave rise simultaneously to rising prices and a wave of ruin for American manufacturers, a phenomenon known as stagflation, that is, stagnation amid inflation. The price level continued to rise and in the first two years of Nixon’s presidency increased by 15%. Then in 1971, Nixon announced the termination of the conversion of the dollar into gold, which led to the crisis of the Bretton Woods system and the subsequent devaluation of the dollar. This helped revive the export of American goods, but imported raw materials and other goods became even more expensive. In addition, Nixon in the same 1971 for 90 days froze the level of prices and salaries in the United States, and then put them under the control of a special federal agency. Inflation slowed somewhat, but unemployment began to rise. To stop the decline in production, Nixon again lifted restrictions on the level of prices and wages, which caused a new round of inflation. In the long run, Nixon’s shock led to stagflation in the United States, reduced the purchasing power of the dollar, and exacerbated the American recession of the 1970s. The rejection of the connection between the world's main reserve currency and gold ensured for the United States a transition to the issuance of fiat money (money from the air). Fiduciary, fiat, symbolic, paper, credit, unsecured money - money not secured by gold and other precious metals, the nominal value of which is established and guaranteed by the state, regardless of the cost of the material used for their manufacture. As a rule, immutable to gold or silver. Often fiduciary money functions as a means of payment on the basis of state laws obliging them to be accepted at par. The cost of fiduciary money is supported by people's faith that they can exchange them for anything of value. The fall in the authority of state power leads to a decrease in the purchasing power of fiduciary money, devaluation, and "flight from money." Reasons for US stagflation. Economists name two main causes of stagflation: 1) decline in production due to a sharp change in the price of raw materials, which is important for this economy (the so-called price shock). A sharp increase in prices for the importing country or a decrease for the exporting country. For example, this is the 1974 oil crisis in the United States. 2) the simultaneous slowdown in production growth (stagnation) and price increases (inflation) may be the result of an incorrect economic policy of the government. For example, the country's central bank can cause inflation by releasing too much money into circulation, while too active regulation of the labor market and production by the state can slow down business activity (stagnation). The impetus for the start of the 1974 oil crisis was the sharp rise in oil prices from OPEC countries. The situation was aggravated by the incorrect reaction of national central banks, which tried to stimulate growth by injecting money into the economy (see Keynesianism), which led only to an uncontrolled rise in prices and wages. On the graph we see the lateral movement and the breakdown of the support of the horizontal channel. Overly dangerous situation. ___________________________________________________________________ The situation with the index on the Dow Jones chart now. It is important how the price will react when retesting near the uptrend line, which will act as a support. There are several scenarios from this important key area: 1) As the price approaches the line of the 38-year uptrend, the price reacts positively and the upward movement continues. The big problem is simply delayed again in time. And the later it happens, the more painful it will be. Fortunately, everyone understands this. 2) Another option, the most reasonable. As in 1970, with repeated testing, we nevertheless break through the 38-year uptrend line, and the price is fixed below it. But instead of moving into a downtrend, the trend goes into lateral movement, forming, as in the 1970s, a side channel of "accumulation of force." The main thing is that the lateral movement was clearly preserved, without strong punctures and slopes of the side channel trend. It is important that the crowd saw exactly the accumulations on the chart, and not the attempt of large market and state players to maintain the index at any cost at certain critical values. I showed the channel width, as in the 1970s, about 40%, and the first waves of basic lateral volatility may have already formed in this upward channel. The range may be different, but 40% is optimal for maintaining the trend. No one knows the future, this can be assumed based on history and your trading experience. 