Last Friday (Sept. 9), the market saw its biggest drop since Brexit and the same psychological pattern happened again: A huge spike in fear. I have said this over and over for the past few years. The market will have pullbacks and shakeouts, but it will not see a SUSTAINED correction if everyone is expecting it and prepared for it. It's amazing how on EVERY sharp decline, we see a spike in put protection, a [...]

One part of my investment philosophy is to gauge investor sentiment. Specifically, I like to use it from a contrarian point of view. In other words, I don't want to be bullish when everyone else is and vice versa. One problem that occurs frequently is there are so many different sentiment surveys that they often conflict. So what do I do? I talk to people. This includes traders, other money managers, potential investors, friends, family, [...]

In early July, I mentioned a stock on my blog called Acacia Communications (Symbol: ACIA). I bought it for my clients and the stock has more than doubled since then. I received many emails asking me what I saw in the stock, so here is the anatomy of my trade: 1) (see chart) ACIA came public in a very tough market for IPOs. There has been a substantial decrease in IPOs this year, so the [...]

Jesse Livermore was one of the greatest traders who ever lived. You can read more about him here. He has so many great quotes, but here are a few of my favorites: 1) The stock market is never obvious. It is designed to fool most of the people, most of the time. 2) Play the market only when all factors are in your favor. No person can play the market all the time and win. There [...]

Last Friday afternoon, Reuters ran a story about Jeffrey Gundlach, the chief executive of DoubleLine Capital. He is advising people to "sell everything" because "nothing here looks good." While I have tremendous respect for Mr. Gundlach, I completely disagree with this statement for the following reasons: 1) For a guy who is nicknamed the "Bond King," he seems to have many strong opinions about the equity markets. He's a genius in the fixed income markets, [...]

At the beginning of the month, I posted my 2016 Second Half Outlook. I know it is VERY early, but so far the blueprint is working out well: 1) The Brexit decline at the end of June may have been the last shakeout before the market finally breaks out of its two-years range. Many times before big price moves in stocks/markets, quick pullbacks occur to shakeout the weak hands. 2) It wouldn’t surprise me if we make new [...]