Finance Trends Letter

Maximize your trading gains , not the number of winning trades you might have. This is the advice of famed Chicago futures trader, William Eckhardt . William Eckhardt image via azquotes.com Now, if you're not familiar with Bill Eckhardt by name, perhaps you know him by reputation. With his friend and partner, Richard Dennis , the pair concocted the famous "Turtle Traders" experiment, in which an eclectic group of novices were taught to trade futures with a rules-based trend following system. An excerpt from Dennis' Wikipedia page on the origins of the Turtle Trading program: "Dennis believed that successful trading could be taught. To settle a debate on that point with William Eckhardt , a friend and fellow trader, Dennis recruited and trained 21 men and two women , in two groups, one from December 1983, and the other from December 1984. Dennis trained this group, known as Turtles, for only two weeks about a simple trend-following system, tradin...

Greetings, friends and readers from across the globe! The New Year is well underway and with it, a pronounced sell-off in global share markets.  So what can we do to protect our mental capital and our financial capital in fast declining markets like these? Let's take a quick look around the world's markets and then I'll share some thoughts on the importance of playing defense in this environment. We began 2016 with one of the worst starts on record for the US stock market. The S&P 500's market valuation plunged by over $1 trillion , erasing the combined equivalent value of tech giants Google ( GOOGL ), Facebook ( FB ), Intel ( INTC ), Netflix ( NFLX ), and Yahoo ( YHOO ). Meanwhile, the Financial Times reported that $2.3 trillion in value had been "sliced from companies across the globe" in the first trading week of the year. The damage was widespread: "...An analysis of more than 6,000 global stocks by the Financial Times showed more ...

Futures, 1-year performance highlights:  Futures, 1-year: $VIX +33% Nikkei $NKY +13% S&P 500 $SPX +1% Yen $FXY -10% Copper $HG_F -22% Oil $CL_F -51% pic.twitter.com/Hipjg8C2ti — David Shvartsman (@FinanceTrends) October 2, 2015   The VIX volatility index zoomed higher as stocks declined in August and September. Japan's Nikkei 225 topped the Finviz futures list of leading stock indexes. The S&P 500 has managed to eke out a gain of 1% over the past year. As noted on Twitter, I believe Finviz' data on ethanol futures is incorrect (they show a 1-year gain of 70%). Here's a continuous weekly chart on ethanol that shows a picture of flat returns over last year's prices.   I believe Finviz' data on Ethanol $EH_F is incorrect. Sorry, let's try that again... pic.twitter.com/Z1WeWEY49d — David Shvartsman (@FinanceTrends) October 2, 2015 Metals and energy prices suffered over the past year, as copper and platinum fell over 20%. Natur...

Quick update on the performance of key US stock indices and futures year-to-date, via Finviz . Coffee (+80%) and Feeder Cattle (+44%) lead the pack YTD, while soybeans (-27%) and cotton (-26%) fare worst. Crude oil is down sharpy from its summer highs, -16% YTD. Natural gas is down 13% YTD.  Here's the data for stock indices year-to-date: Nasdaq 100 (+8%), S&P 500 (+3%), and the small cap Russell 2000 (-6%) YTD.  If you want to dig deeper and check out the performance of individual US stocks, try the Finviz screener and adjust the fields in "performance". You can search stocks for YTD performance and sort the results by volume, percentage gains, stock price or market cap. 

Year-to-date futures gainers (via Finviz), a quick update.   US indices near the top of the list include S&P 500 up 18.8%, DJIA up 18.9% and Russell 2000 up 23.6%. The Nikkei 225 tops all with a 32% gain YTD. Gold and silver continue to under perform this year (after a decade-long bull move), while corn takes second-to-last place with a -29.5% YTD performance.

A quick look at the year-to-date performance of futures and stocks on Finviz .  Natural gas tops the futures list for relative performance. Nat gas is up 27% YTD.  Right behind it is the Nikkei 225 index, up 27%, getting a boost from the latest BOJ monetary easing efforts (note: Yen is down 12% YTD). The Dow Industrials are up 13.5% YTD and the S&P 500 is up 11%. Remember what we learned from Ray Dalio : currency depreciation and money printing are good for stocks (at least in nominal terms).  Gold and silver have been selling off in recent weeks. The precious metals took a hard spill today as the markets mulled a possible winding down of the Fed's QE program. It seems, in this instance, simply scaling back "money printing" efforts is enough to push gold and silver into free fall mode.  Individual stocks have done pretty well year-to-date. Of all US-listed stocks, Finviz shows 4,713 are up (show a positive return) YTD vs. 1,744 down YTD. A simple scr...

Trader, author, and Market Wizard, Victor Sperandeo joins us for an exclusive interview in our first Finance Trends podcast. To say we caught a lucky break with our first guest is a bit of an understatement.  Victor is a highly regarded veteran trader who has been involved with the markets since his first job as a Wall Street quote boy back in 1966. When he began his independent trading career in 1971, his primary goal was to make money consistently, month after month, year after year.  After 40+ years of consistent profitability, I'd say he's met that goal.  Over the course of his career, Vic has traded independently, managed hedge funds and CTAs (commodity trading advisors), and ran portfolios for George Soros and Leon Cooperman. He has also written three books on trading, including, Trader Vic: Methods of a Wall Street Master , a personal favorite which interlaced Vic's trading insights with sections on Austrian economics and personal psychology! In this rare,...

  Jim Rogers has a new book out called Street Smarts and he's out talking about it, along with a few other favored subjects.  Here are a few highlights from his recent interview with Open Currency :  1 . Asked about Germany's repatriation of gold from American vaults, Rogers says they're right to do it and he's surprised they haven't done it sooner. Recently, the Federal Reserve refused the Germans an audit of their own gold, and according to Rogers "it's clear some of that gold has been lent out, or something, as it will take 7 or 8 years to move the gold."  2 . Nearly all governments are printing money, for the first time in recorded history. All major banks are "printing" and debasing their currencies, which brings us to Rogers' favorite safe haven - hard assets.  3 . We are destroying all the people who save and invest. People are getting wiped out because interest rates are zero and below the rate of inflation. Those who bo...

Sugar has been creeping higher lately, as seen on the daily futures chart.  Here's the weekly view which shows the longer swings going back to 2006.  Note the larger uptrends and ensuing deep retracements that have happened from the 2007 base, near 10 cents, on.  Of course, the latest move is more of a slow edge higher off the recent price shelf of 23-24 cents. Sugar will have to clear the 30 cent level and the recent highs near 32 cents before any major move is evident on the weekly charts. Here's the daily chart of SGG, the sugar ETN. I'll be watching for a pullback on lighter volume in the days ahead. Since I'm not active in the futures market, I'll consider a long position in SGG.  Cautionary note: volume is very light in many of these single commodity ETNs. That may lead me to consider other, more liquid, trade opportunities instead.   For those who'd like to read more about sugar from a futures trader's point of view, please see Pete...