Joe Duarte (www.joe-duarte.com) is best known for his honest, no-nonsense and prescient expert commentary on the financial and commodity markets, such as his on-the-money call on CNBC, June 4, 2008, when he correctly noted , that oil had peaked and that a drop below $110 would bring prices to $100 or less. Frank "the master of all things web-related", without whom there would be no Joe-Duarte.com.
Introduction
While others hang on to falling stocks during bear markets and watch their assets dwindle, you can make money or keep more of your bull market gains by applying the market timing techniques in this book. Want to be able to make money when the market goes into a downtrend, but don't really want to go through the hassle of opening a margin account or a futures account?
Stepping Into the World of Market TimingWorld of Market Timing
Have or would like to develop the market analysis skills that allow you to be patient in recognizing outstanding opportunities and not mind a few break-even, lose-a-bit or win-a-bit trades along the way. Recognize that this is a global market in which futures, stocks, bonds and currencies interact and that you must be well versed in the vagaries of international markets to maximize your profit potential.
Market Timing’s Methods and StrategiesMethods and Strategies
Get access to top-of-the-line computing equipment, an online trading account and a high-speed Internet connection, as well as the ability to check your trades when you're not in front of your trading station. But the market reacts not only to facts and realities, but to how traders, financial experts and consumers feel about these trends, and I tell you how to assess both the sentiment and the trend.
Applying Timing to the Markets
Timing the Sectors
The Part of Tens
Here's a list of the icons you'll find and what you can expect from the text they highlight. For Dummies books are written in such a way that you can jump in at any point that interests you.
Stepping into the World of
This part of the book walks you through the basics you need to get started. You get a good view of the work required to predict timing situations and an insider's view of what to expect in this often misunderstood world of trading.
Becoming a Market Timer
Becoming a Market Timer
Large accounts do not guarantee large profits, but can lead to large losses if you are not careful. If you are very good at timing, you will make big profits between 30 and 50 percent of the time.
Peering Inside the Mind of a Market Timer
Peering Inside the Mind of a Market Timer
If the market expects the Fed to do one thing, and the Fed does another, there can be a change in the trend of the markets. If you are right, then the trade will move in the direction you expected, up or down, and you move on to the next stage.
Preparing Yourself and Your Finances for Timing
Preparing Yourself and Your Finances for Timing
I decided I would be willing to pay whatever the price was to successfully time the markets and make timing a second career. But you have to ask yourself the question before you start, and you have to repeat the question regularly.
Working with a professional
When it's your money you're dealing with, you're more likely to be extremely careful about what you do with it. Health: Make sure you are in good physical and mental shape before you start.
Charting Your Course: The Market Timer’s Edge
Charting Your Course: The Market Timer’s Edge
Most timing decisions involve the medium-term time frame; a break below such a trendline is significant, as Figure 4-2 clearly shows—the NDX index lost about 500 points over the next four months before recovering. If a breakout is about success, then a breakdown - the price falling below a support level - is about failure. 50 days: The 50-day moving average is considered a measure of the medium-term trend of the market.
Use this average to make very long-term decisions about the trend of the market. You can use any of a number of oscillators, but it's hard to beat MACD and RSI for consistency in calling the trend and the market's momentum - the two key variables for the timer.
Market Timing’s Methods and
Strategies
I show you how markets sometimes change with the seasons and how to spot major market trends. You also learn about using what people are thinking – through sentiment surveys – to identify key inflection points.
Timing with the Reports That Move the Markets
Timing with the Reports That Move the Markets
As the economy becomes sluggish—indicated by ups and downs recorded in GDP—unemployment begins to rise. This combination of factors - the market's reaction to the data and what the Fed does, or is expected to do at some point in the future - changes or maintains market trends. Additional Impact on Markets: The headlines are only part of the story, just clues to the meat of the report.
It pays to read the fine print and the text of the Fed's Beige Book. If it trends with others, such as the ISM data, it can support the overall trend.
