I started physical therapy on my shoulder today...and found a whole new kind of pain. I was told that beginning physical therapy can be painful...but I truly had no idea.
At first everything seemed fine. Just some minor discomfort in trying to expand the range of motion on my still sore shoulder. Then pop. And then a rush of pain like I've never felt before. The therapist struggled to pop my shoulder back into place. All the while I'm sweating and grumbling with the pain. Not fun.
After an ice pack and electrodes to the shoulder...the therapist tried to work it again. This time an even louder pop...and even stronger pain. I could tell the therapist was truly worried about getting the shoulder back into place. I was just looking for a bucket. After what seemed like an eternity...finally some peace...the shoulder popped back in. Then more ice packs and electrodes...and the therapist sent me home.
Not a fun day. And I'm afraid not much time can be spent on the computer due to the pain.
If anyone has any experience with physical therapy...please let me know if this type of experience is normal. I have another session this Wednesday...and I'm dreading it like the plague.
So, bare with me. I'll try to post a bit here and there. Just can't dive too much into system testing right now. I will tell you that I've been testing a cool little idea that involves US oil rig counts and oil prices to trade oil drillers. The idea seems to have some promise.
Have a great week!
Monday, December 06, 2004
Sunday, December 05, 2004
Weekend Update
In a call-out for trading ideas last week, I received an email from Tony in regard to the following idea: buying NYSE stocks after 4 consecutive down days. Tony states that he's looked at various trading systems and has not found any that work well against the NYSE stock universe.
I agree with him 100%. I have developed over 45 trading systems and only two can trade NYSE stocks successfully. There's just something funky about NYSE stocks. The only tip I've found for trading NYSE stocks is to limit your trading to the NYSE optionable stocks only.
Now, back to Tony's idea of buying after 4 consecutive down days.
I coded the idea first against the QQQQ. There was a surprising amount of trades for this idea with nothing to write home about. So, I filtered the results down to only buying on a drop of over a certain percentage from 5 days ago. I applied various percentages and none really seemed to improve the results. A trend filter did not help either.
Just for kicks, I ran a rough test against NYSE optionable stocks. Results were no better than random entry. Overall, the first wave of testing was frustrating. Does not mean there is not something there. Just means have to dig a little deeper.
My next step is to test volume patterns and possible extending the number of days down. Other ideas could be to test whether it's a brand new 50 day low or if the down days started from a 50 day high. I'll keep you posted on the progress.
Until then...
Daily System Updates
No open trades at this time.
Weekly System Updates
Long system trigger for VNWK at Monday's market open. The system that generated this trade is the same system that generated SPDE and AATK trades the previous weeks. So, as you know, system caters to penny-type stocks with high volatility. Holding periods are mid-term in length. This system is one of my riskiest systems. I trade very little size with trades from this system because losses can be extreme...as you can see by the current losses in the SPDE and AATK trades.
Also, as I'm sure you know, the QQQ symbol has changed to QQQQ. This symbol change is a result of the ETF now trading on the Nasdaq versus the Amex.
I currently have a weekly long system open on the QQQQ (results below). But, this weekend received a new long system trigger for the QQQQ from a different weekly system. This weekly system is based partly on the original Turtle Trading system. TraderMike has a post containing links to the system. Read TraderMike's post here.
Current open system positions:
I agree with him 100%. I have developed over 45 trading systems and only two can trade NYSE stocks successfully. There's just something funky about NYSE stocks. The only tip I've found for trading NYSE stocks is to limit your trading to the NYSE optionable stocks only.
Now, back to Tony's idea of buying after 4 consecutive down days.
I coded the idea first against the QQQQ. There was a surprising amount of trades for this idea with nothing to write home about. So, I filtered the results down to only buying on a drop of over a certain percentage from 5 days ago. I applied various percentages and none really seemed to improve the results. A trend filter did not help either.
Just for kicks, I ran a rough test against NYSE optionable stocks. Results were no better than random entry. Overall, the first wave of testing was frustrating. Does not mean there is not something there. Just means have to dig a little deeper.
My next step is to test volume patterns and possible extending the number of days down. Other ideas could be to test whether it's a brand new 50 day low or if the down days started from a 50 day high. I'll keep you posted on the progress.
Until then...
Daily System Updates
No open trades at this time.
Weekly System Updates
Long system trigger for VNWK at Monday's market open. The system that generated this trade is the same system that generated SPDE and AATK trades the previous weeks. So, as you know, system caters to penny-type stocks with high volatility. Holding periods are mid-term in length. This system is one of my riskiest systems. I trade very little size with trades from this system because losses can be extreme...as you can see by the current losses in the SPDE and AATK trades.
Also, as I'm sure you know, the QQQ symbol has changed to QQQQ. This symbol change is a result of the ETF now trading on the Nasdaq versus the Amex.
I currently have a weekly long system open on the QQQQ (results below). But, this weekend received a new long system trigger for the QQQQ from a different weekly system. This weekly system is based partly on the original Turtle Trading system. TraderMike has a post containing links to the system. Read TraderMike's post here.
Current open system positions:
- 1 QQQQ long with current profit of 5.74%;
- SPDE long with current loss of -9.23%;
- AATK long with current loss of -13.10%.
Thursday, December 02, 2004
Motley Fool Millionaire Article
A recent article by Tom Gardner and Rich Smith of The Motley Fool sparked a system idea or two. Read the article titled, "Be the Millionaire Next Door", here.
Tom and Rich propose a system of consistently pumping money into the market each and every month for up to 25 years in order to become a millionaire. Basically, using the dollar-cost averaging techniques of investing your money in good times and bad. But, what if you could supercharge the system? Like Tim Allen in Home Improvement used to say, "I think it needs MORE POWER. Arrh! Arrh! Arrh!"
Instead of investing your money each month into the market...invest your money each month into a money market account/fund. Then only move money from that account into the market based on system triggers.
These system triggers could be as simple as using moving averages, donchian channels, seasonalities, etc. to determine entry points. You could even change the idea of using stocks to choosing mutual funds. Pick a few sound mutual funds with long-term records. The more non-correlated these funds are the better. And then a system could be built to trigger off these funds or their corresponding benchmark index.
Maybe an even better alternative would be to just use ETF's instead of funds.
Again, the basic premise is to contribute every month...but wait to invest in the market when the system deems it appropriate. The extra little tweak you could make is to play with money management techniques. You could allocate the money from your holding area into the market based on simple formulas such as using a percentage based method of allocation. Or drive down further into more complex techniques such as pyramiding, equity curves, etc.
You're probably asking, what's the difference between this system and regular systems used to enter the market? With regular systems you're looking to stay out of the market as much as possible. Only have your money in at opportune times and remove your money during the risky times. With this system you actually want your money in the market as much as possible. In fact, you never pull your money out with this system. Once you get an entry trigger and move your money into the market...that money is gone to the system. See the difference?
Like I said before, I'm just trying to add more power to Tom and Rich's system. Maybe reduce the time to become a millionaire from 25 years to 15.
I plan on working on this idea over the coming weeks. I'll keep you posted on the progress.
Tom and Rich propose a system of consistently pumping money into the market each and every month for up to 25 years in order to become a millionaire. Basically, using the dollar-cost averaging techniques of investing your money in good times and bad. But, what if you could supercharge the system? Like Tim Allen in Home Improvement used to say, "I think it needs MORE POWER. Arrh! Arrh! Arrh!"
Instead of investing your money each month into the market...invest your money each month into a money market account/fund. Then only move money from that account into the market based on system triggers.
These system triggers could be as simple as using moving averages, donchian channels, seasonalities, etc. to determine entry points. You could even change the idea of using stocks to choosing mutual funds. Pick a few sound mutual funds with long-term records. The more non-correlated these funds are the better. And then a system could be built to trigger off these funds or their corresponding benchmark index.
Maybe an even better alternative would be to just use ETF's instead of funds.
Again, the basic premise is to contribute every month...but wait to invest in the market when the system deems it appropriate. The extra little tweak you could make is to play with money management techniques. You could allocate the money from your holding area into the market based on simple formulas such as using a percentage based method of allocation. Or drive down further into more complex techniques such as pyramiding, equity curves, etc.
