We are getting a bounce from a short term oversold condition, but if the market is truly under distribution, a one or two day bounce will fail abruptly and the indexes will make new lows.
The market's technical condition weakened yesterday as the major indexes broke below short-term support. Volume was lighter than the previous session on both exchanges, avoiding additional distribution. However, the weakness beneath the indexes was more pronounced. The expanding weakness is important because it suggests the pressure is no longer confined to narrow areas of the market.
Pockets of strength included: Energy up 1.5% the strongest major sector over the past five sessions, advancing 2.6%. Oil & Gas groups continue to populate the leadership ranks, along with Coal. Software remains a notable source of relative strength, but also felt pressure, while Farm Machinery, Agricultural Chemicals and Agricultural Operations are emerging as areas worth monitoring. We bought $DE on Monday and shorted $IWM.
The message here is not that the bull market is necessarily over. It's that risk has increased and the market now needs to prove itself. For now, selectivity is paramount. Focus on high-quality stocks emerging from sound bases, while reducing exposure to laggards violating key support. This is not an environment to force trades or rationalize poor action.
Tactically, this is the time to cut laggards, trim extended winners and hedge where appropriateโnot wait until the evidence becomes obvious to everyone . Until we see signs of repair, capital preservation takes priority. Let the market earn your exposure.
https://t.co/JXzFFTmMtn
In 1986 a guy got kicked out of every casino in Vegas for counting cards. So he flew to Hong Kong with $180,000 and started betting on horses instead. He walked away with almost $900 million.
It's Bill Benter. He figured horse racing was just another counting problem. Same math, more moving parts.
He and a partner showed up with $180k and a computer. Benter spent years teaching that computer to guess one thing, the real chance each horse had to win. If his number was better than the odds the bookies gave, he bet. If not, he skipped it.
That's the whole trick. Expected value.
EV = p ยท b โ (1 โ p)
Only bet when your win chance p, at odds b, is worth more than your chance of losing.
This recording was never meant to be some hidden gem. Nobody expected Professor Tsitsiklis to hand the whole foundation away in 45 minutes, but that's exactly what happens on the board. Students in that room pay over $80,000 a year to sit through it. It's free right here. It's free right here.
Every quant, every professional bettor, every hedge fund analyst started with this exact hour. Benter just watched it and actually did the homework.
Almost nobody knows this lecture even exists. Watch it before it gets taken down.
The answer is in this video.
Do this after you get stopped. You will feel better. BUT SELL AND TAKE YOUR LOSS FIRST!
Then you can scream, cry, or throw a tantrum. https://t.co/8tPNJbCcy8
The United States continues to benefit from one of the most dynamic entrepreneurial and capitalistic economies in the world. Entrepreneurs are free to innovate, take calculated risks, and pursue opportunity, while risk capital helps finance the ideas and companies that drive progress and create new industries.
Innovation fuels technological advancement and breakthroughs. Technology, in turn, enhances productivity, efficiency, and profitability across a number of industries. This powerful combination allows economic growth to accelerate without necessarily generating excessive inflationary pressures. It's been referred to as the Goldilocks economy.
As productivity rises, businesses can expand, earnings can grow, and living standards can improve. That creates a virtuous cycle of innovation, investment, and wealth creation that has historically rewarded long-term investors with profitable trading opportunities.
While markets will always experience periods of uncertainty and volatility, the fundamental drivers of American economic success remain firmly in place. For investors, that's an encouraging backdrop.
Innovation continues to create new opportunities, capital continues to seek the next generation of winners, and the market remains one of the most effective vehicles for participating in that growth.
In short, it's a great time to be a stock investor.
Have a great day!
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"By pyramiding up when you're trading well and tapering off when you're trading poorly, you trade your largest when trading your best and trade your smallest when trading your worst. This is how you make big money as well as protect yourself from disaster."