http://www.athrasher.com Tue, 01 Aug 2017 10:30:11 +0000 en-US hourly 1 https://wordpress.org/?v=4.8.1 41738624 Why August Could be One Bear of a Month http://www.athrasher.com/august-one-bear-month/ http://www.athrasher.com/august-one-bear-month/#respond Tue, 01 Aug 2017 10:30:11 +0000 http://www.athrasher.com/?p=3602 Since my last blog post, titled “What I’m Seeing That Has Me Concerned About the Volatility Index” we saw a near 50% rise in the Volatility Index ($VIX) intraday nine days later on June 29th, which caught quite a few Continue reading Why August Could be One Bear of a Month

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Since my last blog post, titled “What I’m Seeing That Has Me Concerned About the Volatility Index” we saw a near 50% rise in the Volatility Index ($VIX) intraday nine days later on June 29th, which caught quite a few traders off-guard. I shared my insight that day in a piece for CNBC, saying the spike in volatility would likely be short-lived. Since then, volatility has resumed its downward path, hitting levels that have rarely, if ever, been seen (depending on which measure of volatility you use). In my VIX post I shared a chart of volatility seasonality, which showed that historically the VIX has put in a low around July/August. To expand on the topic of seasonality I want to dive into equity seasonality for August.

Below we take a look at different viewpoints on market seasonality as well as declining market momentum that could pose as a headwind for U.S. equities.

Seasonality
First up is this monthly seasonal chart by Jon Krinsky, CMT of MKM Partners, as shared by Josh Brown over at The Reformed Broker. Krinsky notes August has averaged a negative decline over the last 30 years but also points out that not every August has been bearish – ’06, ’09, and ’14 were notable exceptions.

Next is a chart I shared on Twitter which is from Tom Thornton’s daily note, Hedge Fund Telemetry. Tom does an excellent job sharing his insights each day in is letter. This chart looks at the decennial pattern of the Dow Jones Industrial Average going back to the early 1900s for years ending in “7”. As you can see, August has been an interesting turning point…. on average for the seventh year of the last 11 decades.

Jeff Hirsch, editor of The Stock Trader’s Almanac, notes that August in a post-election year has not been great for stocks. In fact, it’s the worst month for the Dow and the second worst month for the S&P 500, Nasdaq and Russell 1000 with average declines ranging from -18% to -15%, respective of the index.

Momentum
While discussing U.S. equities we often focus on just the indices themselves, but it’s important to remember that the stock market truly is a market of individual stocks. How those stocks trade is what ultimately impacts the indices themselves. I believe momentum is a powerful tool in stock analysis and can tell us quite a bit on the chart of individual stocks and markets. One such measurement of momentum is the Relative Strength Index (RSI). The chart below shows the average 14-day RSI for each of the stocks that make up the S&P 500. Since March this figure has been in a steady decline of lower highs while the index itself has been grinding higher. What I find really interesting is that we saw something very similar happen during the same time frame last year. In March 2016, the average RSI peaked and began to diverge through August – just before we saw the largest drawdown for that year. Will the same type of price action also follow 2017’s momentum divergence? We’ll see.

Another way to look at momentum is from a lens of being ‘overbought’ or ‘oversold.’ While on a short-term basis being ‘overbought’ can act as a headwind for stocks, it’s often a longer-term bullish sign of strong interest in the stock as buyers push momentum to high levels. By looking at the number of stocks that are seeing a high level of momentum via the RSI indicator we can get a different view of the health of momentum for the overall S&P 500 index. Similar to the chart above, we saw a peak in the percentage of S&P 500 stocks with their respective RSI above 70 (a commonly used level to denote ‘overbought’ status) just above 24%. As the index headed higher fewer and fewer stocks have been able to push their momentum readings above this threshold, with just 6.15% of the S&P 500 stocks getting ‘overbought.’

