TimerFrank's  Instablog

May 23, 2012 (FinancialWire) (By Frank Kollar)

Shares of ISHARES Barclays 20+ Yr Treas (NYSE: TLT) have reached historical highs and are due for a reversal.

In fact, that reversal may have already started.

TLT reached an historical high of $125.03 back on October 4, 2011. It was an intra-day high not a closing high. The ETF went into a tailspin after, dropping 12% to the $110.00 level in a few weeks.

We are looking at the same situation now, with TLT running up to $124.44 intra-day last week and after three days at this level; TLT gapped down at the open on Tuesday, May 22 and will close lower, near $122.00.

The odds of a decline back to $110.00 are not likely, but a drop to the $116.00 to $117.00 level appears to be probable and an emotional trade lower possible.

A short trade at current levels with a buy stop at just above $125.00 would make a low risk trade.

The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy does not currently hold a position in TLT.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

May 22, 2012

Starbucks Corp (NASDAQ: SBUX) has pulled back over 14% from its prior highs. Is this a good time to buy this popular company's stock?

Starbucks is the leading fresh coffee and specialty coffee brewer plus sells high quality whole coffee beans and coffee related equipment.

Starbucks rarely declines as much as this current correction. It is always possible that lower lows are ahead, but if the line we had to wait in this morning to get a cup of coffee is a sign, then the current levels is actually a great buying opportunity.

With support just below the correction lows, at $51.25, we would consider Starbucks a solid buy at this time. Using a tight stop below support at $51.00, it is also a very low risk trade.

Support is at about $51.25.

The Fibtimer.com (http://www.fibtimer.com) Stock Timing Strategy does not have a position in Starbucks.

Frank Kollar has been timing the financial markets since 1982, with online service since 1996. He is a dedicated trend timer and his strategies exited the markets before the crash in 1987 as well as the bear market in 2000 through 2002. During the 2000-2002 bear market and the 2008-2009 bear market his bearish positions resulted in substantial gains, all achieved by trading trends.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SBUX over the next 72 hours.

Veteran, successful market timers and stocks traders stay detached. They know that the markets are impersonal and they trade their strategies methodically. But novice market timers (and novice stock traders) often have trouble achieving this rational mind set.

Stay Detached From Trading Decisions

For example, novice timers (and traders) may take market timing losses and subsequent drawdowns personally. Seeing it as a hit to their ego, and attaching personal significance to what is just an everyday fact of all timing and trading decisions.

Small losses should be expected, and it's vital that you don't take them personally. What is important is keeping them small. Never allowing any loss to grow into a big one. That is accomplished by following a timing strategy that is designed to protect capital.

Disappointment Is Natural

It is natural for a person to feel disappointed after experiencing a drawdown. Financially, real money has been lost.

It's perfectly reasonable to feel a little disappointed, but it isn't useful to take it personally. Disappointment is a natural emotion, but not very helpful in market timing.

In fact, if you take it personally, you might then try to gain back that small loss, by exiting your strategy and taking an ego inspired trade. The odds are good that you will be the poorer for it.

Market Timing Requires Doing The Unnatural

Although we spend a lifetime building up an array of emotional responses to help us cope with uncomfortable feelings, those same, quite normal emotional responses are exactly the opposite of what is needed to succeed in market timing.

Timing requires that you do the unnatural, and control your emotions. A lifetime of learning how to respond to uncomfortable feelings or situations MUST by unlearned to succeed in market timing (or any trading for that matter). Responses that are correct in personal and even business situations, are sure to cause losses in trading the financial markets.

You expect to make a profit over time, but in the short term, even a winning timing strategy is bound to have losers. That's just the nature of probability theory.

So why make it personal? Why put your ego on the line with each trade?

Why brag when you are lucky enough to have the odds work in your favor and then be depressed when the odds go against you? Both emotional responses are normal, yet they are dangerous to successful market timing.

But how do you control perfectly natural emotional responses?

"Unlearning" A Lifetime Of Lessons

When it comes to market timing, you've got to UNLEARN responses that you've spent your whole life learning.

Market timing isn't about you. It is just a strategy that works over time.

In other fields, probability plays little if any role. You put in effort, make sure you meet the expectations of the people who pay you, and you're a success.

In the traditional workplace, it makes sense to put a little ego and pride into your work. Your effort and talent often have a direct payoff.

But with market timing, the odds can go against you, no matter how much work you put in. The perfect trade can go wrong.

That's hard to accept for most people because it means that being a successful (profitable) market timer or trader, to some extent, is just a matter of the odds randomly working in your favor. But there is good logic behind this randomness. And a successful timing or trading strategy uses this logic to profit.

A successful timing strategy will exit losses quickly. It will not stay with a bullish or bearish position to sooth the ego of the strategy's designer. It will also stay with a successful trade and not exit quickly to lock in a profit. That may feel good for a day, but if the profitable trend lasts two, three, five times longer, you have lost out on a huge profit.

Recognizing that odds are part of trading takes some of the glory out of it. But on the other hand, understanding odds helps you cope with inevitable drawdowns.

Conclusion

If you are a seasoned market timer who really has mastered his or her emotions, you are assured that the odds will, over time, work in your favor.

You will enjoy your times of glory as the gains add up. You will hunker down and quietly follow the signals during unprofitable sideways markets or during failed trends.

Taking a detached, unemotional approach may take some of the glory out of market timing, but on the other hand, that same unemotional approach is the KEY to market timing success.

Most importantly, the unemotional market timer will implement the timing strategy. He or she will make each trade consistently, with the certainty that over time the odds will make him or her a successful timer.

At FibTimer we offer strategies with years of success behind them. But all of them, at one time or another, have had losing trades. Staying with the chosen strategy eventually paid off. Timing strategies are designed to make their profits over time, not in a few weeks or even months, though it is always nice when that occurs

Remaining unemotional, so that a timing strategy is adhered to not only in easy (profitable) trading conditions, but also during the tough (unprofitable) ones, leads to success in a field where the majority fail.