Trading Tip Stocks in Your Pocket or Purse: The Market Goes Mobile, Part 2 March 31, 2011
Posted by smarttradepro in Current Issues.Tags: a “next generation” app, a groundbreaking app, Chaikin Power Tools., stock market apps
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Last week, we took a stroll down memory lane and saw how market data availability for retail investors and traders has made huge leaps. Not so long ago, traders used pencil, paper, and day old prices. Today, we have real time data literally right at our fingertips wherever we are—in our pocket or purse on smart phones.
In the coming weeks, we will dig into the inner workings of half a dozen or more stock market apps that are available for the iPhone/iPad/iTouch. With a user base of over 100,000,000, the iPhone is the logical place to start our smart phone app review. We’ll cover the Android platform in a subsequent series of reviews.
Now that market data is generally available to everyone, everywhere, smart phone stock market apps have to raise the bar to grab our attention. It’s commonplace now for apps to provide market data for stocks, indexes and Exchanges Traded Funds (ETFs) and keep track of portfolios or a list of favorite stocks. Instead of merely finding new ways to present a stock’s current price and the relevant news on that stock, the next generation of apps will actually do something with the massive amounts of stock market data out there.
Over the next few weeks, we’ll look apps that offer a unique or useful twist to the standard quote list or portfolio tracking function. We’ll start our examination with a handful of apps that do much more than just keep stock quotes up to date.
Let’s jump right to what I believe is the first true breakthrough cell phone app: a “next generation” app that offers true professional-level analysis on a smart phone. Better than just raw data, this app actually provides a buy, sell or hold conclusion. And here’s the best part: since the app is brand new (it’s only been out 8 days), you can still get it for free, no strings attached.
Like Having a Hedge Fund in Your Pocket
Imagine having lunch with an old friend from school. She mentions that her broker recommended a stock (let’s say it was Amazon, symbol AMZN). You open an app on your phone and in literally less than 5 seconds, show her a 20-factor model rates that AMZN as “very bearish.” You say that it’s not the best time to get in. Then, you show her a visual gauge that quickly and easily shows the stock’s rating and the underlying reasons for the rating.
With a single tap you can drill down into each of the four rating areas shown above (Financial Metrics, Earnings Performance, Price/Volume Activity and Expert Opinion) and see the five sub-factors that drive the rating in each area.
Like all top-notch stock apps, you can instantly show your former classmate charts of the stock (which show Amazon underperforming the S&P 500, by the way) and relevant real-time news feeds. It also has a built in trading link—if you find an idea you’d like to act on, you can do so on the spot.
Clearly impressed, she asks where she can buy this app. You tell her that she can’t buy it, but she can download it for free from the iPhone App Store.
The App Revealed: Chaikin Power Tools
Essentially, all of the apps out there provide data: news feeds, price charts and snapshots of fundamentals. In researching this series, the biggest missing component on almost all of the apps that I looked at was any sort of analytical tools to complement raw data.
Standing alone as the positive exception to this paucity of analytics is a groundbreaking app called Chaikin Power Tools. In previous articles, I have written about Marc Chaikin whom I consider a genius in the field of technical analysis. He has developed well-known technical indicators like the Chaikin Money Flow and the Chaikin Oscillator.
What Marc and his team have done with this app is nothing short of remarkable. I’ve been gushing about this app. In the palm of your hand at any moment it provides a depth of real-time stock analysis that has been almost impossible to find at any price. This product is basically Marc’s magnum opus—his legacy from 40 years on Wall Street. The app uses a 20-factor model that Marc developed to provide real, actionable analysis for almost any individual stock. By actionable, I mean that the Chaikin Power Tools app rates almost any stock you enter on a five point scale:
- “Very Bearish” (lowest rating)
- “Bearish”
- “Neutral” (medium)
- “Bullish”
- “Very Bullish” (highest rating)
In a future article, we will research the 20-factor model. Studying this model is, in my opinion, the equivalent of taking a graduate level course in stock analysis. It is really that comprehensive. As I researched this article, it occurred to me that the Chaikin Power Tool app is like having a hedge fund in your pocket; the analytics are that strong.
Marc tested the app’s analytical model for statistical significance in outperforming the market and it has passed all tests with flying colors. I’ll discuss this testing effort more when we review the 20-factor model in detail in a subsequent article.
Again, since it is brand new, the app doesn’t cost anything during the initial launch phase. Get it for free while you can! If you have an iPhone, an iPad or an iTouch, go to the Apple App Store and search for “Chaikin.” The app has only been available for eight days, so you’ll be one of the first to try it out. The app was featured in Barron’s “Electronic Investor” section this past weekend so the readers of Tharp’s Thoughts are, as usual, on the leading edge of the trading world.
