How to find low and high volume winner Stocks using Chartminer

OFF THE WALL

THEIMPACT OF U.S. GOVERNMENTACTIONS ON THE FINANCIAL MARKETS

BY PAUL KAVANAUGH

OTHER ARTICLES:

ULTRA-HIGH RETURN CONCENTRATED STOCK PICKING

BY DR SCOTT BROWN OFF THE WALLBY COUNTRY BOY RON

BONUSJOURNAL: A GOOD TOOL FOR ANY TRADER

BY GERARD

www.PitNews.com

Vol. 8 No. 11 November 2013

In this issue...

www.PitNews.com Magazine November 2013

Off The Wall!by Country Boy Ron

BONUS: Off The Wall!JOURNAL: A Good Tool For Any Traderby Gerard

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The Impact of US Government Actions on the Financial Marketsby Paul Kavanaugh

PitNews.com Magazine November 2013

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Ultra-High Return Concentrated Stock Pickingby Dr. Scott Brown

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FINALLY, A SCIENTIFICALLY SUPPORTED TECHNIQUE TO IMPROVE YOUR STOCK AND STOCK OPTION PROFITS!

Ultra-High Return Concentrated

Stock Picking:

BY: DR. SCOTT BROWN

How to Find Low and High Volume

Winner Stocks using ChartMiner

ABSTRACTJesse Livermore, Ted Warren, and Nicolas Darvas became millionaires trading stocks exhibiting specific price and volume patterns. This report explains how to follow their lead using an innovative search tool called ChartMiner. EVIDENCE FROM THE JOURNAL OF FINANCE:I hold a Ph.D. in finance from the University of South Carolina. I teach MBA and doctoral students as a tenured professor at the University of Puerto Rico. I am a cutting edge research from the ivory tower. And that means that I am really "linked into" finance. Perhaps the biggest sizzling question in finance is the degree to which markets are efficient. Professors Eugene F. Fama, Lars Peter Hansen and Robert J. Shiller shared the Nobel prize in economics for their intellectual contribution to this area of finance called asset pricing. Fama is a staunch defender of the efficient market hypothesis. Shiller finds this belief silly in the long run. Arbitrage corrects mis-pricing in micro-seconds. But this is not so in the long term. Professional traders categorize price charts into short versus long term for this reason. In long term charts each bar or candle represents a time frame longer or equal to four hours. There are four long term charts; the 4:00 hour, the daily, the weekly, and the monthly chart. Over the years it has become clear that the efficient market hypothesis strong form does not hold. The most damning evidence that markets are not efficient comes

from the Journal of Finance. Known simply as "The JF" this journal is pinnacle of achievement in academic financial economics. Only the most erudite and exacting studies are published. Nine out of ten submissions are rejected. Researchers spend thousands of hours gathering data, testing hypotheses and writing each study. Any retail investor can use vast collection of research to get an edge on Wall Street. The ChartMiner software helps you do so directly. An example is the article entitled "Value and Momentum Everywhere" (Asness, et. al. 2013). Three top finance professors — two from New York University and one from the University of Chicago — show that momentum is a pervasive force in markets worldwide. This study instructs us to seek higher returns in momentum stocks. Another study by Stanford professor Charles Lee and Bhaskaran Swaminathan of North-Western University (2000) show that stocks cycle through four phases in a: Momentum Stock Life-Cycle 1. Low Volume Winners2. High Volume Winners3. High Volume Losers4. Low Volume Losers The best stocks for serious investors are the low volume winners. These rise for years. The high volume winners are more likely nearing a buying climax.

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HOW JESSE LIVERMORE FOUND STOCKSJesse Livermore bought volume winner stocks. He did this even while selling high volume losers short. This allowed him to profit on large scale inside manipulations by the likes of Cornelius Vanderbilt and J.P. Morgan. He made several fortunes. This gave rise to Wyckoff's accumulation-distribution teachings. HOW TED WARREN FOUND STOCKSTed Warren became a master at buying low volume winner stocks in the momentum stock life-cycle. He retired early because of this skill. He looked for stocks rising from low level bases. Ted Warren became so wealthy that he was identified in the Los Angeles Times as a major shareholder of a major stock. Ted Warren shunned low volume losers. HOW NICOLAS DARVAS FOUND STOCKSNicolas Darvas made $2,500,000 in less than 6 years in the late 1950s. This was fully documented in Time Magazine. Darvas became adept at spotting both low and high volume momentum stocks.

