Political Diversions

I don’t believe it is appropriate to use this forum to spread my political beliefs. However, I do follow politics and I wanted to share with you two interesting sites that forecast election results. The first is Nate Silver’s FiveThirtyEight.com. The preceding link will take you directly to FiveThirtyEight’s latest senate forecast.

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Equity Market Snapshot 10-15-2014

The recent sell-off in the equity markets and the dramatic increase in volatility has raised serious concerns among many traders and investors. The fact that the sell-off is occurring in October and the expansion is in its fifth year has further stoked those fears. The following article applies several different technical indicators to the Russell 2000 Index (RUT) in the weekly, monthly, and daily time frames.

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Recession Model Forecast 10-01-2014

The following article updates the diffusion index, recession slack index, aggregate recession model, and aggregate peak-trough model through September 2014. Please note that two new explanatory variables were added to the Trader Edge Recession Models in July and one explanatory variable was replaced in August. The swapped variables measured similar economic data, but the new series had more predictive power and was more forward-looking. For more information on the two new variables, please see “Two New Improvements to Trader Edge Recession Models.”

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Posted in Economic Indicators, Market Commentary, Market Timing, Recession Forecasting Model | Tagged , , , , , , , , | Leave a comment

Non-Farm Payroll (NFP) Model Forecast – September 2014

This article presents the Trader Edge aggregate neural network model forecast for the September 2014 non-farm payroll data, which is scheduled to be released tomorrow morning at 8:30 AM EDT.

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Posted in Economic Indicators, Market Commentary, Market Timing, NFP Forecasting Model | Tagged , , , , , , | Leave a comment

09-30-2014 AAR Strategy Update Posted

The September 30, 2014 AAR Strategy update is now available on the AAR Subscribers page.  If you are not currently a subscriber and would like to learn more about the strategy, there is a detailed description on the AAR Strategy page.

The AAR strategy is a conservative, long-only, asset allocation strategy that rotates monthly among five large asset classes: large-cap U.S. stocks, developed country stocks in Europe and Asia, emerging market stocks, U.S. Treasury Notes, and commodities. The strategy was inspired by the Ivy League portfolio and uses trend and technical filters to reduce downside risk.

If none of the five candidates pass their respective trade filters, the AAR strategy remains in cash for the month.   Stop-loss orders are used on every trade to control losses and to facilitate position sizing and risk management.

Brian Johnson

Copyright 2014 – Trading Insights, LLC – All Rights Reserved.

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Posted in Asset Allocation Rotational (AAR) Strategy, Market Timing, Relative Strength, Risk Management, Strategy Development, Technical Analysis | Tagged , , , , , , | Leave a comment

Option Strategy Risk / Return Ratios Featured in Active Trader Magazine

My new book Option Strategy Risk / Return Ratios: A Revolutionary New Approach to Optimizing, Adjusting, and Trading Any Option Income Strategy is featured in the Trader’s Bookshelf section of the October 2014 issue of Active Trader Magazine.

Brian Johnson

Copyright 2014 – Trading Insights, LLC – All Rights Reserved.

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Recommended Reading 09-25-2014

Readers repeatedly ask me for book and article recommendations, especially new traders who are interested in learning more about trading and investing.  Here are two new magazine subscription recommendations from my personal finance library. For traders who are interested in developing their own tools and strategies, magazine subscriptions are the best way to generate a continuous stream of new trading and strategy ideas.  A complete list of all past recommendations is available on the Recommended Reading page.

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Bested by Rats and Pigeons!

I am a staunch advocate of systematic or rule-based strategies and humans excel at pattern recognition, which would seem to give us an advantage in developing these types of strategies. Unfortunately, we might be a little too proficient. We tend to see patters that are not really there.  Psychologists have a name for this affliction; they call it pareidolia.  It turns out that rats and pigeons do not suffer from pareidolia, which allowed them to beat us handily in a recent decision-making study. This flaw has significant implications for trading.

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Posted in Strategy Development | Tagged , , , | 3 Comments