3) The saddest and most unpleasant option for the United States and for the stability of the whole world. If there is a breakdown of the uptrend line and the price consolidates below it, a very dangerous situation will arise, as in 1930, which can lead to the beginning of a downtrend. Key levels of price stop, I showed on the chart. Even reducing the index to these values ​​can lead to a complete collapse of the US economy, and of the world economy as a whole. Why is this so I described in detail with examples above in the article. Let's hope that this does not happen. Learn to predict a more likely future. Always have different options for your work in a given situation. Work according to the basic plan, based on the situation that is being implemented. _________________________________________________________ My former trading idea is an indicator. Published in April 2019. A trading idea-indicator gave a signal about a market reversal long before its fall. The relationship of the Dow Jones and the Fed% rate We are ahead of the financial crisis. Result. The plateau phase. Reducing the Fed interest rate and raising the price of the index to highs. Then the index price drops and the Fed rates transition to phase 4. prntscr.com The article is extensive and probably very complex will be much to understand. In addition, there is a lot of text in it to convey a thought, unfortunately this scares most people. Many read only headings and look at the price chart. Some people have probably forgotten how to read at all ... Don't be like that. Good luck with trading and understanding everything that happens in the world. More information in my telegram channel SpartaBTC
TVC:DJIEducation
by SpartaBTC
21
Understanding Market Risks Through HistoryIn this post, I'll be referring to the historical chart of the Dow Jones Industrial Average (DJI) in order to explain my perspective on risks associated with the market, and how to respond to current market conditions as a trader and investor. This is not financial advice. This is for educational purposes only . In my previous educational post, I discussed why the Fed's rate hikes were not as significant to us as we thought it'd be. I mentioned the idea of the market already pricing in not only the information itself, but also people's reactions to it as well. As announced, the Fed raised rates on the 16th of March, approving the first interest rate hike in more than three years. As anticipated in my investment thesis, the market handled this well, and the Nasdaq index alone has bounced over 10.49% since the lows of the past 5 days. Today, I'm going to talk about the war in Ukraine from a statistical standpoint, and how this is unlikely to lead to a multi-year recession . Historical Cases - In 1914, the assassination of Archduke Ferdinand marked the beginning of the first global scale war modern society would witness - The war lasted 4 years before Germany admitted its defeat and signed the armistice agreement. - During this time, the Consumer Price Index (CPI) hit record highs of 110%, making today's 7% figures look moderate. - After the war, the Dow Jones Industrial Average rallied a whopping 504%, before the American economy was struck with the Great Recession. - After the Great Recession, the world faced a second world war in 1939, which started with Germany's invasion of Poland. - The markets crashed, but not as severely as the Great Depression, and CPI recorded 74% during this period. - With Japan's surrender, uncertainty was resolved, resulting in the DJI delivering 523% returns. - Then came the Vietnam war in 1964, which started with the Gulf of Tonkin Resolution. - The market ranged sideways for almost a decade, creating lower lows, with situations deteriorated by the Oil Shock of 1973. - During this period, CPI hit record highs of 207% with factors of global uncertainty such as the war, which the US couldn't seem to win, and Oil Shock. - After the war ended and the economy recovered from the Oil Shock, DJI delivered a whopping 1,447% returns, until the market started shaking again with the 911 terrorist attacks against the United States. Lessons Learned - So what is it that the market tells us? - I've outlined what wars and regional conflicts do to markets in the post below: - Historical cases tell us that the market prices in information about the war, and corrects in advance. - Once the conflict actually takes place, the market starts to bounce from its local lows, as uncertainty has been resolved to an extent. - From a macro perspective, as seen through the historical chart of the DJI, the end of wars usually mark the beginning of a multi-year bull rally as negative sentiment will have been completely cleared by then. Market Risks - That is not to say that I'm irresponsibly bullish. I do think there could be probable cases that lead to a global expansion of the crisis, and the collapse of the financial markets. - For instance, Russia's use of weapons of mass destruction (WMD) could damage the markets to a greater extent than anticipated. - It seems as though the market is considering this to be an improbable case, which it is, but there's no reason to be too complacent. - According to an FSB whistleblower, it was recently revealed that Xi Jinping had plans to invade Taiwan this fall, depending on the success of Russia. - If that were the case, then it wouldn't be a huge logical leap to consider north Korea's possible initiation of war against South Korea, and a war breaking out at a global scale. Conclusion [/b It all boils down to uncertainty in the market, and people's irrational responses to it. I believe that a successful negotiation between Russia and Ukraine could lead the markets to swiftly rebound once again, though that is not the only factor of uncertainty at the moment. Inflation (CPI) will eventually cool down in an organic manner, as markets realize the stability that is being brought to the economy, and the Fed's actual influence on the market. People ignore bad news during uptrends, and they ignore good news during downtrends. I see a plethora of opportunities where companies that generate tremendous cash flow at an increasing rate with insane growth indicators, are neglected by the market. It's important that we clearly understand where we're at in terms of the market cycle. I believe that we're at a corrective phase of a bull market, rather than at the beginning of a recession. During corrections of bull markets, the smart move is to buy cheap stocks. It's worked effectively in making money 100 years ago, and I don't doubt that it'll work now as well. If you like this educational post, please make sure to like, and follow for more quality content! If you have any questions or comments, feel free to comment below! :)
