Linkapallooza

With the markets warming up to the idea of a trading range, this seems like a good time to pull back and look at some broader issues. Thanks to all the great blogs out there (281 Bloglines feeds, as of today), I have had a lot to ponder as of late. Some of the latest colon-enabled ideas:

• Dollar: 80 week SMA resistance looms (Bernie Schaeffer)
• UK housing market: is “standstill” optimistic? (Michael Shedlock)
• Southern California housing resales: foreclosures 43.6% of July total (Larry Nusbaum)
• SoCal housing unplugged: a graphical overview (Tim Iacono)
• Sequential Hong Kong GDP: 1.4% drop (Toro’s Running of the Bulls)
• Debt: no takers? (hat tip, Michael Shedlock)
• Global bond market: 8/19/08 snapshot (John Jansen)
• Maoxian: CMBS BBB- spread still widening
• Karl Denninger: CMBX graphic, with a healthy dose of editorial commentary
• Hedge funds: they struggled last month too (Macro Man)
• Hedge fund model: coming unwound? (Cassandra Does Tokyo)
• Sector beat rates: industrials lead the way (Bespoke Investment Group)
• Sectors international exposure: energy and financials at extremes (Paul Kedrosky)
• Strong sectors: one way to increase the odds of success (Pradeep Bonde)
• Sector ETFs: pair trading strategy examined (CXO Advisory Group)
• Level 3 assets: check these before playing a bounce in financials (Barry Ritholtz)
• Gold: does inventory matter? (Tim Iacono)
• Recession predictions: does anyone listen to the economists? (Bespoke Advisory Group)
• Falling oil: what are the economic consequences? (James Hamilton)
• Oil and equities: how correlated are they? (Jeff Pietsch)
• Mark Hulbert: insider buying is bullish
• Paul Kedrosky (and the Pythons) on volatility: low VIX = crucifixion; high VIX = stabbing
• Frugality: finally back in vogue? (Felix Salmon)
• Loss aversion: a six part series on prospect theory from Bruce Hong
• Exit strategies: the keystone of any investing system (Charles LeBeau)
• Solar update: sunlight + poison = food? (Scientific American)
• (en)Gadget alert: Kensington wireless USB docking station

Monday Musings From Around the Blogosphere

I stayed up late to watch the men’s 4x100 freestyle relay and it was well worth losing some sleep to see that amazing anchor leg by Jason Lezak.

In any event, I am fortunate that other bloggers have been out there digging up some nuggets to keep my brain engaged...

• David Merkel discusses The Fundamentals of Market Bottoms
• Eric Roseman is skeptical of a bottom in Stock Market Rally Since July 15 Not Confirmed by LIBOR or Mortgage Rates
• A South Ossetia primer from Jesse’s Café Américain in The Fog of War Descends on the Oil Rich Caucausus
  
• David Enke details The Cost of Low Interest Rates
• Tom Drake checks in with a visual overview of the current environment in Media Blather Versus Reality: Wordless Economics
• James Hamilton is in top form again in Oil and the Dollar
• Michael Shedlock looks ahead in The Future Is Frugality
• Nouriel Roubini’s latest: The Perfect Storm of a Global Recession
• Jeff Pietsch has a new installment in his series superb weekly (and monthly) summary graphics: Market Rewind – Week 32 (08/08/08)
• Barry Ritholtz has some Lessons Learned from a Dangerous Year
• James Picerno is Ranting About Risk (Again)
  
• MontyHigh looks at Gold Fundamentals: Central Bank Selling
• Marc Eckelberry braves a VXN Outlook
• Michael Stokes compares Market Volatility in Up vs Down Trends
  
• Jeff Masters has an August Sea Surface Temperature Outlook that is bullish for warm water and tropical storm activity
• A similar theme was struck by Joseph Dancy, who interprets some of the July tropical storm data and opines on the implications for the current month in Hurricanes May Blow Energy Sector Off Course

The Return of the Links

There was a time where the most popular feature on the blog was my (mostly) weekly set of links to posts on other blogs that had given me something important to chew on. I never intended for that feature to die – and starting today I will do my best to resurrect it.