You're probably asking, what's the difference between this system and regular systems used to enter the market? With regular systems you're looking to stay out of the market as much as possible. Only have your money in at opportune times and remove your money during the risky times. With this system you actually want your money in the market as much as possible. In fact, you never pull your money out with this system. Once you get an entry trigger and move your money into the market...that money is gone to the system. See the difference?
Like I said before, I'm just trying to add more power to Tom and Rich's system. Maybe reduce the time to become a millionaire from 25 years to 15.
I plan on working on this idea over the coming weeks. I'll keep you posted on the progress.
Tuesday, November 30, 2004
Taylor Turkey System Follow-up
Wanted to post a follow-up to the Taylor Turkey system post. This system goes long at the market open the day before Thanksgiving and sells at the market open the Monday after.
This Thanksgiving was another winning year for the system. The Nasdaq Composite had a gain of 0.91%, the DJ-30 had a gain of 0.26%, and the S&P 500 produced a 0.49% gain. Didn't reach the average profit marks from the backtests...but a gain is a gain. Gotta take what the market gives ya.
If ya'll have any ideas you'd like me to test out...send me an email at mike@taylortree.com.
Enjoy your week.
This Thanksgiving was another winning year for the system. The Nasdaq Composite had a gain of 0.91%, the DJ-30 had a gain of 0.26%, and the S&P 500 produced a 0.49% gain. Didn't reach the average profit marks from the backtests...but a gain is a gain. Gotta take what the market gives ya.
If ya'll have any ideas you'd like me to test out...send me an email at mike@taylortree.com.
Enjoy your week.
Taylor Turkey System Follow-up
Wanted to post a follow-up to the Taylor Turkey system post. This system goes long at the market open the day before Thanksgiving and sells at the market open the Monday after.
This Thanksgiving was another winning year for the system. The Nasdaq Composite had a gain of 0.91%, the DJ-30 had a gain of 0.26%, and the S&P 500 produced a 0.49% gain. Didn't reach the average profit marks from the backtests...but a gain is a gain. Gotta take what the market gives ya.
If ya'll have any ideas you'd like me to test out...send me an email at mike@taylortree.com.
Enjoy your week.
This Thanksgiving was another winning year for the system. The Nasdaq Composite had a gain of 0.91%, the DJ-30 had a gain of 0.26%, and the S&P 500 produced a 0.49% gain. Didn't reach the average profit marks from the backtests...but a gain is a gain. Gotta take what the market gives ya.
If ya'll have any ideas you'd like me to test out...send me an email at mike@taylortree.com.
Enjoy your week.
Sunday, November 28, 2004
Weekend Update
- J.P Morgan, when asked what the stock market will do, replied, It will fluctuate.
So, what is next for the markets? First, let's see how far this election rally has come.
Here's the breakdown of past election rallies if you would have invested at the close of the last day in October and sold at the close on the last day of December of the same year within an election year.
S&P 500
Time Period: 1964 - 2000
Total Elections: 10
Total Win%: 70.00%
Total Losing%: 30.00%
Average Profit: 3.85%
Average Loss: -2.74%
Largest Gain: 6.50%
Largest Loss: -7.63%
DJ-30
Time Period: 1916 - 2000
Total Elections: 22
Total Win%: 68.18%
Total Loss%: 31.82%
Average Profit: 5.63%
Average Loss: -5.44%
Largest Gain: 18.95%
Largest Loss: -15.29%
How does that compare with the current 2004 election rally?
The S&P 500 has moved 4.64% from its October close and the DJ-30 has moved 4.93% accordingly.
The S&P 500 has moved slightly ahead of its average profit of 3.85%. Nudging ever closer to its all-time high of 6.50% set back in the 1980 presidential election.
The DJ-30's current profit of 4.93% is still under its average profit of 5.63% and well off its all-time high of 18.95% occuring back in 1928.
What does all this mean? In my opinion, there is still head room for the market. Averages are just averages and the market can go anywhere it likes during the course of an individual data point. But, there's no denying the easy gains are behind us.
The key during these times are having proven exit strategies to protect your hard-earned gains. Letting the market take you out of your positions...not getting silly like me in trying to second-guess the market.
I hope to showcase some of my time-proven exit strategies in the days ahead.
Until then...
Daily System Updates
No open trades at this time.
Weekly System Updates
Long system trigger for AATK at Monday's market open. The system that generated this trade was same system that generated the SPDE trade for the previous week. So, as you know, system caters to penny-type stocks with high volatility. Holding periods are mid-term in length. This system is one of my riskiest systems. I trade very little size with trades from this system because losses can be extreme.
Current open system positions:
- 1 QQQ long with current profit of 3.53%;
- SPDE long with current loss of -7.69%.
Wednesday, November 24, 2004
Happy Thanksgiving!
So far, the market is heading towards the bullish scenario from my prior post. Currently, the Nasdaq is up 0.51% from today's open, DJ-30 is up 0.25%, and the S&P 500 is up 0.31%. Will be interesting to see how close this market can get to its historical average profit %.
Have a Happy and Safe Thanksgiving!
Have a Happy and Safe Thanksgiving!
Tuesday, November 23, 2004
Turkey Day Effect
Performed a fun system test on the major indicies today. Tested for the Thanksgiving Holiday effect on the stock market. If you buy on the Wednesday before Thanksgiving at the market's open and sell at the market's open on the Monday of the following week...you get some impressive results:
Nasdaq Composite
Time Period: 1990 - 2003
Total Trades: 14
Total Win%: 92.86%
Total Loss%: -7.14%
Average Profit: 1.72%
Largest Profit: 5.37%
Only one loss and it was less than half a percent. Not bad.
S&P 500
Time Period: 1962 - 2003
Total Trades: 42
Total Win%: 83.33%
Total Loss%: 16.67%
Average Profit: 0.93%
Average Loss: -0.62%
Largest Profit: 2.64%
Largest Loss: -2.46%
DJ-30
Time Period: 1951 - 2003
Total Trades: 51
Total Win%: 58.49%
Total Loss%: 41.51%
Average Profit: 1.11%
Average Loss: -0.92%
Largest Profit: 3.89%
Largest Loss: -5.23%
Take special note of the length of time frame tested here. The Nasdaq Composite enjoys the best record but with the shortest time frame tested. The Dow Jones is the worst performer but with the longest time frame tested.
I'm afraid the longer we extend the test period...the worse the results will become. But, continuing on this fun factor...let's see what happens if we use the same time period for all 3 indicies in the test:
Nasdaq Composite
Time Period: 1990 - 2003 (same period as previous test)
Total Trades: 14
Total Win%: 92.86%
Total Loss%: -7.14%
Average Profit: 1.72%
Largest Profit: 5.37%
Only one loss and it was less than half a percent. Not bad.
S&P 500
Time Period: 1990 - 2003
Total Trades: 14
Total Win%: 71.43%
Total Loss%: 28.57%
Average Profit: 0.79%
Average Loss: -0.30%
Largest Profit: 2.64%
Largest Loss: -0.72%
DJ-30
Time Period: 1990 - 2003
Total Trades: 12
Total Win%: 64.29%
Total Loss%: 35.71%
Average Profit: 0.83%
Average Loss: -0.23%
Largest Profit: 2.58%
Largest Loss: -0.79%
As expected, the DJ-30 results improved as the tested time period was shortened by almost 40 years. A little odd is the S&P 500 results performing worse under the shorter time period. This throws a minor wrench in my theory of results improving with shorter time periods. Especially since this shortened time period was the roaring bull market 90's.
There might be something to the Taylor Turkey system. A little tweak here, a trend filter there...might improve the results even more. Then again, that could leave you with even less data points in your test. A system with few tested data points has a tendency to forward test rather poorly. Maybe this test should remain as it started...just a fun project.
Please note, the above system results were judged merely by the Total Win% variable. I'm fully aware there are many more important factors to consider when evaluating a system. But, in order to keep the post short, simple, and fun...decided to go with a ratio most investors understand.
Nasdaq Composite
Time Period: 1990 - 2003
Total Trades: 14
Total Win%: 92.86%
Total Loss%: -7.14%
Average Profit: 1.72%
Largest Profit: 5.37%
Only one loss and it was less than half a percent. Not bad.
