A Note On Volume

Volume can be a useful tool for traders.  Trading volume tallies the number of shares (for equities) or contracts (for futures) traded on a given day.

Price is king, but volume can indicate the force behind a price move.  This provides valuable information.

For example, on our daily candlestick chart of JPM below, note that over the past few weeks, volume (overlaid on the chart) on down days (black bars) has been greater than volume on rebounds (red bars).

JPM chart

Chart by Steven Sarnoff h/t stockcharts.com

Low volume on a rebound is not a good sign.  It tells me the bounce is more of a short-covering rally and adds weight to the evidence in favor of a continuation lower.

As with all indicators, there is no certainty; there is only probability.

Subscribe to Options Hotline today to vie for fun and profit.

Best regards,

Steve

 

Your Almost Daily Bit of Wall Street Wit & Wisdom

“Most people don’t want the truth. They want a secret. So if that’s what you want, I’ll give you the only secret you will ever need—there are no secrets.”
— Nick Maggiulli, @dollarsanddata

There is no holy grail for traders, but there are great tools to help you.  With knowledge, courage, discipline, and hard work you can put probability on your side.

Best regards,

Steve

Your Almost Daily Bit of Wall Street Wit & Wisdom

“In maths, 10 x 1 is always the same as 1 x 10, but in real life, it rarely is.  You can trick ten people once, but it’s much harder to trick one person ten times.”
— Rory Sutherland

h/t Jim O’Shaughnessy, @jposhaughnessy

It’s good to be back from a wonderful family celebration in New York.  After all these years in California, there’s still just a little New Yorker left in me.

Best regards,

Steve

Your Almost Daily Bit of Wall Street Wit & Wisdom

“What is life but playing with time..?”
— Keith Richards

We’re heading up to LA for a few days to see our ‘kids,” celebrate our 31st Wedding Anniversary, and jam with the Stones!:-)

Their sound is timeless and always great to hear.  In my opinion, the old musicians are better than the old athletes; they can still play.

Investing is something done over time.  Speculators must be keenly aware of time.  Options are wasting assets, whose time decay accelerates over the last few weeks of their life.

In life, time truly flies.  We’ll be trying to slow it down a bit over the next few days, before we pick up the scrapings and get back to work.

Best regards and gold rings on ya,

Steve

Your Almost Daily Bit of Wall Street Wit & Wisdom

Point drops in any index, be it the DJIA or the S&P 500, are meaningless.  All these ‘3rd largest (point) drop in history’ stories are meant to mislead and scare you.  Don’t let them.  The only thing that matters is by what percentage did an index or stock decline or advance.”
— Jim O’Shaughnessy, @jposhaughnessy

 

Your Almost Daily Bit of Wall Street Wit & Wisdom

Obvious Man

Obvious Man, from Wiley Miller’s Non Sequitur comic strip h/t gocomics.com, Andrews McMeel Publishing

“This is the greatest non sequitur in finance.”
— Jim Grant, editor of Grant’s Interest Rate Observer

The venerable Mr. Grant is referring to bonds priced to yield less than zero.

Deutsche Bank data shows negative yielding debt has topped $15 trillion, representing 25% of all outstanding bonds.

Negative interest rates are not good. They reflect and forecast trouble.  They have serious consequences for investors and sovereign nations.

Who would buy negative yielding bonds?  See the Greater Fool Theory.

Don’t be a fool and don’t be cruel.  Spread some kindness today.

Best regards,

Steve

 

 

Your Almost Daily Bit of Wall Street Wit & Wisdom

lion

h/t NatGeo

“The courage to press on regardless of whether we face calm seas or rough seas, and especially when the market storms howl around us is the quintessential attribute of the successful investor.”
— John “Jack” Bogle

For 30 years and counting, Options Hotline’s focus is on sensible speculating more than investing.

Courage, along with knowledge, discipline, and hard work is a key characteristic of successful traders, as well as investors.

Best regards,

Steve