My Recent Research Project!

  • July 27, 2004
  • Rob Hanna


The market continues to worsen.  Even areas
that had held up well such as energy and steel have begun to buckle.  The Nasdaq
has now broken all recent support levels and is in a definable downtrend.  The
S&P and Dow may soon follow as the May lows seem to get closer every day.  The
market is entering oversold in many areas, which makes shorting a bit riskier
until a bounce occurs.  Patience will be key in the upcoming days and weeks. 
The more dangerous the market environment, the more important it is for traders
to have a significant edge before risking capital.

 

Like many traders, my research
doesn’t begin and end with looking for new stock ideas.  I also enjoy studying
the markets and backtesting ideas I may have.  Last week’s columns about the VIX
were two such examples of the kinds of things I like to look at from time to
time.  Occasionally I’ll begin one of my little research projects and it will
grow to something way beyond what I had originally envisioned.  One such project
recently outgrew my computer screen.  I needed the charts laid out in front of
me.

 


 

Fortunately, I have plenty of
wall space.

 

Unfortunately, my wife saw my
office and is now afraid that I am developing a “Beautiful Mind”.*

 

With all the wonderful research
tools available these days, I still think there are times when nothing can beat
a large printout with hand-drawn notes.  It’s sometimes tough to get a good look
at the “big picture” when you can only see 20 inches or less with your computer
screen.  (If you’re low on wall space, ceilings can provide a suitable
alternative.   Of course, that may make you appear even crazier than the guy
with the wall full of charts.)

 

Many times these kind of “big
picture” ideas can lead traders to discover new edges or perhaps develop new
trading systems.  In some upcoming columns I will discuss some of my thoughts
regarding mechanical trading systems, when they are appropriate, and how traders
may best utilize them.

 

Good trading,

 

Rob


robhanna@comcast.net

 

*I’m sure there is a
communist conspiracy somewhere in those charts.  And even if I am paranoid, that
doesn’t mean everyone isn’t out to get me.

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