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The Drop in The Pound Last Friday Was Not a Black Swan

Distributions of returns of currency pairs have fat tails and the probability of extreme events is much higher than that predicted by normality. The 8% fall in GBPUSD last Friday was not an outlier or a black swan event. Usually … Continue reading

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Buying A 5% Two-Day Drop In S&P 500 For Quick Profits Is A Risky Bet

Based on an analysis on limited historical samples, buying a two-day drop in S&P 500 of more than 5% is a risky bet for both short-term and position traders. The chances of making a profit naturally increase as the holding … Continue reading

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VIX Does Not Always Move Opposite To S&P 500

Yesterday the S&P 500 fell but VIX also fell. Some traders were expecting VIX to rise since stocks fell. But in the markets there are no perfect correlations. Historically, the VIX has moved opposite to S&P 500 about 78% of … Continue reading

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Stock Market Sentiment Modulators

The stock market plunge after the referendum result in the United Kingdom was an attempt from the part of certain market participants to scare retail investors via “market sentiment modulation.” The intent was to create a perception of chaos and … Continue reading

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Price Charts Can Be Misleading

Savvy market professionals know that, finance people know that, even some retail investors know that but the financial media continues to serve price charts to the public. Return charts paint a different story about the state of the stock market.

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A Rare Stock Market Pattern With No Easy Explanation

Yesterday the S&P 500 index gapped up 1.4% on the open but a good part of the gains evaporated during the day and at the close were reduced to 0.6%.  As always, the financial media had an explanation to offer.

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