I’m anxious to hear what you think about the app as an analysis tool. Knowing the quality of the researchers that read this newsletter, I’m sure you’ll be finding more ways to use this rich tool than I can imagine.
For all of the app reviews over the next few weeks, I’ll include a few comments about the apps’ business model because that affects what you see and how it’s paid for.
On Chaikin Power Tools, there are no banner ads or other advertisements, which make it clean visually. When you download the app and start it for the first time, it presents the option to sign up for “investment ideas, product updates and information on mobile trading.” However, this is completely optional and can be skipped. To this app’s credit, there are also no “nag screens” in the future. Secondly, the app has full trading functionality tied in as an option. Many people will find it very useful to be able to research a stock and trade it inside the same app. Currently the app integrates directly with one brokerage partner and others are sure to follow.
Disclosure
I’ve known Marc for over a decade and some time back, he asked me to look at an early prototype of the app. It simply blew me away. Even in preliminary testing, I was completely impressed with what it offered traders.
In full disclosure, I am an early and very minor investor in the project. To paraphrase famed Remington razor company owner Victor Kiam from his TV commercials, “I liked it so much I invested in the company.”
[Publishers Note: This tool has not been endorsed by Van Tharp or The Van Tharp Institute. The five point stock scale is unrelated to Van Tharp’s market types. Neither Van Tharp nor the Van Tharp Institute have any involvement, financial or otherwise, with Chaikin Power Tools or its publisher.]
I’d love to hear your thoughts and feedback on this article or about other stock market apps that you’ve found useful. Please email me at drbarton “at” iitm.com. Until next week…
Great Trading,
D. R.
Stocks in Your Pocket or Purse: The Market Goes Mobile March 26, 2011
Posted by smarttradepro in Current Issues.Tags: Mobile Phone Stock Market Apps, retail stock market analysis, the state of mobile app world:
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n 1986, my love affair with the market took off. As a chemical engineer, I naturally gravitated toward technical analysis and charting. At that time, state of the art charting was a printed chart book.
A Brief History of Charting and Market Data
Every Saturday I would receive my weekly chart book. Back then I had a very different version of end-of-day data. Monday mornings I had “off” but every Tuesday morning, I would read the Wall Street Journal before heading off to work. I would pull out a ruler and my trusty black Flair pen and draw in, by hand, the daily open-high-low-close bar on each chart from Monday’s data. I would repeat this process every morning until the end of the week!
I was not tech averse. Quite the opposite was true. I was a superstar programmer as a college engineering student, programming thermodynamics algorithms on the earliest PCs—floppy drive for data storage, and all of 32kB RAM under the hood.
Instead, the problem was that there were no commercial computer charting packages available. In fact, home PCs were still a luxury item.
Within a short time, though, that began to change. In 1988 I bought charting package from Bruce Babcock to use on a computer from work that had been declared obsolete. Back then, I had to buy a set of historical end-of-day data and, once again, use a data entry program to update data every day by hand using data from the Wall Street Journal! I became as fast using a keyboard for data entry as any good bookkeeper.
In 1994, I finally bought my own PC ($5,023, including shipping). That’s $7,000 in today’s dollars! It still took a couple of more years before I was finally able to get end-of-day data through the Internet—on a dial-up modem, of course.
One of the last steps in getting data before the Internet made everything a piece of cake was my first real-time data feed. Since I had cable television, in 1997 I was able to get real-time intraday futures data through a special cable signal converter. That service cost hundreds of dollars per month.
Finally, by 1999, the internet and its financial market data service providers were a part of the stock day trading explosion and real time data was finally becoming commonplace—even though I was still getting it through a dial-up modem at the time (56k…whoopee!).
Fast forward to today. An iPhone weighs 4.8 ounces. And, with 32GB of onboard storage, has one million times the storage space of that first IBM PC that I worked on in college, which, by the way, I could not put in my pocket.
In less than 25 years, retail stock market analysis has gone literally from pen and paper to a fully functional computer in your pocket. In the next few weeks we’re going to look at mobile phone apps designed for stock market analysis.