So without further ado, here is some of what I have been reading and thinking about in the past few days:

• Barry Ritholtz at The Big Picture reveals alternative methods for measuring GDP and inflation (neither of which are good news for the bulls)
• Felix Salmon of Portfolio.com provides the counterpoint for Ritholtz and leverages an interesting article by David Leonhardt in the New York Times to make the case for why inflation is lower than we think
• The Bonddad Blog is skeptical of an upturn in consumer spending or housing in the second half of 2008 (BTW, congrats on the upcoming nuptials!)
• Sudden Debt reflects on three decades of sentiment and consumer spending data
• Michael Shedlock at Mish’s Global Economic Trend Analysis, summarizes Bernanke’s proposals to slow foreclosures, with some excellent housing and mortgage maps
• Jesse at Jesse’s Café Américain has an update on credit default swaps, with some noteworthy banking chart porn
• Asbury Research has an intriguing analysis of the spread between US Treasuries and the Euro Bund
• Random Roger’s Big Picture has a link to a table of world interest rates
• Bespoke Investment Group’s analysis shows that previous winners led Wednesday’s decline
• James Hamilton at Econbrowser looks at changing driving habits and lower gasoline demand in the US
• Paul Kedrosky at Infectious Greed puts the ‘oil bubble’ in historical perspective…twice
• Jason at The Tasgall Group tracks down an interesting peak oil chart
• Brett Steenbarger at TraderFeed highlights sector rotation money flows into technology and financials
• Marc Andreessen at blog.pmarca.com speaks out in favor of dual-class stock structures for public companies
• Babak at Trader’s Narrative has an enlightening piece on cumulative market breadth
• Andrew Clavell of Financial Crookery analyzes Warren Buffet’s approach to selling long-dated index puts
• Don Fishback’s Market Update cautions against buying straddles before earnings announcements
• Adam at Daily Options Report is underwhelmed by the AMEX’s new fixed rate options (I had a similar reaction)
• Condor Options is wary of the internationalization of the VIX
• …and in the event you missed it, my Ten Things Everyone Should Know About the VIX has become my third most read post ever only 1 ½ weeks after it was published
• Finally, Scientific American weighs in on how you can pay off your sleep debt (do it quickly, before the interest rates reset!)

Scrolling Back…

I have had several requests to revive last year’s practice of periodically publishing links to some of my favorite recent posts from other blogs.

With the caveat that I have not been rigorous about bookmarking all of my favorites, here are some recent posts that I think may have some archival significance well beyond the day they were posted:

• Felix Salmon has convincing proof that an astonishing number of investors trade first and think later (if at all)
• Babak at Trader’s Narrative examines the IBES Valuation model, which shows stocks are extremely undervalued, and offers two interesting hypotheses
• Eddy Elfenbein of Crossing Wall Street show how it is easier to make money while sleeping than while trading
• Michael Shedlock of Mish’s Global Economic Trend Analysis lays out his thinking for how to invest for inflation and deflation
• Maoxian (who I just got around to adding to my blogroll) has one of the best 2007 sector performance graphics, covering 30 sectors
• Eddy Elfenbein of Crossing Wall Street has the 2007 sector performance of the ten S&P industry groups in one illuminating graph
• Brett Steenbarger of TraderFeed has an interesting look on market performance following down days
• Ian Woodward offers a retrospective play-by-play account of the Bernanke speech and the market’s reaction
• Eddy Elfenbein (hat trick!) also has a great graphic comparing SPX performance by VIX level
• Barry Ritholtz of The Big Picture captured another excellent volatility graphic for the DJIA, NASDAQ and Shanghai Composite, this time from the New York Times
• Nadeem Walayat of The Market Oracle drills down on the impact of sovereign wealth funds and the implications for investors
• Did you know that iVolatility.com has a blog? Their most recent entry talks about trading VIX call ratio backspreads
• Just four days after publishing a list of my top 25 most read posts from my first year of blogging, The Fallacy of the Bearish First Five Days has rocketed into the top five most read list in less than 72 hours and seems destined to top that list soon
  
• Finally, Charles Kirk of The Kirk Report recently posted a thought provoking assessment of his excellent blog and the challenges of weaving trading and blogging together in a balanced life portfolio

Odds and Sods

Friday is always a good time to do some housekeeping, so here are some updates to recent themes in the blog:

In terms of fear, yesterday showed a fair amount of it, as the 25.3% increase in the VIX is about twice the median for a 2.6% drop in the SPX. While today’s markets seem to have settled down a little after an exciting opening, the elevated fear persists. For those who may be interested, you can always eyeball today’s VIX and SPX percentage changes on my fear-complacency graph to make your own assessment.

Now that the Fed may be done cutting rates for the moment (see Mike Shedlock, “Is it Two and Done?”), the good-news-is-good-news-and-bad-news-is-good-news cycle may be coming to an end as well. This means we are likely entering a Rorschach cycle, where interpretations of government data start to be largely driven by your view of the investing landscape, in addition to any psychotic disorders that may be lurking just below the surface.

