(Note: Tech Talk is scheduled to appear on BNN Television today at 12:30 PM)

Pre-opening Comment for Monday November 24^th

U.S. equity index futures are higher this morning. S&P 500 futures are up 22 points. The main cause for strength is news of a bailout of Citigroup. The Federal Reserve and Treasury have arranged a preferred share equity infusion valued at $20 billion through the TARP. Yield on the preferreds is 8%. In addition, the U.S. government will backstop $306 billion of Citigroup debt. Citigroup shares are up 50% in overnight trade.

President elect Obama is making news that is helping U.S. equity markets. Over the weekend, he announced plans for a major economic stimulus program to be launched when he takes office on January 20^th. In addition, Obama will announce content of his economic advisory team at a news conference today at 12:00 noon EST.

Evidence of a flight to liquidity appeared again this morning. Gold added another $23 U.S. per ounce. Gold in Canadian Dollars already is approaching its all time high in Canadian Dollars at $1,098.40 per ounce.

Chart courtesy of StockCharts.com www.stockcharts.com

Overnight weakness in the U.S. Dollar also helped gold as well as other commodities priced in U.S. Dollars. Look for the TSX Composite Index to move higher at the opening.

Royal Bank released fourth quarter results before the opening. Data at the time of writing was sparse. However, headline for the report indicated a 15% decline in fourth quarter earnings. Consensus was an increase to $1.05 from $1.01 per share last year.

Economic news during this shortened work week is quiet.

Source: www.cnbc.com

Canadian banks are the earnings focus this week

Source: www.cnbc.com

Trends

The ratio of S&P 500 stocks in an uptrend to a downtrend (i.e. the Up/Down ratio) slipped last week from 0.05 to (15/472=) 0.03. No S&P 500 stocks broke resistance last week and 161 stocks broke support (including another 28 stocks on Friday).

Bullish Percent Index for S&P 500 stocks fell from 27.40% to 8.60% last week and remains below its 15 day moving average. The Index is substantially oversold, but has yet to show technical signs of bottoming.

Chart courtesy of StockCharts.com www.stockcharts.com

The Up/Down ratio for TSX Composite Index stocks was unchanged last week at (10/116=) 0.09. Three TSX stocks broke resistance and 58 stocks broke support (including another 9 stocks on Friday).

Bullish Percent Index for TSX Composite stocks fell from 26.23% to 16.80% and remains below its 15 day moving average. The Index is substantially oversold, but has yet to show technical signs of bottoming.

Chart courtesy of StockCharts.com www.stockcharts.com

The S&P 500 Index fell 73.26 points (8.39%) last week including a gain of 6.32% on Friday. The Index remains in an intermediate downtrend and below its 50 and 200 day moving averages. RSI, MACD and Stochastics are oversold, but continue to trend lower.

Chart courtesy of StockCharts.com www.stockcharts.com

Percent of S&P 500 stocks trading above their 50 day moving average eased from 5.60% to 3.40% last week. Percent remains oversold and near record low levels but has yet to show significant signs of recovery.

Chart courtesy of StockCharts.com www.stockcharts.com

Percent of S&P 500 stocks trading above their 200 day moving average eased from 3.20% to 2.60% last week. Percent remains oversold and near record low levels, but has yet to show significant signs of recovery.

Chart courtesy of StockCharts.com www.stockcharts.com

The Dow Jones Industrial Average dropped 450.89 points (4.77%) last week including a gain of 6.54% on Friday. The Average broke support at 7773.71 last Thursday. Intermediate trend is down and the Average remains below its 50 and 200 day moving averages. MACD, RSI and Stochastics are short term oversold, but continue to trend lower. Strength relative to the S&P 500 Index remains positive.

Chart courtesy of StockCharts.com www.stockcharts.com

Bullish Percent Index for Dow Jones Industrial Average dropped from 36.67% to 6.67% last week and remains below its 15 day moving average. The Index is approaching an all time low, but has yet to show significant signs of recovery.

Chart courtesy of StockCharts.com www.stockcharts.com

Bullish Percent Index for NASDAQ Composite Index stocks fell from 21.08% to 9.57% and remains below its 15 day moving average. Percent is oversold and approaching a record low, but has yet to show significant signs of recovery.

