They Can’t Get It Right, Or Can They?

BarroMetrocs Views: They Can’t Get It Right, Or Can They?

Amazing how some important articles seem to come together at the most opportune times.

Today:

  • An FT editorial on Productivity
  • An article by Edward Luce suggesting that the solution to US problems for productivity is a Universal Basic Income. And, further suggesting that all wings of the political spectrum (from libertarian to socialist) support the idea.
  • An article from Mises.org (Libertarian publication) showing how the neither the policies of Trump or Clinton will solve the US economic ills.

I have attached the three articles.

The reality is there is a Financial tsunami on the way. If I am right,  it ought to take place sometime during the third quarter 2016 to first quarter 2017.

What will cause it is anyone’s guess.

There is a productivity issue in the US. The country is divided and misrepresentative comments like those from Luce that libertarians (as a group) would support a Universal Basic Income don’t help solve the problems.

The Austrians have a solution; but, there is not a hope in Hades that their views will be accepted. Financial Russian Roulette, anyone?

Productivity FT

Universal Basic Income

Trump and Hillary Don’t Know How to Fix the Economy _ Mises Wire

Temporary New Look

I’m Peter Ow, Ray’s business partner.  Our blog has been compromised and used for spam activities.  We have isolated the issue and working behind the scene to fix it.  Ray will continue to share his knowledge and views of the market.

For now, we have a temporary new look while we build something better. Share with us what you like or dislike about this new layout.

We love to hear from you.

Clear and Muddy Roadmap

BarrosMetrics Views: A Clear and Muddy Roadmap

The S&P’s latest price action has confirmed the likely near-term price action; but, has muddied the longer-term picture.

Figure 1 shows the strong bull move up suggesting we’ll see a breach of 2135. When that occurs two scenarios present themselves:

  1. A new bull run (in my view unlikely) and
  2. Some sort of topping pattern. Initially, I favoured an Upthrust. I now think this is less likely.

The problem is my longer-term work suggests that the top is likely to occur sometime in the third quarter 2016 to first quarter 2017. If my short-term scenario plays out, the Upthrust will come too soon. So what is my short-term scenario?

A rally into the second week of June, followed by a sell-off ahead of FOMC. The FED won’t raise rates in June but will strongly suggest it will in July, subject to data. The initial market response will be a rally to new highs followed by a strong sell-off. That sell-off would normally trigger an Upthrust.

So, if the short-term proves correct, how do we reconcile this view with the longer-term? We could say that the longer-term will prove false. But, I have a great deal of faith in that scenario.

I’ll look to reconcile by saying we’ll form some sort of complex top with 3-Drives, or an 18-d  Diagonal Terminal, being the most likely. The two topping formations will easily postpone the final top into my preferred time scenario.

 

2016-05-27_18-24-35 S&P cash daily

FIGURE 1 S&P Cash

 

Are You Procrastinating to Fail?

BarroMetrics Views: Are You Procrastinating to Fail?

This week I had an opportunity to face up to human mortality.  It gave me a chance to face the question: am I satisfied with the way I have lived my life? Is there something more I’d like to accomplish?

At 20, I felt I had an eternity before me. At 70, one of the rarer resources I have is time.

We filled the seats we needed for Ultimate III, the last beta class I am running. (Commercial program to be launched in the first quarter of 2017). The new program runs for seventeen (17) weeks. Interestingly, the objection to the course from prospective attendees was not one of price but time. The lament I most often heard was: “I don’t have the time for the course! Can’t it be a two or three-day seminar?”

Interestingly, the objection to the course was not one of price, but of time. The lament I most often heard was: “I don’t have the time for the course! Can’t it be a two or three-day seminar?”

Let’s see:

  • You are being offered a low-priced, 17-week course; that comes with a money-back guarantee.
  • You are mainly in the ‘group I’d classify as “not quite as successful as I’d like to be”.
  • The course would help you reach your goals.
  • Sure, you would have to work for the result and there would be some chance you would fail. (Of the 18 that attended Ultimate I and II, 2 failed, 16 continue to succeed).

