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W. D. GANN’S 24 TIMELESS STOCK TRADING RULES

  
Analysis, Education
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Here are the 24 rules:

1. Amount of capital to use: Divide your capital into 10 equal parts and never risk more than one-tenth of your capital on any one trade.

2. Use stop loss orders. Always protect a trade.

3. Never overtrade. This would be violating your capital rules.

4. Never let a profit run into a loss. After you once have a profit raise your stop loss order so that you will have no loss of capital.

5. Do not buck the trend. Never buy or sell if you are not sure of the trend according to your charts and rules.

6. When in doubt, get out and don’t get in when in doubt.

7. Trade only in active markets. Keep out of slow, dead ones.

8. Equal distribution of risk. Trade in two or three different commodities if possible. Avoid tying up all your capital in any one commodity.

9. Never limit your orders or fix a buying or selling price.

10. Don’t close your trades without a good reason. Follow up with a stop loss order to protect your profits.

11. Accumulate a surplus. After you have made a series of successful trades, put some money into a surplus account to be used only in emergency or in times of panic.

12. Never buy or sell just to get a scalping profit.

13. Never average a loss. This is one of the worst mistakes a trader can make.

14. Never get out of the market just because you have lost patience or get into the market because you are anxious from waiting.

15. Avoid taking small profits and big losses.

16. Never cancel a stop loss order after you have placed it at the time you make a trade.

17. Avoid getting in and out of the market too often.

18. Be just as willing to sell short as you are to buy. Let your object be to keep with the trend and make money.

19. Never buy just because the price of a commodity is low or sell short just because the price is high.

20. Be careful about pyramiding at the wrong time. Wait until the commodity is very active and has crossed resistance levels before buying more, and until it has broken out of the zone of distribution before selling more.

21. Select the commodities that show strong uptrend to pyramid on the buying side and the ones that show definite downtrend to sell short.

22. Never hedge. If you are long one commodity and it starts to go down, do not sell another commodity short to hedge it. Get out at the market: Take your loss and wait for another opportunity.

23. Never change your position in the market without a good reason. When you make a trade, let it be for some good reason, or according to some definite rule; then do not get out without a definite indication of a change in trend.

24. Avoid increasing your trading after a long period of success or a period of profitable trades.

Major indices close lower for the 2nd consecutive day

  
Analysis, US Market
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NASDAQ leads the way lower

The major indices close lower for the 2nd consecutive day. The NASDAQ index was the weakest

of the majors today.

Some highlights:
  • S&P and NASDAQ index is trading lesson 3% from the all-time high
  • Stocks have their first 2 day losing streak since September 18
  • The Dow industrial average turned back for 2020
  • UnitedHealth care was the biggest drag on the Dow
  • Russell 2000 of small-cap stocks fell by -0.93%
The final numbers are showing:
  • The S&P index fell -23.32 points or -0.66% to 3488.61. The high price reached 3527.94. The low price extended to 3480.55
  • The NASDAQ index fell -95.166 points or -0.80% to 11768.73. It’s high price reached 11939.91. The low price extended to 11714.35
  • The Dow industrial average closed down -165.83 points or -0.58% to 28513.98. The high price reached 28792.56. The low extended to 28461.73.

Lagarde: There is no need to overreact to euro gains

  
  Analysis
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Comments from Lagarde in the ECB opening statement:

Lagarde Sept 10
  • Says ECB will monitor FX rate
  • Strength of recovery remains surrounded by uncertainty
  • Rebound broadly in line with previous expectations
  • Domestic demand recorded significant recovery
  • Uncertainty weighing on consumer spending and business investment
  • Inflation dampened by energy prices
  • Ample monetary stimulus remains necessary
  • Incoming data suggest notable recovery in consumption
  • ECB will carefully assess the euro’s effect on inflation
  • New infections are a headwind to the short term outlook
  • Repeats that an ample degree of easing needed
  • Fiscal measures should be targeted and temporary
The euro jumped to 1.1891 from 1.1850 on the headline from Lagarde.

SoftBank sits on $4B profit on options trade – FT

  
  Analysis
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SoftBank up $4B

SoftBank up $4B
All the talk Friday was about SoftBank’s huge position in equity options and how it may have contributed to the blow-off moves we saw in the tech sector last week.
The FT reports that the trade is sitting on a $4 billion trade.
For all the attention it has gotten, that strikes me as a small number. Founder Masayoshi Son once lost $70B in the dot-com crash and the company is worth close to $100B. SoftBank lost $17.7B on WeWork and Uber last year.
The strategy has focused on options related to individual US tech stocks. In total, it has taken on notional exposure of about $30bn using call options – bets on rising stock prices that provide the right to buy stocks at a preset price on future dates. Some of this position has been offset by other contracts bought as hedges.
“It’s just a levered punt on the market,” said one person with direct knowledge of the trades. “The whole strategy is just momentum buying.”
Without knowing the details of the trade — including the timeline — it’s tough to evaluate. However if the whole strategy is really just momentum buying, then Thurs/Fri showed how quickly it could blow up.
For me though, the whole thing is overblown. $30B is notional (again, depending on the details), really isn’t that much.

