Project Freedom (13): Multiple-Time-Frame Analysis

Attached video and chart are self-explanatory.
Understand this concept would help traders/investors to insist in using Multiple-Time-Frames when analysing their charts.

(Click to Zoom-in for Full Screen Video)
Dow Theory Three Movements need Multiple-Time-Frame Analysis


.

The chart shows that:
1) Stock move the fastest when the three waves move in same direction.
2) Always trade in-sync with the direction of the Primary Wave.
3) Good Entry points with highest Reward/Risk Ratio are when the Primary Trend is UP while shorter terms have came down, Pull-Back Entry.


Relevant article on Multiple-Time-Frame Analysis <- p="">



 

Personal Finance (14): A Multiple-Time-Frame BBC Indicators on STI

Text Deleted on 2016-04-11


Run when you should run, stay when you should stay.

Personal Finance (13): A Confession of a Public Fund Manager In China

Good day,

Attached, ---8<  Cut and Paste >8---- , is the last portion of an article by a public fund manager in China confessing why he can never beat he "super wealth transfer machine"(stock market system) and decided to quit his job.  And, after all, in his 10 years of career as fund manager, he already made more than 10million RMB as a salary despite losing money for his clients...  

The full article, in Chinese, can be read from the link attached:

---------------------------------------Cut and Paste---------------------------------------------
一个公募基金经理的忏悔书
我无法对抗这个制度、我彻底投降、我准备辞职,我对我管理的基金的投资者表示深深的忏悔!我真的无能为力在这个市场中帮助你们赚钱!
  中国XX基金管理公司 XXX基金经理
  (恕我在此不公布老东家的名字,毕竟服务多年,领取了千万元的薪水!)
--------------------------------End of Cut and Pate ---------------------------------------------
http://bbs.hexun.com/stock/post_5_5961685_1_d.html




Any way, here is a very very brief summary with the KEY FACTOR of why he can't win:
"The author, 10 years fund manager in China, described that the stock market is a wealth transfer machine.... Due to the fact that the fund managers, by Law and software system, must keep at least 60% of the money in the market. Even if the fund manager want to get out of the stock and keep cash when the market is clearly in down trend or even crashing, the software would not allow them to sell...."


Here are some points of ponder:
* FACT
Now, the above chart showng the China Shanghai and ShenZhen 300 index (SSE300).  There is clearly more down trend than up trend for the past 5 over years.  And, if one were not only can't short the market, but also must spend at least 60% of the fund to purchase stocks at any point of the time.  As a Public Fund Manager, how can they make money as the calculated probability seriously against them?

Anyway, this is  the rules and regultion for fund managers world-wide.  Imagine IF there is no such rule, what would happen, if most fund managers try to find exits for cash?


* OPPORTUNITY
Now, what would you do IF you are a fund manager under such rule?
The manager would at least want to beat the overall market index by selling the worse sectors/stocks and get a ride on the better sectors/stocks.

So, in order to sell 10% worth of weak stocks in his portfolio, the fund manager MUST FIRST purchase at least 10% of the equal value of stronger stocks before the software system allow him to sell the weak one.

This would result in lot of money rushing into relatively handful of sectors/stocks and result in sharp rally!

For Example:  Some Internet/Games companies are the current percieved "safe harbour" and the money is rushing in at this point of time:(QIHU,DATE,GAME,YY)


















..the above are just a few, can include the famous BIDU (but the up side is may not be that great as high price stock generally move slower... but safer).


*CONCLUSION:
It is better off spend your resources (time and money) to learn and DIY.  The chances is very much higher. 

AND, off course... don't do this:  Dash into the market without going throuh a proper stock market training, withot going through adequate paper practice, and without a reliable trading system.  It is like the message from the following cartoon I found in facebook. :-)





Thank you for your time, and

Bless You
KH Tang


NOTE: THIS ARTICLE IS MERELY FOR AWARENESS ONLY!



Personal Finance (12): Guru Rotation in the Financial Market

There are many famous Gurus in the financial market, and their philosophies are pretty well accepted by their followers (subscribers).

Take for examples:
1. Jim Rogers is the icon represents long term investment in the commodities market.