S&P 500
Time Period: 1962 - 2003
Total Trades: 42
Total Win%: 83.33%
Total Loss%: 16.67%
Average Profit: 0.93%
Average Loss: -0.62%
Largest Profit: 2.64%
Largest Loss: -2.46%
DJ-30
Time Period: 1951 - 2003
Total Trades: 51
Total Win%: 58.49%
Total Loss%: 41.51%
Average Profit: 1.11%
Average Loss: -0.92%
Largest Profit: 3.89%
Largest Loss: -5.23%
Take special note of the length of time frame tested here. The Nasdaq Composite enjoys the best record but with the shortest time frame tested. The Dow Jones is the worst performer but with the longest time frame tested.
I'm afraid the longer we extend the test period...the worse the results will become. But, continuing on this fun factor...let's see what happens if we use the same time period for all 3 indicies in the test:
Nasdaq Composite
Time Period: 1990 - 2003 (same period as previous test)
Total Trades: 14
Total Win%: 92.86%
Total Loss%: -7.14%
Average Profit: 1.72%
Largest Profit: 5.37%
Only one loss and it was less than half a percent. Not bad.
S&P 500
Time Period: 1990 - 2003
Total Trades: 14
Total Win%: 71.43%
Total Loss%: 28.57%
Average Profit: 0.79%
Average Loss: -0.30%
Largest Profit: 2.64%
Largest Loss: -0.72%
DJ-30
Time Period: 1990 - 2003
Total Trades: 12
Total Win%: 64.29%
Total Loss%: 35.71%
Average Profit: 0.83%
Average Loss: -0.23%
Largest Profit: 2.58%
Largest Loss: -0.79%
As expected, the DJ-30 results improved as the tested time period was shortened by almost 40 years. A little odd is the S&P 500 results performing worse under the shorter time period. This throws a minor wrench in my theory of results improving with shorter time periods. Especially since this shortened time period was the roaring bull market 90's.
There might be something to the Taylor Turkey system. A little tweak here, a trend filter there...might improve the results even more. Then again, that could leave you with even less data points in your test. A system with few tested data points has a tendency to forward test rather poorly. Maybe this test should remain as it started...just a fun project.
Please note, the above system results were judged merely by the Total Win% variable. I'm fully aware there are many more important factors to consider when evaluating a system. But, in order to keep the post short, simple, and fun...decided to go with a ratio most investors understand.
Sunday, November 21, 2004
Weekend Update
Finally got back the use of my left arm...so I'll begin testing some new system ideas this week. In addition, fine-tune the new system I created a week or so ago. I'll keep you updated on the progress.
Have a great week!
Daily System Updates
Currently no open system positions
Weekly System Updates
Long system trigger for SPDE at Monday's market open. System that generated this trade caters to penny-type stocks with high volatility. Holding periods are short to mid-term in length. This system is one of my riskiest systems. I trade very little size with trades from this system because losses can be extreme.
Current open system positions:
Have a great week!
Daily System Updates
Currently no open system positions
Weekly System Updates
Long system trigger for SPDE at Monday's market open. System that generated this trade caters to penny-type stocks with high volatility. Holding periods are short to mid-term in length. This system is one of my riskiest systems. I trade very little size with trades from this system because losses can be extreme.
Current open system positions:
- 1 QQQ long with current profit of 1.92%;
Thursday, November 18, 2004
surgery & CVT update
sorry, but tough typing with just one hand. all went well with surgery...but recovery time is taking longer than expected. have to sit in a chair that moves my arm up & down 4 hours a day for up to 2 weeks. ugh! boredom is beginning to set in. i guess i'll get started on memorial day book by vince flynn...the last of the great mitch rapp series.
Daily System Updates
Closing positions at friday's market open (11/19/2004):
Please read the disclaimer on the website. This is not a recommendation to buy, sell, or trade securities. Just a journal of my travels through Wall Street. I can buy, sell, or hold any positions mentioned on this website at anytime. So, be warned.
Daily System Updates
Closing positions at friday's market open (11/19/2004):
- CVT long with current profit of 4.13%.
Please read the disclaimer on the website. This is not a recommendation to buy, sell, or trade securities. Just a journal of my travels through Wall Street. I can buy, sell, or hold any positions mentioned on this website at anytime. So, be warned.
Tuesday, November 16, 2004
Trading System Ditties
- Market orders only. I do not use limit or stop orders in my trading systems. In fact, to avoid slippage issues, I only enter orders for the market's opening print. This allows my backtest results to better fit real world conditions. Or is it, real world results better fit backtest conditions? Ha!
- There is a stock picture and an overall market picture. Making sure the market and stock picture match your idea can improve the performance of your system. But, keep it simple. Try to use just one filter to determine the strength or trend of the overall market. Then drill down to your stock ideas. This approach is even useful in trading ETF's.
- All of my long-term and most of my mid-term systems contain a trailing ATR exit system. I usually avoid a predefined profit exit system. I find it best to let the stock or ETF run where it may and let the trailing ATR do its work. This might not be the most efficient way to capture profit from a trend...but works for me.
- I will also add a timed exit system to some systems. This helps avoid and/or limit the dreaded "dead money" trades.
- It is okay to break the market into exchanges for your systems. I find that extremely useful in my stock trading systems. The New York Stock Exchange trades differently than the Nasdaq. Surprisingly, the American Stock Exchange is closer to the Nasdaq's behavior than the NYSE.. Maybe one day someone will tell me why.
- The Nasdaq is my preferred choice in trading systems. The Nasdaq stocks as a whole tend to trend much better and tighter than the other exchanges.
- I do not have access to foreign stock exchange data. It would be interesting to see how those stocks behave in accordance with my system rules and logic.
Good Night.
Daily System Updates
Current open system positions:
- CVT long with current profit of 0.98%.
Please read the disclaimer on the website. This is not a recommendation to buy, sell, or trade securities. Just a journal of my travels through Wall Street. I can buy, sell, or hold any positions mentioned on this website at anytime. So, be warned.
Monday, November 15, 2004
Surgery & Fund Performance
I'm receiving shoulder surgery to repair a torn ligament this Wednesday. I'm told the surgery should be minor...but partial recovery might take a few days. This could impact the number of posts to the site. Please forgive me if I do indeed miss a day or two. I'll do my best to stay on top of things. On a brighter note...
Below you'll find the recent 6 month performance of my virtual Marketocracy fund.
This will be the first quarter the fund qualifies for ranking by Marketocracy. The fund will be eligible for overall ranking and possibly the financial sector ranking as well. I'll continue to update the site with my progress.
By the way, I mentioned last week that I was going to work on a few system ideas over the weekend. That is true. I started out testing MuckDog's suggestion of the Chaikin Money Flow Indicator. I've never had much success with the Accumulation Distribution type indicators. I'm sure there is something there...just never could find it. But, in the process of trying out different ideas...I began to whittle together a new system. A very exciting system.
The system as it stands right now is one of my best works and yet one of the simplest. It is a weekly system that may hold positions for years. The system may go long or short depending on the entry rules and isn't always active in the market. The system is not quite ready for production. Additional work is required on entry rules, position sizing, and markets to trade. Hopefully, I can work on this system a bit while recovering from surgery.
Daily System Updates
Current open system positions:
Please read the disclaimer on the website. This is not a recommendation to buy, sell, or trade securities. Just a journal of my travels through Wall Street. I can buy, sell, or hold any positions mentioned on this website at anytime. So, be warned.
Below you'll find the recent 6 month performance of my virtual Marketocracy fund.
This will be the first quarter the fund qualifies for ranking by Marketocracy. The fund will be eligible for overall ranking and possibly the financial sector ranking as well. I'll continue to update the site with my progress.
By the way, I mentioned last week that I was going to work on a few system ideas over the weekend. That is true. I started out testing MuckDog's suggestion of the Chaikin Money Flow Indicator. I've never had much success with the Accumulation Distribution type indicators. I'm sure there is something there...just never could find it. But, in the process of trying out different ideas...I began to whittle together a new system. A very exciting system.
The system as it stands right now is one of my best works and yet one of the simplest. It is a weekly system that may hold positions for years. The system may go long or short depending on the entry rules and isn't always active in the market. The system is not quite ready for production. Additional work is required on entry rules, position sizing, and markets to trade. Hopefully, I can work on this system a bit while recovering from surgery.