In the four generals, four horsemen, etc. category, the large cap tech leaders continue to do well, while Southern Copper (PCU) has struggled a bit. The big story in the group, however, is MasterCard (MA), which saw its stock surge 20% after a blowout earnings report. Much of MasterCard’s success can be attributed to increased acceptance of plastic across the globe, rather than in the US, where growth is slowing. In fact, given the doldrums that the Retail HOLDRS (RTH) ETF has been in since July, I will be focusing closely on the many retailers who report earnings just before Thanksgiving. For some related perspectives, Toro’s Running of the Bulls argues convincingly that the four horsemen have a lot of room still to run, while Chris Perruna is following MasterCard closely.

Some quick takes for the VIXophile crowd:

• Ian Woodward notes a fifth Hindenburg Omen signal
• Brett Steenbarger at TraderFeed has some of interesting thoughts about volatility: how VIX spikes can help market timing; and what it means for position sizing
• Mike at HEDGEfolios.com has some compelling thoughts about the Fed and commercial banks in a post-Glass-Steagall world
• Doug Kass predicts that the worst is yet to come in terms of write downs at financial institutions; meanwhile, per Greg Newton at Naked Shorts, Merrill Lynch has tried to park some of its liabilities off the balance sheet for a year
• Bespoke has a great visual comparison of the China bubble to previous NASDAQ and homebuilder bubbles
• Finally, PC Magazine has a very positive review of the new $400 ASUS Eee PC 4G laptop

Super Tuesday Links

I find myself doing fewer and fewer of these links posts lately, largely because others are doing such an exemplary job that my efforts invariably cover a lot more similar ground than they used to. Still, in an effort to leave no tern unstoned, I offer these perspectives, with several sources appearing here for the first time:

• Menzie Chinn at Econbrowser with a global look at inverted yield curves
• Paul Kedrosky at Infectious Greed considers how a live streaming web feed may decide the CNBC vs. Fox Business battle (and kudos to the soft-spoken business channel, Bloomberg TV, which I find considerably less annoying than the other two)
• Sudden Debt compares the surging China market to the South Seas Bubble
• Adam Warner at Daily Options Report examines FXI options
• Misstrade wonders if BIDU is the 2007 version of MSTR (whose plunge I remember all too vividly)
• China Analyst has a table of year to date performance of Chinese stocks that is worth a look
• Brad Setser speculates on the whereabouts of Chinese reserves – and comes down on the side of a purchase by the China Investment Corp. or increased foreign investments
• Jeff Matthews comments on the bull market in analysts’ price targets for Google
• Barry Ritholtz of The Big Picture looks back at the Crash of ‘87
• Chris Perruna reviews how to make money selling short using the William J. O’Neil / Gil Morales approach (anyone remember Morales as an undergraduate cartoonist?)
• Ron Sen at Technically Speaking is bearish per his Bullishness Index (at least as of Sunday)
• …while Toni Hansen outlines her thinking on why a high may be near
• …and Ian Woodward warns of the return of the Hindenburg Omen
• bzbtrader has been discussing some interesting tools lately, most recently the NASDAQ’s risk bar
• Maoxian puts Victor Niederhoffer’s plight into a broader context
• James Hamilton at Econbrowser has all you need to know about superconduits
• Financial Armageddon on moods, bank runs, and the probability of a recession
• Brett Steenbarger at TraderFeed looks at the SPY:EEM ratio and gold vs. large cap tech stocks for insights into trader psychology
• Sudden Debt compares solving the mortgage-backed paper problem to catching monkeys
• Brett Steenbarger at TraderFeed analyzes relative sector performance
• The Econophysics Blog has an anecdotal reminder that the best financial models struggle to digest and predict many real world events
• stocktickr looks at tweaking trailing stops to enhance performance (personal opinion: trailing stops is the closest most of us can get to the holy grail)
• Dr. Brett (again, this time for the hat trick) offers his ten trading guidelines (make sure you have your own list handy)
• Paul Kedrosky at Infectious Greed looks at how to properly cite blog entries in academic papers (but doesn’t answer how these citations will affect Technorati ratings)
• Alex Ross at The Rest Is Noise, finds a graffiti artist after my own heart (and ear)

Pre-FOMC Homework

OK, so it’s more like recommended reading than homework, but the links below have given me a fair amount to contemplate in the past few days and they may be a good way to mark time between now and Tuesday at 2:15 p.m. EDT.

