Sun, 28th May 2017

Anirudh Sethi Report


Archives of “gap” Tag

ALERT : French spreads rocket to 15 month high

And we’re not talking about pâté.

The gap in yields between French and German 10-year bonds has almost doubled in the last three trading days, after months of stability while the two bonds moved pretty much in lockstep

It’s uber-safe bunds or nothing in these troubling days, it seems.

Now, the spread stands at 0.53 percentage points, up by 0.2 percentage points in the last three trading days. The gap stood at 0.17 percentage points in January.

German bund yields are speeding downwards (dropping by 0.04 percentage points today, for example) while all other eurozone bond yields are cranking higher. French 10-year yields are up by 0.035 percentage points today. Mind the gap.

Getting Started in Chart Patterns -Thomas Bulkowski (Book Review )

CHART PATTERNSThomas Bulkowski is probably the best known chart pattern researcher. Among his credits are theEncyclopedia of Chart Patterns and the three-volumeEvolution of a Trader. In this second edition ofGetting Started in Chart Patterns (Wiley, 2014), a book originally published in 2006 and newly revised and expanded with updated statistics, he introduces more than forty chart formations. Better yet, he explains how to trade using them.

Although the title indicates that the book is for novices, it is equally valuable—perhaps even more valuable—for more experienced pattern traders. Without continually reviewing, testing, and revising pattern trading strategies, it’s all too easy to trade yesterday’s market.

In two action-packed chapters Bulkowski explores trendlines and support and resistance. He considers support and resistance to be “the most important chart patterns” because “they show how much you are likely to make and how much you are likely to lose on each trade. That’s like playing poker and knowing the hands of your opponents. You won’t always win, but it helps.” (p. 35)

Japan records smallest trade gap in 9 months,February: Y -800.3bn (expected Y -600.0bn)

Finally, Japan’s trade gap isn’t looking so scary. But the numbers are still disappointing.

Japanese exports rose at an annual clip of 9.8 per cent in February, missing forecasts at 12.5 per cent, while imports rose 9 per cent, higher than forecasts at 7.2 per cent

Both components missed forecasts but the unadjusted trade balance nonetheless improved to a gap of Y800bn, about 70 per cent smaller than the record-setting monthly deficit of $2.791tn a month earlier. Analysts were looking for a Y600bn deficit.

The broader story remains the same, though. A sharply weakened yen has resulted in much higher fuel costs for Japan, driving up import costs. Exports have climbed, too, but Japanese corporations have mostly preferred to enjoy handsome profits rather than cut prices and enhance their competitiveness.

Japan has been running a trade gap for 20 consecutive months now, a major change after recording surpluses every year between 1980 and 2010. Last year’s trade deficit was its widest on record. Read More 

Profiting from Market Trends- Tina Logan (Book Review )

When the market accommodates, trend trading can be highly lucrative. The trick, of course, is to divine the market’s often fickle moods. Tina Logan sets out to help the trader identify and exploit the “good times” in Profiting from Market Trends: Simple Tools and Techniques for Mastering Trend Analysis(Wiley, 2014).

The book is divided into two parts. The first, trend development, has chapters on trend direction, trend duration, trend interruptions, early trend reversal warnings, and later trend reversal warnings. The second part, putting trend analysis to work, deals with the broad market, bull markets, bear markets, and monitoring the market trends; it also includes a case study of the current bull market. Throughout, the text is illustrated with TC2000 (Worden Brothers) charts.

Let’s look at the chapter on early trend reversal warnings to get a sense of the book as a whole. Logan summarizes the warnings in a table. In an uptrend they are: a bearish climax move such as a key reversal or an exhaustion gap, bearish divergence, failure to break a prior peak, change of slope—rising trendline, break of tight rising trendline, approaching a strong ceiling, and bearish candlestick reversal pattern. The warnings in a downtrend are the reverse. Read More 

David Halsey,Trading the Measured Move -Book Review

David Halsey throws out the old notion of a measured move: that you copy an AB move up (or down) and paste it on a retracement low (or high) of C to get your price target D. In Trading the Measured Move: A Path to Trading Success in a World of Algos and High Frequency Trading(Wiley, 2014) he substitutes Fibonacci levels.

He uses three trade setups: the traditional 50% retracement measured move (MM), the extension 50% MM, and the 61.8% failure. When a trade is entered, its target is 123% from a swing high or low (and sometimes from a breakout) that is followed by a retracement (50% in the traditional setup). That is, the target is AB + 23%. Halsey shows both successful and failed MM trades on charts—unfortunately usually grey bars on a black background, which makes them hard to decipher.