Daily System Updates
Current open system positions:
- CVT long with current profit of 1.18%.
Please read the disclaimer on the website. This is not a recommendation to buy, sell, or trade securities. Just a journal of my travels through Wall Street. I can buy, sell, or hold any positions mentioned on this website at anytime. So, be warned.
Sunday, November 14, 2004
Weekend Update
Taking our daughter to get her first haircut was a memorable experience. Funny how life's little pleasures mean the most. We also took her to see The Incredibles. Great movie. Unbelievable graphics. Just phenomenal. Three-quarters into the movie...the entire audience is silent...just totally absorbed into the movie. Don't you just love those movies where you get so into it...you forget you're at the movies? So, go see The Incredibles...two thumbs up!
Here's some interesting reads from this weekend:
Current open system positions:
Current open system positions:
Have a great week!
Please read the disclaimer on the website. This is not a recommendation to buy, sell, or trade securities. Just a journal of my travels through Wall Street. I can buy, sell, or hold any positions mentioned on this website at anytime. So, be warned.
Here's some interesting reads from this weekend:
- Is this the beginning of a new secular bull market? Clem Chambers of ADVFN thinks so and makes a compelling argument. His main reason? "We are experiencing huge global progress. I am using pro-gress in the Victorian sense, progress being the improvement of humanitys lot. This progress will make the world a rich place. Even in sluggish, Europe, the effects of an exploding world economy will inundate us with wealth." Read on...
- Roberto Perdone from the NasdaqTrader blog found a great article on Buffett-inspired investor, Eddie Lampert. This is the guy behind the recent KMART turnaround. Sounds like a pretty sharp cookie having worked with Robert Rubin (Clinton's Treasury Secretary), Professor James Tobin (Nobel prize winner in economics), and astute fund manager, Richard E. Rainwater. Read on...
- Interesting article on Robots and NASA. Read on...
- U.S. is 1st, India is 2nd, Russia is 3rd. What country contains the 4th largest number of computer programmers in the world? Ukraine. Read on...
- It's about time. Why is it so easy for American companies to outsource their IT to India, China, or Russia when they could outsource to rural America for practicaly the same costs? I really like Kathy White's approach in working with universities. It's amazing how many outstanding programmers are being produced from America's rural universities. Yet, very few companies are paying attention. Read on...
- Donald Luskin's take on the falling U.S. Dollar. Claims Warren Buffett doesn't know what he's doing. Greenspan doesn't either. And of course, he knows all. When I read articles like this I always ask...what was the point of writing it? Trying to prove something Donald? Read on...
Current open system positions:
- CVT long with current profit of 0.79%.
Current open system positions:
- 1 QQQ long with current profit of 1.87%;
Have a great week!
Please read the disclaimer on the website. This is not a recommendation to buy, sell, or trade securities. Just a journal of my travels through Wall Street. I can buy, sell, or hold any positions mentioned on this website at anytime. So, be warned.
Friday, November 12, 2004
John Henry & Philip Gotthelf Interviews
Great quotes from John Henry in an SFO Magazine interview:
Another great interview of Philip Gotthelf from SFO Magazine as well. Talks about the COMMODEX System and its evolution. Read here and here. Great stories on his prediction and explanation of the March 2000 blow-off top, investing demographics, development of COMMODEX, thoughts about deflation, his market beating with COMMODEX calling the top, and most of all his father's market lesson.
- If you can put aside what should be, what could be, what ought to be, what would have, could have, should have occurred and just pay attention to what is actually happening, the act of paying attention transforms what is. The greatest action, the wisest, the best action that you can take in almost any situation is to stay with what is, instead of jumping to conclusions or trying to come up with conclusions. Just pay attention.
- I’ve made a lot of money in the last two decades by not predicting anything. You know, once you admit that you can’t predict anything, people don’t want to listen to you.
- A human being never gets a whole picture. The way that we perceive things is in contrast to other things. If you have a white wall and you put a white dot against it, you can’t see it. So, we don’t see things in their totality. We see things only in terms of contrast.
- Markets are basically people’s expectations, and I always call trends manifestations of those expectations.
Another great interview of Philip Gotthelf from SFO Magazine as well. Talks about the COMMODEX System and its evolution. Read here and here. Great stories on his prediction and explanation of the March 2000 blow-off top, investing demographics, development of COMMODEX, thoughts about deflation, his market beating with COMMODEX calling the top, and most of all his father's market lesson.
Thursday, November 11, 2004
System Updates
This weekend I plan to experiment with a few new system ideas. After reviewing a few charts I have noticed cases where the volume expands greatly and the price does not reflect the change until several bars later. I've toyed with this idea before but never had much luck.
I'd like to try testing to see if the volume does expand, the price does nothing one way or the other for that bar, then on the next few bars prices expand rapidly with relatively no increased expansion in volume. This would tell me that shares are in short supply, so to speak. And any buying creates a run-up in price.
Daily System Updates
Close at Friday's open:
We're taking my daughter out this weekend for her very first haircut. Then off to see The Incredibles. Should be fun.
A cold front swept through tonight...so should be a nice cool weekend in Texas. Hope the weather is good where you are.
Have a great weekend!
I'd like to try testing to see if the volume does expand, the price does nothing one way or the other for that bar, then on the next few bars prices expand rapidly with relatively no increased expansion in volume. This would tell me that shares are in short supply, so to speak. And any buying creates a run-up in price.
Daily System Updates
Close at Friday's open:
- 1 QQQ long system with current profit of 4.39%.
- CVT long with current loss of -0.20%;
We're taking my daughter out this weekend for her very first haircut. Then off to see The Incredibles. Should be fun.
A cold front swept through tonight...so should be a nice cool weekend in Texas. Hope the weather is good where you are.
Have a great weekend!
Random Musings
A little bit of fun for the day.
Please take a minute to thank your Veterans today. I'd like to thank my Dad for serving in the Navy during World War II. Not only did he serve his country but he met the most wonderful woman in the world while out on dance patrol, my Mom. Thanks Dad.
Daily System Updates
Closed at today's open:
- If all Chinese jumped at once, would cataclysm result? Answer.
- Are turkeys so stupid they will look up in the sky when it rains and drown? Answer.
- Can a Munchkin be seen committing suicide in The Wizard of Oz? Answer.
- Will initials carved on the side of a tree always remain at the same height? Answer.
- Is the "ninja death touch" real? Answer.
- How far will ants wander in search of food? Answer.
Please take a minute to thank your Veterans today. I'd like to thank my Dad for serving in the Navy during World War II. Not only did he serve his country but he met the most wonderful woman in the world while out on dance patrol, my Mom. Thanks Dad.
Daily System Updates
Closed at today's open:
- 1 QQQ long system with current profit of 3.03%.
- 1 QQQ long systems with current profit of 3.03%;
- CVT long with current loss of -0.98%;
Wednesday, November 10, 2004
Trading Rules Link
Great set of trading rules by Richard Rhodes of The Rhodes Report.
My favorites are the following:
#7 - Be patient. The old adage that "you never go broke taking a profit" is maybe the most worthless piece of advice ever given. Taking small profits is the surest way to ultimate loss I can think of, for small profits are never allowed to develop into enormous profits. The real money in trading is made from the one, two or three large trades that develop each year. You must develop the ability to patiently stay with winning trades to allow them to develop into that sort of trade.
#11 - Do more of what is working for you, and less of what's not. Each day, look at the various positions you are holding, and try to add to the trade that has the most profit while subtracting from that trade that is either unprofitable or is showing the smallest profit. This is the basis of the old adage, "let your profits run."
#17 - Markets form their tops in violence; markets form their lows in quiet conditions. The final 10% of the time of a bull run will usually encompass 50% or more of the price movement. Thus, the first 50% of the price movement will take 90% of the time and will require the most backing and filling and will be far more difficult to trade than the last 50%.
Read on...
My favorites are the following:
#7 - Be patient. The old adage that "you never go broke taking a profit" is maybe the most worthless piece of advice ever given. Taking small profits is the surest way to ultimate loss I can think of, for small profits are never allowed to develop into enormous profits. The real money in trading is made from the one, two or three large trades that develop each year. You must develop the ability to patiently stay with winning trades to allow them to develop into that sort of trade.
