The trend following model by Kaufman says that trading by the direction of the trend is a conservative approach to the markets. Kaufman’s Market Efficient Model states that longer trends are the most reliable but they respond rather slowly to changing market conditions. The main argument of the Market Efficiency Model is that an adaptive method must be applied to the markets for proper trend following.
Volume can help us in confirming breakouts. Let’s examine how we can implement a proper volume trading strategy. First of all what we need is an indicator that gives us a better understanding of what the current volume levels tell us about the state of the market. To accomplish this we need an indicator that compares the current volume of a market to the relative values during the last couple of days.
The VIX equity volatility popped over 10% higher singaling a possible trend change for the S&P500. That could give the VIX another leg up to 18-20 area that prevailed earlier in March. The major indices are falling of the cliff and it’s about time for the S&P500 to follow their lead. The Nikkei lost a whopping 34% since its recent highest high in 2015.
The commercial net positions are a mirror of the large trader net positions. Most of the time commercial net positions mirror the funds trading patterns but there are some important exceptions to this rule. In rare circumstances the commercials need to cover their positions and this can lead to significant price moves. These price moves can be predicted in advance by using the correct set of tools.
FOMC is still on course to increase rates this year according to comments from a number of Fed officials. Analysts continue to forecast 25 bp increases in June and December. Yellen’s dovish speech on Tuesday imparts non-negligible risk to that outlook. She outlined a number of uncertainties to the outlook, including still slow growth, especially noting China and the potential bearish spillover across the Asian regions.
After a 6 month investigation into the global oil industry it was revealed that billions of dollars of government contracts were awarded as the direct result of bribes paid on behalf of companies including Halliburton, its former subsidiary KBR, Rolls-Royce and Samsung. They counted on Unaoil to funnel the bribes and to secure lucrative contracts in Iraq, Kazakhstan, Libya, Syria, Tunisia, and other countries in Africa, the Middle East, and the former Soviet Union.
The COT Report is the single most important report issued by the CFTC revealing internal market dynamics. It’s some kind of sentiment indicator. The data collected on a weekly basis contains market positions of the largest futures traders. Let’s see how we can use the report to accurately predict market turns.