Investing

Wild Wall Streets Computer Trading

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computer trading market moves

In the past few days, the stock markets have whipsawed up and down by as much as 800 points, sometimes during the same day! It can be hard to put a finger on what is driving the stock market when the behavior seems so irrational, but the reality is actually pretty easy to understand. The computer programs have been tightened, and they keep firing off, sometimes together, sometimes opposed, and each movement they create triggers another program, which triggers another program, and so on. Program Trading Once upon a time, computer trading was nothing more that the pre-placed buy and sell orders entered by traders. A stop order to sell if the price dropped below a certain amount. A buy order if the price trended up. Those trades have been replaced by more sophisticated programs run by everyone from big Wall Street banks and brokers, to hedge funds, to so-called quant mutual funds. These programs fire off hundreds, or even thousands of orders in response to pre-defined market triggers. Is there a Credit Karma scam? Get the markets leaning too far, and they start kicking in, often triggering other programs in the process. The result is seemingly bizarre trading patterns, …

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Oil Price Fun (11/2018)

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oil prices

I’ve been swamped so I haven’t been able to update on here as often as I would have liked these past couple weeks, which is a shame because there is tons of interesting stuff going on out there, plus end of year stuff coming, and so on. I’m on it. Don’t worry. In the meantime, my favorite story of the past few weeks is oil prices. Since this time late year, oil prices have been trending higher (with the usual ups and downs). Since June of this year, oil was basically stuck between $65 per barrel and $70 per barrel. That price range might be considered the “real” oil price, or the non-panicked oil price based upon an established equilibrium of supply and demand. Then, Trump started talking about sanctions on Iran, and prices started climbing, topping out at over $76 per barrel. This is because taking Iran’s oil supply off of the world market would decrease supply with no corresponding decrease in demand. But, what Trump shouts and what he actually does don’t always match up, and the administration basically granted sanction waivers for all of Iran’s biggest customers including China. That means that the supply is not decreasing, …

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Market Falls, But… No Panic… yet?

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stock market price down facebook

So, interesting phenomenon happening in the stock market these last few days with the S&P 500 dropping over 5% (around 1,400 points) and even dipping below its 200-day moving average. In the right circumstances, this might be the trigger of a full-on rout in the stock markets. Here is what is missing though: panic. Markets Down – Does Anyone Care? I’ve been subtly (and not so subtly) hinting for about a year now that I think the Federal Reserve is too set in stone on its course to raise interest rates in the face of little to no inflationary pressure. To me, this recovery, as long as it is, doesn’t seem that strong. As such, one rate hike too many, could spell disaster. With this week’s market reacting poorly to rising interest rates in the bond markets, I was dusting off my “I Told You So,” posts. But, it looks like I’ll have to wait a bit longer. My Digit reviews. Despite the fairly big numbers in the Wall Street sell off as late, there isn’t much fear associated with it. When it comes to the economy, nothing matters more than how people FEEL about it. That’s why they try …

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Stocks Have Hard Day – Just Volatility, or the Recession Knocking?

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crystal ball stock market economy

Stocks had a pretty big selloff today in response to a big drop in the bond markets. For those of you keeping score (the baseball kind, not just the points scored), here is the way the game looks so far. Check out my review of Credit Karma. US economy is still expanding, making it one of the longest economic expansions The economy itself is cyclical. It ALWAYS goes up AND down. So, if it has been going up for a very long time, sooner or later, there will need to be a correction, or recession. How hard the recession ends up being is a function of how it hits. A “pop” leads to a hard (potentially shorter) recession. A “soft landing” means markets can regroup and reprice (usually with a lot of sideways movement) without shocking the system. The Fed keeps raising interest rates because… well, because they want to be “hawks” and not “doves” and just for the barest of moments, the supposed “target” of 2% inflation was touched, so here comes the Fed. The Fed not only keeps raising interest rates, it keeps saying it is going to raise interest rates more. One more hike this year, in …

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Are These The Tariffs You’re Looking For?

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tariffs imports markets

OK, so that isn’t a very search engine friendly title for this article, and I don’t really care. The tariffs in Trump’s trade war are starting to make real impacts on certain Americans, and the rest of us may start feeling the effects soon. The most noticeable, immediate impact, is that after a decade as an experienced, professional freelance financial writer, it is now necessary for me to be able to spell the word ‘tariff,’ which up until now never really came up except in examples and edge cases. Generally speaking, tariffs (one r, two f-s) have never been the kind of thing that impacted the middle of Main Street America. Now, I guess we are going big, or going home. In a lot of cases, Trump is shutting the barn door after the horse got out. There used to be real, U.S. manufacturers of solar panels, for example. Not anymore. The companies getting “protection” from Trump’s solar panel tariffs (one r, two f-s) are American, only in the legal sense of subsidies and corporations.  In other cases, maybe something like the steel tariffs could save the few remaining stell companies and mills. The second big impact is now dropping …

