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January 11, 2016

You Ain’t Seen Nothin’ Yet

I seriously doubt that the average market participant realizes the magnitude of the devastation that lays ahead. It is our human nature to project forward based on recent events – a common cognitive bias which can easily lead to painful losses during regular market conditions. But what we are facing over the coming weeks and months will register several standard deviations beyond current worst case scenarios, at least based on activity/pricing I’m currently seeing in the option chains.

We have a lot of material to cover this morning. So grab a cup of your favorite morning brew and pay close attention. Yes, there will be a test.

Let’s start with [...]

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May 9, 2014

I Know What You’re Thinking

It’s pretty easy to predict human behavior once you realize that it all boils down to three primary motivations: sex, fear, and greed. When it comes to predicting the market sentiment of human participants you simply exclude the first one and evaluate the prevalence of the other two. For behind the veil of intellectual sophistication greed and fear are the operating emotions that drive our financial markets. Quite obviously you will find an abundance of fear near market bottoms and ready supply of greed near market tops. So just do the opposite, right? Yes, if it just was so easy we’d all be swimming in ill-gotten coin. The problem is that market tops take time – [...]

 
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November 22, 2013

Human Nature 1.0

As you may have heard – the Mole does not read the news. Actually, to be more precise, he avoids it like the pestilent mental contagion it has evolved into over the years. A bit over a year ago I actually wrote a pertinent post in which I encouraged all readers to unplug themselves from the matrix and in its stead adopt a strict information diet as part of an effort to regain peace and mental balance. However, that said, as a financial blogger my readers often feel the need to share with me salient articles, especially those high on the list of needing to be preserved for posterity.

And with that I present to you this morning’s jewel:

Dow 20,000 [...]

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October 24, 2013

Boring Thursday Morning Briefing

Welcome to our morning briefing. Here we are reviewing short term setups ahead of the NYSE opening bell. If you are a scalper or swing trader then these setups may be of interest to you. As usual keep in mind that these are short term setups although they could be used as early entries for more longer term positions.

Things are pretty flat out there right now and the only short term setup that caught my interest this morning is the NQ which however is a pretty nice one. First up we’ve got increasing Bollinger compression here as the 100-hour is closing in after three sessions of sideways churn. It’s sitting right on top of its 100-hour SMA and the 25-hour [...]

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Cognitive Bias Carousel
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    The tendency to treat money that has already been committed or spent as more valuable than money that may be spent or acquired. Also known … more
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