Feedback in:

“Hi Michael, Would you agree that parabolic blowoff tops offer a way of trading profitably whilst going against the trend? Regards, Jeff”

Is there a generally accepted definition of ‘parabolic blowoff top’ that I can understand with the precision of a number? His response:

“Not that I am aware of. Is your point that, if you can’t define a parabolic blowoff top in precise numerical terms, you cannot backtest its effectiveness as an entry point? If so, I would have to concede that point.  However, would you accept that parabolic blowoff tops are very often a sign that the market may be about to change direction, at least temporarily? Jeff”

How would you define it then? His response:

“Michael, Essentially, as a sharp rise in price followed by a sharp drop, as shown in the chart on this page. On another matter, would you say that reverse divergence between the price and the MACD (as shown in the diagram here) is a sign that the trend may be about to change direction? I am a big fan of trend trading, but I also interested in exploring whether there are profitable counter-trend techniques. Jeff”

I think other readers here may have some good feedback.

This note on StockTwits has drawn some interest. Based off some emails received, from people who know me well, some constructive criticism of my post was offered. To clarify:

1. While the original post openly saluted Lindzon’s entrepreneurial spirit, while at the same time defending my view, some are clearly insulted. It was not my intent to pick a fight or insult Lindzon as a person. Lindzon is not a ‘twit’ by any measure. Do many, many people who gather to chat tips, chase the Holy Grail, etc. — regardless of the location — eventually fall under that classification? No doubt. Can posts here be less abrasive? Sure. Point well taken.

2. The main idea with the original post was to point out what I have long believed and written about concerning fundamentals, predictive technical analysis, tips, chatter and news — it is all worthless. That view is buttressed across some diligent research on the web, in books and in film. Broke, for example, nails financial media and tips head on. Trend Following has done it for years.

A note put together on criticism recently.

The great debate: Are stocks overpriced?

Who knows? It is a fundamental debate never to be solved.

it is not a trend following debate.

Criticism is a good thing. I embrace it and you can read my longer view on the subject of ‘criticism’ here. So tonight I decided to post the three most over the top criticisms toward me saved from over the years. All three critiques are from ‘names’ in the trading space — who clearly did not like the full service truth wash:

Number 1:

“Listen, shitforbrains [sic]. You have been warned. Trust me and listen carefully. There will not be another warning given to you. U [sic] are a lying c**t … and are about to get your ass sued off.”

There was never a lawsuit.

Number 2:

“When it comes to trading Covel is an idiot…Covel has been duped by his own anger and his own blindness to the possibility that there might be others out there who are not dishonest charlatans. [Covel] cannot fathom why someone who actually was as successful as I was would leave so much money on the table and stop trading. The courts will prove [Covel] the spiteful jealous liar that he is…Fortunately, Covel made these statements in a magazine published in the U.K. That means that I can sue him for libel there. The English have very tough libel laws because they don’t like people making things up about the royals…I won’t have to worry about Covel anymore after my suit…[Covel is] an a**hole who has made himself my mortal enemy despite my many attempts to get him to stop…Mike [Covel's] continuing actions are only going to make it clearer to a jury that he is being malicious. The punitive damages rise every time he posts more bullshit.”

There was never a lawsuit.

Number 3:

“You are a lowlife d**k.”

Nice.

I like Howard Lindzon. Entrepreneur to be looked up to. He has said some very nice things about my books. Now that the disclaimer is out of the way: what in the world is the purpose of StockTwits? For example, from their ‘about us’ page:

“Log into the site with your Twitter details or download the StockTwits Desktop and you will be joining a community where market participants share their very best ideas in a continuous real time and open conversation.”

And:

“The beauty is the simplicity. Messages are short and allow a person to read several interesting bits of stock information from various sources at a glance. The lightweight approach highlights the power of delivering vertical value to a horizontal community, where both constituencies share a common passion: the desire to consume and share real-time information.”

And:

“In essence, StockTwits® helps people interested in markets socialize ideas. Whether you are a short term trader, swing trader or investor, whether you prefer stocks, Forex, options or futures, whether you want to eavesdrop or participate, you will find a wealth of information streaming at your fingertips.”

Sure, everyone has a view, but not everyone has a view that you should pay attention to. In fact, if trading as a trend follower ALL of these views are worthless.

Let me blunt: I know who the best traders on the planet are and NONE of them do any of this nonsense. Agree or flame me — could care less because I am 100% dead on telling the truth. This is financial news and information taken to its useless extreme.

Among his many wise points…the one he makes about low artificial rates working against ‘savers’ to the benefit of Goldman types…is spot on:

From ‘The Business Insider’:

“One of the biggest delusions many small investors suffer from–from casual mom-and-pops to full-time day-traders–is that the market is something like a level playing field. It’s not, of course. The average institutional investor has resources and information that the average small investor can only dream of. These include:

* Multi-million-dollar research budgets
* Full-time traders and analysts with years of experience and relationships all over the industry
* One-on-one and group meetings with the managements of several hundred companies a year
* Deep networks of industry contacts that help them sniff out any hint of fundamental change
* 30 brokerage firms calling them all day long with every tidbit of information they unearth
* Quantitative and technical models that allow them to analyze more in seconds than a casual investor can analyze in a year
* Instant trading execution, sometimes provided by computers co-located at trading exchanges
* And so on…”

These factors don’t apply to trend following.

A recent video on Maria Bartiromo:

My videos:

Buy the film here.

I am presenting on a free webinar tomorrow 6pm PST.

Dear Clients, Readers, Partners, Fund Managers, Traders and Friends:

Since 1996 I have worked with and written for thousands. Many of you have either become clients or have perhaps read one of my books. These days many have come to my work first through my film. That said, trend following is STILL not well known!

Spreading the gospel of trend following even more is my goal, but I need your help. How can you help? I would like to request your honest testimonials about any of the following:

1. My trading system courses.
2. ‘Trend Following’ book.
3. ‘The Complete TurtleTrader’ book.
4. ‘Broke‘ film.
5. My web sites.

If you are willing to provide a video (or written) testimonial covering any aspect of my work it will be posted prominently with a link back to your Facebook, Linkedin or website. Video is preferred, and we can help you to do that if needed, but written testimonials would be great too.

In return for your effort I will provide free of charge to those who participate a choice of any one of my ‘Market Wizard’ DVDs (or my film). If you have all of my DVDs already I still hope you consider providing a testimonial!

Thanks,
Michael Covel

P.S. Contact me here.