A reader left a question that I think is pretty damn good. He asked "what are the variables that I use that allow you to do a forward analysis of an asset with any meaningful probability of being right." As someone who believes in top down management I focus on big picture issues and then try to figure the best way to invest toward the big picture while at the same time building in some sort of counter strategy in case my assessment is wrong. So instead of looking at a stock from the bottom up and saying ok, here is a stock with such and such valuations that will make more widgets next year for a slightly smaller cost and buying it, top down looks at the world for things like supply and demand issues, turning points in cycles or big long-lasting themes as examples. The world ...

By Jennifer Yousfi Managing Editor Odds of a future rate hike for the European Central Bank (ECB) increased yesterday (Monday) on news that Eurozone inflation hit a 16-year high in May. With inflation accelerating “it becomes increasingly difficult to argue against an ECB hike in July,” Carsten Brzeski, an economist at ING Groep NV (ADR: ING) in Brussels, told Bloomberg News. Soaring food and energy costs pushed inflation up 0.6% in May to an annualized rate of 3.7%, an increase from April’s 0.3% monthly rate and 3.3% annual rate. High commodity costs fueled the increase, as food costs shot up 6.4% in May, up from 6% in April. Energy prices soared 13.7% year-over-year on the back of record high oil, up from a 10.8% increase the prior month, the European Union’s Luxemburg-based statistics office said. Story continues below…...

Some people are making this way harder than it is when it comes to making money. I make it very clear when I am going very long and when I am only buying a few to a hundred shares of something. A newbie will not know this but anyone with at least a few months will know that. So when you see that there are so many longs tonight don’t get too excited thinking that this market is going to be super bullish. It is what it is. A low volume rally. But this low volume rally is loaded with short sellers, via the NYSE short interest constantly hitting all-time highs now at 14.27. So as long as the short sellers jump in the market and people continue to deny the rally–bulls fell to 37% from 50% in this week’s investors intelligence poll. I have heard some actually say “I thought we ...

Time to saddle up and fly west to San Francisco to meet with the development team of a very large online broker - I can say no more.Flying a MD-80? Why yes, I am, but it's with Delta - wish I knew how to play those odds in The OddsMaker.Outside of these meetings I'll be visiting some institutional clients but we plan to stay close to Menlo. If you'd like a little one-on-one assistance with Trade-Ideas or learn how we keep the ship afloat, please let me know via the comments section or at info@trade-ideas.com Subject: Menlo RoadTripIf there is a good response we'll set up a convenient time for everyone to meet. If it's just one or two that are interested we'll still meet or at the least schedule ...

Are you tired of being spoon-feed trades without knowing how to come up with the ideas on your own? Many traders fall into the trap of being fed the fish but never really knowing how to go about fishing on their own. This post and next week's aim to fix that.

The Words that Would Not Go Away

I've had a mental breakthrough recently about something that Dr. Brett Steenbarger lodged into my mind during one of my Chicago visits at his office. How could he have known that this thought would percolate in my head for so long?

Well I finally am able to pour it out by applying his trading approach to the suite of tools we offer here at Trade-Ideas - using The OddsMaker.

Creating and Testing Themes in the Market

The market is always giving answers to traders. If you don't ask the right questions, it sounds

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Figuring out exactly what the market will do at the very next moment is tough to do. Understanding what mood the market is in, however, proves to be not only easier, but eventually leads to better accuracy about what comes next.The beauty of Trade-Ideas' tools is that you get to ask and answer your questions about the market's mood.Trade-Ideas allows you to develop any theme or behavior about the market like,"Are recent new lows enticing buyers?""Do bounces in this market have strength or are they dead cats?""Do any of these themes behave differently in the afternoon than in the morning?""What are the odds of a winning trade on any of these themes in the market right now?"

Aren't these better questions to be asking than "Is this stock going up or down?"

Subscribers who use The OddsMaker (our event-based backtesting tool) already know how to answer

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