Mobile Phone Stock Market Apps: The Good, The Bad and the Ugly
For the next few weeks, I’d like to take you on a tour de force through the iPhone apps I’ve been reviewing. Why the iPhone? Three words: installed user base. Apple announced on March 2, 2011 that they have now sold 100,000,000 iPhones. In addition, iTouch and iPad devices can use iPhone apps, so this really is the biggest mobile market around. However, with the Android platform now growing faster (by many estimates) than even the iPhone, later this spring or summer, we’ll also take a look at apps available for Android phones.
After looking at more than a dozen stock market apps, here are a few general comments on the state of mobile app world:
- Almost all apps have a portfolio feature where you can track the movement of stock holdings. Profit and Loss tracking is clearly best done through an app that has a direct link to your broker or through an app that ties to a web site where buy and sell information can be entered. Therefore, portfolio management for a “general app” (as opposed to one linked to a brokerage) becomes a minimum requirement and not a distinguishing feature.
- Charting across the board is surprisingly readable. While you will not be doing your technical analysis on these charts, the high resolution screen does allow you to make sense of the charts. Almost all of the free apps that I’ve looked at are limited to line charts with volume indication. I will eventually look at a few of the paid apps that provide more charting options.
- Charting is also universally fast (at least it is with a Wi-Fi connection). The speed of chart drawing and switching on almost every app was one of the most surprising things I encountered in the preliminary screening.
- Many of the free apps had significant advertising banners. I don’t really count this against them (they are free, after all!), but it is a plus for the apps that don’t take up limited screen real estate with banner ads.
- A news feed is a key feature of many of the apps. Many have general market feeds plus specific chronological feeds for individual stocks.
I’ll be taking an in-depth look at a handful of the better apps over the next few weeks. Please send me the name of any apps that you have used with your comments on what you like and what could be improved, and whether I can use your name in upcoming articles.
I’d love to hear your thoughts and feedback on this article or about trading and investing in general at drbarton “at” iitm.com. Until next week…
Great Trading,
D. R.
Preliminary Thoughts and Positioning on Japan’s Current Situation March 18, 2011
Posted by smarttradepro in Current Issues.Tags: A Few Economic Thoughts, Intraday traders, Long term traders and investors, Short Term Actions to Consider, swing traders would be wise
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In a natural disaster that dwarfs most others in recent memory, our thoughts and prayers go out to the courageous people of Japan. In the face of dire conditions, we see a brave nation coming together to begin what will certainly be a long road to recovery. Amazingly, with power, food, water and services in short supply or even non-existent, there has been essentially no looting. What a credit to the character of a nation.
Before we look at the financial side of the event, we have to be aware of how fluid the nuclear plant situation remains. Despite the many designed-in redundant defense systems at the Fukushima Daiichi nuclear power facility, the reactors are far from under control. This lack of control will continue to add to the uncertainty of the markets until the plant has been stabilized. Even as I was proofreading this article on Wednesday before lunch, the Dow plunged 155 points in about twenty minutes on what was thought to be new information from a European nuclear official. That new information, however, turned out to be an opinion based on old information. Any snippet of news over the next days and weeks could send the market into a tail spin or rocketing higher. Be on high volatility alert until the situation (especially on the highly emotional nuclear front) stabilizes.
Let’s turn our attention now to the economic aftermath of the tragedy; we have a number of factors to consider.
A Few Economic Thoughts
Morgan Stanley’s Steven Roach, a well-regarded thinker, points out that this earthquake/tsunami disaster comes on the tail of an economy in Japan that has been suffering for years. The population of Japan has been aging AND declining for some time now. The effects of that demographic profile have been compounded by a very strict immigration policy that has put extreme pressure on economic productivity in the country. After the short-term stimulus and aid package effects wear off, these background circumstances do not bode well for a speedy recovery in Japan.
Let’s look at a few other issues:
- Japan’s overall economy could be devastated. Power loss and disaster recovery have caused many industries essentially to shut down for the near term. In addition, a more valuable yen will continue to depress the Japanese export trade. Early indications are that the effect on Global economic growth will be at least 30 basis points, just in the short term.
- Repatriation of the yen to assist in the disaster recovery process has significantly strengthened the currency—too much so for the central bank. In the period of an hour on Monday, The Bank of Japan bought 186 BILLION dollars (selling the yen) to keep the yen from strengthening further. A hedge fund manager that I know calculated that without this intervention the yen could have jumped to 70 yen per dollar (instead of 81 or where it stopped on Monday). If the aftermath of the Kobe earthquake in 1995 is any indication, the yen has more appreciating to come.
- The Bank of Japan has very few bullets left to help the economy. A $500 billion stimulus package is already underway. This amount basically equals the US’s QE2 expenditures, but it enters an economy that is only one-third as large.