So, does the time objection make sense?  Not to me.

Perhaps it’s the perspective of age.  At 70, my tomorrow’s are limited. I have to achieve what I can now. At 30 or 40, you have another 30 or 40 years to spare; and at 20, you have 50 or 60 years to spare.  Thirty to sixty years sound like deep moats; but, it’s easy to while away the time. Then, at a blink an eye, you suddenly are a septuagenarian and time is no longer a luxury.

Evidence says that ‘regret’ is the strongest sentiment the older generation articulates. Among the top five is;

I wish I’d had the courage to live a life true to myself, not the life others expected of me“. I read that as including the feeling – ‘I should have gone for what I truly wanted”.

So, here’s the bottom line: don’t postpone what you truly want. Whatever it is, won’t come easily; but work for it. The joy of attainment is worth the effort.

 

S&P Revisited 2016-05-23

BarroMetrics Views: S&P Revisited 2016-05-23

Comment: I shall not be posting on Tuesday and Wednesday this week. Next post will be on Thursday, May 26.

Since my last blog, Are You Ready for 2017’s Tsunami? V, the S&P has done little do confirm its near-term direction:

  • After the double-distribution trend day down, it rallied, sold off.  and has then gone sideways. (Figure 1)
  • Looking at the sideways price action:
  1. On Wednesday and Thursday last week, the S&P flirted with closing below the 5-day swing Head and Shoulders. (Figure 1)
  2. But, for Friday, we see a bullish bar with below average range and normal volume. I rate this as somewhat bearish. (Figure 1)
  3. Friday’s delta chart shows  bearish inclination. The bull bar shows no buying confirmation. (Figure 2).

All told, I am still awaiting a clear signal for the near-term direction. I am looking to see either a buying or bearish conviction.Let’s see what the next three days bring.

2016-05-23_06-16-25 01 NVD

FIGURE 1 S&P Cash

2016-05-23_06-52-43 02 MDD24

FIGURE 2 MarketDelta Daily 24-hour E-mini

Why? IV

BarroMetrics Views: Why? IV

Today we take a look at Professor Oettingen’s third motivational strategy: ‘mental contrasting’ where we go back and forth between Indulging and Dwelling. This focus creates a tension that drives us to resolve – thus providing the motivation for action.

The strategy calls for two steps:

  1. A frequent use of the mental contrasting strategy; and
  2. Execution of a plan i.e. taking an action step to move towards our goals.

In Ultimate II, I set as a daily task, step 1: to mentally review the outcome of the trading goals, and to also review the traders barriers to those goals and the steps he was taking to overcome the barriers.

Simple right? The exercise would take no more than 10-minutes per day. And yet……moving the attendees to do this took the patience of Job and the creativity of Jobs (Steve). Eventually, we managed to get everyone on board.

What will be interesting to discover is how many continued once they completed the course. We are looking at some innovative ideas for Ultimate III to encourage maintenance of habits.

Here we complete the series. We started with seeking to understand the reason ‘why’ is a necessary component of trading success, and ended with a process to ensure we maintain the motivation for discipline.

Have a great weekend!

 

Why? III

BarroMetrics Views: Why? III

In yesterday’s blog, we said ‘why’ was an important motivator. The Ericson process is effective and no fun; we need a strategy to keep going. Knowing ‘why’ drives the motivation strategy.

But, just what strategy is successful in the face of hard work and the inevitable temporary failure?

Professor Gabriel Oettingen of the New York University has done some fab work in this area. She found that there are three motivational strategies, of which one is superior.

  1. The ‘Dwelling’ – the strategy of Chamine’s saboteurs: Create a sensory-specific picture of the barriers to success.
  2. The ‘Indulging’ – the strategy favoured by the success crowd: a rich sensory-specific picture of what our future would be like if we attained our goal.

Her research shows that both methods have a scientific basis.

Negative emotions (Dwelling) help drive persistence, commitment and focus; positive emotions (Indulging) lead to mental flexibility and insight (creating new connections). Unfortunately, both strategies have serious drawbacks.

