Ten Market Rules to Remember

Ten Market Rules to Remember by Bob Farrell

1. Markets tend to return to the mean over time.
2. Excesses in one direction will lead to an opposite excess in the other direction.
3. There are no new eras -- excesses are never permanent.
4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.
5. The public buys the most at the top and the least at the bottom.
6. Fear and greed are stronger than long-term resolve.
7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.
8. Bear markets have three stages -- sharp down, reflexive rebound and a drawn-out fundamental downtrend.
9. When all the experts and forecasts agree -- something else is going to happen.
10. Bull markets are more fun than bear markets.

Bob Farrell was the chief stock market analyst at Merrill Lynch for decades. He has seen all types of markets and his 10 market rules are considered classic investment advice.

Interesting to apply some of his thoughts to the crude oil market of today.

Buy Low, Sell High

Nothing happening for me today in the crude oil market. The oil inventory report has been moved to Thursday due to the Labour day holiday, so hopefully that gets the market moving.

This is an interesting read, smart people making good decisions.

Jamie Dimon's swat team
How J.P. Morgan's CEO and his crew are helping the big bank beat the credit crunch.
By Shawn Tully, editor at large

"Dimon and his team are on top today because they took a daring stance at the height of the credit bubble. J.P. Morgan mostly exited the business of securitizing subprime mortgages when it was still booming, shunning now notorious instruments such as SIVs (structured investment vehicles) and CDOs."

Click on the read more icon for the full Fortune story.
read more digg story

RISK

Ospraie fund to close after 27 per cent slide

NEW YORK — "Hedge fund manager Ospraie Management LLC will close its flagship fund after it plunged 27 per cent in August on losses in energy, mining and natural resources equity holdings, in one of the biggest ever closures of a commodities-focused hedge fund." PARITOSH BANSAL Reuters

People love to point out the huge returns that have been made in hedge funds, along with the fees hedge fund managers have made over the past few years. One can never forget that those returns are earned by taking on a large amount of risk.

Sometimes the risk comes around and bites you in the rear.

Click on the read more icon for the full Globe & Mail story.


read more digg story

Oil price of $100 a barrel on horizon

"Oil prices sank to a five-month low of just more than $105 a barrel on Tuesday as traders turned their sights on signs that slower growth was spreading beyond the US into Europe, Japan and even emerging markets." Financial Times, By Javier Blas and Carola Hoyos in London and Michael Mackenzie in New York

Click on the read more icon for the full Financial Times story.


read more | digg story

In Trading Hope is a Four Letter Word

Let's see my quote as of 6:51 am was, "hopefully the best trading is not done for the day".

Right.

Nine signals in the day, I took the first 6 and then quit with 4 BE + 1s, 1 full stop, and 1 partial stop.

The crude oil contract came close to going limit down this morning, but then spent the rest of the day slowly grinding upward.

In case your wondering what happens to crude oil if it goes limit up or down, I revisited that scenario this morning.

Maximum Daily Price Fluctuation

"$10.00 per barrel ($10,000 per contract) for all months. If any contract is traded, bid, or offered at the limit for five minutes, trading is halted for five minutes. When trading resumes, the limit is expanded by $10.00 per barrel in either direction. If another halt were triggered, the market would continue to be expanded by $10.00 per barrel in either direction after each successive five-minute trading halt. There will be no maximum price fluctuation limits during any one trading session." Source: NYMEX Web Site

Our risk management kept us safe and we shall see where we go tomorrow.

$100 oil is not far away.

13 Tick Renko Crude Oil Charts (click on chart to view)

Crude Oil Breaks $110

This looks interesting.

Hopefully the best trading is not done for the day.

Daily Crude Oil Chart