TVC:DJIEducation
by Michael_Wang_Official
8
Using different deflactors on IndexesHere I put up a series of deflactors on the Nasdaq 100 Total Return... I like to use Total Return Indexes becuase they acurately reflect the actual growth of the invested money, rather than simple price indexes... I picked the Nasdaq because as you may have noticed from previous posts the Nasdaq is the absolute winner in terms of performance in the last 15 years... also (unfortunately) I did not find a Total Return option for the S&P500 on Tradingview... actually it's quite bad out there, even spglobal.com doesn't seem to publish those anymore, much less deflated with CPI... Anyway, moving to the chart here we present a series of deflactors applied to the $NDX Total Return since INCEPTION: 1. Gold 2. CPI 3. CPI+DXY 4. M2 (Fred money stock) 5. REAL M2 (Fred money stock with CPI) I found the Real M2 the most interesting idea, for in a high monetary inflation environment, Real M2, purges the nominal M2 (total monetary inflation) of its price inflation "component", and comes to a somehwat more balanced deflaction than the original metric (435% performance using M2 Real, vs 275% using the Pure M2 deflactor)
NASDAQ:NTTREducation
by LotusTrading20
3
Correction vs Market Crash (1)My definition of Correction: During any rally whether it is Bullish or Bearish, there are times when traders and investors start to reevaluate their positions, take some profits or accept their loss and make changes in their portfolios composition. Usually it happens a couple of time during any rally regardless of its nature(Bullish/Bearish). My definition of Market Crash: Any bullish rally almost always leads to a Bubble formation and a major catalyst (election, wars, pandemics..etc) is going to burst the bubbles! Most asset classes experience a sharp decline in value during market crash and it is usually more than 30%. But the real reason behind any market crash is not the difference between market values and intrinsic value of the asset class. In my opinion it is the change in the view of most investors for the outlook and future of that asset that cause the crash. To wrap it up, compare the next 1-4 year outlook we have with the situation we experienced in 2020. To be continued... Moshkelgosha
TVC:SPXEducation
by Moshkelgosha
6
Stock Traders Almanac Monthly AnalasysThis is an analyzation Yale Hirsch's book "Don't Sell Stocks on Monday" in which he defines stock markets high/low months over the past 100 years. High Months: January, March, April, July, November December Low Months: February, May, June, August, September, October Green Lines mark Positive Correlation with High Months Red Lines mark Positive Correlation with Low Months White Lines mark no Correlation for the month. 8 times out of the past 3 years the averages were wrong for an %80 accuracy.
TVC:DJIEducation
by AlvinThai
DJI (Wall Street): Pattern in the chaos.In this chart I show a tight summary of what's been happening with the DJI (Wall Street). I apply the theory of curves. It shows weakening momentum in its north side drive. I refer to just a handful of fundamental issues for both the bulls and the bears . In recent times various forms of 'stimulus' has kept this market afloat. Then in the last 2 weeks, hope and greed surrounding the Consolidated Appropriations Bill 2021, gave some life but volatility in the market. This evening (2020-20-23), there is nervousness because the Bill was referred to by POTUS as "a disgrace". That is a real cause for nervousness because POTUS has snookered himself i.e. if he doesn't veto the Bill. This is a matter of law and politics but entirely relevant to market volatility. I take no sides. All I know is that there is money to be made (and lost), wherever there is volatility. But anything is possible, they say in these markets. It's probable that price can move up as well as it can correct down. The main job of a trader is not be to right, but to limit how wrong s/he might be with controlled affordable losses. The other nice part of the job is letting winning positions run when the market is in his/her favour. It's so simple - but NOT easy, obviously. 😄 Disclaimers : This is not advice or encouragement to trade securities on live accounts. Chart positions shown are not suggestions. No predictions and no guarantees supplied or implied. Heavy losses can be expected if trading live accounts. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on opinion expressed here or on my profile and you lose your money, kindly sue yourself.
