This is a book everyone should read (even if this Economist link isn’t exactly flattering). My virtual sister-in-law gave it to us for Christmas (trader/market shrink and economist/options trader in the house after all) and I am very glad she did. In these days of blaming the bankers and even capitalism for the economic descent we currently find ourselves in, it would be helpful for more people, at least in my opinion, to understand even just the first chapter.

Chances are if you are reading this, you aren’t a person who needs a refresher course on this but did you know that effectively there was a futures contract in 1500 BC? In “Iraq” no less? Or the real role of credit – over time? Having been raised in a post-depression, no debt household I actually am MORE fond of the use of debt for having read this chapter.

See the thing in my mind is NOT that the banks created structured products but that 1) they were not exchange traded 2) the overall number of market players was very limited (see #1). Then you have the rating agencies …. (talk about a Madoff-like “relationship based decision”) but what about President Bush’s “ownership society” and MOST of all, the people who took out mortgages they KNEW they couldn’t afford!

Part of me wishes I would have realized that I could get that mortgage on the 3.5 million dollar house in Old Greenwich…. but oh well, I wouldn’t have done it anyway because in my own mind, the math wouldn’t have worked – even if it did compute to the mortgage broker.

I digress…. what I meant to say is I personally think the book is worth reading even if the Economist basically trashes it.

well they asked…. and yes we are in a bear market i.e. sell the rallies and buy the dips.

I hated to sound like a downer but hey, Roubini I am not (although so far…. )

MONEY MATTERS on ABC NEWS NOW

Having said that, 900 in the S&P futures held like a rock.

Talking about that on TV was probably a bit too much but to me trading is all about finding the levels that the crowd sees as the proverbial “support” or “resistance” . Then, watch what happens there. How much time do we trade around these levels? Where are people putting their short-term stops above and below? (In other words it is a range around the levels and depending on recent volatility, that range can be wide.)

In fact speaking of stops, part of the reason these levels work is in fact the stop placements entered around key levels. It becomes self-reinforcing (particularly when the time element is added in). High volume nodes on a Market Profile (forgive me CME but I have no way to put an R sign in with this wordpress) work the same way – the volume shows that many traders are involved at that price and very well may defend it – or bail if it goes through.

At Schonfeld I learned that support is meant to be broken so I am always kind of looking for signals that it will be – the trend of the TICK and “Breadth” … both of these cash market indicators can give you a clear heads-up.

well they asked…. and yes we are in a bear market i.e. sell the rallies and buy the dips.

I hated to sound like a downer but hey, Roubini I am not (although so far…. )

MONEY MATTERS on ABC NEWS NOW

Having said that, 900 in the S&P futures held like a rock.

Talking about that on TV was probably a bit too much but to me trading is all about finding the levels that the crowd sees as the proverbial “support” or “resistance” . Then, watch what happens there. How much time do we trade around these levels? Where are people putting their short-term stops above and below? (In other words it is a range around the levels and depending on recent volatility, that range can be wide.)

In fact speaking of stops, part of the reason these levels work is in fact the stop placements entered around key levels. It becomes self-reinforcing (particularly when the time element is added in). High volume nodes on a Market Profile (forgive me CME but I have no way to put an R sign in with this wordpress) work the same way – the volume shows that many traders are involved at that price and very well may defend it – or bail if it goes through.

At Schonfeld I learned that support is meant to be broken so I am always kind of looking for signals that it will be – the trend of the TICK and “Breadth” … both of these cash market indicators can give you a clear heads-up.