South Africa’s Gold Fields profit jumps on rising Bullion prices

  
  Analysis
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Via Reuters

Via Reuters
  • Gold fields interim profit up by 300%
  • Higher interim dividend revealed equal to total dividends declared last year
  • Higher gold prices boost future dividend potential
  • Lowers 2020 output guidance

Expect this kind of pciture to be repeated across gold miners as long as bullion prices remain supported.

Crude oil inventories for July 31 -7.373M vs -3.335 est.

  
Analysis, Crude
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Crude oil inventories for July 31

  • crude oil inventories -7.373M vs -3350M estimate. The drawdown is a little lower than the 8.587 from the private data last night
  • gasoline 0.419 million vs. -0.500M estimate
  • distillates 1.591M vs 0.986M estimate
  • Cushing 0.532M vs 1.309M last week
  • crude oil implied demand 18063 vs. 17762 last week
  • gasoline implied demand 9386.6 vs. 9250.1 last week
  • distillates implied demand 4812.7 vs. 4859.1 last week
  • US refinery utilization 0.10% vs. 0.20% estimate. Last week 1.6%
The price of crude oil after a brief dip is back trading near high levels for the day at $43.41. That’s up $1.71 or 4.12%. The high for the day reached $43.52. The 200 day moving average is currently at $43.92. The price of the September contract is not traded above its 200 day

European shares end the session with mixed results

  
Analysis, Global Indices
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Italy and Portugal indices move higher

the major European indices are ending the session with mixed results. Germany, France, UK and Spain show declines while Italy and Portugal eked out gains. The closes are showing:

  • German DAX, -0.43%
  • France’s CAC, -0.42%
  • UK’s FTSE 100, -0.62%
  • Spain’s Ibex, -0.2%
  • Italy’s FTSE MIB, +0.3%
  • Portugal’s PSI 20, +0.95%
Italy and Portugal indices move higher_
In the European debt market, benchmark 10 year yields fell across the board with UK yields down the most at -2.8 basis points.
European 10 year yieldsIn other markets as London/European traders look to exit:
  • spot gold $-4.25 or -0.23% $1806.05. The high for the day reached $1813.48. The low extended to $1802.97
  • WTI crude oil futures fell $0.19 or -0.46% to $41.01. It’s high price reached $41.18 while the low extended to $40.60. The September contract is currently down $0.21 or -0.51% of $41.19
In the forex market,
  • GBPUSD. The GBPUSD is trading at new session highs in the currently hourly bar. In the process, the price has moved back above its 200 and 100 hour moving average. That tilted the bias back to the upside in what has been an up and down market over the last 7 or so trading days. On the topside a trendline connecting highs from this we currently comes in at 1.2634. The high from yesterday reached 1.26487. The high for the week on Monday reached 1.26652.
  • EURUSD: The EURUSD moved higher in the London session after finding support buyers near the 38.2% retracement of the move up from the Friday low at 1.13759. The high price reached 1.1441. The high price from yesterday reached 1.14512. There is close support at 1.14223 area

BOJ’s Kuroda: Economic activity has gradually resumed

  
Analysis, Economy
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BOJ governor, Haruhiko Kuroda, begins his press conference

Kuroda
  • But Japanese economy remains in an extremely severe siituation
  • Pace of recovery to only be moderate
  • Inflation is likely to be negative for the time being
  • Future economic developments remain extremely unclear
  • Risks are tilted to the downside for prices, economic growth
  • BOJ won’t hesitate to ease further if needed
  • Will continue to support corporate financing, markets
Kuroda is still maintaining a more subdued take on the economic situation but that is hardly a surprise. The recent economic data from Japan have been rather poor and a possible virus resurgence only adds to more risks surrounding the outlook.
But Kuroda stands firm in assuring that the BOJ policies since March are having an impact, though I’m sure they pretty much lucked out on this one with the Fed and ECB doing most of the heavy lifting to appease financial risks in the market for the most part.

Some Trading Secrets

  
  Education
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  • Stop placement
    • Don’t place stops at round numbers (which are common support / resistance zones).
    • Place stops below support zones (above resistance zones) to give price every opportunity to move in desired direction.
  • Trade with the trend
    • Select stocks that are moving with the general market and industry trends.
  • Enter on breakouts near the yearly high
    • Breakouts from chart patterns within a third of the yearly high perform best (statistically). If price doesn’t rise within a few days, consider selling immediately.
  • Exit only on expected significant price turns
    • Don’t be so quick to sell. Learn to predict significant price turns.
  • Use trendlines as sell signals
    • If prices are trending up and then drop below a trendline, the trend isn’t up any longer. However it doesn’t mean that the trend is down.
    • Victor Sperandeo’s criteria to determine if a trend has changed from up to down: (i) price drops below an up-sloping trendline, (ii) lower high (or failed breakout), (iii) lower low.
  • Ignore news
    • Don’t believe scenarios spun by news outlets.
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