Editors' picks
FOREXCOM:US30Education
by Captain_Walker
8
Trading with Regression Trend, 21 day MA, RSI, and MACDI just wanted to share some tricks I learned using some basic TA tools in trading view. I marked up the NASDAQ with some examples. Please note that hind sight is 20/20 and using these tools in real time is much harder. First, I think the Regression Trend tool is underutilized by traders. It is a very powerful tool for automatically generating trading channels. IMO, I would wager that most automated trading algorithms use some form of this technique under the hood. Linear prediction is the easiest and most common form of regression analysis. What you are trying to do is fit linear a trend to the stocks movement. IT takes a little practice to know when a trend has switch from bull to bear and back again. I find that the 4h is a good time frame to eliminate a lot of the noise in prices. Also, heikin ashi instead of candle sticks can make this easier, but you can't see gap ups/downs, which can be important. One way to ID a trend change is to look for a new high to break out and clearly close above the current channel. Once you find the "pivot", then you start a new regression trend moving it along to keep up with the previous day's price. Some times it can be better to let it lag a day or two to better estimate the price's location in the trend, which may be important when a trend first starts as there is not much data for the prediction. What you are looking for is highs and lows that get close to or have a candle wick out of the trend. This give you a high probability that the price is about to reverse. That is kind of the whole thing. Just keep movin gthe trend along with each day looking for the price to touch the top or bottom of the trend. Obviously, more info is better. This is where the other tools come in. The 21 day SMA is a nice one (you have to configure the MA to days not the default and set it to 21). If the price touches this level, it will most often bounce off (up in a bull market and down in a bear). You should also look at the RSI for obvious overbought and oversold conditions. Again, the 4H seems to work best for swing trading. You need to use the regression trend with the RSI as the RSI reading can give you a "false" trigger in strong markets as it can stay oversold or overbought for several days. Last by not least is the MACD. It is a great momentum indicator that you can use to determine when the market is switching gears from buying to selling and vice versa. There are other more advanced tools like trend lines, fib levels, and Waves that are very helpful, but to be honest I think you can be very successful with just the basic techniques I described. Maybe another day I will go into more detail on those tools. Hope this helps and good luck.
TVC:NDQEducation
by Dr_Roboto
3
It's not a bird. It's not a plane! It's a channel. Nobody really knows for sure why channels develop. There are loads of theories. I'm not interested. A channel is usually discovered late, obviously because the channel is evolving and then you see it. Unbelievable as it is, it is there. So what do you do. Well, I don't give advice. What I do is understand that there may be limited opportunity to exploit. I say limited because when late in the game, price can break up out of the channel or down out of the channel. That means that if price approaches either end of the channel, it is a critical time. All one can do is take the loss! It's called a stop loss. Channels also do strange things like break out and then go madly the other way. If everybody had a magic formula how to work them, everybody would be zillionaires. It ain' t happening! But there is still money to be made by following microtrends. That's where you follow small trends from 3 min to 15 min. These can take days to play out. For newcomers it's not a good idea to work blindly in a channel. Find other indicators to assist. Experience is also an important thing. As I always say blowing up 10 Tradingview paper trading accounts is far better than blowing up one live account. Get the safe experience almost totally for FREE!
FOREXCOM:US30Education
by Captain_Walker
DJI: Trump's Covid-19 Case - A Historical ComparisonIn this analysis I'll be shedding light on my own theory on: - How President Trump's Covid-19 Positive news may impact the market - Similarities and differences in historic cases - Why Trump possibly announced his testing positive so quickly Trump's Testing Positive - Trump testing positive for Covid-19, 4 weeks before the presidential elections, is not good news - Especially considering that the current market is momentum driven, such bad news is good enough to scare new investors from pouring money into the market We can see a similar case where the president's medical condition negatively impacted the market Historic case - President Eisenhower suffered a heart attack in September 25, 1955. - Before this incident, the stock market was at an unprecedented bullish rally - Immediately after news was released that he was hospitalized, the market fell by 6%, leading to $14 billion instantly vanishing - Eisenhower recovered, and it was later announced that his condition was not serious - Eventually, the market bounced, and continued to rally upwards - President Trump also announced his testing positive for Covid-19 a few hours ago - Just as Eisenhower's case, the stock market is in an uptrend, with significant bullish momentum - The market is correcting, due to bad news, but not as significantly as that of the past - Just as Eisenhower, considering the fact that Trump will be taken care of seriously, it's most likely that he will recover from the virus - As such, it's reasonable to expect that the market will continue to rally upwards - However, it's also important to consider that market situations are not the same as the past - For more in-depth explanation on what makes today's market special, check out my previous analysis below: Why did Trump announce his condition? - This is an important question to ask, as Trump announced his testing positive for Covid via twitter - Trump is arguably the most powerful person in the world. He could have concealed his condition if he really wanted to, and later justify it as "classified information" - What could have been Trump's intentions behind this? - In the case of the Prime Minister of the UK, Boris Johnson, his support rate was at 48% prior to him testing positive - After he got the virus, there was a sentiment of sympathy among the general public, leading to his support rate skyrocketing to 72%, an all time high support rate ever since Tony Blair - Given this case, and the fact that the presidential elections will be held in 4 weeks, Trump could have been targeting this sympathetic sentiment among the general public - It's also highly likely that Trump recovers quickly, with the best medical staff from the country treating him - As such, he will be qualified to talk about the issue (as someone who has caught the virus), and suggest that he's the only one capable of solving the problem. Conclusion As past cases demonstrate, problems regarding the President's medical condition is never good for the market. However, given that the president recovers quickly, this could end up being a 'buy the dip' opportunity. If you like this analysis, please make sure to like the post, and follow for more quality content! I would also appreciate it if you could leave a comment below with some original insight.
