Deleted on 2016-04-11.
Showing posts with label Sector Rotation Trading. Show all posts
Showing posts with label Sector Rotation Trading. Show all posts
Personal Finance (12): Guru Rotation in the Financial Market
There are many famous Gurus in the financial market, and their philosophies are pretty well accepted by their followers (subscribers).
Take for examples:
1. Jim Rogers is the icon represents long term investment in the commodities market.
2
2. Marc Faber, also known as Dr. Doom, advocates that the market is collapsing, collapsing, and collapsing...
3.
3. Stephen Leeb is using the "Peak Oil" as a backgroud and focus on Energy Sector.
4.
4. Peter Schiff is singing about the collapsing US Dollar and Accumulates physical gold or GLD (ETFs).
.
And, when they are correct, they will occupy everywhere in the media and get more followers.
Now... As shown in the charts, they were ALL CORRECT at certain point of time in a "Rotational Manner".
So... Don't you think that having a "market neutral mentality", doing your study, understand and follow the market actions with the charts, and perform asset class rotation is a better deal?
Now...
See what the successful Trader and Trainer in the Stock Market, Richard D. Wyckoff, had to say:
<Go to Home>
Take for examples:
1. Jim Rogers is the icon represents long term investment in the commodities market.
2
2. Marc Faber, also known as Dr. Doom, advocates that the market is collapsing, collapsing, and collapsing...
3.
3. Stephen Leeb is using the "Peak Oil" as a backgroud and focus on Energy Sector.
4.
4. Peter Schiff is singing about the collapsing US Dollar and Accumulates physical gold or GLD (ETFs).
.
And, when they are correct, they will occupy everywhere in the media and get more followers.
Now... As shown in the charts, they were ALL CORRECT at certain point of time in a "Rotational Manner".
So... Don't you think that having a "market neutral mentality", doing your study, understand and follow the market actions with the charts, and perform asset class rotation is a better deal?
Now...
See what the successful Trader and Trainer in the Stock Market, Richard D. Wyckoff, had to say:
Very true! In my view, most of the publication on financial advices and news are just
like Coke or genetic modified foods. They are
are produced for the public consumption with the intention of making a profits out of it. The earlier one chooses to stop taking them, the
earlier he gets healthier.
In a Nutshell : Why Market Rotation?
The stock market, as of today, is working like a Giant Ponzi Scheme as a Whole, which is formed by Multiple Smaller Ponzi Schemes as Sectors, Countries and Individual Stocks. The Public Media would help to Rotate in Bubbling few Sectors/Countries//Stocks at a time for profiteering and dump the shares to the public, let them burst, and then ROTATE the operation to Other Sectors/Stocks.
The stock market, as of today, is working like a Giant Ponzi Scheme as a Whole, which is formed by Multiple Smaller Ponzi Schemes as Sectors, Countries and Individual Stocks. The Public Media would help to Rotate in Bubbling few Sectors/Countries//Stocks at a time for profiteering and dump the shares to the public, let them burst, and then ROTATE the operation to Other Sectors/Stocks.
"What information consumes is rather obvious:
it consumes the attention of the recipents.
Hence a wealth of information creates
a poverty of attention."
- Herbert Simon
<Go to Home>
<Comments>
Project Freedom (8): Follow the Money
Follow The Money: When China Stimulates its Economy, Buy Coal!
Figure 1: The Correlation between FXI and KOL
The above illustration
shows the XinHua China 25 index, the Global Coal ETF Charts, and their
correlation.
As China is the world
Largest Coal Consumer, when they stimulate their economy they need more energy
for their power plants, more material to built infrastructures and consumer
products, therefore the demand for coal would increase.
Figure 2: One year after the China Economy Stimulation Plan
The above chart shows
the Result a year after the stimulation.
Though the XinHua China 25 index rose for 85%, there were many other
sectors/countries performed much better than that.
The Top Ranking was KOL
(Global Coal ETF), follow by Metal, China Real Estate and other related
material producing countries.
YES… These are History.
Is there anything that
we can learn from it???
Figure 3: China market bound on 7 Sep 2012 with new stimulation plan
Of course!!!
