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Monday, 26 June 2017

How to Spot a Lie

If you are laughing, no problem, it is out of frustration, I get it.

In today's modern era the cliche is "I don't know what to believe." I know that my friend sorry to say it but that is the facts!

That makes it tough, not knowing what to believe when it comes to making money with your money. The pain of not knowing what to trust will impact everything from the initial consideration to the profit/loss outcomes.

Plus most of us are sick of all the platitudes engulfing our trading life. Like," cut losses short and let profits run" and  "past performance is no guarantee of future results."


Traders rely on statistics, which suffer from an image problem. Ok got it, everyone knows there are three types of lies -- lies, damn lies, and statistics. Even after the joke ends, today people just don't believe in statistics.

You only have to go back to the 2016 Presidential elections to see the failure of the polls preceding the election. Their inability to predict the outcome of the race accurately makes it easier to understand the public distrust in statistics.

There is a large plurality of people with no faith in statistics, leaving a clear division; and just not politically.

On the one side, there are people who see statistics as crucial. On the other side are individuals that see statistics as rigged. On the one hand, statistics are needed to move beyond emotional anecdotes, used as an objective measure of progress. While many other people only see fabricated numbers. This group feels the numbers do not reflect what's happening in their everyday lives.

On the one hand, statistics are needed to move beyond emotional anecdotes and used as an objective measure of progress. While many other people only see fabricated numbers. This group feels the numbers do not reflect what's happening in their everyday lives.

What makes the widespread distrust even more confusing for the informed trader is the knowledge we have that this time, this uninterrupted period of no market volatility, will not be different. That change will come back into the market, and it is not a dull idea when Warren Buffett says "the true investor (trader) welcomes volatility."

Does it go without saying that with change comes opportunity comes to those who are ready, right?

If we as traders have to rely on statistics, what are the ways to spot the lies and find the reliable numbers While some vendors hide their product under the veil of superficial high prices, in real life good advice is free, it is work that costs money.

So for the intermediate/advanced trader, who knows the current, no brainer market will end at some point, here is an opportunity to access three exclusive trading videos pull from our member's library. Give us your name and email for easy access to the following TMT short videos.

Fill out the three line form below with your full name and email for easy access to three short videos from our members only Advanced Trader Mentorship Series.

1. What is a robust strategy and how can you test for robustness?

2. What is an overlooked statistic in performance reports that of critical importance to the trader's success?

3. What is the decisive question traders need to answer today?

Sign up for three short videos intermediate/advanced traders

If you would like more than just a review of the above videos, make an appointment here for a real-time demonstration of our tactics or a free one day pass into our member's only blog.

Great and Many Thanks,

Jack F. Cahn, CMT
Thinking Mans Trader 1775 E Palm Canyon Drive, Suite 110- box 176 Palm Springs, CA 92264.NV USA., 800-618-3820

-- Thinking Mans Trader does not assume the risk of its clients trading futures and offers no warranties expressed or implied. The opinions expressed here are my own and grounded in sources I believe to be reliable but not guaranteed.

