Tap into feedback loops to unravel market trends and discover profitable trading opportunities
The Janus Factor presents an innovative theory that describes how feedback loops determine market behavior. The book clearly shows how the theory can be applied to make trading more profitable. The metaphor of the two-faced god Janus is used to reflect alternating market environments, one dominated by trend followers and the other by contrarian bargain hunters.
In this book, author Gary Anderson puts forth a systematic view of how positive and negative feedback drive capital flows in the stock market and how those flows tend to favor either sector leaders or sector laggards at different times.
Discusses how to find better performing stocksOutlines when and how to use momentum strategies for big profitsAddresses when and how to use contrarian strategiesGary Anderson is the winner of the 2003 Charles H. Dow Award, presented by the Market Technicians Association
Intellectually challenging and highly practical, The Janus Factor offers insight into market behavior and new methods for capturing stock market trends.
Gary Edwin Anderson is a principal od Anderson & Leo, providing stock market consulting and advisory services to an international clientele of professional asset managers, including banks, mutual funds, hedge funds, and financial advisors. A well-known technical analyst, Anderson won the 2003 Charles H. Dow Award from the Market Technicians Association for his paper on feedback loops in the stock market, Anderson s work has been featured in Barron s, and he has been published in Technical Analysis of Stocks & Commodities. In addition, he publishes a weekly commentary, Equity Portfolio Manager, and is the primary author of Trader s Boot Camp (tradersbootcamp.com), an online educational services.
The Janus Factor vii Introduction xiii Acknowledgments xv CHAPTER 1 Foundations 1 Serendipity 2 The Data Set 5 Reasons and Causes 6 Befuddled 7 Which Way Is Up? 9 CHAPTER 2 The Assignment 13 Measuring Risk: Offense and Defense 14 Picturing Offense and Defense 17 The Benchmark Equivalence Line (BEL) 19 The Trend of Relative Performance 22 CHAPTER 3 Feedback and Capital Flow 27 Feedback 28 Feedback and Capital Flow 31 Calculating Relative Strength 37 The Relative Strength Spread 39 Trend Followers and Contrarians 41 CHAPTER 4 The Janus Factor 45 Structure and Entropy 46 Confidence 47 Is the Market Predictable? 48 Balancing Acts and Paradigm Shifts 54 CHAPTER 5 Seasons of Success 57 The Venturi Effect 58 The Relative Strength Spread and the Performance Spread 61 Group Studies 68 CHAPTER 6 Why Jesse Went Broke 71 The Cotton King 74 1911-1914 75 The Final Years 80 CHAPTER 7 Sheep Dogs and Other Contrarians 83 The Sheep Dog Effect 85 A Contrarian Hedge? 87 The Contrarian Rebound 88 The Contrarian Collapse 92 CHAPTER 8 Situational Awareness 99 Bielema's Choice 101 The Bet 106 Let Us Calculate! 109 CHAPTER 9 The Direction of Momentum 115 Relative Momentum 117 Relative Momentum versus Relative Strength 123 CHAPTER 10 Long Strategies 127 The Critical Moving Average 127 The DOM Strategy 129 Contrarian Threats 130 A Defensive Long Strategy 133 It's a Bull Market, You Know 135 CHAPTER 11 The Complete Strategy 137 Combined Long and Short Strategies 139 The Model Portfolio 141 Execution 143 Appendix 149 About the Author 163 Index 165