Now… Let’s look at these news:
(The analyst from China said that the government will invest more than 1000 Billion RMB to strengthen their infrastruture to simulate the economy)
2. 万亿项目获批股市“一阳指”
(China market bounds up on the news on new stimulation plan approval)
3. China approves US$158b in infrastructure
Yes. The history will repeat itself to high degree (provided there is no major war and natural disaster).
Notes:
1) This is similar worldwide... It follows the Pareto Principle, since the recorded history, that 80% of the wealth belongs to the 20% of the people (these numbers are just getting bigger in spread - 90% vs 10% or worst). The more money the governments pour into their economy would only benefits to the minority who know how to get it. Normal working class would normally working harder to keep their job, and therefore miss the opportunities and suffer from the aftermath through inflation.
2) Even though the world economy is in deep trouble, and it will reveal the trouble later at a bigger scale when there is not way to cover up. But, at the moment, these stimulus could help to prolong the grow before the final collapse. Just like giving another heavy dose of drug to keep the already exhausted sport man to continue the game...
Therefore, timing it with charting for proper entries and exits to ride the trend is important, never argue with the mass psychology that forms Mr. Market with logic using the conscious mind.
<Home>
(China market bounds up on the news on new stimulation plan approval)
3. China approves US$158b in infrastructure
Yes. The history will repeat itself to high degree (provided there is no major war and natural disaster).
Notes:
1) This is similar worldwide... It follows the Pareto Principle, since the recorded history, that 80% of the wealth belongs to the 20% of the people (these numbers are just getting bigger in spread - 90% vs 10% or worst). The more money the governments pour into their economy would only benefits to the minority who know how to get it. Normal working class would normally working harder to keep their job, and therefore miss the opportunities and suffer from the aftermath through inflation.
2) Even though the world economy is in deep trouble, and it will reveal the trouble later at a bigger scale when there is not way to cover up. But, at the moment, these stimulus could help to prolong the grow before the final collapse. Just like giving another heavy dose of drug to keep the already exhausted sport man to continue the game...
Therefore, timing it with charting for proper entries and exits to ride the trend is important, never argue with the mass psychology that forms Mr. Market with logic using the conscious mind.
"A speculator must concern himself with making money out
of the market and not with insisting that the tape must
agree with him. Never argue with it or ask for
reasons or explanations."
- Jesse Livermore
<Home>
Project Freedom (4): Understanding of the States of Market Trend and Rotational Trading Concept
Attached are a few charts aim to demonstrate the importance of understanding the State of Market Trend and the Rotational Trading Concept which could help one to handle his personal finance.
POINT I: Understanding of the States of Market Trend.
Fig 1. ^STI Daily Chart (2 years) (Click on the chart to Zoom in)
Over the two years period, when breakdown into percentage...
The UPTREND is : 31.39%;
The DOWNTEND is : 18.05%;
The SIDE WAY is : 50.56%.
Fig.2 ^STI Daily Chart (1997 Jan - 2012 Apr)
.jpg)
.jpg)
As the previous point illustrate that money put in one market/Stock/Fund are really productive about 30% of the time in UPTREND, 20% in DOWNTREND, and wasting time 50% of the time.
So, if one were to only LONG the market, does that mean 70% of the time he must wait???
Not true if he understand the concept of Sector Rational Trading.
Fig 3. State of Trends in S&P500(SPY)
and its 9 sectors(XLB,XLE,XLF,XLI,XLK,XLP,XLV,XLU,XLY) (Apr 2010 to Apr 2012)
See...
The money in the market are of fix amount. When the stock market is moving up strongly, people would pull money out of bond market and put into stocks and cause bond market to fall, and vice versa. Similarly, the professionals would not put their funds in equal distribution into all sectors, they would pull the money out from the weak sectors to put them into the strong sectors. And the sectors Relative Strength would keep changing over time. In the picture, you can see the TREND is Out Of Phase from one another.
With the same token, one can then zoom into the individual stocks, in the strongest sector, to ride on the trend with the few strongest stocks
By the way, you may be interested to zoom into the chart and see the respective percentage of trends in various sectors.