- The effects of the earthquake are actually quite bearish for crude oil. A global slowdown should depress oil prices. Current political tensions in the Arab League nations will continue to keep oil prices elevated and may offset any global slowdown. This tug-of-war between fundamental and geopolitical pressures will result in a very volatile energy market into the intermediate time frame.
- As an interesting aside, the Japan Exchange Traded Fund (Symbol: EWJ) had its highest volume trading day ever on Tuesday. SPY is the highest volume stock in the world, trading an average of 150 million shares a day. EWJ is a very active stock, trading 30 million shares a day on average. On Tuesday, EWJ traded more shares than SPY, with 396 million shares traded vs. 359 million, respectively. This is just another indication of the market’s news sensitivity.
- In the face of all the market negativity, we must remember that the Japanese people have shown themselves time and again to be an extremely resourceful, resilient and industrious group. A national tragedy like this will only strengthen their resolve and very likely mitigate many of these negative factors in the long run.
Short Term Actions to Consider
In the face of expanding volatility across almost all markets and with the market’s news sensitivity level at a 10+, swing traders would be wise to curtail activity, widen stops and reduce position size. Swing trading systems tend to get chopped up in extremely uncertain markets.
Long term traders and investors need to mind their stops and more sophisticated players may want to consider adjusting position size to take into account the extra market volatility.
Intraday traders can enjoy the ride! Be nimble to change directional expectations at a moment’s notice, with huge swings possible on news or even rumored news.
As a final note, you may want to check out the stunning before and after satellite images that show the devastating effect of the tsunami and give at least a modicum of appreciation for what the Japanese people are going through. The images can be found here. Moving your cursor across the pictures shows the scale of the devastation.
I’d love to hear your thoughts and feedback on this article or about trading and investing in general at drbarton “at” iitm.com. Until next week…
Great Trading,
D. R.
Crude Oil: The End of the Rally Is Near March 10, 2011
Posted by smarttradepro in Current Issues.Tags: a short term top in crude is near, Technicals in Crude Are Ready for a Retrace
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A couple of weeks ago, we talked about the troubles with civil uprisings in the Arab League that are toppling dictatorships.
Fear of a major disruption in oil production, along with an actual loss of about one percent of the world’s oil supply, has caused crude oil prices to skyrocket. This significant rise in the cost of crude has impacted the price we pay for many things including a gallon of gas and the valuation of the stock market in general.
However, there are technical, fundamental and geopolitical reasons to believe that at least a short term top in crude is near. Let’s look at crude from both perspectives.
Fundamentals of Crude: Supply and Demand plus Geopolitics
The geopolitical angle of this game is fairly easy to see, for a change. The worries about disruption in oil supply due to the Arab League turmoil have largely been baked into prices already. Remember the old trader’s adage, “Buy the rumor, sell the news.” The Libyan civil war is largely at a standoff. So the news event that could reverse the meteoric rise in crude could come Friday in Saudi Arabia’s “Day of Rage.”
Many informed pundits predict that the pre-planned protests in Saudi Arabia will be a non-event. The Saudi government is much more mature and stable than those of Tunisia, Egypt or Libya. And the National Guard there is very loyal to the royal family. Lastly, Saudi’s great wealth has been spread around fairly well, giving less cause for true economic outrage.
On the supply and demand front, there has been no news that could contribute to the 22%+ rise in crude oil prices. In fact, a glut from Canada has caused the U.S. reserves to be filled to the brim. And even though the Arab League problems have caused a 1% disruption in daily oil flow, the Saudis have stated publicly that they stand ready to increase supplies to cover this shortfall if needed. The US has also hinted that it could dip into the strategic reserve.
The Technicals in Crude Are Ready for a Retrace
A quick look at a crude oil price chart will show that this big run-up in crude oil has overstretched price to the upside.
As we can see in this chart, the RSI reading has only topped 70 (the traditional level for an oversold reading on this indicator) for crude oil twice in the last 15 months (before the current run). Both instances were met with pullbacks. Obviously, this run-up was more severe than the other two, which only had one day each above the 70 level; the current run has spent 6 days above that level.
The RSI reading alone doesn’t mean that a crude pullback is eminent, but if the Saudi rallies on Friday are uneventful, that could relieve some of the political tension that is holding crude prices high in the face of plentiful supply. A pullback to the 50% retracement of this run-up would then be very likely.
I’d love to hear your thoughts and feedback on this article or about trading and investing in general at drbarton “at” iitm.com. Until next week…
Great Trading,
D. R.