Tuesday, 4 April 2017

Greatest Game Ever Created: The Capital Markets

Signing of Button Wood Agreement

The Buttonwood Agreement formed the New York stock exchange and kicked-off the capitalist game called the stock market. To understand the stock market has to do with fiancĂ©. For a business to raise funds – finance – they offer shares in its company. To do this, there has to be a secondary market – the aftermarket – one that buys and sells the shares to provide liquidity to the original investors, called initial public offering (IPO). No one would buy an IPO if they did not have a way to sell it, full stop.
However, the bastion of the stock market remains one of the great unknowables for the majority even if they own common shares. Worse yet, many people who own shares have bought into shares not understanding risk, i.e., market risk.
What they need to understand is “the world is but a stage, ” and it is the story, the presentation, the PR that makes the market, not economics.
Today investors face information overload and misinformation.  The problem is compounded by the most sources of information being credible but the information being provided has nothing to do with the market, ascertain cause and effect of the stock market.
For example, Deal Book, a blog of the New York Times, written by Andrew Ross Sorkin could not be more trustworthy. However, their content, while informative from an academic view, has nothing to do with why the market is zigging and zagging.
A financial blog maintained founded in 2005 by Bill McBride Calculated Risk is followed for its economic commentary. The problem, again, is traders will use the stories to formulate opinions about macroeconomic events—such as employment statistics or political event—and how they will affect major indices.
Therein lays the rub, there is no hard and fast cause and effect between the news and market action. Unless of course, the news is about the market’s action in and of itself.
Shock blogs like Zero Hedge reflect how people follow the hype in their pursuit of profits. This blog is the stock markets equivalent to Breitbart when it comes to alt-facts. Zero Hedge is a leading source of gossip and other news that could have large impacts on a person’s judgment. The blog uses a pseudonym from Fight Club – Tyler Durden – to give it a macho image and to maintain its comments anonymously.
So many of the financial blogs are information providers and some with a point of view. Others provide information based on a trading idea, a strategy to enable the investor to act. One of the actionable types of blogs is COT Timers.
This financial blog interprets weekly Commitments of Traders (COT) reports, which provides the large dollar positions in most actively traded markets, including the equity indices. The idea presumes to watch what big money is doing is to know what smart money is doing. What they failed to understands is that big money persons are just people who can make mistakes like anyone else.
After years of publication, they have stop publishing on Monday, 22 September 2014.
To get a better handle of how the markets operate ask yourself what would you do, if you were mega rich, don’t laugh. How would you buy a major position in a stock without spooking the market, that is driving the price up making your investment more expensive? Put another way, how would you unload a major position in the security without causing the market to collapses?
Here is an investor’s fact of life: Big money needs liquidity to move into and out of a market. That liquidly is provided at major turning points when the broad-based public is active, providing that liquidity.  They are buying when big money is distributing shares and panic selling providing big money the opportunity to buy.
A contrary opinion blog created by Birinyi Associates provides aggregate data from other financial blogs. “Ticker Sense”  tracks the bullish or bearish opinion of major advisory blogs. It created the “Blogger Sentiment Polls” to provide insight into the financial blogosphere’s aggregate opinion on the overall market. The strategic idea is to look for an extreme reading of optimism after a major market advance to earmark a peak and an extreme pessimistic reading at major market lows.
Technical analysis blogs reduce everything to price to have an idea of when change is about to occur. The focus of Fallond Picks commentary is short-term trading. He provides a technical summary daily, but he still falls back on discussions of fundamental causes, and I am not sure from his writing how in-depth his understanding is of Technical Analysis.
You now have more understanding than the majority of stock owners. Remember when you are listening to the nightly market wrap it is a rationalization of a price based market events that preceded their comments.

Did your Mother call you a contrary child? 

Join the club and now you understand how to put that personality trait to good use. 

I welcome all comments and will respond promptly.

Thursday, 8 December 2016

MarketMap 2017 Best Deal on the Street


is an annual three issue technical brief that provides traders with a scenario map for the upcoming year based on a historically tested mathematical formula. Traders gain insight into trend direction outlined for the year. More importantly, MarketMap provides a change of trend dates for the entire year. These dates pinpoint when traders can expect one of six types of change in direction. MarketMap gives the trader lead time to prepared and the ability apply the correct trading strategy.

Now is your chance to get your copies of TMT's annual MarketMap-2017 with the annual map of trends and the change of trend dates.


Virtually everyone's trade decisions could be impacted by the news event, economic events, political events broadcast by the mass media. I doubt seriously if you allow yourself to be reactive to such events or for them to be part of your trading strategy and, as a result, you consistently make money.

I would hope you have at least come to the realizations that news event based strategy is just speculation. Rather you want your trading to be objective and systematically based.

In 2010 I took my successful trading philosophy based first principles and decades worth of trading experience converted that into a comprehensive technical model to oversee all of my algorithmic - mechanical - trading strategies.

There are two main parts of the complete model. One is the Technical Event Model (TEM). This part of the overall systems anticipates changes in market context. In other words, direction trading signals only have a definition but no meaning unless the trader has an idea of what context they are coming from.

The second part of the master system is our MarketMap model that gives the trader major inflection dates, what TMT calls a change of trend dates (COTs) to expect Technical events.

The January barometer is likely the best known of any forecasting tool. It began as a bellwether month theory, if prices ended the month lower than it started the year, the next 11 months would be down. It was refined by the late and great Joe Granville ?a hero to me - to the first three days of January and later on in its evolution that included the low of the previous month of December needed to be broken to call the year bearish.