So there we have it. When looking at the S&P 500, the 50-day Moving Average seems to have become a favorite level of dip-buyers to step up their activity. As of this writing, we are still well above the 50-day as well as the shorter-term, 20-day with the index just a few points off its all-time high. If we do see weakness in equities I’ll be watching the prior June high as well as the 50-day MA as potential support levels. We are still in a well-defined up trend and that shouldn’t be discounted too quickly. There are plenty of catalysts that could keep prices buoyed, but it’s also important to understand the historical market implications and patterns that we also are facing. This should make for an interesting August for sure!

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

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What I’m Seeing That Has Me Concerned About the Volatility Index http://www.athrasher.com/im-seeing-concerned-volatility-index/ http://www.athrasher.com/im-seeing-concerned-volatility-index/#comments Tue, 20 Jun 2017 10:30:55 +0000 http://www.athrasher.com/?p=3584 I’ve had a great response to my Dow Award paper, Forecasting a Volatility Tsunami, with it being downloaded over 3,000 times since April. I really appreciate the support and the positive feedback I’ve received so far. Last week I had Continue reading What I’m Seeing That Has Me Concerned About the Volatility Index

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I’ve had a great response to my Dow Award paper, Forecasting a Volatility Tsunami, with it being downloaded over 3,000 times since April. I really appreciate the support and the positive feedback I’ve received so far. Last week I had the opportunity to do a webcast with the Market Technicians Association, going into much greater detail about the importance of risk management and shedding some more light on the topic of the paper – low levels of dispersion within the VIX.

What I’m seeing today
As of June 16th (last Friday), the dispersion within the Volatility Index (VIX) (i.e. daily gyrations in in the index) has fallen below the threshold I highlighted in my paper. As I mentioned in my webcast and in the paper itself, I do not believe this ‘trigger’ alone is not enough to generate a final conclusion on the potential direction of the VIX and that in my own research I combine it with several other pieces of data. For example, low levels of dispersion in the Volatility Index is similar to clouds forming in the sky that often precedes rain storms, similar to how low dispersion in the VIX often precedes spikes higher. Just like being able to have dark clouds in the sky without rain, we’ve had periods of time where dispersion has been low for the VIX without it being followed by a spike higher. This is why we must continue our analysis in looking at other pieces of data for confirmation.

While last Friday sent the standard deviation (which is how I chose to measures dispersion) for the VIX to a very low-level, paired with some over factors I follow, has sent up a yellow flag for volatility in my opinion. Below is chart of the VIX with previous instances of what I’m seeing taking place right now. Since 2012 we’ve had this type of trigger occur before several intermediate and large swings within the VIX Index as well as at the end of 2010.  Most recently we saw three occurrences in August of last year before the Volatility Index rose over 70% and major U.S. indices weakened for several weeks.

Seasonality
I find it extremely interesting that this is occurring near the end of June, as based on seasonality, that has been when the Volatility Index has historically bottomed out. Thanks to Callum Thomas for the below chart, which he included in his weekly ‘chart storm’ over the weekend, showing the seasonal patterns for the S&P 500 and the VIX Index since 1990.

This post is not meant to act as a recommendation to buy or sell securities but to show an example of how I have incorporated volatility dispersion within my own research. We’ll see what the VIX does in the coming weeks.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

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What’s In A Name? http://www.athrasher.com/important-name-company-stocks-performance/ http://www.athrasher.com/important-name-company-stocks-performance/#comments Tue, 13 Jun 2017 10:30:54 +0000 http://www.athrasher.com/?p=3571 “What’s in a name? That which we call a rose By any other name would smell as sweet.” Romeo and Juliet One of my goals for 2017 was to read more. While I’m nowhere close to the Patrick O’Shaughnessy-level of Continue reading What’s In A Name?

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“What’s in a name? That which we call a rose
By any other name would smell as sweet.”