#11 - Do more of what is working for you, and less of what's not. Each day, look at the various positions you are holding, and try to add to the trade that has the most profit while subtracting from that trade that is either unprofitable or is showing the smallest profit. This is the basis of the old adage, "let your profits run."
#17 - Markets form their tops in violence; markets form their lows in quiet conditions. The final 10% of the time of a bull run will usually encompass 50% or more of the price movement. Thus, the first 50% of the price movement will take 90% of the time and will require the most backing and filling and will be far more difficult to trade than the last 50%.
Read on...
Tuesday, November 09, 2004
Turtle Soup
Typically, my system ideas come from observing the market. Other times, they come from fading conventional logic. For example, while reading the book Trend Following by Michael Covel...I ran across the classic Donchian 5-20 moving average crossover system. For those not familiar with this system it's fairly simple:
The key to this type of system is position sizing and diversifying your trade vehicles enough that when one is choppy another one might be trending.
So, back to trading system ideas. I periodically test these classic well known systems against the American markets just to see if things have changed. And in the process of testing this 5-20 moving average system last weekend...I decided to reverse the rules. Instead of buying when the 5 day moving average crossed above the 20...I went long when the 5 day crossed below the 20. The results were quite amazing.
This reminds me of Linda Raschke's Turtle Soup system. Richard Dennis trained several traders on Donchian's classic four-week breakout system. These group of traders were called Turtles by Dennis. These Turtles would go long the security the next day following a new four-week high. Linda figured out that all the buying from these Turtles would create a quick initial run-up in the price of the security. After the initial wave of buying...prices would quickly drop back down. And Linda would fade the move...short the Turtles...hence the name Turtle Soup.
Daily System Updates
Current open system positions:
Until then...
- If the 5 day moving average crosses above the 20 day moving average...go long;
- If the 5 day moving average crosses below the 20 day moving average...close your long and go short.
The key to this type of system is position sizing and diversifying your trade vehicles enough that when one is choppy another one might be trending.
So, back to trading system ideas. I periodically test these classic well known systems against the American markets just to see if things have changed. And in the process of testing this 5-20 moving average system last weekend...I decided to reverse the rules. Instead of buying when the 5 day moving average crossed above the 20...I went long when the 5 day crossed below the 20. The results were quite amazing.
This reminds me of Linda Raschke's Turtle Soup system. Richard Dennis trained several traders on Donchian's classic four-week breakout system. These group of traders were called Turtles by Dennis. These Turtles would go long the security the next day following a new four-week high. Linda figured out that all the buying from these Turtles would create a quick initial run-up in the price of the security. After the initial wave of buying...prices would quickly drop back down. And Linda would fade the move...short the Turtles...hence the name Turtle Soup.
Daily System Updates
Current open system positions:
- 2 QQQ long systems with current profit of 3.38%;
- CVT long with current loss of -1.18%;
Until then...
Mid-Day Readings...
- Last week's Petroleum Summary. Pay attention to the recent increase of diesel versus gasoline prices. Typically, gasoline is cheaper at the pump than diesel. Currently, this isn't the case. Down here in Texas...diesel is running over the $2.00/gallon mark while gasoline hovers around $1.85/gallon.
- The trend towards clean energy and IT's ever increasing role. Read on...
- da Vinci a Robotician? Amazing how little we've come in 500 years. Read on...
- Really interesting blog from Warren Meyer. The CoyoteBlog. Dig the name. Don't miss his post on the 2008 election here.
- Great insight into foreign ETF's by Roger Nusbaum from Random Roger's Big Picture blog. I have watched the TRF fund from the sidelines for a year or so. But, the CEE fund looks a bit more interesting with its greater emphasis on banking & energy. I also like his write-up on Turkey. Read on...
Monday, November 08, 2004
Fade the Taylor
"I think the most important thing to do is to develop a system that you have confidence in. You will get nowhere if you are second-guessing what you are doing. When the market is open, you need to know what you are doing, and why you are doing it, without thinking too much about it. If you start thinking too much about what you are doing or second-guessing yourself, you will quickly get taken out of the game." -- Phil Rosten
Officially out of my short position in QQQ today. You know what that means? Start shorting. :)
I was able to leverage back into my weekly long systems today as well (in addition to the recent QQQ long system trade). I only have a couple of securities that I wasn't able to get into...just because they have moved too far. Hopefully, I can catch them in the next few days or weeks.
To witness some of the pain I endured while missing the election move...look no further than the following Marketocracy 6 month performance chart below. In particular focus on 11/01/04 and beyond. That's when I sold my systems and shorted the QQQ.
The above chart reflects the Marketocracy virtual fund I maintain of my system trades. I've always had compliance issues with the fund...mostly because I maintained too large a cash position. But, recently I've cleaned it up and achieved compliance. This virtual fund is much more conservative than my personal portfolio...mostly due to the many rules & regs involved in running a fund. And much harder to trade systems that are short in duration. So, most of my trades in this fund involve my long-term weekly systems. If you can remember to maintain the fund...it is a nice way to track your performance. Might be worth a look...registration is free.
Daily System Updates
Great little write-up on the investing public's pricing mechanism for stocks. I've always assumed that market participant's price stocks according to future good or bad events. But, after my recent debacle with hunch trading...maybe I had it all wrong. This article explains market participants might just pick stocks by extrapolating the present to the future. And disregard any notion that the future may be different from the present. Interesting. Why didn't you write this a week ago? :)
Good post regarding the habits of Ineffective Traders by Ken Wolff. I particularly like his write up on item #7, "A defeatest attitude". An old saying is the most you will get out of life is what you ask for. If you put your house up for sale for $140,000...nobody is going to drive buy and offer you $200,000. Unless you live in California. But, the point is, you control how high you reach. Don't limit yourself.
Please read the disclaimer on the website. This is not a recommendation to buy, sell, or trade securities. Just a journal of my travels through Wall Street. I can buy, sell, or hold any positions mentioned on this website at anytime. So, be warned.
Officially out of my short position in QQQ today. You know what that means? Start shorting. :)
I was able to leverage back into my weekly long systems today as well (in addition to the recent QQQ long system trade). I only have a couple of securities that I wasn't able to get into...just because they have moved too far. Hopefully, I can catch them in the next few days or weeks.
To witness some of the pain I endured while missing the election move...look no further than the following Marketocracy 6 month performance chart below. In particular focus on 11/01/04 and beyond. That's when I sold my systems and shorted the QQQ.
The above chart reflects the Marketocracy virtual fund I maintain of my system trades. I've always had compliance issues with the fund...mostly because I maintained too large a cash position. But, recently I've cleaned it up and achieved compliance. This virtual fund is much more conservative than my personal portfolio...mostly due to the many rules & regs involved in running a fund. And much harder to trade systems that are short in duration. So, most of my trades in this fund involve my long-term weekly systems. If you can remember to maintain the fund...it is a nice way to track your performance. Might be worth a look...registration is free.
Daily System Updates
- Closing 1 QQQ system with current profit of 2.95%;
- 2 QQQ long systems with current profit of 3.60%;
- CVT long with current loss of -1.57%;
Great little write-up on the investing public's pricing mechanism for stocks. I've always assumed that market participant's price stocks according to future good or bad events. But, after my recent debacle with hunch trading...maybe I had it all wrong. This article explains market participants might just pick stocks by extrapolating the present to the future. And disregard any notion that the future may be different from the present. Interesting. Why didn't you write this a week ago? :)
Good post regarding the habits of Ineffective Traders by Ken Wolff. I particularly like his write up on item #7, "A defeatest attitude". An old saying is the most you will get out of life is what you ask for. If you put your house up for sale for $140,000...nobody is going to drive buy and offer you $200,000. Unless you live in California. But, the point is, you control how high you reach. Don't limit yourself.
Please read the disclaimer on the website. This is not a recommendation to buy, sell, or trade securities. Just a journal of my travels through Wall Street. I can buy, sell, or hold any positions mentioned on this website at anytime. So, be warned.