• Vinny Catalano puts the current situation succinctly: “It’s a Bull Market ‘til it Ain’t”
• Ben Bittrolff at The Financial Ninja weaves together a more detailed tapestry, with some charts, news and commentary that offer a good snapshot of the pre-FOMC markets
• James Picerno at The Capital Spectator on the Fed’s balancing act vis-a-vis interest rates and the strength of the dollar
• Accrued Interest (yes, that really is a bond-only blog) makes the case for the Fed cutting to 3.75%
• Mike Shedlock of Mish’s Global Economic Trend Analysis on why the credit ponzi scheme is a disaster that cannot be averted
• …and why swaptions are a large part of the problem
• Eric Roseman at Roseman Eruptions says Asia is dodging the bullet because of a lack of leverage in private equity deals
• Tim Knight of The Slope of Hope looks at hope vs. panic zones for the RUT, suggesting we should follow the next big move instead of fading it
• Headline Charts looks at 17 years of advance decline data and says we need a confirming A-D line to move higher
• Menzie Chinn at Econbrowser explains why the labor market is worse than you think
• Monty Silverman of Econocator recaps what the banks have to say about weak payroll data
• Paul Kedrosky at Infectious Greed points out the distinction Jeff Saut makes between 1988-1992 and the current housing crisis. What’s different now? Rising inventories.
• …and Barry Ritholtz of The Big Picture draws some parallels to the anchoring effect mindset of investors whose bad trades turn into ‘long-term investments’
• Monty Silverman of Econocator notes that according to Merrill Lynch, assets have not (yet) priced in a recession
• Chad Brand at The Period Capitalist with some reminders on how to best think about insider buying vs. insider selling
• John Brasher’s Covered Call Blog discusses covered call plays on the i-banks going into earnings (Lehman leads off the earnings parade Tuesday BMO)
• Adam Warner at Daily Options Report on what you can learn from options volume
• Ticker Sense drills down on deteriorating earnings in the financial sector
• The CXO Advisory Group looks at a strategy to sell puts for 40% per month (what color is that swan?)
• Barry Ritholtz again, this time with a new historical twist on 9-to-1 days
• David Merkel of The Aleph Blog has an instructive look back at fear vs. rationality in a post-9/11 world
• Mebane Faber at World Beta highlights some recent academic papers of note
• Barry Ritholtz (can you say hat trick?) has a copy of the extremely cool Information Architects’ map of the web (someday this will be great archival history)
• My chimp is smarter than your baby? Maybe not, but it’s very close, notes Steve Hsu at Information Processing
• Speaking of babies, no parent should be without a $170 pocket camcorder, because you never know what’s coming next…

Pre-Employment Report Links

The more volatility we have, the less likely I am to set aside some time to collect and publish some of my favorite recent links, hence the lack of links here in the past month or so. I don’t want this informational/archival aspect of the blog to atrophy during the period when it may have the highest archival value, so I offer up the following links (including several voices new to this blog) that captured my attention during the last couple of days:

• Jack McHugh, via Barry Ritholtz at The Big Picture, puts the current investment environment into perspective
• Brad Setser speculates that the large ‘European’ purchases of US debt might not be petrodollars, but coming from American banks
• Mark Hulbert notes the bullish implications of three 9-to-1 up days in the second half of August
• Agustin Mackinlay at The Global Liquidity Blog elaborates on bonds in panic mode and equities in denial
• Brett Steenbarger at TraderFeed is on the same page as Mackinlay, expressing concern about the rapidly increasing commercial paper spreads
• Vinny Catalano points out that recent liquidity growth may just be a means of counteracting the decrease in liquidity from 2001-2005
• Just in time for tomorrow’s report, Barry Ritholtz of The Big Picture examines some alternative ways of measuring unemployment
• …and Michael Shedlock of Mish’s Global Economic Trend Analysis has a comprehensive analysis of the declining employment situation
• Mike Larson of Interest Rate Roundup looks at the implications of today’s Mortgage Banker Association foreclosure data
• Grace Cheng comments on the winding down of the carry trade
• …and Monty Silverman at Econoncator notes that Dresdner Kleinwort believes the carry trade will resume
• Toro’s Running of the Bulls has another study showing that higher volatility translates into lower returns
• Burt at Commodity Equity makes the case for a resurgence (and buying opportunity) in railroads
• Paul Hickey at Bespoke Investment Group has a handy bull and bear market historical reference guide
• David Gaffen at the WSJ’s MarketBeat Blog updates us on the hemline indicator (bad news all around: hemlines are dropping)
• Finally…if robots can cross the Atlantic in a small boat, how hard can it be to make them better traders?

Portfolio A1 Losing Altitude Quickly

First, an apology. Last week I was on vacation and made a best efforts attempt to keep the information for Portfolio A1 current. As you can see from the transaction log below, I posted an ‘update’ of the portfolio too soon and missed the signal to sell Amkor Technology (AMKR) and replace it with AST Test Limited (ASTSF), the Taiwanese semiconductor testing company.