Romeo and Juliet

One of my goals for 2017 was to read more. While I’m nowhere close to the Patrick O’Shaughnessy-level of 100+ books a year (Patrick’s book club is a great place to find new titles to read by the way), I am trucking along with my reading list and I’m currently in the middle of reading Pre-Suasion by Robert Cialdini. So far the book has been excellent and is one of my favorite books I’ve read so far this year. While not a finance-related book, there’s one section that stood out that is trading related and helped reinforce something I’ve believed for quite a while.

That is, that many make trading and the evaluation of stocks much more difficult than it truly needs to be. Hours are spent building complex spreadsheets, forecasting cash flows, counting cars in parking lots of retailers, analyzing changes in tone of a CEO during a media interview, etc. Meanwhile, (it’s of my belief that) the market rises and falls on the simple shift of human emotion and psychology which drives supply and demand for a stock. 

That’s where Mr. Cialdini comes in.

Below is a page of Pre-Suasion from a chapter in which Cialdini discusses the idea that people prefer topics and names to be as easy as possible to perform or say. For example, he cites a study that was looked at the names of lawyers and found that those with the hardest names to pronounce were less likely to advance up the ladder of their respective law firms. He also discussed the stock market and the performance of stocks with easy to pronounce names and ticker symbols. 

Seriously! From 1990 through 2004, stocks that had easier to pronounce names outperformed those with unpronounceable names. Now obviously what’s considered easy can vary by the eye mouth of the beholder. But this boils down to the notion that people are drawn to things that are simple – even when it comes to deciding where to invest the trillions of dollars that make up the U.S. financial market.


This is unlike to persuade many of those involved in our field from continuing to expand their spreadsheets with costs of goods sold and revenue projections; nor should it as there is likely value that can be derived from that practice. But it’s important to not lose sight of the idea that at the end of the day, supply and demand within the stock market is largely driven by human emotion. Well what about the HFT traders and all the algos? Sorry to disappoint you but those algorithms were originally written by humans too!

Einstein said “Make things as simple as possible, but not simpler” and he was right. I believe that’s why the concept of long-term trend following has been so effective for so many years. While being one of the simplest ideas of trading (but one of the toughest for investors to stick to), almost binary in its genesis. In fact, AQR showed an example of positive performance of trend following going back to 1880.

This isn’t a post arguing that trend following is superior over other methods or that discounting cash flow is a waste of effort. But to show the simplicity of human desire for the easiest and simplifed solutions, even when it comes to stock selection. At the end of the day basic emotion reins supreme in the search for the easiest route to decision making.

Source: Pre-Suasion: A Revolutionary Way to Influence and Persuade by Robert Cialdini

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

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What’s You’re Biggest Regret? http://www.athrasher.com/whats-youre-biggest-regret/ Thu, 01 Jun 2017 13:15:29 +0000 http://www.athrasher.com/?p=3568 Dr. Travis Bradberry recently shared an article he wrote on LinkedIn titled, “Five Choices You Will Regret Forever.” With a title like that, it’s hard not to click. I’m a sucker for good clickbait. I had a personal connection to Continue reading What’s You’re Biggest Regret?

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Dr. Travis Bradberry recently shared an article he wrote on LinkedIn titled, “Five Choices You Will Regret Forever.” With a title like that, it’s hard not to click. I’m a sucker for good clickbait. I had a personal connection to each of the five choices  Bradberry lists (I included them below). Our lives are full of decisions, some mundane others live-changing, but all are important.

I recently returned from an amazing trip to Italy with my wife. We visited six wineries, saw some breathtaking historical art and monuments, learned more than my brain could hold on to, all while eating some amazing food. While I’ll have memories from the trip that (I hope) last a lifetime – one of the biggest takeaways was the need to experience more of life. In my final days, as Bradberry’s article discusses, I want to limit the number of regrets I have. I am not naive in thinking there won’t be any, but at the age of 30 I’m still young enough to keep that list as short as possible.

