Tuesday, May 2, 2017

From the mind of a trader

The following is one article from my book Swing (Sector Rotation + Momentum) Trading 3rd Edition:

There are many articles on sectors by other authors and from other sites such as Market Watch. Andrew McElroy writes articles on sectors in SeekingAlpha.com. Search for his articles and you will learn a lot. His recommendations may not make you money, but it should in the long run. Learn from his ideas and his reasons behind them. I’ve not checked his performance as they’re not relevant for learning. Here are some of my sample notes on his articles.

·        Reflation is used by the government to restart the business after contraction. It is arguable. His article “An inflection point for the reflation trade” also demonstrates how Moving Average (200 days) is used. Enter the symbol such as XME under finviz.com and check out SMA-200%. If it is above (> 0), it is a buy in theory.

·        From his article on CHK, Andrew stated his reasons to buy this stock. As of 3/16/17, finviz.com showed the double top indicator and then it plunged. The forward P/E shows 4.7 and there were a substantial insider purchase. The company has written the asset in a massive way and it explains the low P/E. The purchase is betting oil/gas increases above $60/$3.

·        Many sectors should rise and fall at the same time. However, divergence occurs as gold and gold miner described in his 3/7/17 article. Usually they correlate again eventually. Consider buying the one that has been lower.

·        Sell when it is fully valued as in his article on Bank of America. Buy on fears and sell on greed. The hike of interest rate would make banks more profitable. He used TLT to check for correlation.

·        A trader should learn Elliott Wave and watch the chart more often. I bought crude oil ETF in Jan., 2016 and do not touch it until oil returns to the recent high – wishful thinking? Traders usually do not buy at bottoms as long-term investors do.

·        Sometimes there are many other factors such as short squeeze besides what the chart such as 200-SMA tells you. Otherwise, there are no poor folks. Reducing manipulation by market makers, use 50-SMA together with 200-SMA. 

Articles link:


 I have several books on sector rotation. Hope one of them would fulfill your need.

1. For those who are into Sector Rotation and Momentum. New book.
Click here for Swing Investing 3rd Edition (Sector Rotation + Momentum)
or enter into your browser https://www.amazon.com/dp/B06XRQ1MMS

 2. Sector Rotation.
Click here or type the following

3. For couch potatoes. It is simple, rewarding and requiring only 30 to 60 minutes every month. New book.
Click here for more info.
or enter into your browser: https://www.amazon.com/dp/B072L1NZVB

4. If you're  not too deeply into sector rotation. Complete The Art of Investing (Kindle version has over 870 pages) is the most cost effective. It misses several chapters on sector rotation that I wrote recently.
Click here for more info. or type the following

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