As it turns out, ASTSF lasted only one week in the portfolio and is being dropped along with Navistar International (NAVZ) in an effort to find a way to stop the bleeding.

The task of propping up the portfolio falls to Western Refining (WNR) and PepsiAmerican (PAS) – two relatively conservative plays that appear to be ideally suited to minimizing further downside risk rather than maximizing any gains from a bounce.

In the meantime, the equity curve tells the story of the damage. The total return is now -13.7% and the peak to trough drawdown currently sits at -22.6%. This will be a very difficult hole to dig out of, but I still like the long-term performance characteristics of this portfolio and have no intention of cutting the portfolio off without at least a year’s worth of performance statistics from which to learn some lessons.

A snapshot of the portfolio is as follows:

Links: Play it Where it Lies

It has been almost a month since I posted my last set of links, so I am going to bend the rules a little to incorporate posts of note from the last three weeks or so that I consider to have a fair amount of enduring value and are important to have in my personal archives. At this stage in the game, most of this is not breaking news, but hopefully these links will still provide some excellent fodder for contemplation.

Going forward, if you are looking for a set of links to give you a nearly real-time snapshot of the who is thinking what in the investment world, I highly recommend you check out the excellent links provided by Abnormal Returns and Barry Ritholtz at The Big Picture.

In semi-random order:

• Larry McMillan in Barron's makes the case for why VIX options may offer better portfolio insurance than SPX options
  
• David Gordon of the Deipnosophist puts some of the recent credit spread issues in historical context
• David Kneupper of the dk Report elaborates on the predictive power of the IBD100
• CH Tan at Cougar Jump captures the 12 stocks that salmoned upstream on three consecutive days last Wednesday, Thursday and Friday, with increased volume
• From Options Doggy comes the CEO quote of the month, on the lure of retirement
• The Lauriston Letter outlines a trading strategy which combines the VIX and put to call ratios (two of my two favorite indicators)
• Jeff Kohler of Option Addict has four reasons not to trade VIX options (I generally agree with his thinking here)
• Eddy Elfenbein of Crossing Wall Street unveils the magic of bullish Wednesdays
• Brett Steenbarger at TraderFeed highlights his favorite articles and much more (bookmark this one!)
• Simply Options Trading has a list of some sector rotation resources
• Bespoke Investment Group studies net analyst upgrades and downgrades to see if they can predict market direction (it appears they cannot)…and talks about why earnings guidance may not matter
• Corey at Afraid to Trade has some insight into the technical damage caused by earnings misses
• The CXO Advisory Group offers tepid support to moving average crossover systems
• I.L. at musings of a trader flags research showing the validity of the head and shoulders pattern
• Bill Gross of PIMCO talks about the implications of the rising cost of financing and other issues in his August 2007 outlook
• James Hamilton of Econbrowser examines how relevant OPEC is
• Chris Geerlings in Financial Sense outlines four scenarios for US oil reserves
• Chris Perruna notes a divergence between oil stocks and the commodity
• Barry Ritholtz at The Big Picture looks at the divergence between oil and natural gas
• Pradeep Bonde at Stockbee examines two short selling strategies from Mark Boucher
• Brett Steenbarger at TraderFeed offers some thoughts on anticipating stock market volatility…researches what happens after markets gap down and gap up…and talks about opening range breakouts
• David Merkel at The Aleph Blog has 25 ways to reduce portfolio risk
• Macro Man has an excellent overview of Chinese Trade
• …and David Altig at macroblog thinks that it will be longer than most expect before the Chinese economy fulfills our collective expectations
• Mebane Faber of World Beta discusses a new $25 billion managed futures fund
• David Merkel is at it again, this time tinkering with the Fed Model
• From the what’s-in-a-name department comes the CXO Advisory Group’s study of the successful Decision Moose asset allocation framework
• Tom Lydon at ETF Trends suggests a closer look at a new asset class: foreign real estate ETFs
• Maoxian offers up an indirect comparison of the brain of an undergraduate and someone about to get an MBA
• Stephen Leavitt of the Freakonomics Blog shines some much needed light on in-flight ‘news’ programs offered by airlines
• Barry Ritholtz at The Big Picture has some ideas on when to buy low…for items other than stocks
• Uglychart has some suggestions on which fruits and vegetables should be organic only in your shopping cart
• Numeric Life has a warning out that obesity is contagious
• …and finally, Matt at Paleo-Future has a peek at my next vehicle

Dow 13,600 Links

I have fallen a little behind on posting some of my favorite recent links, so I’ve jettisoned many of the ones that are no longer timely, but have retained some from the past two weeks or so that I think may have a broader long-term application.