Anyway, I thought Bradberry’s list of five regrets is well worth sharing and so here the are (in abbreviated form with a link at the bottom of this post to the full article):

Bronnie Ware spent her career as a palliative care nurse, working exclusively with people who were 3 to 12 months from death. She made a habit of asking them about their greatest regrets, and she heard the same five regrets time and time again. By studying these regrets, you can make certain that you make good choices and don’t fall victim to them yourself.

They wish they hadn’t made decisions based on what other people think. When you make your decisions based on other people’s opinions, two things tend to happen:

  1. You make a poor career choice: There are too many people out there who studied for a degree they regret or even spent their lives pursuing a career they regret. Whether you’re seeking parental approval or pursuing pay and prestige over passion, making a poor career choice is a decision that will live with you forever.
  2. You fail to uphold your morals: When you get too caught up in what your boss thinks of you, how much money you think your spouse needs to be happy, or how bad you will look if you fail, you are at high risk of violating your own morals. Your intense desire to make yourself look good compromises your ability to stay true to yourself and, ultimately, to feel good.

They wish they hadn’t worked so hard. Working hard is a great way to impact the world, to learn, to grow, to feel accomplished, and sometimes even to find happiness, but it becomes a problem when you do so at the expense of the people closest to you. Ironically, we often work hard to make money for the people we care about without realizing that they value our company more than money.

They wish they had expressed their feelings. We’re taught as children that emotions are dangerous and that they must be bottled up and controlled. This usually works at first, but boxing up your feelings causes them to grow until they erupt. The best thing you can do is to put your feelings directly on the table. Though it’s painful to initiate, it forces you to be honest and transparent.

They wish they had stayed in touch with their friends. When you get caught up in your weekly routine, it’s easy to lose sight of how important people are to you, especially those you have to make time for. Relationships with old friends are among the first things to fall off the table when we’re busy. This is unfortunate because spending time with friends is a major stress buster. Close friends bring you energy, fresh perspectives, and a sense of belonging, in a way that no one else can.

They wish they had let themselves be happy. When your life is about to end, all the difficulties you’ve faced suddenly become trivial compared to the good times. This is because you realize that, more often than not, suffering is a choice. Unfortunately, most people realize this far too late. Although we all inevitably experience pain, how we react to our pain is completely under our control, as is our ability to experience joy. Learning to laugh, smile, and be happy (especially when stressed) is a challenge at times, but it’s one that’s worth every ounce of effort.

Any of those stick out to you? I’m sure at least one does if you are honest with yourself. While this blog’s focus is on technical analysis and the financial markets I think it’s important to recognize there’s a world beyond the 500 S&P stocks. My passion is trading and it’s something I believe I’m good at. But it’s important to not lose focus on other aspects of life and making sure the list of  regrets is kept as small as possible.

Source: Five Choices You Will Regret Forever (LinkedIn)

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

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Price and Seasonal Weakness Plague Mid Cap Equities http://www.athrasher.com/price-seasonal-weakness-plague-mid-cap-equities/ Thu, 04 May 2017 10:30:38 +0000 http://www.athrasher.com/?p=3562 Last week I discussed the growing divergence within the S&P 500 as the largest components of the index were outperforming the smaller $SPX stocks. To continue on that topic, below we’re going to look at the S&P 400 Mid Cap Index. Continue reading Price and Seasonal Weakness Plague Mid Cap Equities

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Last week I discussed the growing divergence within the S&P 500 as the largest components of the index were outperforming the smaller $SPX stocks. To continue on that topic, below we’re going to look at the S&P 400 Mid Cap Index.

$MID recent made a run back to its prior 2017 high but was unable to breakout, creating a lower high in momentum, based on the Relative Strength Index. This creates the third major lower high since its December as momentum continues to weaken for this mid cap index.