2
2. Marc Faber, also known as Dr. Doom, advocates that the market is collapsing, collapsing, and collapsing...


3.
3. Stephen Leeb is using the "Peak Oil" as a backgroud and focus on Energy Sector.



4.
4.  Peter Schiff is singing about the collapsing US Dollar and Accumulates physical gold or GLD (ETFs).


.
And, when they are correct, they will occupy everywhere in the media and get more followers.

Now... As shown in the charts, they were ALL CORRECT at certain point of time in a "Rotational Manner".

So...  Don't you think that having a "market neutral mentality", doing your study, understand and follow the market actions with the charts, and perform asset class rotation is a better deal?


Now...
See what the successful Trader and Trainer in the Stock Market, Richard D. Wyckoff, had to say:


Very true!  In my view, most of the publication on financial advices and news are just like Coke or  genetic modified foods.  They are are produced for the public consumption with the intention of making a profits out of it.  The earlier one chooses to stop taking them, the earlier he gets healthier.


In a Nutshell : Why Market Rotation?
The stock market, as of today, is working like a Giant Ponzi Scheme as a Whole, which is formed by Multiple Smaller Ponzi Schemes as Sectors, Countries and Individual Stocks.  The Public Media would help to Rotate in Bubbling few Sectors/Countries//Stocks at a time for profiteering and dump the shares to the public, let them burst, and then ROTATE the operation to Other Sectors/Stocks.


"What information consumes is rather obvious:
it consumes the attention of the recipents. 
Hence a wealth of information creates
a poverty of attention." 
- Herbert Simon 



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Project Freedom (12): Livermore Secret Market Key on Price Chart


Jesse Livermore (July 26, 1877 – November 28, 1940) is one of the most famous legendary traders in stock market.  His intriguing hero’s journey in the Wall Street was well recorded in the book – “Reminiscences of a Stock Operator” by American author Edwin Lefèvre.   And, this book is widely quoted in many trading books and recommended in many trading classes.

But, not many people know about his “Livermore Secret Market Key” which was written by himself and published in 1940.  This book can now being found in Wikipedia Link for free download.
Jesse Livermore spent up to 40% of his book in explaining the technical details of his operation in the stock market.  The challenge is for the reader to understand and implement it.
Unfortunately, it is not a simple task to understand the method in table form.  For there was no programming flow-chart during his time, he used a table and long procedures to go through how to fill it up.  Most beginners will lost his way in their first few attempts.
The objective of this article is to demonstrate that the 6-columns table can be programmed into 6-levels of band in modern price chart, and it would faciliate the readers to visualize the interaction of Jesse Livermore Secret Key and the stocks. 

Fig 1.  Transformation of Livermore Secret Market Key from Table to Price Chart. 


Fig 2. The Livermore  Secret Market Key in Action.

One of the famous quote from Jesse Liver more is:
"Wall Street never changes, the pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes".


So, What do you think?   IF he is still around today and using the same method, written 70+ years ago, can he still make money?

The following are various charts using Livermore Secret Market Key and they clearly demonstrate that he is right.  For this method is advocating Trend Trading and ignore minor noise (which means do not run in and out of a stock too frequently).


A Minor Change in the Rule:

During his time, Jesse Livermore used fixed amount of dollar to define the "Levels of Band" as filter, similar to Point and Figure charting method using 3 point change.  But as of today, there are stocks trade more than hundreds or thousands of dollar, so two types of changes can be applied to the original method to see the effect.  The first change in the method is, logically, using the fixed percentage change, and second, using the fixed amount of Average True Range(ATR) for the band's level.


Fig 3. Livermoare Secret Market Key applied on SnP500 ETF(SPY) (Weekly)
In Figure 3, the upper chart shows the "Fix Percent Band" while the lower chart shows the "ATR Band".




Fig 4. Livermoare Secret Market Key applied on SnP Financial Sector ETF(SPY) (Weekly)


There are two points to be made in Figure 4 (Click and Zoom In).
1) It is Crystal Clear that if one were to follow the weekly chart religiously, he will not suffer from the 2008 financial crisis. For the chart shows a clear down trend.

2) Using "ATR Method"  is superior than "Fix Percentage Method", for every stock/commodity/ETF has its own characteristics in terms of Volatility.  Using ATR method help to adjust the band-level automatically for all vehicles.