So without further ado, the next installment in what I have been reading and thinking about as of late…

• Paul Kedrosky at Infectious Greed reminds us that the volume of IPO registrations often help flag market tops
• Tim Knight of The Slope of Hope sums up the current market situation from his perspective (please note the top graphic…)
• Eddy Elfenbein of Crossing Wall Street calculates that the markets are up about 675,000% in the past 75 years
  
• Earnings season is just around the corner, and Bespoke Investment Group flags the high volatility plays
  
• …and has one of the better earnings calendars
• Forget T. Boone Pickens because Jim Kingsland of The Kingsland Report is calling for $85 Oil
• Chris Perruna looks for insights from a combined view of the NASDAQ and crude oil
• The CXO Advisory Group offers up the largest changes in P/E ratios
• Ticker Sense examines Fed Funds rates, pauses, and market performance
• Larry Nusbaum of Millionaire Now has a great graphic (and post) on US housing prices
• The CXO Advisory Group evaluates a strategy of selling index put options [For the record, while CXO and Bespoke may appear multiple times in these links, I have no affiliation with these parties, I just think they do excellent work]
• …and Roger Nusbaum offers some thoughts on the new Put Write Index
• …but Mebane Faber at World Beta has some cautionary notes and advice
• The CXO Advisory Group also says we shouldn’t bother with engulfing candlestick patterns
• Where do your new ideas come from? Pradeep Bonde at Stockbee shares some thoughts about his new ideas
• Zero Beta goes crazy (but has a lot of fun) playing with Google Trends
• Andy Swan thinks you can Prosper by lending money via the net
• The title says it all: from Barry Ritholtz at The Big Picture, “Your Choice in Media Determines How Uninformed You Are” (Pssst! It’s not too late to check out Bloglines and Google Reader)
• Another study concludes that organic food is better for you
• And finally, John Timmer at Ars Technica highlights a forthcoming paper which will attempt to establish that “the universe will destroy the evidence of its origin” (disclosure: I am long the universe at the time of this writing)

My Contrails; Your Entrails

When I was first dating my wife, I looked up in the sky and make a comment about a series of wavy ‘entrails’ that were spicing up our sunset. I know the difference, of course, but once the damage was done, there was no ‘undo key’ to restore my dignity. I think I can still hear her laughter.

In any event, I eventually got over the embarrassment and she married me anyway, so it really shouldn’t matter…but since today is a full day of travel that will probably leave me out of pocket for almost 24 hours, I figured that while I’m leaving contrails, readers could benefit from the following linked entrails to better position themselves to profit from whatever the future brings:

• Barry Ritholtz at The Big Picture has a list of 26 cognitive biases you should internalize and attempt to compensate for in your trading
• In the unlikely event that anyone missed this, do yourself a favor and read (or re-read) Brett Steenbarger of TraderFeed and his three part series, Trade Like a Scientist…Part One: The Scientific Mindset; Part Two: Framing Trades Scientifically; and Part Three: Three Common Mistakes of Traders
  
• Zero Beta unveils the Apple Hype Cycle – and what it means
• Kevin’s Market Blog describes how the dollar is leading the bond market
• Babak at Trader’s Narrative talks about short ETF volume as a market tell
• The CXO Advisory Group offers up an excellent review of sector performance by calendar month
• One sector that is struggling is REITs, as The Capital Spectator's James Picerno recounts
• Don’t get too excited about trends though, because according to Ed Seykota (via Pradeep Bonde at Stockbee), trends don’t exist
• Should you worry that Bush’s low approval rating might hurt stocks? Mark Hulbert doesn’t think so
• Jim Kingsland of The Kingsland Report has two superb energy graphs that you should study
• Paul Kedrosky at Infectious Greed suggests you look at BP’s 2007 Statistical Review of World Energy (I couldn’t agree more)
• James Hamilton of Econbrowser warns us not to get our hopes up on oil shale
• It is may now be eight days old, but Bill Cara’s review of gold miners is still worth checking out
• Ticker Sense looks at the correlation of global equity indices
• Bespoke Investment Group has a nice set of graphics covering global interest rates
• Babak at Trader’s Narrative discusses the problem of interest rate-sensitive stocks and their effect on market breadth data
• Looking for a new edge? The CXO Advisory Group notes how value-oriented firms with high ROIC are superior performers
• The title says it all: “Investors Do Better with Fewer Choices,” from Paul Kedrosky at Infectious Greed
• Thomas Ott at Neural Market Trends demonstrates how volatility comes in clusters
• James Hamilton at Econbrowser weighs in using the yield curve to hone your GDP predictions
• Kevin’s Market Blog explains one way to use the TLT to day trade the SPY
• The dk Report notes a rash of blogger “developments,” while continuing to deliver what I think is the best end of day market analysis in the blogosphere
• I offered up some of my favorite books on risk earlier in the week, but Roger Ehrenberg of Information Arbitrage has the One Minute Manager version of some of the same ideas
• Peer-to-peer networks are improving the internet, according to MIT’s Technology Review
• Trader Mike has some great advice on how to add investment-related search engines such as Google Finance, Yahoo Finance, etc. to your Firefox search bar
• Engadget explains how to use rice to repair water-damaged electronics
• And finally, the first definitive proof that the end of civilization is near: Airbus gets approval for in-flight cell phone calls in Europe…

Some Recent Links to Ponder

…or at least for me to archive for easy retrieval in the future.