While the 100-day Moving Average was able to provide some support during the low earlier in the year, price has unable to gain transaction along with the large cap U.S. equities. The bottom panel of the chart shows the relative performance of the S&P 400 vs. the S&P 500. With relative performance having peaked in December, the ratio line has been putting in a series of lower highs as mid caps struggle to keep up. While price is still well off its prior low, relative performance is beginning to creep closer to its 2017 low, a bad sign for mid cap stocks.

Looking at volume on this daily chart, we can see a recent increase in large selling days. In early April we saw three consecutive above-average days of selling as a short-term low was put in for $MID. However, more recently two more days of above-average down volume have taken place – a sign that many traders attribute to institutional selling.

Turning our focus to seasonality, this recent weakness in the mid cap index begins to make a little more season. Based on the below chart from EquityClock, over the last 20 years, the S&P 400 has put in a short-term high in early May before picking back up later in the month

Going forward I’ll be watching to see how $MID acts if price gets back to the prior ’17 low and if the relative performance ratio does in fact set a new low. This period of weakness does align with long-term seasonality and if the seasonal pattern continues to play out we could see mid caps weaken further until later this month.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

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A Growing Divergence in Performance for the S&P 500 Components http://www.athrasher.com/growing-divergence-performance-sp-500-components/ http://www.athrasher.com/growing-divergence-performance-sp-500-components/#comments Thu, 27 Apr 2017 10:30:56 +0000 http://www.athrasher.com/?p=3553 As we approach the final days of April, if you were to look back and try to put your finger on a theme for the last four months, one that you may select could be the growing divergence taking place in Continue reading A Growing Divergence in Performance for the S&P 500 Components

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As we approach the final days of April, if you were to look back and try to put your finger on a theme for the last four months, one that you may select could be the growing divergence taking place in the S&P 500. What I’m referring to is the separation in performance that appears to be taking place among the largest of the S&P 500 stocks and the less large (smaller?) stocks that round out the index. Eyeing a long-term chart of the equity market there appears to have been a couple previous examples of this taking place, I’ll get into those later. First let’s look at present day…

Below is a chart of the S&P 500 Index (red line) and the ratio between the S&P 500 Equal weight ETF ($RSP) and the S&P 500 ETF ($SPY) which is cap-weighted. (yes I could have used the indices but I, no big reason why I chose not to. I just naturally gravitate to ETFs). I tweeted out this chart yesterday but I wanted to provide a little more commentary to what’s taking place.

When the Black line is rising that is telling us that the Equal Weighted $RSP is rising more (or falling less) than the cap-weighted $SPY, and when it’s declining the opposite is taking place. The latter is what we are seeing play out so far in 2017 with the largest of the S&P 500 components leading the charge higher.

Another instance we saw this play out was in 2012. During the initial bounce off the low in May we saw the S&P 500 begin making higher lows but it was being done on the backs of the largest components – as we can see with the black ratio line making lower highs from May through August. This divergence was ultimately responded with the market as a whole heading to new highs and the smaller S&P companies once again taking the lead.

The reason that we may attention to which parts of the market are leading and lagging is because it provides insight into the level of risk taking that’s occurring within the market. It’s commonly believed that the larger the company’s market cap, the less riskier the stock (obviously there’s plenty of examples of this not being 100% true all the time). When the market is trending higher many bulls want to see the more riskier portions of the market, such as small caps and mid caps show strong relative performance. And one way we can measure that is by looking at which parts of the S&P 500 are showing that relative performance – the largest weighted or the smallest weighted stocks within the index.

Here’s another example a divergence being formed between the two differently weighted ETFs. Let me first say, yes this is showing the 2007 peak in stocks before the Financial Crisis. No, I’m not calling for a long-term top in the S&P 500, this is just another example of a similar divergence. As with many major market peaks, the are lead by a narrowing of breadth, also known as participation. This showed up in the lack of relative strength among the smaller S&P 500 stocks in June 2007 through the rest of the year. And we know how that played out in the next twelve months….