Conclusions from Piont II:
1) It illustrates a VERY IMPORTANT POINT that is IN CONTRADICTION with one of the popluar myth in the investment industry --> That is DIVERSIFICATION the money into many sectors in equal portions as to reduce RISK. As sectors trend pretty much follows the market (after all they are the components that create the market).
2) In order to maximize the profit from the market and reduce risk. One must always rotate money into the strongest few sectors when there is a trend.
---------------------------------------------------------------------------------------------------------------------
I found a picture on the web and it is Very True.
A more throughout explaination on Sector Roation -> Back to Basics & The Galaxy Chart.
POINT I: Understanding of the States of Market Trend.
Fig 1. ^STI Daily Chart (2 years) (Click on the chart to Zoom in)
The above chart show a daily chart for ^STI from Apr 2010 to Apr 2012. This particular period is selected to show that money put in the market (so call buy and hold investment) can ended up with zero percent return over years.
In the price chart, there are algorithms built-in to draw the trendlines (also act as dynamic support and resistance lines). When the bar change color, it signal a possibility of change in trend.
In the lowest pane, it is an indicator desgined specifically to measure the Vibrational Energy of the stock:
If the Energy is High and moving upwards, it signals a state of UPTREND MARKET.
If the Energy is High and moving downwards, it signals a state of DOWNTREND MARKET.
If the Energy is Low, it signal a state of SIDE WAY MARKET.
It also display the number of bars in the respective state of trend and its percentage over the period. For example:
Over the two years period, when breakdown into percentage...
The UPTREND is : 31.39%;
The DOWNTEND is : 18.05%;
The SIDE WAY is : 50.56%.
Fig.2 ^STI Daily Chart (1997 Jan - 2012 Apr)
.jpg)
So, one may think that two years of data could be too short to make the point. How about longer period of data?
So, with the longer term of data, it show that the result is similar with the previous finding. And, lead to some basic understanding of the market trends structure...
Conclusions from Point I:
1) The Speed of UPTREND is SLOWER and DOWNTREND is FASTER.
2) BUY AND HOLD strategy is NOT WORKING in todays market.
3) One must be able to ride on the Trend in order to make profits from the market.
POINT II: Understanding of the Sector Rotational Trading Concept.1) The Speed of UPTREND is SLOWER and DOWNTREND is FASTER.
2) BUY AND HOLD strategy is NOT WORKING in todays market.
3) One must be able to ride on the Trend in order to make profits from the market.
As the previous point illustrate that money put in one market/Stock/Fund are really productive about 30% of the time in UPTREND, 20% in DOWNTREND, and wasting time 50% of the time.
So, if one were to only LONG the market, does that mean 70% of the time he must wait???
Not true if he understand the concept of Sector Rational Trading.
Fig 3. State of Trends in S&P500(SPY)
and its 9 sectors(XLB,XLE,XLF,XLI,XLK,XLP,XLV,XLU,XLY) (Apr 2010 to Apr 2012)
See...
The money in the market are of fix amount. When the stock market is moving up strongly, people would pull money out of bond market and put into stocks and cause bond market to fall, and vice versa. Similarly, the professionals would not put their funds in equal distribution into all sectors, they would pull the money out from the weak sectors to put them into the strong sectors. And the sectors Relative Strength would keep changing over time. In the picture, you can see the TREND is Out Of Phase from one another.
With the same token, one can then zoom into the individual stocks, in the strongest sector, to ride on the trend with the few strongest stocks
By the way, you may be interested to zoom into the chart and see the respective percentage of trends in various sectors.
Conclusions from Piont II:
1) It illustrates a VERY IMPORTANT POINT that is IN CONTRADICTION with one of the popluar myth in the investment industry --> That is DIVERSIFICATION the money into many sectors in equal portions as to reduce RISK. As sectors trend pretty much follows the market (after all they are the components that create the market).
2) In order to maximize the profit from the market and reduce risk. One must always rotate money into the strongest few sectors when there is a trend.
---------------------------------------------------------------------------------------------------------------------
I found a picture on the web and it is Very True.
Bless You
KH TangA more throughout explaination on Sector Roation -> Back to Basics & The Galaxy Chart.
.jpg)