Chart courtesy of StockCharts.com www.stockcharts.com

The NASDAQ Composite Index gave up 132.50 points (8.74%) last week including a 5.18% gain on Friday. Intermediate tend is down and the Index remains below its 50 and 200 day moving averages. MACD, RSI and Stochastics are short term oversold, but continue to trend lower. Strength relative to the S&P 500 Index remains negative.

Chart courtesy of StockCharts.com www.stockcharts.com

The Russell 2000 Index lost 49.98 points (10.95%) last week including a gain of 5.51% on Friday. Intermediate trend is down and the Index remains below its 50 and 200 day moving averages. MACD, RSI and Stochastics are short term oversold, but continue to trend lower. Strength relative to the S&P 500 Index remains negative.

Chart courtesy of StockCharts.com www.stockcharts.com

The Dow Jones Transportation Average fell 371.67 points (10.64%) last week including a 4.48% gain on Friday. The Average broke support at 3,283.12 and resumed an intermediate downtrend. MACD, RSI and Stochastics are oversold, but have yet to show significant signs of bottoming. Strength relative to the S&P 500 Index remains positive.

Chart courtesy of StockCharts.com www.stockcharts.com

The TSX Composite Index fell 900.57 points (9.94%) last week including a 5.57% gain on Friday. The Index broke below its October 28^th low at 8,537.34 and resumed an intermediate downtrend. MACD, RSI and Stochastics are short term oversold, but have yet to show significant signs of recovery. Strength relative to the S&P 500 Index is neutral.

Chart courtesy of StockCharts.com www.stockcharts.com

Percent of TSX Composite stocks trading above their 50 day moving average fell from 13.93% to 8.20% last week. Percent is oversold and approaching its all time low, but has yet to show significant signs of recovery.

Chart courtesy of StockCharts.com www.stockcharts.com

Percent of TSX Composite stocks trading above their 200 day moving average fell from 5.74% to 3.69% last week. Percent remains oversold and near a record low, but has yet to show significant signs of recovery.

Chart courtesy of StockCharts.com www.stockcharts.com

The Australia All Ordinaries Index fell 339.10 points (9.10%) last week. Intermediate trend is down and the Index remains below its 50 and 200 day moving averages. Short term momentum indicators (RSI, MACD and Stochastics) are oversold, but have yet to show significant signs of bottoming. Strength relative to the S&P 500 Index remains positive.

Chart courtesy of StockCharts.com www.stockcharts.com

The Nikkei Average fell 551.59 points (6.52%) last week. Support has formed at 6,994.90. Resistance has formed at 9,521.24. Intermediate trend is down. The Average remains below its 50 and 200 day moving average. Short term momentum indicators (RSI, MACD and Stochastics) are oversold, but have yet to show significant signs of recovery. Strength relative to the S&P 500 Index remains negative.

Chart courtesy of StockCharts.com www.stockcharts.com

The Shanghai Composite Index held remarkably well last week considering the downdraft in most world equity markets. It slipped 17.05 points (0.86%). Intermediate trend remains down. Support has formed at 1,664.92. The Index is struggling to move above its 50 day moving average at 1981. MACD and RSI continue to recover from short term oversold levels. Stochastics are short term overbought and rolling over. Strength relative to the S&P 500 Index remains positive.

Chart courtesy of StockCharts.com www.stockcharts.com

The London FT Index lost 455.70 points (10.77%), the Frankfurt DAX Index fell 582.83 points (12.37%) and the Paris CAC Index gave up 410.21 points (12.46%) last week.

The U.S. Dollar remains a primary focus. It continues to trend higher, but momentum clearly is waning. On Friday, it briefly touched a new high, but closed down sharply to below highs reached four weeks ago. MACD already has rolled over from a short term overbought level. RSI and Stochastics are short term overbought, but have yet to roll over. Strength in the U.S. Dollar is caused mainly by a flight to liquidity by international investors who are buying U.S. Dollars to buy U.S. treasuries. The credit freeze in world markets continues. Equity markets will not recover significantly until significant technical evidence of a thaw in the credit freeze surfaces. That hasn’t happened yet.