FIGURE 1: Wendy’s Company (WEN) is a LOW VOLUME WINNER

FIGURE 2: Facebook, Inc. (FB) is a HIGH VOLUME WINNER

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HOW I FIND STOCKSYou need a simple tool that allows you to x-ray diagnose thousands of charts looking for low and high volume stocks. I know. I searched high and low for such a tool and could not find one. I was picking stocks blind. That had to stop... I turned to Lan Turner of Gecko Software for help. The programmers at Gecko Software created an amazing tool that allows me to profit from low and high volume winner momentum stocks.

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P.S. There is no "easy" way to get rich in the markets. This is not a scanner, it is an x-ray. Please come prepared for work. You have to do the work to reap the reward.

-Doc Brown

FIGURE 3: Electronic Arts Inc. (EA) is a LOW VOLUME WINNER

REFERENCES:Asness, C., Moskowitz, T., and Pedersen, L., 2013. Value and Momentum Everywhere. The Journal of Finance 68, 929-985. See online: http://onlinelibrary.wiley.com/doi/10.1111/jofi.12021/abstractLee, C., Swaminathan, B., 2000. Price Momentum and Trading Volume. Journal of Finance 5, 2017-2069. See online: http://onlinelibrary.wiley.com/doi/10.1111/0022-1082.00280/abstractWarren, T. 1994. How to Make the Stock Market Make Money for You, Buccaneer Books. See online: http://www.amazon.com/How-Make-Stock-Market-Money/dp/1568493576LeFevre, E. 2006. Reminiscences of a Stock Operator [About Jesse Livermore]. Wiley Investment Classics. See online: http://www.amazon.com/Reminiscences-Stock-Operator-Investment-Classics/dp/0471770884/ref=sr_1_1?s=books&ie=UTF8&qid=1382640895&sr=1-1&keywords=reminiscences+of+a+stock+operatorWyckoff, R., Livermore, J. 2012. Jesse Livermore's Methods of Trading in Stocks. Snowball Publishing. See online: http://www.amazon.com/Jesse-Livermores-Methods-Trading-Stocks/dp/1607964503/ref=sr_1_3?s=books&ie=UTF8&qid=1382641065&sr=1-3&keywords=jesse+livermoreDarvas, N. 1960. How I Made $2,000,000 in the Stock Market. Martino Fine Books. See online: http://www.amazon.com/How-Made-000-Stock-Market/dp/1614271690/ref=sr_1_1?s=books&ie=UTF8&qid=1382641169&sr=1-1&keywords=Nicolas+Darvas

Chart courtesy of Track ‘n Trade. Visit: www.TracknTrade.com for a FREE TRIAL!

NOT JUST SOFTWARE, CHARTMINER IS A COMPLETE TRADING COURSEI created a series of video trainings that teach you how to spot the very same kinds of momentum stocks that made Jesse Livermore, Ted Warren, and Nicolas Darvas rich men. ChartMiner puts you in an interactive environment where you can fish the nuggets out of the sluice yourself.

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The Impact of US Government Actions on the Financial Markets

By Paul Kavanaugh

www.PitNews.com Magazine November 2013

U.S. DOLLAR

Since the year 2001, the US has pursued policies that have weakened the US dollar relative to most other major world currencies. These policies have had a significant impact on commodity and currency prices. In 2001, the US dollar hit a high of 12129. As of this writing, the US dollar is trading at 7906. This represents a staggering 34.82% decline in the price of the US dollar index futures.

A weaker US dollar can increase global demand for US exports, as it makes our goods more attractive (cheaper) in terms of other currencies. Taking a look at some of the major commodity and currency prices, we will see that the weaker dollar (in addition to other factors) has allowed the prices of these markets to rise significantly.

FIGURE 1: US Dollar declined by 34.82% Since July 2001

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MAJOR COMMODITY SECTORS

In 2001, crude oil futures hit a low of $16.70 per barrel. As of this writing, crude oil is trading at 9785. This represents an increase of 485.59% in the price of crude oil futures. In 2001, gold made a low of $255 per troy ounce. As of this writing gold is trading 1352.40, which represents a 430.35% increase in price. In 2001, corn futures put in a low of $1.84 per bushel. As of this writing, December corn futures are

trading at $4.40, which represents an increase of 139.13%. In 2001, the Euro FX futures had a low of 0.8342. As of this writing, the euro is trading 1.3807, which represents an increase of 65.51%. In 2001, E-Mini S&P futures hit a low of 939. As of this writing, the E-mini S&P is trading 1756, which represents an increase of 87.01%.