The measured move trade setups are not stand-alones. Halsey discusses the use of multiple time frames, seasonality, NYSE tools, tick extremes and divergences, and gaps. He also discusses how to manage positions and take profits, advanced (actually, pretty basic) risk management, trading psychology, and having a trading plan and journal. Read More 

CAD gap seen widening for June quarter; may hit around $25 billion

India’s current account deficit, which hit a record high in the last fiscal year, is expected to rise in the June quarter from the previous three-month period before easing due to sharp fall in gold imports and improving exports.

Five economists predicted the June quarter current account deficit (CAD) would rise to $23-25 billion, or 4.8-5.4% of gross domestic production (GDP), from $18.1 billion, or 3.6%, in the March quarter.
The data will be released on Monday.
The gap typically widens in the June quarter from the previous quarter due to seasonal factors including lower exports. In the June quarter last year, the current account deficit was $17.1 billion.
“CAD is likely to peak in Q1 and is expected to fall in subsequent quarters because there has been a clamp down on gold imports.
India’s high current account gap has made the country especially vulnerable to a surge in capital flows out of emerging markets in recent months, sending the rupee down as much as 20% this year to a record low on 28 August, although it has since recovered some ground.
In a bid to narrow the gap, which has been fuelled by heavy oil and gold imports and sluggish exports, the government increased the gold import duty three times this year to 10%. Read More 

20 Rules for Traders (Must Read )

1. Forget the news, remember the chart. You’re not smart enough to know how news will affect price. The chart already knows the news is coming.

2. Buy the first pullback from a new high. Sell the first pullback from a new low. There’s always a crowd that missed the first boat.

3. Buy at support, sell at resistance. Everyone sees the same thing and they’re all just waiting to jump in the pool.20-RULES

4. Short rallies not selloffs. When markets drop, shorts finally turn a profit and get ready to cover.

5. Don’t buy up into a major moving average or sell down into one. See #3.

6. Don’t chase momentum if you can’t find the exit. Assume the market will reverse the minute you get in. If it’s a long way to the door, you’re in big trouble.

7. Exhaustion gaps get filled. Breakaway and continuation gaps don’t. The old trader’s wisdom is a lie. Trade in the direction of gap support whenever you can. Read More 

John C. Maxwell,Sometimes You Win—Sometimes You Learn (Book Review )

We’ve all read innumerable times that we learn more from failure than from success. Well, that’s not quite accurate. The sentence should probably read: “Failure provides a better opportunity for learning than does success.” Not all people—in fact, probably few people, take advantage of the opportunity that failure offers.

John C. Maxwell, a prolific author of self-help books, wants to increase the number of learners. Sometimes You Win—Sometimes You Learn: Life’s Greatest Lessons Are Gained from Our Losses (Center Street/Hachette, October 2013) explains how to turn failure into learning. John Wooden wrote the foreword to the book, based on its outline, a few months before he died.

Losses are tough, there’s no getting around this fact. They cause us to become emotionally stuck and mentally defeated, they create a gap between knowing and doing, they never leave us the same. They hurt, but when we don’t learn from them they really hurt.

Maxwell approaches learning from multiple perspectives: the foundation of learning, the focus of learning, the motivation of learning, the pathway of learning, the catalyst of learning, the price of learning, and the value of learning. His final chapter is entitled “Winning Isn’t Everything, But Learning Is.” He incorporates anecdotes, insights from others, and apposite quotations such as Bill Gates’s famous line: “Success is a lousy teacher. It makes smart people think they can’t lose.” Read More 

India slips to lowest ever rank on global competitiveness: WEF report

India has slipped to 60th position in terms of its competitiveness globally, while Switzerland has retained its top rank.

This is India’s lowest ever rank and also 31 places below its peer emerging market China.

Releasing the annual Global Competitiveness Report 2013-2014, Geneva-based World Economic Forum (WEF) today said highly innovative countries with strong institutions continue to top the rankings.

While Switzerland is on top for fifth year in a row, United States has reversed its four-year downward trend to occupy 5th position and Japan has risen to ninth place. Read More 

Deutsche Bank’s Jain: Europe is falling behind

READ THISDeutsche Bank’s co-CEO Anshu Jain has been speaking at a banking conference in Frankfurt this morning organised by German newspaper the Handelsblatt, reports the FT’s Frankfurt correspondent, Alice Ross.

After suffering some light teasing from the German presenters about the fact he was speaking in English, here are some highlights:

  • He expressed concern over the stricter rules on leverage ratios being imposed on US banks compared to European banks, saying that the US was adopting a ‘very’ high standard and that Europe hadn’t and shouldn’t. Still, he said that the debate over leverage ratios was “done” and that the industry now needed to move on.
  • He sounded repeated warnings about the growing gap in economic growth between the US and Europe, with European countries falling further behind: “Europe is falling behind the US in every factor; the banking sector is one of them,” he said.
  • He also warned that regulation has become competitive between different regimes: specifically the US and Europe, such that at times the regulations contradict each other and make it hard for the banks to follow – though he insisted he was critical of the need for regulation as such. Read More