Chart courtesy of StockCharts.com www.stockcharts.com

Conversely, the Euro remains in an intermediate downtrend, but downside momentum is waning. Support has formed at 123.94 and resistance has formed at 131.18. MACD and RSI are recovering from short term oversold levels. Stochastics are short term oversold, but have yet to show significant signs of recovery.

Chart courtesy of StockCharts.com www.stockcharts.com

The Canadian Dollar held just above support at 77.00 last week. Short term momentum indicators remain oversold, but have yet to show significant signs of recovery. Resistance exists at 87.14.

Chart courtesy of StockCharts.com www.stockcharts.com

The Japanese Yen has formed resistance at 109.25 and support at 99.45. Short term momentum indicators (MACD, RSI, Stochastics) are overbought and have rolled over

Chart courtesy of StockCharts.com www.stockcharts.com

Several technical analysts including Dennis Gartman recently gave dire warnings about further weakness in equity markets if a triangle pattern by the Euro/Yen cross is broken on the downside. So far, the triangle is holding.

Chart courtesy of StockCharts.com ww.stockcharts.com

The CRB Index continues to trend lower. Significant technical signs of a bottom have yet to appear.

Chart courtesy of StockCharts.com www.stockcharts.com

Ditto for crude oil! Significant technical signs of a recover remain elusive.

Chart courtesy of StockCharts.com www.stockcharts.com

Natural gas continues to trend lower, but is showing early technical signs of trying to bottom. Colder-than-average temperatures in Eastern Canada and U.S. are helping. Seasonal influences are positive into December.

Chart courtesy of StockCharts.com www.stockcharts.com

Energy stocks in the U.S. have held remarkably well despite weak crude oil and natural gas prices. Their strength relative to the S&P 500 Index remains positive.

Chart courtesy of StockCharts.com www.stockcharts.com

Gold literally exploded on the upside above resistance at $778.30 U.S. per ounce on Friday. Next upside technical target is to the $930 level where previous resistance exists. Strength can be attributed to a flight to liquidity. ‘Tis the season for gold to move higher between mid November and February!

Chart courtesy of StockCharts.com www.stockcharts.com

The move on Friday was more impressive in Euros and Canadian Dollars. All time highs are not too distant.

Chart courtesy of StockCharts.com www.stockcharts.com

Chart courtesy of StockCharts.com

Gold equity indices on both sides of the border literally exploded on the upside on higher than average volume on Friday. iShares on the TSX Gold Index also broke short term resistance at $13.41. ‘Tis the season for gold equities to move higher until February.

Chart courtesy of StockCharts.com www.stockcharts.com

Gold stocks are outperforming gold, a positive technical signal for both.

Chart courtesy of StockCharts.com www.stockcharts.com

Silver is lagging the gain by gold, but probably not for long. Support exists at $8.40. Resistance exists at $10.80. Short term momentum indicators continue to recover from oversold levels. MACD is showing positive divergence relative to price.

Chart courtesy of StockCharts.com www.stockcharts.com

Base metal prices (e.g. copper, aluminum) continue to trend lower.

Chart courtesy of StockCharts.com www.stockcharts.com

Lumber continues to surprise on the upside. ‘Tis the season for lumber and lumber stocks to move higher from the end of October to at least the end of January!

Chart courtesy of StockCharts.com www.stockcharts.com

The yield on 10 year U.S. treasuries fell below key support at 3.25% last week when the flight to liquidity went into over gear on Thursday. Intermediate downside technical target on the breakdown is 2.45%.

Chart courtesy of StockCharts.com www.stockcharts.com

Other Factors

Tech Talk’s prediction that an important low by U.S. equity markets and most sectors on October 10^th, was wrong. Panic selling of corporate securities (equities, preferred and bonds) and purchases of U.S. treasuries last Thursday in order to improve liquidity was not anticipated. Activity in world markets on Thursday was a once in a life time experience. The last time an event of this nature occurred was in December 1932 to February 1933 when a similar crisis in credit markets occurred. That’s the period when hundreds of U.S. banks failed.