  • Dwelling: Climb into this foxhole and you may have difficulty clambering out. It may lead to a ‘what’s-the-point’ mindset.
  • Indulgence: There is more than enough research to show that visualising the outcome will reduce, not increase, the motivation to succeed because the visualisation process provides the psychological reward of success. As a result, we are less inclined to produce the actual outcome.

There is a third strategy – one that enjoys the benefits of both strategies without their drawbacks: for tomorrow, guys and gals.

Why? II

BarroMetrics Views: Why? II

Ericson’s first step to mastery is to set your goal. But, this presupposes ‘why’ we want to attain the goal. So, for me, the first step to success is to ask: ‘Why this goal?’.

In trading, the answer I am usually given is ‘to make money’.  But, if you think about it, it’s never just about money. Money is a tool of exchange. We can’t sleep with it, we can’t eat it, we don’t derive social pleasure from it, etc. Money is useful for its exchange value.

Bottom line, we trade:

  • For reasons of emotional security,
  • For what we can do for our loved ones,
  • For self-esteem and sometimes
  • Because we achieve a higher purpose – we  are able to make a difference.

If you recognise Maslow’s hierarchy, well done! I believe that Maslow’s model holds the explanation to our behaviour.

The question comes up ‘why do we need to know our why?’.

The answer is Ericson’s process is not easy, and it is certainly not fun. We need a motivator to keep us on track. Knowing our ‘why’ provides the motivation to persevere.

Also, notice that the ‘why’ is value driven. The idea fits nicely with the ACT model where actions are driven by value derived goals.

More tomorrow.

 

Why?

BarroMetrics Views: Why?

‘Why’ what? What’s this ‘why’?

To answer the query, we need first to understand why so traders continue to fail – fail despite the advances in the realms of investing, psychology and learning.

There are only two reasons why traders fail

  1. Ignorance (don’t know what to do) and/or
  2. Ineptitude (don’t do what they know).

Ignorance we cure by acquiring knowledge. In trading, this is the easy part.  I believe the majority of those who fail take this step. The stumbling block is turning that knowledge into a skill (i.e. overcoming ineptitude). Most traders use this format to learn:

  • Acquire some knowledge.
  • Learn to apply that knowledge through repetition until
  • The knowledge becomes second nature.
  • At this point learning (improvement stops).

That is precisely the route to take for failure.

Anders Ericson has made a study of mastery. The route Masters take is very different. Over the next few blogs, we’ll have a look at his route to mastery

 

Are You Ready for 2017’s Tsunami? V

BarroMetrics Views: Are You Ready for 2017’s Tsunami? V

My apologies for the break. I went to Singapore and struck probs with my notebook. Anyway, now back in HK till early July.

When we left this series, I said that I’d look at the technical picture. Fundamentally I have taken the view that we’ll see a bear begin in stocks towards end 2016, early 2017.

Figure 1 shows the 13-week Ray Wave count. It raises the possibility that we may see an earlier move down. If that is going to occur, we need to see the down move start now. It took 10 bars to form Wave V. If a top is to form now, we need to see the II-IV trendline breached in the next 6 weeks.

The alternatives are:

  1. More sideways price action, followed by a new high that holds below 2242. The likely max target is 2724 and the min is 2175. The new high is followed by acceptance below 2104,
  2. The new high accepts above 2242 and continues with another bull leg up.

Of the two, I rate scenario (1) as the greater probability.

If the bear is to start early, we’ll have a clear signal tonight if we see another strong day down.

Figure 2 show the day session of the E-mini. On Friday, it formed a traditional double distribution trend days. Pete used to say, ‘trend days are not good continuation days UNLESS it’s the start of a move’.

Let’s see what tomorrow brings.

2016-05-16_18-37-16 13w RWCount

FIGURE 1 13-w Ray Count Cash S&P

2016-05-16_18-38-22. ES Pitt DD Trend Day

FIGURE 2 ES Day Session Market Profile.