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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

“One nagging concern I’d like to ask you about…”

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Hi Mike,

Love your work and am a subscriber about to begin trend trading myself. One nagging concern I’d like to ask you about. I’ve read about every piece of material you’ve written and watched computerized trading’s rise to prominence since you started writing. In today’s computer programmed trading environment can a newbie today equipped with your teachings still succeed?

Thanks for your thoughts on this. I’m sure it’s a common question.

My longer answer is here.

Michael Covel and Larry Hite
Michael Covel and Larry Hite





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Weekly Market Recap Jun 17, 2018

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After two weeks of rallies, the S&P 500 mostly consolidated this week – except for Friday the action was very reminiscent of 2017 with almost no volatility at all intraday and modest gains or sideways action.  Friday was the wrench in the mix, with a gap down to open the day but buyers came in during the afternoon and in the end the markets had a week to digest prior gains.  Friday’s action was due to TRADE WARS(tm)!

President Donald Trump approved tariffs on about $50 billion of Chinese goods, marking the latest escalation in the trade spat between the two countries. Beijing has said it intends to assess tariffs on a corresponding amount of U.S. goods, while Trump said the U.S. would pursue more tariffs if China retaliates. Subsequently, Trump said there was no trade war with China.

The Federal Reserve did what it had telegraphed what it would do:

The Federal Reserve voted to raise its benchmark federal funds rate by a quarter percentage point to a range of 1.75% to 2%. Eight of 15 Fed officials now expect at least four rate hikes will be needed this year, up from seven at the March meeting.

The Fed’s dot plot, a projection by the members of the central bank’s expectations for rates in the future, shows the policy-setting Federal Open Market Committee penciling in two additional rate increases in 2018 for a total of four increases in the year. That is up from expectations from three in the March Fed rate estimates.

More interesting this week was the European Central Bank which Thursday left interest rates unchanged and laid out plans to taper its program of monthly bond purchases later this year. The central bank is aiming to bring them to a halt by the end of 2018.   There was no “taper tantrum” by markets, as we saw in the Bernanke era.

“The ECB did a pretty good job telegraphing what it’s planning to do. [ECB President Mario] Draghi is following Ben Bernanke’s playbook, with a zero-interest-rate policy, bond buying, and then eventually shrinking the central bank’s balance sheet. When we did all that, our market continued to move higher, which gives investors confidence that the blueprint they’re following is the correct one,” said Phil Orlando, chief equity market strategist at Federated Investors.

For the week the S&P 500 closed up fractionally while the NASDAQ added yet another 1.3%!

On the economic front the consumer price index popped 0.2% in May; some funny headlines out there about that being the “hottest in 6 years!” – it’s an annualized rate of 2.4%… woo hoo.

The increase in the cost of living last month was spearheaded by the rising cost of gasoline, medical care and shelter — rent and home prices.  The cost of medical care has accelerated again after a slowdown toward the end of 2017. Ditto for rents and home prices.

Meanwhile the producer price index did surge 0.5% in May on the back of the big jump in oil.  Core producer prices that exclude food, energy and trade rose a much smaller 0.1% last month.

Retail sales jumped 0.8%, double expectations.

“U.S. households are back to their free spending ways, with the strength of May’s retail sales figures implying that second-quarter real consumption growth (and GDP growth for that matter) will now be more than 4% annualized. With the benefit of the tax cuts, strong employment growth and a slow acceleration in hourly wage growth, consumption growth should remain strong going into the second half of this year,” said Paul Ashworth, chief U.S. economist at Capital Economics.

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

Speaking of oil, the chart has a bit of a “bear flag” look to it which should make consumers happy if it fulfills.  Turn the chart upside down and looking at the most recent period you’d love to see that chart action if you were a bull – i.e. a breakout, consolidation with a minor pullback, then a push forward Friday.  Of course we are not looking at the chart upside down so it might bode well for bears – we shall see.

The week ahead…

No major economic news – trade war concerns certainly could pop up again.

Index charts:

Short term: The S&P 500 was quiet while the NASDAQ continued to churn up.

The Russell 2000 was steady as a rock in a consolidation phase after a huge run.

The NYSE McClellan Oscillator went slightly negative late in the week but not enough to raise eyebrows yet.

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

Charts of interest / Big Movers:

Monday, Sempra Energy (SE) jumped nearly 16% after activist investors Elliott Management and Bluescape Resources revealed a “value creation” strategy for the company.

Tuesday, Lands’ End (LE) soared 27% after the retailer said its first-quarter sales got a 12% boost from sales of uniforms to Delta Air Lines.

In this week’s biotech lottery, Galmed Therapeutics (GLMD) surged 151% Wednesday after successful trial results of its drug to treat nonalcoholic steatohepatitis.  You can say that again.

Thursday, Tailored Brands (TLRD) tanked 22% after the retailer late Wednesday reported comparable sales below analyst forecasts.

Also Thursday, Etsy (ETSY) jumped 26% after the company raised its 2018 revenue growth guidance range to 32% to 34% from the range provided last month of 22% to 24%.   Etsy said the increased guidance comes as it plans to increase the transaction fee it charges when a seller makes a sale. The fee was previously 3.5%, but will increase to 5.0% on July 16.

Go Twitter (TWTR) go!

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



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“I assured him it’s part of your raw charm…”

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Hola Michael,

Here’s a fun comment to brighten your day. I often drive to pick up my son from School in Singapore and we listen to Trend Following Radio. Today you dropped a few F-Bombs and I explained to Vaughan (age 10 named after Stevie) that you’re a little rough around the edges at times; to which he responded, “Maybe we should sand him.” But I assured him it’s part of your raw charm and no need.

Great stuff on the podcast as always. As a like minded American on year 12 of my expat adventure in Singapore, I too enjoy the “low noise” and high excitement in Asia. Look forward to catching up for a great Vietnam coffee at the Hyatt one day (no crappy clear Asian beer for me either). I know we’ll have a lot of cool stuff to chat about as I’m a crazy serial entrepreneur trying to live the dream. Actually not trying, Doing. Got no complaints.

Keep up the awesome podcasts and if Jim isn’t in town your next trip to Singapore just give a shout and we’ll chew the fat, literally. The American club just opened a proper Texas BBQ restaurant poolside and as a native Texan I give it my full approval.

Cheers
[Name]

Thanks!

My early baseball career forever burdened me with some occasional raw language.

The Trend Following Team
The Trend Following Team





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