Here is part of the MarketMap-2016 published February 2016

In the last two years running January indicator has been bearish, including 2016. This year the price action in January fit all the requirements for a bearish outlook including the market taking out the lows posted in December 2015.

It was originally devised by Yale Hirsch in 1972; the January Barometer has registered only seven major errors since 1950 for an 88.9% accuracy ratio. When you net out the eight flat years (less than +/- 5%) the batting average slips to a .738, which includes 2015.

The exceptional years that witnessed bull advances are 1966, 1968, 1982, 2001, 2003, 2009, 2010. So over 50 years it missed three yet over the last 15 years it missed four out of seven down January's. Its batting average seems to be tailing off in the new millennium, maybe after getting too much notoriety.

The above graph is Thinking Mans Trader MarketMap for 2016 suggest that the year 2016 would be higher after the first half of the year is locked into a trading range. Our primary model of dates for major changes of trend (COTs) confirmed a major COT in mid-July, see table.

This primary time model is not about projecting a high or a low pivot; it is about a confluence of methods pointing to a time window for change, a change of trend.

Getting back to basics for a moment, there are only six trend changes. From up to down or up to sideways; down to up or down to sideways; sideways to up and sideways to down.

Both of these MarketMap models provide a nice and neat scenario for the year, and the bullish outcome of the current trading Dow range from 15,300 to 18,500. But while that gives me a warm and fussy feeling, it has little to do with how I will trade or my TMTs trade, except that it points out opportunities when no one else is looking for that change. It gives the trader an actual model to keep them from reacting to the hyper news media.

MarketMap puts my traders and me on the front foot, so there is no need to get caught by surprise not knowing what strategies to trade.

Our outlook is the bullish outlook for 2016.

Here is the real time ES with dates marked for cross check

Get your copy of MarketMap 2017, two important publications: the year-end MarketMap for 2017 and the MarketMap January 2017 map with COTs for 2017 for one low price of $69.00.

MarketMap 2017 -Trriple Issue

-- Thinking Mans Trader does not assume the risk of its clients trading futures and offers no warranties expressed or implied. The opinions express here are my own and grounded in sources I believe to be reliable but not guaranteed.

Thursday, 10 November 2016

The Buzz on Election Day

Thinking Man’s Trader

Jack Cahn
Market Strategy Selection

  -  Yesterday November 8, 2016 10:45 PM PST

The overnight reaction to Australia projecting Trump to win E College and Trump is winning is news real time news is outside TMT strategy. TMT does not care why unless the why is explained by a technical event because that is predictable.

From a forecast opportunity point of view. a decline expected into election day +/- a day or two was expected and a change of trend low on Nov. 8 +/- a day or two.

The chart below shows a few things.
1. the panic index on weekly and daily ES is at or near a panic extreme.

2. %BB-VIX on a daily basis is oversold. Weekly %BB-VIX is trending higher.

A low was in the forecast; it looks like a mini panic low at best if you are concerned about the long-term 401k, or related l-t equities.

What I found amazing was that with the very slow decline from the August -Sept peak, that mutual funds had raised cash to nearly 6.5% of net asset values, a higher amount compared to the low in March 2009!?

The implication is buying power.

From a day trading point of view, daily bar stock indices posted Rule2 on your charts Oct. 20 calling for increased Volatility.

Therefore day trading systems that like the action after rule 2 technical events should do well and to a lesser extent Rule 4. This advice is empirical observation and back testing of %BB-DBR for TF EMD and ES.

As I post this, all three of the major stock index futures in the Globex are trading below a windfall profit of 3 SDs. These levels are

3 Sds 2 SDs
ES = 2,064.02 - recover to 2,087.52
TF= 1,158.25 - recover to 1,485.83
EMD = 1,473.36 - recover to 1,485.83

A day session open below these levels is a give me the trade, a high probability of profit taking - short covering - and the squeeze of new shorts- put on in "emotional reaction" to a news event.

What I call the gift trade is outlined above, a day open below the 3 SD is a buy with a target of 2 SDs. Money management stops base on your risk profile or a percent of the 3 Sds - 2 SDs difference.

The above chart points out the low expected on election day.  As always more to follow, inside TMT member's only community.