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“It has also been interesting to witness your own life journey and growth…”



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Hi Michael:

I’ve been immersing myself in your podcast over the last few months. I’m not sure if it was the best decision to start at the beginning but I am about half way through 2013 at the moment. You are currently still in Asia. I spent three months there myself just traveling around. Not only has it been fascinating listing to your podcast regards trend following but it has also been interesting to witness your own life journey and growth, (eg yoga, travel etc) all compacted down into a few months. I’m looking forward to the rest and catching up to modern day. And I have also enjoyed reading some but not yet all of your books.

So I won’t go into detail as to why I think trend following is very much suited to me but listening to your podcast daily has given me the confidence to take full responsibility over all my trading decisions. I had already accepted full responsibility as to the outcome of my investment. Eg if I ask and receive financial advice, whatever the outcome, it is still my responsibility. But along with that came many frustrations which you completely address and have now given me the vehicle (trend following) to actual choose the trades I make.

Fortunately I am an oracle database programmer and so am a long way into generating my own fully automated system which will simply pump out my daily actions. And fortunately I have the personality to simply follow them because that’s easier than having to make a discretionary decision.

So firstly I simply wanted to thank you for your great work and secondly ask a simple technical question which maybe you won’t answer but that’s OK.

When charting most professional suggest that a Exponential MA is superior to a Simple MA for a number of reasons but when people talk about systematizing there trading on your podcast they always refer to a Simple MA and I am wondering from a trading perspective does it not really make any difference or is it simply that a Simple MA is easier to code?

Anyway things may have change across the 5 years that I am behind on your podcast and perhaps you no long take email, But I’m glad I have contacted you. You have had a profound affect on my life. I really enjoy the psychology and self improvement aspect of your podcast and the constant message of taking full responsibility and not looking to the ‘Man’ to look after me.

By the way I am in Australia, not sure if you have made it down this way yet.

Martin T.

Thanks for the nice email!

A good link for you? Here.

On entries? Preference are price breakouts v. moving averages.

No Australia yet!

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Strategies & Ideas

Lawrence Krauss Interview with Michael Covel on Trend Following Radio




Lawrence Krauss
Lawrence Krauss

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Lawrence Krauss is a theoretical physicist and cosmologist, professor at Arizona State University, director of its Origins Project and author of bestselling books: “The Physics of Star Trek” and “A Universe from Nothing.” He is an advocate for science based data, public policy based on sound empirical data, and scientific skepticism. His goal is to reduce the influence of superstition and religious dogma in popular culture. His most recent book is “The Greatest Story Ever Told–So Far: Why Are We Here?”

When did Lawrence first discover he was a skeptic, someone who would think outside the box? He was encouraged to think for himself from a very early age. He grew up Jewish but slowly grew out of ideas that surrounded the religion. No real a-ha moment, just gradually decided that religion wasn’t something he could believe in. In 6th grade he also began doing poorly in school. His parents moved him to a different school where he subsequently did much better. Lawrence knew that he wasn’t a different person, but it was other people’s expectations that wavered how he performed. From then on, he was conscious of not letting others opinions of him bring down his performance.

Richard Feynman has played a large role in Lawrence and his studies. He is a great example of someone who did not let other’s hinder him. Feynman was charismatic, intelligent, and excited about all things new – he didn’t rely on other’s opinions. The charisma Feynman possessed, combined with the genius of his science made him the legend.

How does Lawrence describe science? It is a process rather than a collection of facts. Science helps to establish what is true from what is non-sense. It also breaks the sensible from the non-sensible. Lawrence brings this mindset into religion taking a controversial stance saying, “God is completely irrelevant to science.” He fiercely believes that the idea of religion was created as a way to explain how the world worked before we had the technology and science to know how it actually works.

In this episode of Trend Following Radio:

  • Big bang theory
  • Religion in science
  • Simulations
  • Skepticism

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Weekly Market Recap Aug 12, 2018




Indexes spent the past week churning along as news flow was generally quiet…outside of Turkey and Russia that is.  The NYSE McClellan Oscillator has been in the red for weeks, and breadth has remained pretty weak but the indexes continue to hold up!  A conundrum indeed!  That said keep an eye on foreign markets to see if any “contagion” happens – thus far, the U.S. markets have been acting impervious.

“Despite the gains in the averages last week, fewer stocks hit new 52-week highs and an increasing number of issues reached new lows for the year. Overall, the technical indicators argue on the side of caution,” said William Delwiche, an investment strategist at Baird, in a note.

Trade Wars!! ™ continued but without much affect on markets.

“Things are looking good in the U.S. in terms of earnings and data, but things aren’t as rosy if you look to China, emerging markets or Europe. Weakness in those regions could eventually become a headwind for the U.S.,” said Suzanne Hutchins, senior portfolio manager of the $1.5 billion Dreyfus Global Real Return Fund, which is run out of the investment boutique Newton.