FIGURE 2: Gold is up $100 from its October 15th low

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WHAT IS BEHIND THESE MOVES?

There is an inverse correlation between commodity and currency prices relative to the US dollar. The reason for this negative correlation has to do with basic math. Since commodity prices in the US are denominated in US dollars, if the value of the US dollar declines the price of the commodity increases. Although this correlation can vary from time to time, over the longer term there does seem to be a fair degree of consistency in this relationship. CURRENT EXAMPLES

Recently we have had some examples of US Government Actions affecting the financial markets including the partial shutdown of the US Government, the debt ceiling debate and most importantly Quantitative Easing. U.S. GOVERNMENT SHUTDOWN

Damon Pavlatos, the CEO of FuturePath Trading, LLC had the following to say regarding regarding the recent partial US Government shutdown, “The effects of the Government shutdown have started a ripple effect and a chain of market shocks already. Leading up to Oct. 17 the uncertainty ignited a rally in the gold and currencies.

For example Gold is up $100.00 off its October 15th low. The same with the dollar, it weakened against most of the major currencies. Uncertainly in our government and the ability to be united has shaken confidence globally in large and small investors. When the consumers are unsure of the economic future they pull back from spending. The recent pending home sales were down -5.6% vs. up 0.5%. I’m sure there will be more surprises to come in the future economic releases.” THE DEBT CEILING

The government came close to hitting its borrowing limit recently, and the fear of this causing a historic debt default weighed heavily on investor

sentiment. As it is often said, “The market abhors uncertainty”. By simply “Kicking the can down the road”, the US is set up for another round of investors pulling risk off the table early in 2014. QUANTITATIVE EASING

The most significant recent US Government action on the commodity and currency markets since 2008 has been the $85 billion monthly purchases of treasury and mortgage-backed securities by the Federal Reserve (FED). Since this program was implemented, commodities including stock index futures and energies been supported by the anticipated low interest rate outlook for the economy. It will be interesting to see what impact the much anticipated and debated exit strategy of this program will have as we go forward into 2014.

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“Fed policy and the tapering debate has a great influence on many markets as the easy money has distorted and supported for months. How many times do we see headlines stating that a market has advanced or declined because of potential Fed action or inaction rather than any sound fundamental reasons. Equities advance on weak data as the Fed maintains stimulus! Markets decline on string reports as Fed will taper purchases!”

THE TAKEAWAY

US Government actions certainly do have an impact on commodity and currency futures markets. Linda Taschke of LBR Group suggested the following; Events like the partial government shutdown and potential default on US Debt often cause investors to lower their exposure, and can create opportunities as those investors dog-pile back into the market.

*This information has been prepared with data that is to the best of our knowledge correct. No guarantee as to its accuracy is being made. Futures and Forex trading involves significant risk and is not appropriate for everyone.

Registered since 1991 Mr. Kavanaugh is a frequent contributor to major media outlets including the Wall Street Journal, CBS National News, Bloomberg and Reuters. In addition, Mr. Kavanaugh teaches trading techniques through his frequent web seminars. If you would like to contact him, you can email him at paul@fptrading.net or call 312 987 2080.

“For many years I have been fascinated by the impact of the Government’s actions on the commodity and currency markets. With, the recent partial government shutdown, the debt ceiling debate and the quantitative easing program the Federal Reserve is currently pursuing 2014 promises to be a fascinating year!”

BY: PAUL KAVANAUGH

-Paul Kavanaugh

Frank Lesh, a veteran futures broker with FuturePath Trading, explains it like this.

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A FUTURES AND A FX BROKER WITH FUTUREPATH TRADING, LLC.

Off The Wall Pulled off The Wall from: The Pitnews.com ForumsVisit The Wall at: Forums at: http://thewall.pitnews.com

Rolling over or not? The next day or two will show up or down, also should say oh ya, could go, side way a few more days. :) It's been almost 2 months since last posting been busy here on the farm.