The collapse in the corporate fixed income market and the swing into treasuries on Thursday was “breathtakingly” swift. Most of the action happened in the afternoon after Congress decided to do nothing (at least for now) for the auto industry and Treasury Secretary Hank Paulson indicted that action on the TARP essentially was done. Concern about the collapse of Citigroup also added to weakness. Big U.S. banks such as Citigroup are large holders of corporate bonds purchased during the reverse takeover privatization period in 2006 and 2007. Investors are concerned that corporate bonds will be dumped on the market if a major bank such as Citigroup fails or is merged with another bank. U.S. corporate bond ETFs fell more than 10% last week.

Chart courtesy of StockCharts.com www.stockcharts.com

Meanwhile, the yield on one month and three month U.S. treasury bonds briefly fell to 0.0% last week (After transaction costs, yield was below 0.0%) and closed on Friday at their lowest level in history.

Chart courtesy of StockCharts.com www.stockcharts.com

Chart courtesy of StockCharts.com www.stockcharts.com

The yield on two year treasuries touched an all time low on Thursday at 1.00%.

Chart courtesy of StockCharts.com www.stockcharts.com

The yield on twenty year treasuries spiked to a multi-year low.

Chart courtesy of StockCharts.com www.stockcharts.com

Other fixed income security indicators (e.g. the TED spread) confirmed that credit markets remain frozen despite efforts by central banks around the world to improve liquidity. The TED spread has declined from highs set in early October, but remains elevated.

Chart courtesy of StockCharts.com www.stockcharts.com

The focus is on Citigroup, a stock that fell 60.4% last week on growing concerns about a failure. A collapse of Citibank would have an impact on the economy that would be several multiples of the failure of Lehman Brothers. A failure by Citigroup would make bankruptcy of General Motors look like a minor event. Citigroup met over the weekend to consider alternatives for survival including a break up of the company and a merger with another major bank. The Federal government is aware of the implications of a failure and will not allow Citigroup to go under. Ultimate solution to this situation was unknown at the time of writing.

Chart courtesy of StockCharts.com www.stockcharts.com

Volatility in equity markets remains near record levels despite the significant decline on Friday.

Chart courtesy of StockCharts.com www.stockcharts.com

Efforts by the G20 nations to thaw the credit freeze continued last week. Canada pledged to move into deficit spending. Switzerland lowered its overnight rate by 1.00%. Another 21 U.S. banks received TARP money. President Bush announced an extension of unemployment benefits this weekend. However, all of these efforts take time to work. The money has been delivered to the banks mainly through capital infusions ($2 trillion in the U.S. alone), but the banks are reluctant to recycle the money into the corporate and private sectors until stability of the financial system is restored. The stage is set for a thaw in the credit, but it hasn’t happened yet.

Political influences on U.S. markets turned positive on Friday. News on Friday afternoon that President elect Obama is expected to announce today the confirmation of Tim Geithner as the next Treasury Secretary was the trigger for the strong rally. Obama also is expected to announce selection of other members of his economic team today. Later in the week the appointment of Hillory Clinton as Secretary of State likely will be confirmed. Yesterday, a New York Times headline read, “Obama vows swift action on vast economic stimulus”. Look for more good news about cabinet appointments and plans for implementation of the Obama platform during the next few weeks.

Is history repeating itself? Partially! The last time that a credit crisis of the current magnitude occurred was in November 1992/February 1933. President elect Roosevelt waited from November until Inauguration Day on March 3^rd to announce his “New Deal”. Meanwhile, credit markets from November to the end of February froze solid. Hundreds of banks in the U.S. closed their doors during this period. Unemployment spiked. Stock markets tanked and tested their 1932 lows. Response to the “New Deal” was immediate even though initial efforts by the new president were far from revolutionary. In fact, economists later claimed that specific action at the time was tame and probably did more harm than good to the economy in the long run. However, confidence returned to credit markets and the stock market began to recover. Confidence was restored mainly because the U.S. had elected a young president that offered hope and a new sense of direction (Sound familiar?). A similar scenario is likely to repeat in the weeks ahead. The Dow Jones Industrial Average more than doubled from March 1933 to the end of 1933. What’s different this time? The credit freeze in 2008 has not lasted as long as the credit freeze in 1933 (at least not so far). Current unemployment rates are not even close to the 25% level reached in early 1933. The Obama team seems to understand the urgency of moving quickly (demonstrated by timely announcements of key people prior to the January 20^th Inauguration Day) instead of waiting until January 20^th.