Editors' picks
TVC:DJIEducation
by Michael_Wang_Official
79
THE BIG PICTURE: Health is everything! Man and Money vs Virus! I think this chart will be of interest, in overlooking the big picture. I say what I see and it is largely about a health timebomb approaching. So I deal with some technical and hidden fundamental issues. Always say what you see on the charts! Remember TA is about sentiment - until reality catches up. 1 - A popped bubble. 2 - A reinflated bubble. 3 - A reinflated bubble struggling to remain inflated. 4 - Total daily cases of COVID continuing north. 5 - Total daily cases is rising above the area of struggle in the DJI. Note that the DJI represents sentiment in the top 30 major organisations - so it is important. I entirely accept that because total daily cases is summative, it is not a sound measure of the impact of the virus on health or control of the virus. But think deeply - yes these are fundamental issues - representing ' reality '. The total number of people infected means that a percentage of them will suffer lasting effects of the virus e.g. central nervous system problems, mental health disorders, clotting disorders, lung problems, heart problems and exacerbations of previous illnesses. This means there is a mounting economic burden that isn't quite realised by leaders. Why is biotechnology and services servicing those industries flourishing? Obvious - isn't it. Healthcare directed at fighting COVID has left lots of people with significantly reduced care for non-covid related conditions. What happens to those people? It can be expected that their health will deteriorate. I can't go into a whole list of medical conditions - but it's massive. There is only minor focus on the economic impact of that. Nations need 'health' for workforces to contribute well to 'the economy' and to service debt. Our leaders have focused on 'the economy' and preventing a major financial crash that was coming anyway. The virus was just the pinprick. There was in the UK recently a situation where health set against the economy. This was misguided simply because health is the economy. When people think of health they usually think of physical health. However, there is another ticking time bomb of mental health problems . Nobody knows exactly how big this is gonna be. If you thought people with physical health problems were neglected, then it is much bigger for those with new or pre-existing mental health problems. People who are mentally disabled but were managing with aids, adaptations and supervision aren't getting all that as they would have pre-covid. Is this likely to improve in the next 6 months? I don't think so. How can economies recover if they are beaten by seriously damaged physical and mental health of its workforces? Difficult one. Financial hardships are projected to get worse into Winter, in the northern hemisphere. That's not good for physical or mental health. I have little doubt that agents of the FED will pump this market north, and that Robinhoods will punch the air with the FED. However, you can't create a sound economy built on thin air. The bedrock of a sound economies are the health of people. If money printing would solve everything, then GDP and employment (of various types) would be irrelevant. Surely they aren't irrelevant. So - expect the unexpected, is what I'm saying. Near 100% retracements in the face of such fundamental issues has to be suspect. There could be a big 'drop' coming - so stay alert (no predictions today - only probabilities). Those hoping for Gold to rocket north may also have a surprise. Disclaimers : This is not advice or encouragement to trade securities. Chart positions shown are not suggestions. No predictions and no guarantees supplied or implied. Heavy losses can be expected. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on opinion expressed here or on my profile and you lose your money, kindly sue yourself.
