Interest Rates Rise – Impact on US Stock Indices?


BarroMetrics Views: Interest Rates Rise – Impact on US Stock Indices?

Non-Farm today and I am expecting a figure that is is at least on the better side of consensus (Consensus range: 162K to 240K, Consensus: 200K).

If I prove correct, that will clear the path for the FED to raise rates. That it would, provided the job figure produced no surprises, was made clear by Kaplan and Fisher. It was also confirmed by Yellen.

Let’s assume rates do rise. What effect will that have on the S&P?

I suggest very little in the way of a bearish reaction.

I see this current move as being the last leg of the   13-w bull market that started in 2008. It’s what I call an R2 move (parabolic rise) that is driven by sentiment. My sentiment tools rate the current move to be on par with the 1987 top. Gann Global has a possible date for the top in the time zone, March 17 to April 10.

However, I do think we’ll see a bullish reaction, given that the S&P is in a parabolic move up. Gann Global has a possible date for the top in the time zone, March 17 to April 10.  I’d like to see the S&P put on another 10% before I become overly bearish. In the meantime, I am keeping an eye on the corrections: a 3% drop will signal a top is in place.



Accountability 3

BarroMetrics Views: Accountability 3

Great! We’ve finally arrived at Reeder’s equation. The basis is a simple one, the degree to which you are motivated is the extent to which the positives outweigh the negatives.

(Treasures – Troubles) + Contributions – Choices = Commitment (or lack of it).

What are treasures?

Well, here’s my contribution: Our values must form the basis of Treasures. Our goal needs to be based on and formulated in line with,  our top values. Once Values are in place, we can think of Treasures as the rewards we are seeking by our goal achievement.

Troubles are the price we pay for our success. Their impact depends on their severity and acceptability. It’s important to bear in mind that Troubles outweigh Treasures by a factor of five to one.

Within the definition of Treasures and Troubles, we fit Gracia’s model. So, for Treasures and Troubles, we not only consider the Rewards of Success and the Pain of failure; we also consider, the Rewards of Failure and the Pain of Success.

Contributions are the irrevocable investments we make in terms if time, talent and tangibles (money and what money can buy). There are times we need to include ‘tenderness’: the giving of self e.g. caring for another.

Finally Choices. The more choices we have, the more commitment will decline.

The strategy to maximising commitment is to increase positives and reduce the negatives. Both books provide a series of strategies to do this as does Acceptance and Commitment Therapy (ACT).

So, over to you. You now have the means to secure any goal you truly desire. You just need enough willpower to run through the equation.

Learn by Doing

BarroMetrics Views: Learn by Doing

Ultimate III jus concluded. The class was evenly split between institutional and retail traders. But, the results could not have been more different.

Today, we’ll look at the retail stats.

Ultimate is a 4-month course whose main focus is to ensure that the attendees can apply the course ideas in their trading. Whether or not they do, depends, of course, entirely on them. But, at least, they can apply the concepts if they wish. It includes a theoretical and practical dimension:

  • Four weeks for theory,
  • Followed by a tw0-day seminar/webinar.
  • Then three months of application.
  • Finally, four weeks of unassisted trading (the exam). Here I am looking to see if the attendees follow the process rather just relying on the results of the trading.

Here are the retail stats:

  • 23% dropped out at the end of theory section. In other words, 67% took the practical.
  • 7% failed to complete practical section.
  • 31% failed the exam. By this I mean, they knew what they had to do but failed to do it.

Here’s a classic example:

John chose to trade mechanically. Given the results of his personality test, I agreed with his election.

September 2016 had unsuitable trading conditions for FX. When that happens, mechanical traders lose money. At this point, John abandoned the system or at least found ‘reasons’ why he would not trade the signals. 

Unfortunately, from the end of October, conditions reverted; and if John had continued to trade the system, he’d have made a tonne of money.  So, what stopped him from returning to the system? The need to prove he was right in stopping its use. 

When you compare John with the 39% who did well in their exam, the main difference is the successful group did the basics well:

  • They followed their position sizing rules.
  • They adhered to the method rules – whether they were mechanical or discretionary rule-based traders.
  • Most important of all, they kept their journals (both equity and psych), AND they reviewed them, so they learned from their mistakes.

More tomorrow


In Breakout!, I wrote why I was looking to buy the S&P at the price zone 2278 to 2275 (basis CFDs). Figure 1 shows why I did not enter – the downside momentum was so strong, I never got a setup.