• Worried about bond yields? The CXO Advisory Group explains why you shouldn’t care – for at least another month
• Babak at Trader’s Narrative demonstrates how bond yields can be used to help identify market tops
• Accrued Interest puts it less delicately when it comes to bonds: Capitulate or Die
• …then cuts to the chase with this thought: Assume Bill Gross is lying
• David Gordon at The Deipnosophist (ask him, not me) uses bonds to help differentiate between oscillating and vacillating
• David Merkel of The Aleph Blog has an excellent summary of the current bond situation
• How bad was the June 7^th decline? Ticker Sense puts it on one top ten list
• Not trading much during the first hour of the day? Brett Steenbarger at TraderFeed will have you reconsidering…
• Kevin’s Market Blog also suggests you pay attention to the recently bullish second week of the month
• Think the market is topping? Pradeep Bonde of Stockbee has some ideas on how to find good short candidates
• Looking for reasons to support your idea that the markets might not be topping? Mark Hulbert concludes that insiders are still bullish
• Adam Warner at Daily Options Report ponders what constitutes normal volatility
• Bespoke Investment Group has a reminder to keep an eye on the Sotheby’s indicator
• Marc Andreessen (a consistently good read, so far) sounds a lot like a bubble atheist – or at least an agnostic
• Jeff Miller of A Dash of Insight has a new angle on personal savings rates
• Brett Steenbarger at TraderFeed (again) on how understanding attribution bias can help you become a better trader
• Paul Kedrosky of Infectious Greed has a glimpse at the future of the Wall Street Journal
• Roger Ehrenberg at Information Arbitrage breaks down why the mainstream media sucks – and what white spaces they leave behind
• …and also happens to be looking for quants (even if you don’t think you qualify, it might be interesting to see what quants look like under the hood)
• Netgear has a new ‘Powerline Network Extender’ that will allow you to extend your router functionality to any electrical outlet

Pre-Lebron Links

Tonight is the opening game of the NBA finals and for the first time in as many years as I can remember, I not only care, but I might actually be tuning in.

On that note, let’s play linkfest…

• Kevin’s Market Blog makes the case for silver over gold
• Corey at Afraid to Trade has a primer on sector analysis using free information available from Prophet.net
• In a weekly update, Headline Charts offers up some interesting insights into market breadth and volume
• The dk Report looks under the hood at market breadth
• Babak at Trader’s Narrative explains why NYSE breadth can be misleading
• Mebane Faber at World Beta and looks at dwindling bond spreads
• …and Agustin Mackinlay of The Global Liquidity Blog has one explanation for them – and a hint about some potential consequences
• Index Universe weighs in on the first exchange-traded contract for credit default swaps
• Meanwhile, Paul Hickey at Bespoke Investment Group offers up a list of oversold fixed income ETFs
• Babak at Trader’s Narrative also has some interesting insights on an IBES valuation model
• Michael Bommarito at ETF Central has some interesting observations on the VIX vs. the RVX (the volatility of the Russell 2000)
• The CXO Advisory Group reports that fund managers from down under do not do a good job of timing stock trades
• Jeff Miller of A Dash of Insight suggests a reality check on trendlines
• Menzie Chinn of Econbrowser has a fascinating map of global financial openness
• Michael Shedlock of Global Economic Analysis debunks a number of globalization myths and puts the global economy in perspective
• CNN has a revealing chart of global gas prices (tip of the hat to Eddy Elfenbein at Crossing Wall Street)
• Barry Ritholtz at The Big Picture with an analysis of New York Magazine’s look at New York City businesses
• Marc Andreessen (yes that Marc Andreessen) has some innovative ideas about personal productivity
• How credible are you on subjects you haven’t yet talked about? How good is your topic net? (hat tip to Maoxian)
• Move over Palm, it looks to me like VIA is hot on the trail of the future of ultra-mobile computing
• How is your memory these days? NewScientist.com explains how the brain only tries to remember what it thinks is most relevant
• Finally, the Freakonomics Blog (which should be required reading) is as surprised as we are by the #2 male baby name in the UK