Canada’s financial service sector is a focus this week and early next week. Big write offs by Royal, Commerce and BMO are anticipated when they release fiscal fourth quarter results. The question is “How much?” The sector likely will remain under pressure until the news is released. Look for a significant rally shortly thereafter. Additional comments are available at the end of this report.

U.S. equity markets have a history of moving higher around the Thanksgiving holiday. Brooke Thackray’s book entitled, “Thackray’s 2009 Investor’s Guide” has a page entitled, “Thanksgiving” Give Thanks & Take Returns”. The trading day before Thanksgiving (i.e. this Wednesday) and the trading day after Thanksgiving (i.e. this Friday) historically have been two of the strongest days of the year for the U.S. stock market. Data from 1950 to 2007 show that the S&P 500 Index has gained an average of 0.7% per period. The trade was profitable 78% of the time. The main reason for strength during this period is a lack of institutional activity and a greater influence by retail investors. Institutional investors usually “call it a holiday” around noon on Wednesday and are “gone for the day” until Monday morning. Volume falls to below average levels on both days.

Cash sitting on the sidelines continues to build. At this stage, fear is precluding rational thinking. Fundamental, technical and seasonality analysis is being ignored. Equity markets are being driven by emotion and computerized trading that generate both bull and bear raids. Movements by the Dow Jones Industrial Average of 5% per day are becoming common. Most investors with cash are reluctant to “take a chance”. However, this period will pass, credit conditions will thaw and investing based on rational thinking will return. When it does, the scene is set for a substantial upside move. We just are not there yet.

The Bottom Line

• Play the seasonal trade in gold. The flight to liquidity will help.
• If long cash, watch for technical signs of a thaw in the credit freeze. The next intermediate move on the upside will be a rewarding experience.
• If long quality investments with good fundamental value, good strength relative to the market and encouraging seasonal influences, continue to hold, but prepare for lots of volatility.
• If long investments that don’t fit the above categories, take a loss for tax purposes.

 

Tech Talk’s Weekly Column in the Financial Post

(Published in Saturday’s Financial Post. The original report is available by paid subscription through www.nationalpost.com )

Canada’s Banks: Where to now?

Canada’s banks start to release fiscal fourth quarter reports next week. What is their outlook?

Seasonal influences

Canada’s financial services sector has two periods of seasonal strength: from the end of September to the end of December and from the end of February to the end of May. The better of the two periods is from the end of September to the end of December. The October to December trade was profitable in nine of the past 10 periods for an average gain per period of 6.7% plus dividends. Seasonal strength is related to anticipation of encouraging news by the banks when they release fiscal fourth quarter earnings for the period ended October 31st. Chief executive officers love to give good news when they announce fourth quarter results. Historically, reports have included several favourable annual recurring events including strong seasonal earnings gains, dividend increases, stock splits, share repurchases and a favourable outlook for the following fiscal year. Sub-prime mortgage woes starting in September 2007 precluded the possibility of favourable recurring annual events last year. Net result was a decline by the TSX Financial Services Index of 6.1% during the October to December period in 2007. The current September to December period is a repeat of the September to December 2007 period. Anticipation of favourable annual recurring events is not happening once again.

The enclosed chart shows optimal seasonal entry points during the past seven periods. Notice that no entry point was indicated last year or this year.

Chart courtesy of StockCharts.com www.stockcharts.com

Technical influences

The TSX Financial Services Index currently has a negative technical profile. Intermediate trend is down. The Index trades well below its 50 and 200 day moving averages. Strength relative to the TSX Composite Index turned negative early in October. Short term momentum indicators (Relative Strength Index, Moving Average Convergence Divergence and Stochastics) are oversold, but have yet to show technical signs of bottoming.

