Sunday, November 16, 2014

Top 4 Must Read Trading Books From a Hedge Fund Manager

Dylan Johnson 23 is the Hedge Fund Manager at Sardonyx Capital, a fully systematic quantitative hedge fund launching January 1st 2015, the President & Founder of Obsidian Analytics, and creator of the Obsidian Mechanical Automated Trading System. Mr. Johnson has extensive experience in quantitative analytics, systems design, algorithmic trading, and systems testing, dynamic forecasting models, and risk-management strategies. He holds a bachelor of art degree in economics & business from the University of Pittsburgh.

Top 4 Essential Books for a sound and all around beginner to advanced education in quantitative systematic trading.

1.       New Trading Systems And MethodsPerry KaufmanNew Trading Systems & Methods provides a comprehensive overview of trading systems, systems testing, money management and risk management education. The book provides chapters dedicated to each type of method to be used in trading, such as momentum systems, trend following systems, regression systems, time based systems etc. and many more in an encyclopedia like fashion. It includes each systems reasoning, method of use, and provides implementable examples of each. It also is full of information on how to appropriately implement, evaluate, measure performance, and analyze trading systems. This book is great for getting ideas and methods of developing your own system.

2.       Quantitative Trading Strategies Lars Kestner; Quantitative Trading Strategies begins with a complete historical background on quantitative systems trading, and builds the book chapter by chapter teaching the reader how to create a trading system following a scientific process and then how to correctly asses evaluation and optimization of trading strategies. Kestner also presents many profitable trading systems that can be used and implemented by the reader in the financial markets. This book goes into specific details in the design and creation process of algorithmic trading systems.

Thursday, November 13, 2014

Should You Be Watching GoPro and Ali Baba?


Two stocks that show extreme strength on the daily chart are $BABA (Ali Baba) and $GPRO
(GoPro). There are two reasons why one should buy the dip in them in the future: 

1)Extreme strength on the daily chart (Parabolic patterns and really strong RSI).
2)Retail Buying Interest

 I am not saying these two stocks are a buy right now, as they can endure quite a bit of turbulence (specifically IPO unlock dates in the future). But these are two must have swing trades for long term traders. An example of a past pick like this would be Twitter ($TWTR) which shows both the risk and reward of these type of IPO trades. The stock went as low as $30 (from a high of $70) then, went on to nearly double at its recent peak of $55.

There will be quite a bit of risk and volatility in trying to swing trade $GPRO and $BABA, but it does offer quite a bit of reward. If I feel like there is a perfect buying opportunity I will likely alert ChartLearning.com readers in the future.

Sunday, November 9, 2014

Why The Market Has To Pullback

$QQQ $COMPQ Nasdaq Technical Analysis Bearish

I believe the Market will pull back for many reasons, however in this post I will list three. I believe that the Nasdaq ($QQQ) is more susceptible to a deeper pullback, so I will use its chart (shown above) to demonstrate my case.

1) The Nasdaq chart has left quite a few gaps, I believe 3 out of the 4 gaps must eventually fill in the medium term.
2)The V shape bounce is one of the steepest bounces I have seen. I believe this type of momentum is not sustainable long term.
3) Since the last gap up, the chart has left quite a few topping candlesticks. These candlesticks are signaling a bearish reversal. 

In terms of a time frame, I believe in the short term (from now till 2 weeks) the Nasdaq will attempt to fill in at least two of the gaps.

Sunday, November 2, 2014

Is The Market Finally Overstretched?

SPY SPX Stock Chart Analysis Technical Market Timing

A little over two weeks ago, I made a bottom call, which has worked out perfectly. However, the Market in the short term is incredibly overstretched, using various indicators that I follow.  One indicator will be discussed in detail in this post. The chart above is the SP500 and its 13 EMA, below the chart is the PPO indicator which measures the distance from the stock current price and the 13 EMA. When the indicator crosses the top horizontal line (readings above ~2.3+), the Market eithier pulls back or pauses momentarily. I have highlighted the 3 other times this has occurred in the last two years. I think it is more likely the Market pulls back and fills a few gaps, rather than just pausing. Regardless of what happens in the short term, in the medium term (1-2 months) the Market is likely to go higher.