The Turish lira took a hit late in the week (-17% Friday) as Trump and the ECB attacked… boosting the U.S. dollar… and bonds.

The steep decline in the Turkish currency came after the European Central Bank expressed concerns about potential contagion from Turkey’s problems, especially in the banking sector.  The country is struggling with double digit inflation and its reliance on foreign funding. With much of its debt denominated in U.S. dollars, the stronger buck has added weight to its debt burden.  Analysts and investors have also attributed the relentless pressure on the Turkish currency to a growing diplomatic spat between Washington and Ankara over the detention of a U.S. pastor in Turkey.  The lira’s stumble prompted U.S. President Donald Trump to announce a doubling of U.S. tariffs on certain Turkish goods.

Turkey’s currency volatility has recently accelerated and now gotten to the point where it’s beginning to impact global markets as investors worry about European banking exposure,: said Alec Young, managing director of global markets research at FTSE Russell.

Russia also had a rough week as Trump attacked…

Newly announced U.S. sanctions—and the potential for a second round of actions in 90 days—roiled Russia’s currency and blue-chip stocks as the country braced for further economic pain amid uncertainties over the Trump administration’s commitment to enforcement.

Economic news was sparse and not market moving.

For the week the S&P 500 lost 0.3% while the NASDAQ added 0.4%.

Here is the 5 day weekly “intraday” chart of the S&P 500 … via Jill Mislinski.

Everyone thought Snapchat would be the new hip thing but it’s Instagram which is stealing the show!  Another win for Facebook.

For large parts of the past two years, it seemed like Snapchat would be the next platform that no one could afford to ignore. Having quickly gained popularity it only seemed like a matter of time before it would break through to the mainstream and compete with the likes of Facebook, Twitter and Instagram. However, over the past 12 months Snapchat’s growth has slowed significantly and many people are beginning to ask whether the once innovative social media app was nothing more than a passing fad.  In fact, it has been Instagram, not Snapchat, that really had its big breakthrough in the past year. Having implemented, or shamelessly copied as some would argue, Snapchat’s popular Stories feature, Instagram’s simple design appears to be more appealing to the broader public than Snapchat’s sometimes confusing user interface. The platform that Facebook acquired for $1 billion in 2012 recently passed the 1 billion active user mark.

Speaking of which…

Snap (SNAP) stock fell 6.8% Wednesday after the company issued quarterly guidance for the first time as well as reported a user decline.

The week ahead…

Retail sales hit Wednesday.

Will any of the “foreign weakness” matter?

The longest bull market on record hits in about a week!

Index charts:

Short term: The S&P 500 is holding its breakout – is that a double top in the NASDAQ??? Hmm – see the Russell 2000. 😀  A new high negates that thought in the NASDAQ.

This double top in the Russell 2000 continues to hold.

The NYSE McClellan Oscillator stayed in the red for a FOURTH week in a row (a full month).  When this happens it is usually a good idea for short term traders to go cautious but in this case the indexes have held up quite well.

Long term: Still very positive for the “buy and never sell” crowd.

Charts of interest / Big Movers:

Monday, SeaWorld Entertainment (SEAS) surged on positive earnings.

Pain Thereapeutics (PAIN) plunged 48% after the drug company said the U.S. Food and Drug Administration rejected its non-opioid drug.

Tuesday, Elon Musk tweeted Tesla (TSLA) was going to go private @ $420 a share – a pretty interesting (but legal) way to announce corporate news!

Zillow (Z) sank 15% after the company late Monday posted earnings and announced its acquisition of a mortgage lender.

Rite Aid (RAD) sank 12% Thursday after a merger between the retailer and Albertsons Cos. was called off.

Yelp (YELP) surged 27% after the review website late Wednesday reported better-than-expected earnings and raised its full-year profit outlook.

Roku (ROKU) jumped 21% a day after it reported better-than-expected revenue and unexpectedly swung to a narrow profit.

Friday, Redfin (RDFN) tumbled 22.4% a day after it forecast slower revenue growth in the third quarter.

TradeDesk (TTD) for the win… that’s TWO massive gap ups the past 2 earnings seasons and well ove 100% GAINS since May!!!

The fast-growing provider of programmatic solutions is hitting new all-time highs after posting strong second-quarter results following Thursday’s market close.   Revenue surged 54% to hit a record $112.3 million for the quarter. The Trade Desk’s own guidance three months ago was calling for just $103 million on the top line, 41% growth.  Marketers are taking to The Trade Desk’s algorithmic solutions, and several of its categories including connected TV, audio, mobile video, and mobile in-app saw their numbers more than double. Advertisers that come to the company tend to stick around. Customer retention has now clocked in north of 95% for 19 consecutive quarters.

Have a great week and we’ll see you back here Sunday!