End of May Links

The most recent installment of the cornucopia of things that I have been reading and thinking about as of late:

• Kevin’s Market Blog (and a hearty welcome back to him) has some thoughts on how to reverse engineer a good moving average
• Jeff Miller at A Dash of Insight shines some light on buybacks
• …and Chad Brand at The Periodot Capitalist explains why he is a fan of buybacks
• Yaser Anwar offers some suggestions on how to hedge with futures and options
• Looking for optionable ETFs? Michael Bommarito at ETF Central has done the work for you
• Eddy Elfenbein at Crossing Wall Street notes a divergence between stocks and bonds
• David Gaffen at the WSJ’s MarketBeat blog has five reasons for rising bond yields
• Mark Hulbert offers a contrarian analysis on bond sentiment
• The CXO Advisory Group finds that 52 week highs are an important momentum indicator for individual stocks (I have found many of my biggest gainers on the daily new high list)
• Toro’s Running of the Bulls contemplates shortages in some lesser known metals
• Chad Brand (again) delves into why consumers will keep energy stocks humming
• Paul Hickey at Bespoke Investment Group with some thoughts on why oil (the commodity) may be poised to outperform oil stocks
• Babak at Trader’s Narrative ponders the end of the bull market for REITs (it has to come eventually, right?)
• The CXO Advisory Group with some data that good companies to work for are good places in which to invest your money
• In a related note, Barry Ritholtz of The Big Picture finds that companies with satisfied customers are also good investments…and the CXO Advisory Group draws a similar conclusion from the same study
• Hisham Ayoub of Biohealth Investor opines on the early release of clinical data to selected parties in advance of the American Society of Clinical Oncology’s (ASCO) annual meeting
• Paul Hickey again, examining sector P/E ratios this time around
• Brett Steenbarger at TraderFeed on the biology of trading
• Uglychart.com on the pain of losing money (it’s more biological that you think)
• More Brett Steenbarger, this time highlighting Itiel Dror’s research into factors that impair decision-making
• Need a micro-fridge powered by a USB? Engadget has the gadget
• For the slightly desperate, Avis rolls out in-car WiFi, also via Engadget
• …which will never compare to The Slurpr, already destined to be the undisputed bandwidth-stealing champion (and the favorite of the extremely desperate)
• Finally, for the terminally overworked, Dilbert puts life in perspective

Pre-Expiration Links

OK, so links below are not really all about options expiration, but this is expiration week and it’s my blog, so…

• Kash at The Street Light on mobile phones and efficient fishermen
• Do you have a favorite bond market blog? I suggest you try Accrued Interest and check out their perspective on A Brief History of Time
• Headline Charts updates their ongoing look at market breadth and momentum
• Michael Shedlock of Mish’s Global Economic Trends Analysis interprets the April PPI data
• Barry Ritholtz of The Big Picture breaks down 136 years of S&P 500 returns
• The CXO Advisory Group has an update on corporate earnings
• James Hamilton at econbrowser: Northern Ghawar is in Decline (if true, all these other links are pretty much irrelevant…)
• Eddy Elfenbein at Crossing Wall Street on the bond market looking for a rate cut
• The BofA CEO calls for more sanity and less stupidity in the credit markets, courtesy of Toro’s Running of the Bulls
• Agustin Mackinlay at The Global Liquidity Blog discusses some dramatic new thinking on the part of Bill Gross at PIMCO
• Brett Steenbarger at TraderFeed on the equity put to call ratio and the significance of total option volume trends
• Adam at Daily Options Report has some thoughts on what the high implied volatility premium may be telling us
• Eric Savitz at Barron’s Tech Trader Daily on the corporate cash implications of stock options backdating
• Mebane Faber of World Beta with some interesting micro-cap seasonality data
• Pradeep Bonde of Stockbee has everything you need to know about the float
• James Picerno at The Capital Spectator on why investing always boils down to momentum vs. value
• Abnormal Returns has some thoughts on how to invest in the art market
• Paul Hickey at Bespoke Investment Group has an easy to digest ETF family tree
• HEDGEfolios suggests that traders think about their adversity quotient
• Trader Mike on overthinking contrarian approaches
• ETF Central has some interesting data on various indicators and their correlations
• Macro Man offers a ‘remedial lesson in statistics’ (can you ever know too much?)
• The Econophysics Blog (don’t you just love that name?) looks at the Foresight Saga
• Thomas Ott of Neural Market Trends is busy at work on timing market volatility
• Howard Lindzon ponders two possible futures for CROX
• The Freakonomics Blog examines the five second rule (if you drop it and pick it up quickly, can you still eat it?)