Prices did stop at the next support zone 2258 to 2263. Today. I’ll be a buyer if there is 30-min acceptance above 2281.50 with stops below 2258.

If prices break below 2258, the next support zones are 2248 to 2252 and the spike low zone. 2228 to 2. Acceptance below 2228 would negate my bullish scenario.


FIGURE 1: 240-Min S&P (CFD)



Update on Ray’s ebook

A while back, Ray had embarked on writing an ebook on goal achievement and organisation, entitled “Live the Life of Your Dreams”.

He had completed his first version but not happy with its form and wanted to rewrite it.  He just had a cataract op and will be going for his hip operation on 2-Dec.  Given his surgery and time needed for recovery, his ebook can only be available sometime next year.  I’m unable to provide a precise date for now.

Thanks for your well wishes, patience and support.



BarroMetrics Views: Hibernation?

The attached article from sets out the quandary in which the FED has found itself: ’52’ is correct – despite the trillion of dollars the US economy is still in an anaemic condition.

But the article fails to consider two points:

  1. What is the FED going to do if economic conditions deteriorate? There seems little left in the tank of goodies that will provide a remedy.
  2. The FED’s main hold on the markets is its credibility. Lose that and all the QE in the world won’t mean a jot.

For both these reasons, I expect an interest rate hike in December.

In the meantime, both the FX and US stock markets have continued with their choppy, non-directional trading.

I’m going to have to learn to day trade or get another job!


“For Or Not For Me”

BarroMetric Views: “For Or Not For Me.”

Here I am sitting in Boston’s Public Library. It’s an amazing place! But not as incredible as Harvard’s where the library extends four floors down below ground level! Why down and not up or sideways? That’s a story for another day.

Today is more about an intriguing conversation I have been having with an Aussie friend, let’s call him Derek. Derek is a psychiatrist specialising in counselling teenagers especially those who are either at Uni or about to enter Uni.

I have great respect for Derek and usually bounce ideas off him when I am uncertain.

I sent him a copy of the ebook I am writing – well, the introductory chapter and mindmap outline of the rest of the book. Derek was very complimentary:

“You have succeeded in capturing and placing the latest research in one bundle. Anyone following the process will have solved the problems of optimising their use of time as well as some of the usual barriers like procrastination, failing to remember easily ……”

“BUT”, he added, “you are marketing to the wrong crowd. No matter how overwhelmed they may be, no matter how much they may feel there aren’t enough hours in the day, and no matter how effectively you book will solve their problems – traders won’t come at it!”

I asked: “Why?”

“Because traders won’t move their comfort zone. The book’s subject matter is too far outside ‘trading’ for its contents to be sufficiently motivating.

You are better off helping the Uni student who is more likely to be helped by the ebook.”

I told him he was wrong. So, he set up a simple challenge. What that challenge is, I’ll tell you the next time I write the blog. I’m not sure when but it will be before I leave the US.

Oh, I almost forgot. I was asked what I am calling the ebook. At this stage: The 5 Stages of Self-Management, optimising the effective use of your time.

Up or Down?

BarroMetrics Views: Up or Down?

324 pips in one day! That was the GBPUSD range yesterday.

I have to say I was surprised – given we have a rate decision on Thursday at 9::30 UK time.

The rally was expected: the GBPUSD had shown a lack of selling follow-through and that, together with the BOE announcement, suggested a rally was on the cards. What surprised me was the extent of the rally in a 24-period. It looked like we were not only seeing short covering but also fresh buying.

Given the change I believed Brexit had brought to the GBP value structure and the long-term chart picture, I see the GBP as being in a sustained bear market.

Figure 1 shows the Spot Monthly chart (from TheChartStore) from 1900. The pattern I am focusing on is:

  • The Nov 80 high
  • Feb 1985 low, and
  • The Value Area sandwiched between the two extremes.

We normally would have seen an upside breakout to test the Nov 80 high. Instead, we have seen acceptance below the Value Area Low (June 2001).

The downside breakout usually means one of two things:

  1. The Value Area is still in the process of completion. In this case, we’ll see a test of the Value Area Highs (Nov 2007 and Sept 1980); or
  2. The Value Area is complete, the breakdown is genuine, and we’ll see a test of the Feb 1985 lows.

More tomorrow……..

2016-07-13 GBPUSD 12m