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Investing For Hurricanes

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I usually wouldn’t write an article like this, but I’m trying something new, so let’s do this. Do hurricanes affect the stock market, and the overall U.S. economy? How Hurricanes Affect The Stock Market Like the vast majority of stock market moves caused by news items, the actual impact on the stock market tends to be negligible when measured over any period of more than a week or two. In other words, investors love to freak out about the news, only to forget what the story was a short time later. Weather, like hurricanes, is no different. Check out my Ebates review. Consider that an upcoming hurricane, no matter how large, has a relatively small area of impact compared to the country overall. While a hurricane might completely decimate, say, South Carolina, that impact won’t be felt in Ohio, Texas, or pretty much any other state you can name. And, if we are being really honest, the biggest of hurricanes don’t really do much long-term damage unless accompanied by flooding. Whether it’s Hurricane Katrina, or Hurricane Sandy, the damage beyond some power failures, damaged roofs, and fallen tree branches was all done by the flooding. So, if you want to …

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No-Brainer High Risk Apple Trade Coming Up

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apple event stock trade

Apple has announced an event on September 12. Traditionally, Apple announces new iPhones and other “gadgets” in September, and expectations are high. So, what is an investor to do? If you are a long-term investor, nothing. Absolutely nothing. The event will generate some noise in Apple’s stock price, but the actual effects will take place over the months and years as Apple executes on its strategy, and how well the new phones are received. Short-Term Apple Trade What about a short-term investor looking for a little trade on Apple’s big event? In that case, it’s time to look into options and start pricing volatility plays. No matter what Apple announces there will be a reaction. In fact, there is a very good chance that there will be an OVER-reaction. That reaction will show up in a quick rising, or falling stock price. Check out our Zelle review. Now, if you don’t understand options, and don’t already have an options enabled account, this move is not for you, but if you’ve been to this rodeo once or twice before, there is money to be made here in a good volatility trade, coupled with the usual leverage of stock options. Buy Apple …

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What Is After Hours Trading

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stock market price down facebook

Facebook reported some garish earnings guidance after the market closed today and the reaction was pretty big. In fact, it was so big, that news outlets and other investment analysts started publishing stories about how far down Facebook stock was trading “after hours.” When this happens, people have questions, mostly, What is After Hours Trading. After Hours Markets Although it never really matters to most people, the reality is that isn’t just one stock market. There are actually several different exchanges. A couple of decades ago, accessing these other exchanges wasn’t really the kind of thing that your average trader had much ability to do. Of course, times change. These days, with the advent of electronic trading, and online brokerages, it’s actually pretty easy to access the other exchanges, even if you don’t know you are doing it. After the standard trading markets — NYSE, NASDAQ, and AMEX – close at 4:00 PM Eastern, those other markets fire up offering After Hours Trading, sometimes referred to as Extended Hours trading. Most major brokerages offer their clients the ability to access those extra trading hours, although you usually have to sign some forms saying that you understand the risks. Basically, the …

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Stock Market Correction

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After Monday’s stock market fall, there was a run up yesterday on Tuesday, then a little drop on Wednesday, and now a 1000+ point market drop again today. So, let’s get a headcount before we proceed. Stock Market Results Last Few Days Monday: -1175 Tuesday: +567 Wednesday: -19 Thursday: -1033 Add it all up, and you get -1,660 for the week. Oh, and by the way, the market was down 666 points last Friday. From the market’s high point, this equates to a drop of a little over 10% putting us into correction territory. (A correction is usually defined as a drop of 10%.) Do We Panic Now? Take a look at what I wrote about Monday’s big stock market drop. Although the market has dipped even further, the result remains the same. For long-term investors with a well diversified portfolio, the best course of action is to ignore all short-term market moves. Even if this is the beginning of a recession (We are totally due for one) the long-term scenario is still the same. The ever higher march of inflation, plus a U.S. economy that always comes back eventually means that holding on, and continuing to invest is the best solution for long-term investing …

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Stock Market Rising More

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stock market economy business

Anyone out there with their “the stock market is doomed” predictions acknowledging how much money they would have cost you if you had listened to them and gotten out of the markets in the last several months, or even the last year or two? No? Didn’t think so. It looks like the doomsdayers will have to wait a little bit longer as U.S. companies such as Caterpillar and 3M both reported pretty solid earnings this week driving up the stock market further. It’s a little hard to claim that there is no basis for increasing stock prices when stocks are actually doing well. Give it a week or two. Once earnings season has passed they’ll be back to tell you about how overbought, overvalued, and over-hyped the market is. How Long Will Stocks Keep Rising I don’t know how much longer the stock market will keep going up, and neither does anyone else. That’s why money mangers are always careful to compare themselves to the stock market, and not to their own predictions or track record of being right. Imagine how much more responsible financial analysis might be if you had to publish not only your trading record versus a …

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