Fundamental influences

Analysts following the Canadian financial services sector have reduced significantly their fiscal fourth quarter earnings estimates during the past three weeks. Analysts have been prompted by news and rumors of significant non-recurring write offs to be added to fourth quarter reports. This week Bank of Nova Scotia announced an $890 million write off to be included in its fourth quarter report and Toronto Dominion Bank announced a $350 million hit from credit trading losses. Analysts are looking for similar write downs by other banks, particularly Bank of Montreal, Royal Bank and Canadian Imperial Bank of Commerce.

Excluding write downs, fourth quarter operating earnings reports are expected to compare poorly relative to the same period last year. Consensus estimates show an average decline on a year over year basis of 7.6% for Canada’s top six banks. Following are consensus estimates

Operating earnings in the fourth quarter have been impacted by declining profits from wealth management and merchant banking operations as well as the need for growing reserve requirements for domestic banking operations.

Other Factors

Dividend yields on Canada’s bank stocks are exceptionally high at present. Yield on the TSX Financial Services Index is approximately 4.8%. Chances of dividend reductions are remote. The high dividend yield for stocks in the sector will limit downside risk.

Bill Carrigan’s Blogs

Brrrr! It’s cold outside! Weather in Eastern Canada and U.S. has been colder than average this winter. Bill comments on natural gas and “gassy” stocks. Following is a link to his blog: http://www.gettingtechnicalinfo.blogspot.com/

Headline in Bill’s weekly column in the Toronto Star reads, “Treasury note yields signal market’s direction”. Following is a link to the report:

http://www.thestar.com/comment/columnists/94635

 

Black Swan Investing

Nassim Nicholas Taleb, author of “The Black Swan: the impact of the highly improbable” appeared on CNBC early last week. Mr. Taleb claims that U.S. equity markets are experiencing a “Black Swan”. He manages one of the most successful U.S. hedge funds this year, up over 50% to date. Tech Talk discussed his method of investing in a Financial Post column on September 6^th. The column will be repeated tomorrow.

An interesting column on “Timing the market”

On November 15^th, Noreen Rasbach wrote an interesting and controversial column in the Report of Business that supported the “Buy and Hold” strategy. The column focused on an analysis completed by a U.S. professor suggesting that timing the market (i.e. being out of the U.S. equity market for a determined time each year) could result in missing some of the best performing days that appear randomly and therefore a Buy and Hold strategy is superior over a Timing the Market strategy. He provided data based on missing the top ten performance days from 1963 to 2004.

Tech Talk wasn’t going to let that one pass. Noreen was contacted by email and given an explanation about how and why timing the market works through the use of technical and seasonality analysis. The appropriate studies were offered as evidence. The email concluded with the following paragraph:

Can you time the market? Yes! Must you time the market? Yes, for at least the next eight years (based on the 16 year stock market cycle). How can you time the market? By using a combination of technical and seasonal analysis!

Noreen interviewed Tech Talk last week. On Saturday November 22^nd, she graciously wrote a column in Report on Business entitled, “Understanding the swings helps get the odds on my side”. The column provides a quick summary of some of the methods used by Tech Talk to arrive at investment decisions. The column is well written and worth a read.

 

Adrienne Toghraie’s “Trader’s Coach” Column

Getting Bad Reviews for Traders

By Adrienne Toghraie, Trader’s Coach
www.TradingOnTarget.com

Getting a bad review can be a devastating experience, even for the most seasoned performer. You have given it your all and then you discover that your audience is not just under-whelmed, but downright disapproving. As a trained performer, and now as a writer, I am no stranger to bad reviews. I can tell you from my own experience that a bad review can come out of nowhere and hit you like a bomb.

Do traders get bad reviews? Well, not like a writer or stage performer does, but a professional trader who has been in the field for any length of time is not exempt from the potential for bad reviews. For example:

1. Every time you make a trade you might say you are reviewed by your Business Plan that asks the question – Did you follow your rules?
2. You were hired as a trader for a large financial firm and you just got your recent review – and it is less than enthusiastic. In fact, you are notified that you are just close to being let go.
3. You have taken on a handful of clients and are managing their money. One day, you get a call from one of your clients who announces that your performance is sub-par and he is pulling his account.
4. You have spent years developing a trading system that you have meticulously tested and have now begun to market to other traders. You find a write-up in a trading journal that says, in effect, that your system does not work and is not worth the money.