Once was Lost...Now I'm Found
I really tried. I tried to be the gun-slinging trader like Trader Vic, Livermore, and Jim Rogers. Someone who can cull through various sources of information and gather a trading conviction. Throw money at that conviction and hold strong until market reality meets market perception.
I'm just not that type of trader. I'm a system trader...thru and thru. These past few weeks have been horrible for me. I sold off my system positions which have all since gone on to fresh new highs. And shorted the QQQ which has held fairly steady around my entry prices. So, while I've lost very little money with my short position...I've lost much by being out of my system positions.
This was my last and final attempt at this type of trading. From now on, regardless of what happens with my QQQ short, I'm going back to system trading and development. In fact, this weekend alone I came up with 3 new ETF systems. What really stings, I came up with a system that is triggering a long position at Monday's open for the QQQ. This system has a 93% win ratio and an average profit of 5%. Ouch for my short position, huh?
Here's my plan. I'm going to watch the market before open tomorrow to try and get a feel of this week's direction. What really interests me is the US Dollar. Right now, it seems to be in a bit of a free fall. A continued free fall in the Dollar will garnish more and more attention from Wall Street. I have a feeling the US Dollar will become the single most talked about investment topic of 2005. This could indeed put a drag on the market and cause the Fed to raise rates much higher than anticipated. This will also keep the current rotation from small caps to large caps in the American market going strong. Large Caps can typically wither the storm better than small caps from the effects of the falling dollar. Most large caps are multi-nationals and thus a loss in American dollars are offset by gains in international dollars.
I'll hold my short position as long as the level of $38.00 is not broken. And take profits where they occur. I'll also look to initiate the new system trigger for the QQQ to go long sometime this week. Could be tomorrow if the $38.00 level is broken...otherwise I'll wait until a time I deem appropriate. My main point is to liquidate my hunch trade and gradually leverage back into my open system positions.
System Updates
Received system triggers this week. These stocks were triggered as longs for Monday's opening: AVTR & ERIE. Both of these stocks were triggered by the TightUptrend Weekly system. This system looks to enter stocks whose range is very narrow and uptrend is well defined. These systems trade off weekly data and typically hold positions 6 months to several years.
Received a few triggers for closing existing positions:
Until then...
Please read the disclaimer on the website. This is not a recommendation to buy, sell, or trade securities. Just a journal of my travels through Wall Street. I can buy, sell, or hold any positions mentioned on this website at anytime. So, be warned.
I'm just not that type of trader. I'm a system trader...thru and thru. These past few weeks have been horrible for me. I sold off my system positions which have all since gone on to fresh new highs. And shorted the QQQ which has held fairly steady around my entry prices. So, while I've lost very little money with my short position...I've lost much by being out of my system positions.
This was my last and final attempt at this type of trading. From now on, regardless of what happens with my QQQ short, I'm going back to system trading and development. In fact, this weekend alone I came up with 3 new ETF systems. What really stings, I came up with a system that is triggering a long position at Monday's open for the QQQ. This system has a 93% win ratio and an average profit of 5%. Ouch for my short position, huh?
Here's my plan. I'm going to watch the market before open tomorrow to try and get a feel of this week's direction. What really interests me is the US Dollar. Right now, it seems to be in a bit of a free fall. A continued free fall in the Dollar will garnish more and more attention from Wall Street. I have a feeling the US Dollar will become the single most talked about investment topic of 2005. This could indeed put a drag on the market and cause the Fed to raise rates much higher than anticipated. This will also keep the current rotation from small caps to large caps in the American market going strong. Large Caps can typically wither the storm better than small caps from the effects of the falling dollar. Most large caps are multi-nationals and thus a loss in American dollars are offset by gains in international dollars.
I'll hold my short position as long as the level of $38.00 is not broken. And take profits where they occur. I'll also look to initiate the new system trigger for the QQQ to go long sometime this week. Could be tomorrow if the $38.00 level is broken...otherwise I'll wait until a time I deem appropriate. My main point is to liquidate my hunch trade and gradually leverage back into my open system positions.
System Updates
Received system triggers this week. These stocks were triggered as longs for Monday's opening: AVTR & ERIE. Both of these stocks were triggered by the TightUptrend Weekly system. This system looks to enter stocks whose range is very narrow and uptrend is well defined. These systems trade off weekly data and typically hold positions 6 months to several years.
Received a few triggers for closing existing positions:
- Closing SMSI with current profit of 13.64%;
- Closing PFSW with current profit of 10.53%;
- Closing MCD with current profit of 4.92%.
- 2 QQQ systems with current profit of 3.49%;
- 1 QQQ system with current profit of 2.84%;
- CVT with current loss of -2.36%.
Until then...
Please read the disclaimer on the website. This is not a recommendation to buy, sell, or trade securities. Just a journal of my travels through Wall Street. I can buy, sell, or hold any positions mentioned on this website at anytime. So, be warned.
Thursday, November 04, 2004
Taking out Stops
I'm taking off from work Friday so expect my posts to be very limited. I'll probably check in at the market open and check the job's report and the market's reaction to the report. From there I plan on shutting er' down and enjoying some of this great weather.
Quick update on the trading systems:
Check out the QQQ chart below.
It looks like many traders are betting on a great jobs report tomorrow morning. I believe even if we don't get a good report...the market could still rally. So, be careful out there. And remember, next week is a new beginning.
Until then...
Quick update on the trading systems:
- Trigger to sell one QQQ system at Friday's market open (current profit 2.56%).
- 2 QQQ systems will continue to be open with current profit of 2.56%.
- 1 QQQ system continues to be open with current profit of 1.92%.
- MCD system continues to be open with current profit of 3.42%.
- CVT system continues to be open with current loss of -2.16%.
Check out the QQQ chart below.
It looks like many traders are betting on a great jobs report tomorrow morning. I believe even if we don't get a good report...the market could still rally. So, be careful out there. And remember, next week is a new beginning.
Until then...
I Fought the Law
"Investing is all about risk/reward. Presently Wall Street is selling you risk. So if you are buying their lemonade, just remember the stuff comes from lemons." -- Bill Cara from TraderWizard.com
I fought the law and the law won! So far, that's what it looks like. I tried to go against the tide and the tide was just too strong. I haven't stopped out on my short, yet. But, man, is it ever close. Of course, I never issue a hard stop and never close a position intraday. Through exhaustive backtesting, I have found it is always best to enter your I'm a loser and must get out of my position trade the following morning at the open. Until then...I have to fight this tide with all my might.
Bill Cara from TraderWizard has come up with an interesting idea. What if we track the market pundits on TV? Track their prognostications? That way, anytime you begin to hear these blowhards speak...you'll know whether they have the perfomance to back their mouthpiece. Read on...
I fought the law and the law won! So far, that's what it looks like. I tried to go against the tide and the tide was just too strong. I haven't stopped out on my short, yet. But, man, is it ever close. Of course, I never issue a hard stop and never close a position intraday. Through exhaustive backtesting, I have found it is always best to enter your I'm a loser and must get out of my position trade the following morning at the open. Until then...I have to fight this tide with all my might.
Bill Cara from TraderWizard has come up with an interesting idea. What if we track the market pundits on TV? Track their prognostications? That way, anytime you begin to hear these blowhards speak...you'll know whether they have the perfomance to back their mouthpiece. Read on...
Wednesday, November 03, 2004
What A Day!
"Don't try to buy at the bottom and sell at the top. It can't be done except by liars." -- Bernard Baruch
Wow! What a day. We got the presidential pop in the market. Now, we wait and see what happens next. If this is indeed the mid-term top...man, are we fixing to see a fight. The bulls are plenty and out in force. I haven't seen this level of speculation in a very long time. So, if a top is in...expect the next few days for the market to do everything in its power to reach and then break this morning's high.
As you can see, the market popped this morning and then spent the rest of the day selling off. I got my opportunity to short some more at the opening. Was it a tough short? Yes. Even tougher to read article after article discussing the bullishness of the market and this economy. My next moves are the following:
Here's a quick update on how my daily systems are doing (of course I'm out of these):
The next few days are going to prove very interesting.
Later trades.