Get into the action! Start posting on The Wall, and maybe you’ll see your article or chart highlighted here in our next issue of PitNews.com Magazine! http://thewall.pitnews.com

The Wall is PitNews.com’s trading forum, found on the web at http://thewall.pitnews.com or from the tab link on the front page of PitNews.com. Each month, we highlight a chart submitted by one of our users. This Month’s Off the Wall Chart comes from: Country Boy Ron

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Journal: A Good Tool For Any Trader

EXAMPLE OF A JOURNAL ENTRY:

Next answer questions such as, “Why do I feel the way I do?” “Will this affect my trading?” “Do I need to address this situation now or can it waits until after my trading is concluded?” We are looking for thoughts on how to deal with the feelings so that they will not negatively affect your trading. It is okay if you cannot bring a positive conclusion to the event, but it is important that your record the event and the associated feeling or feelings the event bring to the forefront of your mind. Make sure you use a time stamp for each entry. For example; 1:00 am a negative event created strong negative feelings that may affect your trading in the morning. By 6:00 am you have worked through the event and now feel or think you feel no negative feelings. So you feel it is okay to trade. The right hand side page should be used to record the logical thought aspects of your trading. Logical thinking is not as easily understood as many people think or as common as it might seem at first glance. We think logically only when we face new challenges or difficulties. For example, if we were to answer the question ‘Where is your entry to go long?’ with ‘right above the 50% retracement level of the present correction’, it is possible that we did not think logically, but instead we simply retrieved a pre-established response.

by Gerard

Open your journal so that you have a left hand page and a right hand page open for you to record your thoughts. Use the left hand side page for your emotional thoughts journal, and the right hand side for your logical thoughts journal. In other words use the left hand page or emotional thoughts page to record or describe your experienced emotion; manifesting emotional behavior, rather than logical, rational behavior; describing what occurred or events leading up to the emotion, what the emotion is, and your thoughts on why you feel the way you do about the event. Keep in mind the event may not be trade related but rather just life related. Your dog died. You’re having a bad day. You have a cold. You have had 10 losing trading in a row. A friend needs your help with a bad time. Etc. Try to be objective when writing down the situation. Instead of writing, “I am upset because my lazy neighbor keeps parking their car in my driveway”. Write as an observation of the situation; “my neighbor has parked their car in my driveway again”. Then write about the feeling this situation creates. For example; anger, fear, helplessness, frustration, happiness, or hurt, etc.

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We may at one time have had to work that out with logic… find a strong resistance area to place our long entry beyond, or we may simply have memorized some another person’s proven methodology, answering the question like a parrot. It really does not matter, the answer is now automatic and logical thinking is not required to supply the answer. Please let me be clear; I think there is nothing wrong with this kind of answering because it would be very hard work to look at our charts and prove the 50% retracement level is a good place to enter long every single time the question comes up. The point I am making is that we should not confuse automatic retrieval stored information (memorized answers) with logical thinking. Logical thinking is a process that requires some attention to be directed to each step of the methodology. If a step or part of the method is skipped, it has been filled by some assumption, desire, fantasy; but each part of the methodology in which logic is applied requires an effort of attention to following the methodology. Logic can be described as being like finding your way through a maze, a maze whose end is the same regardless of the hopes and fears of the person navigating it. Think of ‘finding your way’ as your methodology, and ‘a maze’ as all the possible variables that can be used with your methodology. A particular decision is objectively right or wrong, that is, it leads more quickly to progress toward the desired outcome; a successful entry, exit, or adjustment. As a successful trader the resulting desired outcome is pre-determined, fixed, and immutable; we will be successful. However, the end result is also unknown, or there would be no point in pursuing the thought to find it. The only time I can think of using logical thought when the desired outcome is known would be, for example, you were interested in the steps involved in the methodology, for example, to design a software program or spreadsheet that would use your method of trading. What logical thought cannot do is pursue an initial intent other than the intention to follow its course to wherever it leads. When using logical thought we

must not fight it, we must let the thoughts discover what they will. In other words; don’t get ‘married’ to a position, when logic says exit, then exit. Computers use software to follow logical thought, and may be capable of piecing together pieces of logical thought to create new pathways, but that is as close as they can come to thought, having no attention. They are incapable of intending it, just as they are incapable of pathological or psychological thought. Logical thought lacks scale, lacks hierarchical ordering by quality. It can only compare like things quantitatively and then apply pre-established rules to produce a result or decision. It is a powerful tool in its sphere, but its sphere is limited and completely uncreative. To be successful at using logical thought you MUST be able to turn frustration into curiosity and employ creativity to find a logical adjustment when required. Though we may not know the outcome, we can use logical thought to follow a step by step methodology which includes logical adjustments not emotional adjustments.

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