So there are two examples of a growing separation in the largest and smallest stocks that make up everyone’s favorite equity index. One (2012) was resolved with the market going higher and another (2007) that led to a major bear market. Which one will we see? No idea, and there’s no reason we must replicate either of these instances. The important takeaway is the acknowledgement that the largest companies in the index are what have been leading it higher – that’s where bulls seem to be concentrating their efforts.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

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CNBC and Investopedia Interviews http://www.athrasher.com/cnbc-investopedia-interviews/ Wed, 19 Apr 2017 10:30:09 +0000 http://www.athrasher.com/?p=3544 The response I’ve gotten back from my research on market volatility has so far been really positive and it’s now in the top 1% of papers downloaded at SSRN, which means a lot to me that so many have had a interest Continue reading CNBC and Investopedia Interviews

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The response I’ve gotten back from my research on market volatility has so far been really positive and it’s now in the top 1% of papers downloaded at SSRN, which means a lot to me that so many have had a interest in reading my paper. I’ve also had the opportunity to discuss the Dow Award and my research in a couple interviews, which I’ve linked below.

(On a side note, I promise to get back to writing more on the blog – it’s been more a lack of time than a lack of insights I’ve wanted to share with you guys, so hopefully can start producing more content very soon.)

At the MTA Symposium I spent a view minutes talking with JC Parets of All Star Charts for Investopedia.

I also did an interview with Brian Sullivan for CNBC, discussing my work and some of the resent signals of narrowing dispersion in the volatility index.

Meet the Winner of the 2017 Charles H. Dow Award (Investopedia)
A new method for predicting volatility ‘tsunamis’ (CNBC)

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

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Forecasting a Volatility Tsunami http://www.athrasher.com/forecasting-volatility-tsunami/ http://www.athrasher.com/forecasting-volatility-tsunami/#comments Wed, 12 Apr 2017 12:02:20 +0000 http://www.athrasher.com/?p=3536 Let me first say a huge thank you for all the kind words and messages I’ve received regarding winning the Charles H. Dow Award. This past week was the annual Market Technicians Association Symposium in New York. Traders from all Continue reading Forecasting a Volatility Tsunami

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Let me first say a huge thank you for all the kind words and messages I’ve received regarding winning the Charles H. Dow Award. This past week was the annual Market Technicians Association Symposium in New York. Traders from all over the world came together to discuss the markets, different strategies and approaches to trading, and some of the new technology that’s being developed around technical analysis. It was also great getting to meet many of you that have been following this blog and/or me on Twitter/StockTwits. I always enjoy getting to learn new ways of viewing the financial markets and getting to discuss new ideas with other traders and asset managers.

Needless to say, it was a huge honor to receive the Dow Award on Friday in front of so many professionals I have such great respect for. I’ve uploaded the paper to the SSRN and I look forward you all getting to read my paper, Forecasting A Volatility Tsunami.

It seems we are inundated with the idea that just because the Volatility Index (VIX) is at a low-level that it will immediately spike higher. I found in my research that there’s a better way to forecast these spikes in the VIX, a better way to identify a market environment that has often lead to large moves in volatility. I liken my findings to the forming of storm clouds, not all clouds lead to rain but nearly all rain storms are preceded by the clustering of clouds. The market environment I describe in my paper doesn’t always lead to spikes in the VIX but nearly all spikes have been preceded by this unique price action pattern found in the volatility market. As a Portfolio Manager and someone who places a great value on risk management, I believe it’s important to know when risks of large volatility spikes are present and I believe my paper lays the foundation for this as well as for further research on the topic to be conducted.