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Weekly Market Recap Aug 05, 2018




We began last week’s recap with this chart regarding the percent of stocks in the NASDAQ over their 50 day moving average – it was at 42%.   Fast forward a week and the number is 42% again – despite a 1% gain for the week in the index.  So a bit of a divergence here; mega stocks like Apple – the first trillion dollar company in the U.S., are masking some weakness below the surface.

Monday thru Wednesday were essentially a wash on the indexes but the good vibes of Apple helped indexes Wednesday thru Friday (stocks initially had gapped down quite sharply Wednesday pre market).  While the employment data was not great, within the scope of the larger picture the trend is still solid and these things tend to get revised a few months out anyhow.

I’ve mentioned one company twice already in the first two paragraphs so unless you’ve been living under a financial rock this was the rock star of the week:

The Federal Reserve met this week and as expected – nothing of note came to light.  Markets are pricing in about a 90% probability of another rate hike in September and a 70% chance of another in December. The Fed upgraded its view of the economy to “strong” from “solid”.

The Fed kept its main interest rate unchanged at 1.75% to 2%, as widely expected, and indicated that it is likely to raise rates next month as the economy remains strong.  Markets have penciled in two further rate increases for this year, in September and December.

“The FOMC expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the committee’s symmetric 2% objective over the medium term,” the Fed said.

According to Kent Engelke, chief economic strategist Capitol Securities Management Inc., that is only the second time this century that the central bank has referred to the economy as strong. “The only other time since 2000 that the Fed has described economic growth as strong in its policy statement was May 2006, just after the GDP posted a 5.4% annualized increase,” he said.

Your weekly TRADE WARS ™!!! update:

Tuesday it was reported China and the U.S. were holding talk but the end result was that the countries made little progress .  Wednesday, the White House announced a proposal to raise tariffs on $200 billion worth of Chinese products to 25% from the previously announced 10%.   Friday,  China threatened to retaliate with tariffs on $60 billion in U.S. goods,

Chinese markets continue to dislike this news a lot more than ours.

On the economic front, Tuesday brought news consumer spending rose 0.4% in June. Analysts had been expecting a 0.5% increase.  ISM Manufacturing came in at 58.1 Wednesday vs expectations of 59.5 – still a very strong reading (anything over 50 marks expansion).   ISM non manufacturing fell to 55.7.

The monthly employment data for July showed a gain of 157,000 jobs, and the unemployment rate falling to 3.9%.  Expectations were for 195,000 jobs added.  The annualized rate of wage gains was unchanged at 2.7%.

Fun fact:

According to data from JPMorgan, with more than 60% of the market having reported, 86% of companies in the S&P 500 have topped profit expectations, the highest such ratio in its data, which goes back to 2009. Nearly 75% of companies have beaten revenue expectations.

For the week the S&P 500 gained 0.8% while the NASDAQ added 1%.

Here is the 5 day weekly “intraday” chart of the S&P 500 … via Jill Mislinski.

The week ahead…

We’ve just come off an action packed week – trade wars, Fed, employment data, major amount of earnings reports.  That is going to narrow down to earnings report (but less of them) and MORE TRADE WARS.

Next piece of fun news:  14 trading days to go until this S&P 500 bull market becomes the longest of all-time at 3,543 days.

Index charts:

Short term: The S&P 500 is holding its breakout – watch that level just below 2800 if there is any selling.   Apple is a massive component of the NASDAQ and helped out this week quite a bit.

We mentioned this double top in the Russell 2000 a few weeks ago – it continues to hold; another sign of divergence.

The NYSE McClellan Oscillator stayed in the red for a third week so those with a shorter term outlook should be more cautious for now.

Long term: Still very positive for the “buy and never sell” crowd.

Charts of interest / Big Movers:

Tuesday, Lumber Liquidators (LL) sank 21% after it reported a surprise second-quarter loss, though revenue was ahead of expectations.

Shopify (SHOP) fell 6.7% despite reporting second-quarter earnings that beat expectations.

Wednesday, Pandora (P) spiked 15% a day after it reported second-quarter earnings and revenue that beat expectations.  It had fallen sharply just ahead of it’s report!

Thursday, Tesla (TSLA) jumped 16% a day after the electric-car maker reported quarter revenue that was stronger than expected. The company, shares of which have been extremely volatile throughout 2018, also said it expects to be profitable and cash-flow positive in the second half of the year.

TripAdvisor (TRIP) tumbled 11.2% after it reported revenue that came in below expectations.

Blue Apron Holdings (APRN) reported a second-quarter loss that narrowed from the previous year and revenue that fell 25%. The stock plunged 24%, bringing its year-to-date decline to 51%.

Red Robin Gourmet Burgers (RRGB) tumbled 19.3% Thursday, a day after it gave a weak preliminary second-quarter report.

Friday, Dish Network (DISH) jumped nearly 15% after the satellite pay-TV service reported better-than-expected second-quarter earnings and revenue.

Have a great week and we’ll see you back here Sunday!

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