Trader’s Narrative

I’ve been meaning to write a review of Jason Goepfert’s website, SentimenTrader, for a while now. I’ve used them myself and referred to their analysis before. If you’re unfamiliar with it, SentimenTrader is basically a one stop shop for actionable technical analysis. The name of the site is a bit misleading since it goes above and beyond simple sentiment measures and keeps track of a dizzying array of indicators and data. If you’re really into technical analysis, SentimenTrader is your wet dream.

Goepfert has been a trader for around 10 years and before worked in the operations department of a large hedge fund. But his credibility as a technical analyst was cemented when he was awarded the 2004 Charles H. Dow award for his analysis of mutual funds cash reserves(pdf) as an indicator of market performance.

What attracted me to SentimenTrader was their focus on actionable analysis rather than just research for research’s sake. You can find a lot of insightful commentary nowadays from various good sources. But almost none of it is really going to help you make money as a trader. That’s what sets SentimenTrader apart. No matter what your style of trading, it is helpful to have a guide that can give you a better understanding of the trend and point to areas where it has a high probability of changing.

The other reason why I like Jason’s site is that he is an inexhaustible fountain of ideas. Sometimes it seems he has one a day! Anyway, he methodically researches every single one and if it survives scrutiny, shares it on the site. I suppose that’s how he has come up with his numerous proprietary indicators. Unlike many though, he doesn’t just blindly follow an indicator but instead picks it apart to get to the underlying concept. And he is ruthless in discarding indicators when he notices that they stop working.

To see some specific examples of what I mean, check out Goepfert’s contributions to Minyanville. Or register for a risk-free 2 week trial.

The only criticism that I can offer him would be to improve the design and user friendliness of his site. The look of the site simply doesn’t match the caliber of information it contains and it may turn away some who ‘judge a book by its cover’.

Very soon (hopefully tomorrow) I’ll have a special announcement related to SentimenTrader which you won’t want to miss

Stephan Vita’s Alchemy of Trading has an openhouse and I thought I would check it out and write a review.

Alchemy was a free blog at one point but Stephan put up a subscription wall around it last year and began charging about $20 a month. He added some new content but mostly, the paid content is similar to his previously fee blog. You can also read some of the paid content on a delayed basis on his blog.

Alchemy is divided into several categories: Real Time Blog, Brainstorming, Real Time Portfolio Allocation, Sector Rankings, Gurus and Sentiment Models, Chart Laboratory, and more. The most interesting and educational is the Real Time Blog and Brainstorming where Stephen writes his thoughts and actual trades in (more or less) real time.

As I’ve already griped, Stephen insists on using his own lingo to describe market concepts leaving the novice scratching their heads. For example, the category The Professor’s Nags is devoted to potential short candidates (’nag’ is used for its meaning of an old, overworked horse). I supposed simply calling them Potential Shorts is way too simplistic.

Stephen is predominantly a break-out swing trader looking for relative strength and a positive technical picture to go long and the opposite to go short. For example, yesterday he went long UACL as it broke above resistance. But he usually takes small positons, preferring to leave a large ballast of cash. Right now he is 53% short (energy) and 14% long (transport/logistics) with 33% in cash. Stephen also provides information on the general market tone using internal indicators like advance/decline, COT, sentiment and the McClellan oscillator. And more recently he has come to rely heavily on Tom DeMark’s TD sequential buy/sell signals.

So is all that worth $240 a year? That depends.

With very little work anyone can pull together the same info found on Alchemy. All you need is a filter to find break out candidates, and to keep track of sectors, sentiment, and general market tone. But if you want it done for you because you don’t have the time or if you are starting to learn about trading and have no clue what you’re doing, then it might be worth it for a few months.

If you are new to trading, you should start out with some basic books on technical analysis because otherwise you’re not going to get the most out of sites like this one. But if you want to learn from websites, you should also check out similar sites like Minyanville. Like Alchemy it has a real time trading blog and lots of analysis but in some ways it is superior. For one, it is the product of a team of 30 traders, not one person. Two, eventhough it is a tad more expensive at $25/month, they offer a 2 week free trial.

In any case, take advantage of Stephen’s offer and check out Alchemy for the day.

If you read a few trading advisory sites, it doesn’t take long to notice that some of them revel in their own vocabulary and lingo. It gets so bad that they offer dictionaries to ease novice readers into their world.

For example, take Contrarian Chronicles by Fleckenstein. He provides a handy ‘dictionary’ to help you de-code Fleckisms.

Another offender is Minyanville, spearheaded by Todd Harrison (former head trader at Cramer Berkowitz). They likewise provide “The Minyanville Dictionary”, a massive tome that spans from ‘acne’ to ‘zagger’. Whatever that means.

But the worst offender is Stephen Vita over at Alchemy of Trading. He insists on peppering his commentary with massive amounts of his own unique lingo rendering it all but incomprehensible. He is also kind enough to provide an abridged dictionary. But I stopped reading his comments regularly long ago.

Maybe it’s like highschool where you’re not ‘cool’ unless you speak your own language, unintelligible to those outside of your inner circle. Whatever the reason, I wish everyone would stop this insanity.

Why be proud of spouting so much esoteric verbiage that you need to provide a de-coder ring to your readers? I have a suggestion, why not use a simple and alternative means of communication? It is called the English language.

Does that make me ‘uncool’? a ‘dork’? I don’t really care. My solemn promise is to never write in a way that requires a dictionary (abridged or otherwise).