These are just a sampling of the kinds of bad reviews a trader can look forward to when he reaches out beyond the confines of his trading desk to work for or with others.

Getting it right

The first thing I have learned to do when I get a bad review is to look to the source. When I was younger, I took every bad review to heart as the gospel truth. But, over time, I came to see that the reviewer often has a point of view or an agenda that may color his perception, making it far less of an indictment of my work and much more of a reflection of his own position. For example,

• Highly talented people are often badly reviewed by others in the same field who are jealous and feel threatened by a more talented individual’s work.

For traders, this can be a problem if, for example, a talented young trader is being reviewed by an older trader of limited talent, who is now in management but still feels threatened by the superior talent of others.

• Some critics are simply poorly prepared to assess the worth of the work of those they review. Having never performed the work they are reviewing or never at the level of difficulty in the same working conditions, their harsh review may be unfair and off the mark. In addition, they may be expecting perfect results in the midst of a perfect storm. Or, their training may be limited or out-of-date, but they still see themselves as expert critics.

For traders, this can be a problem in a situation in which the person who reviews their work considers himself an expert but has a very limited understanding of the situation or grasp of the technical issues involved. This situation is even more fraught with peril when that under-trained critic is a client.

• Some critics have a hidden agenda. They have political, social, or philosophical positions that they want to advance at the expense of their mandate to fairly and honestly evaluate. Since they see everything through this political or philosophical lens, if you mistakenly step into the quagmire of their hot topic, your work and performance will be taken as an affront, and you will pay a heavy price.

Thus, it is important that you take the time to evaluate the motive and background of the person who is making judgments.

Not personal

The next step in responding to a bad review (assuming that you have cleared the reviewer’s motives) is to step back emotionally and remember that the review is not personal. What I like to do is to imagine that I have just been given a precious piece of information that I can use to make money, to be more successful, to reach more people, etc. Furthermore, I take a minute to be grateful for the time and thought that went into producing the review. I like to remind myself that the reviewer had to have been willing to say what was honestly on his mind, knowing that it could potentially come back to hurt him. So, rather than seeing a bad review as an attack, to which I would respond emotionally, I work to see it as a gift that can help to improve my performance.

Make it useful

Now that you have lowered the level of your emotional response to a bad review, it is time to use it as the gift that it is. Ask yourself the following:

• What is the central issue or problem that this review is highlighting?
• What can I do to put this observation to use – how can I correct this problem?
• If there is nothing I can do to correct this problem, how can I prevent it from occurring in the future?

Now get to work and put this information to use.

The final step

The last step in this process will be the hardest of all to put into practice. But, I promise you that, if you do this, the rewards will be much greater than you can imagine. If it is feasible, once you have corrected the problem, go back to the individual who gave you the bad review and show him how you corrected the problem. Then, thank him. Yes, thank him for helping you to improve your performance. The chances are that you will have him as a friend and ally for life.

Adrienne Toghraie, Trader’s Coach

Adrienne@TradingOnTarget.com

www.TradingOnTarget.com

919-851-8288

TOP PERFORMANCE SEMINAR

Presented by Adrienne Toghraie, Trader’s Coach

“You cannot trade a proven system

without discipline”

2-day Intensive Training

TradingOnTarget.com

ADToghraie@nc.rr.com

Matt Blackman’s Blog

Matt discusses “Another week of living dangerously”. Following is a link to this blog:

http://tradesystemguru.com/content/blogcategory/34/68/

The blog also gives additional information about the 1932-1934 period and provides a cartoon on the latest action toy, Ben Bernanke entering his helicopter.

 

= = = = = = = = = =

Disclosure: Except for iShares on the TSX Gold Index, Mr. Vialoux does not own securities mentioned in this report.

Disclaimer: Comments and opinions offered in this report are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed.

 Print This Post