What Investors Really Need to Know About an Inverted Yield Curve

What Investors Really Need to Know About an Inverted Yield Curve

The biggest risk in the bond market isn’t rising rates or the Fed vs. Trump. It's the inverted yield curve. At least according to the headline on CNBC. Over at The New York Times, it’s a similar story. “What’s the Yield Curve? ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention” Investors are facing a flood of stories about this indicator. But, the truth is the yield curve hasn’t inverted yet. So, we can take some time to learn about what the curve is and what it means. The Yield Curve Shows the Price of Money Some analysts pay attention to the yield curve all of the time...
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This Technical Indicator Tells You Which Technical Indicators to Use

This Technical Indicator Tells You Which Technical Indicators to Use

Traders often turn to technical indicators to develop trading strategies. They might use a moving average, the relative strength index (RSI), stochastics or one of the hundreds of other indicators that have been developed over the years. Sometimes, the indicators will work well. At other times, the indicators will be ineffective. To some traders, there appears to be no rhyme or reason as to when to expect an indicator to work. To others, the answer lies in the state of the market. Among the first to delve into this problem was J. Wells Wilder who developed the RSI. He also developed ...
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Bad News in the Employment Report Shows the Bull Market Is Near an End

Bad News in the Employment Report Shows the Bull Market Is Near an End

Good news for the economy continues to appear. The Wall Street Journal noted that “Economists expect the low U.S. unemployment rate to go even lower over the next year, reaching levels not seen in a half-century. Private-sector economic forecasters surveyed in recent days by The Wall Street Journal on average saw the jobless rate—4% in June after touching 3.8% in May—falling to 3.7% by the end of 2018 and 3.6% by mid-2019.” It hasn’t been below that level since December 1969, when it was 3.5%. Source: Federal Reserve Unemployment has rarely been lower than it is now outside of ...
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The Simplest Momentum Indicator Can Be Very Effective

The Simplest Momentum Indicator Can Be Very Effective

Technical analysts can turn to hundreds, if not thousands, of indicators. Many are designed to measure momentum. Analysts have created these indicators in search of an edge, a tiny advantage that gives them a chance for profits by getting ahead of other traders. Momentum is considered to be the velocity of price changes, in general terms. Technical analysts aren’t trying to say a price is moving at a certain, steady rate, like the velocity of a car. They are trying to determine when the price is moving, or delivering gains in a trending manner, or when a reversal is due. The latter i...
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Oil, Iran and Saudi Arabia

Oil, Iran and Saudi Arabia

The price of oil is widely followed because oil is critical to economic growth. But, it’s also a chicken and egg type of question. Economic growth drives demand for oil. That raises the price of oil. But, high oil prices choke off economic growth. When oil is priced “just right” we have economic growth. Just right pricing also helps to maintain stability in one of the most volatile regions in the world, the Middle East. Right now, prices are higher than they were a year ago, but they seem to be just right. However, it seems unlikely prices will remain near their current level. The...
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Free Tools for Relative Strength Investing

Free Tools for Relative Strength Investing

It’s always interesting to talk to different investors. Many will be able to explain what they look for in charts. Individual investors are often looking for large price declines. They are often looking for value and believe that value is easiest to spot after a breakdown. Professional investors often take a different view of charts. Rather than a variety of indicators, many professionals look for relative strength (RS) on their charts. This is an indicator that compares the stock on the chart to all other charts. RS highlights whether a stock is outperforming or under-performing whe...
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Marijuana Is a Challenging Market

Marijuana Is a Challenging Market

The next investment boom appears to be in sight. It’s in marijuana. This strikes many investors as a self-evident truth and an investment that seems likely to deliver large gains for investors willing to accept the new industry. Marijuana is a growth industry, with established demand and now a supply that is increasingly becoming legalized. The legalization could fuel more demand and that could make it an even bigger business opportunity and an even better investment opportunity. Booms always seem like they should be easy to trade. And, sometimes, they can be. The Internet bubble see...
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How to Trade Break Out Patterns

How to Trade Break Out Patterns

Break out patterns are important for traders. They can offer the opportunity for profits. And, they provide a ready made strategy for managing risks. Overall, for traders who rely on charts, break outs could be the most important pattern to consider. For traders who don’t rely on charts, break out patterns can also be useful. They can be a way to identify times when it can be best to add to their positions, or when to take profits. They can also highlight when the stock of interest isn’t providing a profit opportunity. Defining Break Out Patterns When discussing patterns, traders can ...
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Specific Health Insurance Stocks to Buy Now

Specific Health Insurance Stocks to Buy Now

Health insurance exchanges were created by the Affordable Care Act (ACA).  Exchanges are a market place for consumers to find individual and family coverage and for insurers to easily access customers. It’s a web site that serves like any other ecommerce site, in theory. But, ACA exchanges are unlike anything else. They are a source of political debate and of strong opinions. But, from an investor’s perspective, none of that matters. What is important to investors is whether or not insurers can profit by offering products through the exchanges. After several years of general problems...
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The Best Way to Read a Chart

The Best Way to Read a Chart

Chart reading has been the subject of analysis for almost 100 years. The first book on the subject was likely published in 1930. Richard W. Schabacker published Technical Analysis and Stock Market Profits, that year. It was originally a series of lessons but was in a book form by 1932. Schabacker covered reversal patterns, continuation patterns, trend lines, support and resistance, how to develop price targets from chart patterns and how to trade the patterns. It’s all been explained for many years yet many traders still struggle with charts. Buffett’s View on the Subject May Not Be Ri...
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