Wow! What a day. We got the presidential pop in the market. Now, we wait and see what happens next. If this is indeed the mid-term top...man, are we fixing to see a fight. The bulls are plenty and out in force. I haven't seen this level of speculation in a very long time. So, if a top is in...expect the next few days for the market to do everything in its power to reach and then break this morning's high.
As you can see, the market popped this morning and then spent the rest of the day selling off. I got my opportunity to short some more at the opening. Was it a tough short? Yes. Even tougher to read article after article discussing the bullishness of the market and this economy. My next moves are the following:
- If the market can exceed today's high over the next few days then I'll be forced to close my short positions and rethink my strategies. In fact, I'll probably stick to what I do best...system trading.
- If the market cannot exceed today's high and begins breaking down...I'll probably place my final short on the market. Or I might perform some searches for individual stocks to short.
Here's a quick update on how my daily systems are doing (of course I'm out of these):
- 1 QQQ system sold at the open this morning for a 2.94% profit.
- 3 QQQ systems are still open with a current profit of 1.99%.
- 1 QQQ system is still open and up 1.35%.
- The MCD stock system is still open and up 2.30%.
- The CVT stock system is still open and down -2.36%.
The next few days are going to prove very interesting.
Later trades.
Movie Madness
Yes, I'm still short the market. Yes, I shorted more at the opening. Yes, my gut is wrenching.
To keep my mind off the market today, I checked out some upcoming movies that look promising. Release Dates and summaries provided by Yahoo!.
I'm especially pumped by the upcoming release of Ocean's Twelve. The first one, Ocean's Eleven, is one of my favorite movies. Hopefully, Twelve does not disappoint. If you like Ocean's Eleven...you should try renting The Italian Job. The Italian Job has the same type of assembling of crew and heist plot as Eleven...but with a bit of goofiness added in.
One more note. We're finally enjoying some cooler weather here in Texas. I have to say, it's about time! This is my favorite time of year. Tis' the season for chili!
Later Trades.
To keep my mind off the market today, I checked out some upcoming movies that look promising. Release Dates and summaries provided by Yahoo!.
White Noise - Release Date: 01/07/2005
Michael Keaton plays successful architect Jonathan Rivers, whose peaceful existence is shattered by the unexplained disappearance and death of his wife, Anna (Chandra West). Jonathan is eventually contacted by a man (Ian McNeice), who claims to be receiving messages from Anna through EVP (Electronic Voice Phenomenon), the process through which the dead communicate with the living through household recording devices. At first skeptical, Jonathan then becomes convinced of the messages' validity, and is soon obsessed with trying to contact her on his own. His further explorations into EVP and the accompanying supernatural messages unwittingly open a door to another world, allowing something uninvited into his life.
In Good Company - Release Date: 12/29/2004
Dan Foreman (Dennis Quaid) is headed for a shakeup. He is demoted from head of ad sales for a major magazine when the company he works for is acquired in a corporate takeover. His new boss, Carter Duryea (played by Topher Grace) is half his age--a business school prodigy who preaches corporate synergy. While Dan develops clients through handshake deals and relationships, Carter cross-promotes the magazine with the cell phone division and "Krispity Krunch," an indeterminate snack food under the same corporate umbrella. Both men are going through turmoil at home. Dan has two daughters--Alex, age 18, and Jana, age 16--and is shocked when his wife tells him she's pregnant with a new child. Between college tuition, the mortgage and a new baby, Dan can't afford to lose his job in the wave of corporate layoffs. Carter, in the meanwhile, is dumped by his wife of seven months just as he gets his promotion. Dan and Carter's uneasy friendship is thrown into jeopardy when Carter falls for, and begins an affair with, Dan's daughter Alex (Scarlett Johansson).
The Assasination of Richard Nixon - Release Date: 12/29/2004
Based on real life events, "Assassination" is set in 1974 and centers on a businessman (Penn) who decides to take extreme measures to achieve his American dream.
Blade: Trinity - Release Date: 12/08/2004
For years, Blade has fought against the vampires in the cover of night, with the world above unaware of the brutal ongoing war. But now, after falling into the crosshairs of the FBI, he is forced out into the daylight where he is driven to join forces with a clan of human vampire hunters he never knew existed - The Nightstalkers. Together with Abigail (Jessica Biel) and Hannibal (Ryan Reynolds), two deftly trained Nightstalkers, Blade follows a trail of blood to an ancient creature that is hunting him...the original vampire, Dracula.
Ocean's Twelve - Release Date: 12/10/2004
Danny Ocean (Clooney), reignited flame Tess (Roberts) and the rest of a band of thieves and con men (some returning and some new), team up for another three huge heists, but this time they're in three different locations - Rome, Paris and Amsterdam. In Amsterdam, the prize is Rembrandt's "De Nachtwacht" painting, which resides at the Rijksmuseum. Meanwhile, casino owner Terry Benedict (Garcia), whom Ocean and crew ripped off in Las Vegas, is hot on their tail, looking for revenge.
I'm especially pumped by the upcoming release of Ocean's Twelve. The first one, Ocean's Eleven, is one of my favorite movies. Hopefully, Twelve does not disappoint. If you like Ocean's Eleven...you should try renting The Italian Job. The Italian Job has the same type of assembling of crew and heist plot as Eleven...but with a bit of goofiness added in.
One more note. We're finally enjoying some cooler weather here in Texas. I have to say, it's about time! This is my favorite time of year. Tis' the season for chili!
Later Trades.
Tuesday, November 02, 2004
Short the Market!
My move to short the market will either look prescient or stupid. And the market will soon be the judge. I did sell my final position mid-morning today, McDonald's. Gain? Just a little over 3.00% on that trade. Being completely out of the market left me flush with cash for my next investment opportunity.
I waited patiently all day today for just the right trigger. I wanted to see a range expansion to the downside breaking the strong uptrend in place all day today. My moment finally came late in the trading day. And I sold short the QQQ as fast as I could.
After my initial trade was safely in the green...I waited and watched for signs of some consolidation to initiate another short on the stock with just minutes to spare before close.
I'm expecting the market to open up Wednesday and that's where I would like to initiate my final short on this stock.
This has been one very tough trade. Just thinking through all the crosscurrents of the market this week have been taxing on my mind. It's almost a relief to finally have this trade underway. If it goes my way...great. If not...a lesson learned.
Once again, I'll give you my quick ditty on why I sold everything and went short.
As I'm ending this post...the presidential election is still very close. It looks that momentum is with President Bush. If so, tomorrow could see a nice little pop to the upside. Looks like more work and gut wrenching is still ahead of me.
Have a good night!
I waited patiently all day today for just the right trigger. I wanted to see a range expansion to the downside breaking the strong uptrend in place all day today. My moment finally came late in the trading day. And I sold short the QQQ as fast as I could.
After my initial trade was safely in the green...I waited and watched for signs of some consolidation to initiate another short on the stock with just minutes to spare before close.
I'm expecting the market to open up Wednesday and that's where I would like to initiate my final short on this stock.
This has been one very tough trade. Just thinking through all the crosscurrents of the market this week have been taxing on my mind. It's almost a relief to finally have this trade underway. If it goes my way...great. If not...a lesson learned.
Once again, I'll give you my quick ditty on why I sold everything and went short.
- Good news was priced in. Everyone was touting an expected rally once the election was over. The old axiom...sell hope and buy fear never felt more applicable.
- Long-term interest rates have fallen for months giving the market a quiet underlying strength. But, long-term rates are now hitting against the bottom of their downtrend channel. Most of my positions were in financials...particularly regional banks. I feared that any bump up in rates were sure to put a drag on these stocks.
- The market's ignoring high oil prices and focusing on the presidential election instead. After the election, oil prices will still be high and I'm afraid their effects on the economy just beginning.
- The S&P 500 and Nasdaq Composite were bumping against the upper portion of their downtrend channel. I'm a big believer in trend trading. Going with the trend is usually half the battle. Then pick your entry correctly to give you the confidence to weather any short-term volatility against that trend. The S&P 500 and Nasdaq Composite were bumping against the upper portion of their downtrend channel. In fact, I believe the Nasdaq Composite hit a new 84 day high. This seemed like a good place to gain entry into the mid-term downtrend.