So, from here on, the following charts will ONLY use ATR band (Dynamic Band that self-adjust to the stock volatility) as demonstration.



Fig 5. Some Hot stocks - Apple and Google (Weekly).







Yes.  Due to whatever reason, even till today, there are still people using "Buy and Hold" method in the market.  From the above Chart, there are two points we can learn:
1)  IF the Goal is to make profit from the market, follows the trend.  NEVER EVER ARGUE with the price chart.  IF the Goal is to PROVE he is right that the stock will eventually go up again some time in the future while the chart moving down, by all means, let him hold on as long as he like.

2) IF the market is on side-way, using Trend Trading Method would incur in lost, therefore, one need to learn to learn the master the skill of CUTTING LOST.  It would be so much better to acknowledge that was only a small error made in the market rather than let it continue to grow and eventually becomes a BIG MISTAKE.


The following are more charts to illustrate the points mentioned above.

Fig 6. Commodity - Silver and Gold ETFs (Weekly)
.
Fig 7. Commodity - Argriculture and Commodity Index (Weekly)

NOTE: If Argiculture commodity is moving down or in a side way, chances that those related companies are not performing too, even if whatever fundamental data of the stock are strong.  Use the money to invest someway else, and wait untill the relevant commodity to move up, then buy the related stocks.


.
Fig 8. Malaysia KLSE Index and Singapore STI (Weekly)


..
Fig 9. Hong Kong HSI and Japan Nikkei 225 Index (Weekly)

.
It is very interesting to note that Malaysia market has performed so much better among her few Aisa peers since the 2008 global finacial crisis.  My guess is that the DID NOT lose so much money in that crisis in the US Banks as compare to the others. :-)




"There are many times when I have been completely in cash, especially when I was unsure of the direction of the
market and waiting for a confirmation
of the next move...."
Jesse Livermore



------------------  Additional Information  Added on 11 Aug 2014 -----------------------

Excerpt from the book - Jesse Livermore's Methods of Trading in Stocks - written by Richard D. Wyckoff
//--------------------------------------------------------------------------------------------------// 
HIS OFFICE EQUIPMENT

He arrives at his office ,which is on one of the upper floors of a big down town skyscraper. There is no name on the door. It consists of a reception room,private offices for some of his assistants. and his own private office,separated by swinging doors from his board.room. This is an oblong room with a long silicate quotation board on one side and a row of windows opposite. On the board are exhibited quotations for thirty or forty of the leading active stocks, and a few each of the active futures in cotton, wheat, corn and oats. The quotation board is not arranged according to the ordinary custom prevailing in brokerage houses. The changes in quotations are not posted by means of printed tickets containing merely the opening, high, low and last figures; instead , each stock has its own column running the full length of the board. in which the various changes in quotations are written with chalk, with the numerous sales strung along down below the abbreviations. He prefers this kind of board because it gives him a line on the swings of a stock, the extent of its rallies and reactions, as well as its relative activity. The volume of trading does not appear on the board; he gets this from the tape.

(Also in the the book - there is a concise chapter on Tape Reading)
Chapter 4. How Livermore Reads The Tape
                 How He Judges The Turning Points
                 How He Plays The Intermediate Swings

//---------------------------------------------------------------------------------------------------//


In Short, the Jesse Livermore Secret Market Key is NOT COMPLETE without integration of the trading volume from Tape Reading.




----------------- Additional Information Added on 25 Sep 2014 ----------------------------
From Investopedia:

"Dark PoolsDark pools are an ominous-sounding term for private exchanges or forums for trading securities; "

"The current controversy surrounding dark pools may lead one to think that they are a recent innovation, but they have actually been around since the late 1980s. Non-exchange trading in the U.S. has surged in recent years, accounting for about 40% of all U.S. stock trades in 2014 compared with 16% six years ago. Dark pools have been at the forefront of this trend towards off-exchange trading, accounting for 15% of U.S. volume as of 2014, according to figures given by industry insiders."


Personal Finance (11): Financial Self-Defense - A Critical Personal Skill to Live in This Modern World Economy

Let's go through some financial facts:

* On Governments' Investment:
 
Few weeks ago, I was wondering what is going on with the "World Islands" that build by Dubai as there is no news about it...  And found that these islands are sinking back to the sea!
 
