Monday, May 26, 2008

A Look at the Dollar and Other Ideas Worth Cashing In On

* Dollar Weakness - As the chart of the U.S. Dollar Index (cash) vs. S&P 500 Index (cash) indicates, we've seen more of a bounce in stocks since March than in the dollar. Whereas stocks are meaningfully above their lows even after last week's selloff, the U.S. dollar is approaching its all-time lows. Though expectations of continued Federal Reserve easing have themselves eased, any anticipations of rate firmness have not been sufficient to support the dollar.

* Framework for Day Trading - The EminiDayTrading site offers a free webinar that offers their interesting approach to understanding and trading markets on the day timeframe.

* Missed It By a Tick - An erudite and experienced trader and author writes to me of a trade that he missed, hoping to get filled at just the right tick. When that tick went unfilled, his trade idea went unfulfilled. Inspired by Swinburne's stanza in The Garden of Proserpine, he writes:

Tricked for a Tick

The trading gods are fickle
They live I have no doubt.
They love to cause a pickle
Hoping to sound us out.
The answer is decision
One made with quiet precision
With fear and greed unrisen
That's what it's all about.

"Decision made with quiet precision": I don't think I could summarize trading psychology any better--certainly not more poetically!

* The Advantages of the Pros - One way that professional traders seize an advantage in the marketplace is by testing trading strategies across a range of market conditions and then automating the execution of the successful strategies. This can be extended across a range of strategies so that, under any market conditions, there will be some strategies making money--without untoward psychology affecting the execution. I see where Stock Tickr has teamed up with Trade Ideas to test and automate strategies for active traders. This strikes me as particularly promising.

* What's Going On With Oil? - Trader's Narrative offers an interesting view and John Mauldin passes along his perspective on the speculative boom.

* Just Keeps Getting Worse - Research Recap recaps the delinquency rates among residential mortgage-backed securities as a function of issuance year.