Here is the link to read my full Charles H. Dow Award winning paper: Forecasting a Volatility Tsunami

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

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A Cycle Peak Is Approaching for the U.S. Equity Market http://www.athrasher.com/cycle-peak-approaching-u-s-equity-market/ http://www.athrasher.com/cycle-peak-approaching-u-s-equity-market/#comments Tue, 21 Mar 2017 10:30:20 +0000 http://www.athrasher.com/?p=3531 I try to keep an open mind when it comes to applying various forms of analysis to financial markets. I of course have my preferences: pure price and volume analysis while incorporating tools to evaluate momentum. However, there are many Continue reading A Cycle Peak Is Approaching for the U.S. Equity Market

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I try to keep an open mind when it comes to applying various forms of analysis to financial markets. I of course have my preferences: pure price and volume analysis while incorporating tools to evaluate momentum. However, there are many other tools at the disposal of a trader, some can be beneficial while others are often just variations of noise. While I do not heavily use cycle analysis in my research, it is something I keep an eye on.

I’ve mentioned the currently cycle several times on Twitter as well as a couple of blog posts…

On August 8th of last year I tweeted out this cycle was peaking. The S&P ultimately declined 5% before the post-election rally took hold. In January of last year I also tweeted about the cycle before equities dropped 11%. On April 21, 2015 I wrote an article for See It Market highlighting the cycle, stocks then dropped about 12%. And in 2014 I wrote a post, Is A Cycle Peak Coming Later This Year? Which was just before the S&P 500 declining a little over 7%.

I don’t bring these tweets and blog posts up to pat myself on the back but to show that I didn’t just make up this cycle yesterday by formfitting the data.

We are now at a point where the cycle is turning once again and with equities at/near (depending on which index you look at) new highs, the risk is to the downside. The amount of prior declines has not been bull market-ending but instead have been buying opportunities. Based on the strength in the breadth data, I don’t see a major argument why this time should be different – i.e. a 5-10% drop before buyers step back in. I’m not saying that’s what will happen, but that’s what’s taken place over the last several years when the cycle has topped or bottomed. We’ll see what Mr. Market brings in the coming weeks, but it appears the risk/reward is not overly favorable from a cycle standpoint.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

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Charles H. Dow Award http://www.athrasher.com/charles-h-dow-award/ http://www.athrasher.com/charles-h-dow-award/#comments Tue, 07 Mar 2017 20:51:36 +0000 http://www.athrasher.com/?p=3522 I’m extremely honored to announce that I’ve won the 2017 Charles H. Dow Award given by the Market Technicians Association (MTA). The Dow Award is given by the MTA for research completed that’s helped advance the study of technical analysis Continue reading Charles H. Dow Award

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I’m extremely honored to announce that I’ve won the 2017 Charles H. Dow Award given by the Market Technicians Association (MTA). The Dow Award is given by the MTA for research completed that’s helped advance the study of technical analysis and has been received by many authors and money managers I greatly admire. My research paper, “Forecasting A Volatility Tsunami,” which takes a unique look at market volatility will be released in several weeks and I’ll be sure to share it on the blog once it’s made public.While I completed the paper over six months ago, the topic and findings are quite pertinent during the current market environment.

After joining the MTA and earning my Chartered Market Technician (CMT) designation several years ago, it was a professional goal of mine to complete a piece of research that was worthy of receiving the Charles H. Dow Award. I consider it a great honor to have my work acknowledged and I look forward to the feedback it gets by those I respect in our industry.

From the Market Technicians Association:

In 1994 the MTA established the Charles H. Dow award to highlight outstanding research in technical analysis. The Award has received over 160 submissions, and recognized 17 papers for their excellence. Of the 21 authors/coauthors who have won, eight have gone on to publish books based on their submissions to the Charles H. Dow Award. Winners have presented at the MTA Annual Symposium, local chapter meetings, and participated in MTA podcasts and/or educational web-series.

Charles H. Dow Award (MTA)

2017 Market Technicians Association Symposium Press Release (MTA)

[Update: The research paper can now be downloaded at SSRN: Forecasting a Volatility Tsunami]

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

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