Then, I wanted to figure out what was the development cost...  And found from the Wikipedia that: "The World's overall development costs were estimated at US$14billion in 2005".
 
Oh!  That's lot of money gone into the sea.
 
Then, I figure out that Government of Singapore Investment Corp. had lost USD41.6billion, or Three "World Islands", in US Market alone, during the 2008 financial crisis according to WSJ: http://online.wsj.com/article/SB125418236117447877.html


* On Personal Insurance and Investment Scheme:

Now let's look in to the price chart one of the global insurance company: AIG
(Yahoo Chart)
I AM curious how AIG is going to pay back all their clients long term life insurance and investment scheme, in long run, as the baby boomers are starting to collect their matured contracts now...


        
Others Ponzi Schemes: Such as Geneva Gold, The Gold Guarantee (TGG), etc...
 
Hundred of Investors at Hong Lim Park on The Gold Guarantee Scam (06 Mar 2013)


* On Taxes

Government can change rule for all kind of tax:  Example:  
(Here is the link )

 








*
*On Inflation:

The value of money(cash) is contine to be depreciated over time due to inflation.
 
 Source: - http://www.tradingeconomics.com/singapore/inflation-cpi
A very good source to check on many financial data from Money Supply, GDP, Debt, etc of various country worldwide.




Here is an Extreme case of Inflation...
This is what you can get for 100 billion zimbabwe dollars.




As many countries are increase their money supply today, and some call it as the age of "Currency War".  If thre is a war, there will be losers, and lot of time, there is no meaningful winner in the war as all public suffer.
 

 
*On Currency War:


A short interview with James Rickards - The author of the Book:
Currency Wars - The Making of the Next Global Crisis

 
 
 
 
 
*The Point of Finanical Self Defense is: DIY
The era of working hard in one job, save enough income to entrust a good fund manager to grow the money for retirement was over since the year 2000 tech bubble.  And, if someone has not started to educate him/herself to learn about managing his own investment account, please think again. 
 
Of course, Rome was not built in one day.  The road to learn/practise about investment involve risk of money and time committment. 
 
As Mark Twain said "Focus on the future, because that's where you going to spend the rest of your life."  So, if it is something very important and must be learned, start to read relevant books, start to attend seminars, including start to loose certain amount of money and gain experience...  While one still have the luxurious of time and money to do so.    See... A plane that take off from the same run way, just need to turn its direction a few degrees will alter its course by hundreds of miles...
 
 






 
"But trading and investing is like any other pursuit
—the longer you stay at it the more technique
you acquire, and anybody who thinks he
knows of a shortcut that will not
involve “sweat of the brow”
is sadly mistaken."
- Richard D. Wyckoff
 



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Self Development Idea (16): Individual Destiny Enrichment (IDE) Program

Few weeks ago, I had a Chinese New Year gathering session with some old colleagues and friends, and we were talking about the GOOD OLD TIME... of Motorola.


There were many programs and cultures that were great, and I particularly like the Individual Dignity Entitlement (IDE) Program. 

The frist time I saw the six questions (as shown in the following picture) on a notice board while I was a young engineer travelled to Boynton Beach Factory in Florida about 20 years ago.  I got a strange feeling after reading through these questione carefully.  I didn't know if the feeling was FEAR or EXCITEMENT for the heart beat raised while thinking about the answers! 



For the fear part, I thought: What if I were to answer "NO" to some of these questions, then why AM I here with the company?  Would I get fire for that?  And, If I were to answer "Yes" to all the questions, I must be fooling myself or not thinking hard enough.

For the excitement part, I felt that there must be something I can learn and benefit from it as these questions ask something that I'd never seriously thought about.

Yes!  Under the Ex-CEO, Chris Galvin, the IDE program was launched world-wide, including new factories in China down to the operator level.

Of course, this program did not exist in the company for long time already, but the profound impact to many individual still exsit.

Be still, and think.
Why would we need to have an immediate boss to has a dialogue with us every three months in order to discover our very own problems and opportunities for improvement?