FOREXCOM:US30Education
by Captain_Walker
US TECH: GAME OVER?Well, get your popcorn ready!! US Tech 100 is in a precarious position. This is another thing that rules the world! Price ducked below 11000 - which is considered important. Will it stay below? How would I know? 🤷‍♂️🤦‍♂️ At time of posting price is a 10920-ish. Does this mean the backs of the USTECH and NASDAQ are broken? Of course not. Expect permabulls to do their stuff. We need them - for the big money transfer- so they're much loved! 🤣 Price action on this on the 3 to 5 min time frame today was soooo exciting! LOL. Call me a nerd - it's fine. LOL. 😉😎 If you wanna see what's really happening you just gotta get dirty in the trenches! I'll be doing a video soon, showing how I look at price action in the indices, comparing the rule of Tech100 with other indices. Stock up on popcorn! 😂👳‍♂️ I don't do predictions - because I believe trend is more important than price . Disclaimers : This is not advice or encouragement to trade securities. Chart positions shown are not suggestions. No predictions and no guarantees supplied or implied. Heavy losses can be expected. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on opinion expressed here or on my profile and you lose your money, kindly sue yourself.
UEducation
by Captain_Walker
Exact mathematics on markets - is that possible?W.D. Gann: "If we wish to avert failure in speculation we must deal with causes. Everything in existence is based on exact proportion and perfect relationship. There is no chance in nature, because mathematical principles of the highest order lie at the foundation of all things. Faraday said: `There is nothing in the Universe but mathematical points of force.’" Remainder: Original impulse of any kind finally resolves itself into periodic or rhythmical motion (rhythmical motion = arithmetic progression) en.wikipedia.org
DJ:DJIEducation
by ToKnowToWillToDareToBeSilent
3
Focus On What Matters The Most... Trend Trading!Sometimes as traders we tend to focus on every little move and get overwhelmed with price action. I personally believe making your charts simple is the key to success! 1. Trend Trading 2. Risk Management The 2 things that matter the most by far when it comes to trading. You as a trader need to step away from focusing on every price action move in the markets, and focus on trend. Trying to be overly aggressive on trying to capture exact bottoms and exact tops will only lead to more stress. With trend trading we can filter out a lot of the noise and focus on what matters the most! Here we look to buy or sell when all 3 charts line up the same color to identify bigger moves in the markets. This is good for both swing trading and daytrading. The reason a lot of traders FAIL as daytraders is because they get lost in all of the noise on the lower timeframes and also try to play every breakout. If you just focus on trend you will have a better chance at becoming a better trader. We than manage our risk whenever we do get a trend chop and learn how to get out of a trade and not let them run against us. Trend + Risk Management = Happy Trader 😁
CME_MINI:ES1!Education
by UnknownUnicorn2319099
3
Best Times To Play The Markets, Swing Trader Perspective.Here we have a chart of Nikkei 225 index on a 3 day chart. Nothing is more powerful than identifying potential trend reversals, notice that I said "potential". Nothing is guaranteed when it comes to trading, you will never be 100% winning in the markets. The only edge that you have when it comes to trading is identifying trend accumulation, distribution and risk management following an overall trend. If you apply S&R to a 5 min chart vs 1 week chart, which ones levels do you think will play a more valid role in the markets? The weekly will 100%! You better be a trained professional and have a good track record of experience if you think you're just going to show up to work everyday and try to scalp every single little move sitting in front of the monitor 24/7. I personally 100% believe the big picture is where it all counts. I believe the proper way to trade the markets is to use it as an investment vehicle to work for you over time. This is why on most of my charts you will see I'm a fan favorite of the daily chart and up. These timeframes are critical to identifying the major trends in the markets. You will be chasing your tail more than anything in a 5 minute timeframe and most likely realize why trading has such a high failure rate. Let the trade come to you! If you can learn how to manage risk and not let a bad trade get away from you, then you are already one major step ahead of the pack of failing retail traders. You see... this understanding to cut loss quick is more important than anything you will ever learn from the markets. The mentality of most retail traders is the famous "I want to get rich fast" mentality. When a trade goes against them, most have a tendency to hold onto that position with hope's to recover... this is how most blow their accounts. A lot of traders with this mentality tend to think they need to borrow money that they don't have from their broker, as if having more working capital will get them richer faster. If you can't trade with $25 in your account, chances are you probably don't need to use $25,000 to trade with. Most traders learn to become impatient with the market and use the lowest of timeframes where most of the noise in the markets occurs. Are their success stories of traders that made it as daytraders? ABSOLUTELY! I'm sure they went through years of training and learned to correct their failures. You can't let the markets beat you up if it goes against you and