The Seasons and Cycles That Influence the Markets
The Seasons and Cycles That Influence the Markets
Sold at the end of January and stay off the market in February. The last day of the month and the first five days of a new month - the turn of the month - is a very good seasonal pattern that actually holds more often than not. One of the most watched cycles on Wall Street is the presidential cycle — the notion that the stock market responds in certain ways to a certain part of the term at any given time.
The basic principle of the cycle is that the stock market tends to be down or flat during the first two years of a government term, but tends to recover in the last two years. The presidential cycle is still an important guideline, especially in year three, where the chances of a stock market rally remain quite favorable.
Digging In to Trends, Momentum, and Results
Digging In to Trends, Momentum, and Results
This is the one that gives you enough time to get in and usually enough time to get out without missing the fat part of the move. Knowing when you are in a secular trend is very difficult until you have been in one for some time; therefore, intermediate-term trading is suitable for maneuvering during long-term trends as well as extraordinary secular trends. A failure at a TDP means that the market has failed at three significant trends - the short, intermediate and long term trends.
Look for two important signs of a W bottom: First, a momentum bottom causes a deep bottom on the MACD histogram; the second V results in a much higher bottom on the MACD histogram - a sign that the market is about to rally, as happened in Figure 7-5, because even though the market made a lower bottom, selling had much less lag, leaving the market vulnerable to buyers. All trends have momentum - a tendency for prices to move up or down over a longer period of time.
Timing with Feeling: Making Market Sentiment Work
Timing with Feeling: Making Market Sentiment Work for You
If you see the signs of a fear cycle, take a look at what the market is doing. When the market fell into 2003, Goldman stock didn't do much, again suggesting that big money wasn't particularly interested in the market's prospects. Stocks recovered, but crumbled again as the market began to factor in the effects of the subprime crisis on Wall Street.
By the time the evening news hypes a market-related story, you are near the end of the trend from the market's point of view. These intrusions will increase as the stock market goes to new highs and the media hype increases, and they will disappear when the market crashes.
Applying Timing to the Markets
I give you the specifics of the return of market analysis techniques in trading that give you the best chance of making profits.
Timing in the Real World
Examining a Sample Trade
Timing in the Real World: Examining a Sample Trade
- Address potential problems
- Analyze the market’s trend and your options for capitalizing on it
- Make sure that the fundamentals and the technical aspects of the market are pointing in the same direction
The trend in Figure 9-2 was clearly to the downside, and I had decided to sell the market short. I had my vehicle selected - the ProShares Ultra Short ETF (SDS) - and I had a pretty good idea that I wanted to get in early in the day, especially if the market was quiet. In other words, I would probably start selling this position when the market closed for it.
Beware of any open positions that may suffer when the market turns against you. Make sure the fundamentals and technicals of the market are pointing in the same direction.
Timing the Stock Market
Timing the Stock Market
- The stock stopped falling
- As selling accelerated, volume started to rise significantly
- The stock started moving sideways, showing that the trend might reverse
- In March, the market bottomed
SPY works well if you want to trade the general trend of the broad stock market. In this case, the QID rises twice as high as the Nasdaq 100 when the index falls. Dow Diamond Trust (DIA): Use this ETF to trade the overall trend of the Dow Jones Industrial average.
Ultra Dow30 ProShares (DDM): This ETF tracks the performance of the Dow Jones Industrial Average on a two-to-one basis. When the stock moves beyond the trend line, it is time to sell at least a portion of the position.
Timing the Bond Market
Timing the Bond Market
In those situations, the bond market actually influences the actions of the Federal Reserve. And at the center of the phenomenon is the entity known as the bond market. The trend of the bond market does not necessarily have to match the trend of the economy.
The bond market was betting that rising fuel prices would lead to a significant US slowdown. When the subprime mortgage crisis hit, the bond market bounced back, betting on a sluggish economy again.
Timing Foreign Markets
Timing Foreign Markets
The circled portion of the FXA chart roughly corresponds to the downtrend on the AUS chart. The circled portion of the EWZ chart corresponds to the time period shown in the chart to the right. ETF price movements therefore represent the general trend in that particular region of the world.
You can mix and match, assess regions of the world or get more specific, without focusing on one approach or the other. As you get better and find out which regions of the world you like, you can develop your own relationships and apply this method to your own list.