Why Not change only a few word*, as shown in the below diagram, and make it a very personal IDE (Individual Destiny Enrichment) Program and do personal review?

The good culture should continue to stay with the individual regardless the company continue to exist or not.



 
"If you don't put in effort to control your own destiny,
someone else will most willingly do it for you."
- unknown



By the way...
I read about some articles long time ago, mainly from WSJ, commented Chris Galvin was not living in a realistic world and took this program as an example.
And, I don't think so.  It must had taken extremely great courage for him to launch and roll out this program world-wide.  For many companies which only main goal is profits, the management would be ashamed to read through the original questions.

And, only until the people are tired of all those scandals, from big financial scandals to the milk powder scandals, and recent horse meat scandals...world-wide, people will eventually realize the vision of such profound program.





-----------------------------------------  Added on 28 Feb 2013  --------------------------------------------



[From the Harvard's Famous Success Principle]
The difference between the success and failure of a person is based on how he uses his after working hours. And his destiny is decided by how he use the time between 8.00pm to 10.00pm.

Every night, take 2 hours to read, study, think or involve in meaningful discussion or debate. You will discover that your life starting to change. Continue to persist this for years..... And Success will wave it's hand to you.













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Project Freedom (11): What's "Project Freedom".

Good day,
Let's start with some questions:
Do you play Chess?  Any kind of Chess...
How long does it take to train a person to be a World Chess Champion?


Well, the answer to the latter question would not be simply a matter of time to learn.  Just like if everyone were given a chance for education, and not everyone would pass the exams within a given period of time.
Now, anyone who uses computer likely has heard of the real story that the long-term world chess champion, Garry Kasparov, was beaten by Deep Blue (a chess-playing computer developed by IBM) in 1997.
  





And, here are some benchmark information on the Deep Blue Computer in 1997 and today's computer technology:

"In June 1997, Deep Blue was the 259th most powerful supercomputer according to the TOP500 list, achieving 11.38 GFLOPS on the High-Performance LINPACK benchmark."

"As of 2010[update], the fastest PC processors six-core has a theoretical peak performance of 107.55 GFLOPS (Intel Core i7 980 XE) in double precision calculations."

And, from the "CPU Benchmark site", I found that my current laptop (i7 3632QM) can run about 78% of the i7 980X. Which is 7 times the execution speed of the Deep Blue!!!
Now, lets look at another scenario, if everyone were to carry the same program that was in the Deep Blue on their latest notebook PC today and play chess, who would win???
If the CPU power is the same, then the outcome would be a draw over many games.


Now...
With the above metaphor, lets look into other questions:

If there is a Computer-Aided-Trading Software that can consistently beat the market, and it is made available to the general public at some extremely low cost.  What would happen to the stock market?  Would it bring more positive impacts or negative impact?

My guess is that the software would lost it's effectiveness in making the amount of money as when eveyone has the edge means no one has an edge.

As of today's market, over long run, more than 95% of the general public are making a lost in the market.  So, if and when there is such thing available, it would benefit more than 95% of the people while disappoint the few...


So...
The next question would be: Is it possible for human being to workout such a program that can automatically adapt itself to all kind of market fluctuation and yet continue to make profits even at current environment?

For the previous chess example, it can be computerized because the chess has finite chess pieces and each chess piece has finite moves.  So, even the number would ended up as an enormous huge over many steps into the future move, it can be easily handle with today's computing technology.

And, if one were to go through all the trading books and courses, he would most likely be conditioned by them to believe that success of trading is and art which consists of roughly 30% Trading system, 30% Risk/Reward Management, and 40% Psychology.

Personally, I know that anything had been logically done by a human brian, it had gone through certian processes and can be programmed into software.  In order to write the software, a model of the stockmarket chess board has to be built first....

Take for example.... 
The following diagram shows a Stock Market Chess Model.
Note: Those item marked with "*" was posted in previous articles.  (Click and Zoom In)



And the following shows the OUTPUTs from the model.

All Charts deleted on 2016-04-11.


Bless You
KH Tang







"Whatever I desire for me,
I desire for all humanity"
- Barrie Konicov

---------------------------------------------- Added on 30 Aug 2013 --------------------------------------------
My Vision and Believe in Faning Out OGTS.