call it quits. You have to stay consistent and let every failure become a valuable learning lesson. It's going to take time, this is one of the hardest jobs on the planet if you choose to make it hard. ---------- So what do I look for? Like I said above I focus on trend trading from a technical analysis stand point. Observe the candles on the chart above. Green is buy pressure and red is sell pressure. Big bricks stronger pressure and compression doji bricks are weakened pressure. My goal at the end of the day is to look for the trend transitions at points of exhaustion. Notice how at the bottom of the crash the bricks began to compress to form a doji that shifted green, That's my transition. Look below and see the ema dots then also shot green and the custom rsi left oversold territory. That is your opportunity. You will manage your risk at these turning points. If you take a small hit and get stopped out, oh well. You managed risk and didnt let a trade get away from you. You can't control the market, you can only walk with it and not let your ego get in the way of trading. Now you see that we have tight compression forming up top of this major trend reversal from the bottom. Ema dots going red and the custom rsi is shifting down from overbought territory. These are the ideal times I look to trade. If I drop down to a daily I see that we have a valid Resistance level as price rejects off of it based off previous level. Will this Resistance hold strong to selloff? Who knows! The market makers will create the next move, not you. You have to play both sides when the time occurs. That Resistance is my edge. Price goes up and price goes down. In order for the price to go up or to go down it needs to transition in a sideways manner to accumulate or distribute in any market. My best chance of trading is finding these major potential reversal points, especially ones like this with such a tight compression and managing my risk. I will risk a small amount on a stop and diversify my portfolio. The market will not trend sideways and flatline forever. All you need to do is find these trend reversals, manage tight risk in anticipation to capture the next major trend. *This material is for educational purposes only
TVC:NI225Education
by UnknownUnicorn2319099
4
JOURNEY SOUTH?The most important part of trading - especially with true trend-following - is stalking your prey very very carefully. The next is controlling loss. Trend followers suffer heavier controlled losses - but also enjoy far greater gains - than those who rely on targets-based methods of trading. It is certainly not for 'everybody'. Only about 20% of all traders are true trend followers. Trend continuity trading is not trend-following. Of high importance with 'stalking' any particular trend - because losses can be heavier - is the entry point. For example the ideal entry point in the chart snapshot would have been close to 26000. Anything much lower than that means risking heavier losses. I'm often asked if A, B, or C instrument is heading north or south. Most traders when they ask this sort of question are not thinking in terms of time frame. They're mainly looking at price and thinking R:R ratio. In trend following all you can do is control the loss. You do not know how much you may eventually gain. That's why it's very scary! But this is not a tutorial on trend following techniques or strategy. Overall though, one just has to pick a trend control loss and follow on that chosen time frame. It could be a lowly 1 min trend to a higher 1H trend - whatever you want so long as you can take the loss without flinching. I almost never get involved with higher than 1H trends these days. For those new to trend-following, from my experience, a simple 5 min trend can take up to about 2 days before it reverses. A 15 min trend can last several days. 1H trends can last a couple weeks. Of course, they can be very short lived too. Trend followers will also use harmonic patterns and other methods to assess key entry points. So 'we' don't have a problem with other methodologies. We'll use anything to get a pound of flesh out of the markets. But following the trend is the big thing. Disclaimers : This is not advice or encouragement to trade securities. No predictions and no guarantees supplied or implied. Heavy losses can be expected. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on opinion expressed here or on my profile and you lose your money, kindly sue yourself.
FOREXCOM:US30Education
by Captain_Walker
QUANTUM SLOWNESS - WHAT NEXT?Hopefully this post is both educational and entertaining. I was having a discussion on line about the advantages of quantum speed trading - and how it has a greater power than the human brain. For sure it is more powerful at number crunching. But quantum slowness is about trends! Look at the lovely 15 min trend. No big muscle computing power required. Just your plain slow eyes. If you had hugged that 15 min amber trend line on the break out of bad news, you would have been sitting very happy, after 24 hours. So - true trend-followers do not care about brute force computing power. The human mind is superior for trends. Any arguments? Some will be asking me what's next? How would I know? I don't have any ownership of the future. Ask your friendly guru out there - not me! :) :) Disclaimers : This is not advice or encouragement to trade securities. No predictions and no guarantees supplied or implied. Heavy losses can be expected. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on opinion expressed here or on my profile and you lose your money, kindly sue yourself.
FOREXCOM:US30Education
by Captain_Walker
3