Usually when making investments, it is implicit that investors believe they have some degree of knowledge about the future. So Wall Street has more fortune tellers than any other industry. I feel I've had an advantage over the years because I am clear about a couple of things: 1) it is part of the nature of life itself (and markets are simply manifestations of people's expectations) to trend, and 2) I will never have a complete or full understanding of anything. Therefore, all investment decisions should be based on what can be measured rather than what might be predicted or felt. -- John Henry, famous commodities trader and Boston Red Sox owner
As I'm ending this post...the presidential election is still very close. It looks that momentum is with President Bush. If so, tomorrow could see a nice little pop to the upside. Looks like more work and gut wrenching is still ahead of me.
Have a good night!
Rogers Interview
I'm heading home...but had to post the link to this great interview of market wizard, Jim Rogers. Thanks to the Commodity Trader for posting this interview.
Read article here.
I agree with Rogers on several points in the interview. Most importantly that oil will see much higher prices in the coming years. Although a pullback is needed from current levels.
Also pay note to what he says about utilities. And check out a few of the utility stocks and their corresponding stock charts...like TXU and Southern. I think an investment paradigm is in the making here. These stocks are moving into a different asset category. Moving from the old measure of dividend yields to the new one...the unthinkable for utilities...growth rates.
Dynegy's recent buying spree in this field is just a sign of things to come. Of course, these stocks are all due for a much needed pullback. But, pay attention to this sector. It could get interesting.
Read article here.
I agree with Rogers on several points in the interview. Most importantly that oil will see much higher prices in the coming years. Although a pullback is needed from current levels.
Also pay note to what he says about utilities. And check out a few of the utility stocks and their corresponding stock charts...like TXU and Southern. I think an investment paradigm is in the making here. These stocks are moving into a different asset category. Moving from the old measure of dividend yields to the new one...the unthinkable for utilities...growth rates.
Dynegy's recent buying spree in this field is just a sign of things to come. Of course, these stocks are all due for a much needed pullback. But, pay attention to this sector. It could get interesting.
Random Links
"The public have an insatiable curiosity to know everything. Except what is worth knowing. Journalism, conscious of this, and having tradesman-like habits, supplies their demands." -- Oscar Wilde
Some Random Links to fill your trading day.
Excellent article by WallStreetWindow's Michael Swanson on the media's spin on investing and politics. I totally agree with the bullishness show producers force upon guests of the TV and Radio shows. I had the same thing happen to me when asked to be a guest for a popular investment radio show back in May of 2000. I wanted to talk about some of the stocks that were going to get cut in half...but the producers only wanted long picks. Really opened my eyes to what the media is about. Read on...
I'm not a fan of Robert Prechter. I view someone like him as a broken clock. Always telling the same time. The clock is worthless...yet everyday it reports the correct time...twice. But, this article has a few gems that Prechter doesn't even know he released. Read on...
Have a great election day!
Some Random Links to fill your trading day.
Excellent article by WallStreetWindow's Michael Swanson on the media's spin on investing and politics. I totally agree with the bullishness show producers force upon guests of the TV and Radio shows. I had the same thing happen to me when asked to be a guest for a popular investment radio show back in May of 2000. I wanted to talk about some of the stocks that were going to get cut in half...but the producers only wanted long picks. Really opened my eyes to what the media is about. Read on...
I'm not a fan of Robert Prechter. I view someone like him as a broken clock. Always telling the same time. The clock is worthless...yet everyday it reports the correct time...twice. But, this article has a few gems that Prechter doesn't even know he released. Read on...
Have a great election day!
Monday, November 01, 2004
The Market Sirens and Elections
I've sold my positions. Almost all of them. The only remaining position I have is McDonalds (MCD) with a 3.25% gain. I've sold the QQQ positions even though 4 of the systems currently have a .98% gain and one has a .35% gain. I even received a trading system trigger on CVT yesterday that I did not pull at the open today. That position would have been down -0.98% at the close.
I know I did a bad thing. In order to trade your systems you must remove all emotions. You must follow them rigidly. Most of my positions I've held for over 2 1/2 years. All of them were sold at the end of trading today. I've weathered many storms with those positions. But, I'm seeing things differently now. Maybe what I see is short-term in nature. I just don't think so.
It just feels like a strong top is or has taken place. The market sirens are singing their song...and I was almost lured to that island of Anthemoessa. I'm not sure what caused me to awake from their beautiful singing filled with GOOG like returns for many months to come. Where almost any breakout from congestion quickly garnishes several percentage points. Heck, some have even called those breakouts lottery tickets because of the huge moves accorded. Whatever shook me by my shoulders and melted wax into my ears...I'm grateful. At least for now.
Now that you know where I stand...let me show you some research you might find interesting. I researched the Dow Jones Industrials in respect to election years. Particulary, the time period from the end of October thru the end of December of the same year. I wanted to know what type of returns to expect from this very short period in time when the president is chosen thru the end of that election year. These results are based on election years 1916 - 2000.
Not bad, huh?
To go a step further, I reviewed the S&P 500. These results are based on the election years of 1964 - 2000.
Very similar to the DJ-30 scenario.
I'm sure after seeing these numbers you're thinking I'm crazy for selling all my positions. You can't argue with the numbers. I mean we have at least a 68% chance of experiencing an average positive return of 5% or greater from now til' the end of December. And there's further research that agrees with this bullish scenario.
There's the Fed Model that suggests stocks are 37% cheaper than treasuries. Read on...
You also have the built in seasonality factor of November thru April where this period has outperformed the May thru October timeframe 70% of the time. Read on...
Despite all this great news, why am I bearish? And why if I'm a system trader would I give up all my hard-earned years of research for a hunch? I'll answer that in one word...EDGE.
I create systems to capture an edge in the market. The only way I make money is to find some edge or inefficiency to exploit. What happens when the edge I rely on is known by many participants? Does the edge vanish? I believe so. That's why I cashed out. I cashed out because the edge I was trading was gone. And there's another edge available to trade. I believe this new edge is rested on the fact that so many traders and hedge fund managers are leaning the same way. They are all using the same research and trading the same edge. They all know this bullish news. And they have been positioning themselves for this bullish news for the past few weeks.
What will happen when the market sirens stop singing? The answer to that question is the edge I'm looking to exploit.
Until then...
I know I did a bad thing. In order to trade your systems you must remove all emotions. You must follow them rigidly. Most of my positions I've held for over 2 1/2 years. All of them were sold at the end of trading today. I've weathered many storms with those positions. But, I'm seeing things differently now. Maybe what I see is short-term in nature. I just don't think so.
It just feels like a strong top is or has taken place. The market sirens are singing their song...and I was almost lured to that island of Anthemoessa. I'm not sure what caused me to awake from their beautiful singing filled with GOOG like returns for many months to come. Where almost any breakout from congestion quickly garnishes several percentage points. Heck, some have even called those breakouts lottery tickets because of the huge moves accorded. Whatever shook me by my shoulders and melted wax into my ears...I'm grateful. At least for now.
Now that you know where I stand...let me show you some research you might find interesting. I researched the Dow Jones Industrials in respect to election years. Particulary, the time period from the end of October thru the end of December of the same year. I wanted to know what type of returns to expect from this very short period in time when the president is chosen thru the end of that election year. These results are based on election years 1916 - 2000.
The Dow Jones Industrials were up or breakeven 68% of the time and down 32% of the time. During those up or breakeven times...the DJ-30 eaked out an average gain of 5.63%. And during those down times the DJ-30 shed an average 5.44%.
Not bad, huh?
To go a step further, I reviewed the S&P 500. These results are based on the election years of 1964 - 2000.
S&P 500 was up or breakeven 70% of the time and of course down 30% of the time. The average move experienced during up or breakeven times was 3.85%. While the average loss during down times was -2.74%.
Very similar to the DJ-30 scenario.
I'm sure after seeing these numbers you're thinking I'm crazy for selling all my positions. You can't argue with the numbers. I mean we have at least a 68% chance of experiencing an average positive return of 5% or greater from now til' the end of December. And there's further research that agrees with this bullish scenario.
There's the Fed Model that suggests stocks are 37% cheaper than treasuries. Read on...
You also have the built in seasonality factor of November thru April where this period has outperformed the May thru October timeframe 70% of the time. Read on...
Despite all this great news, why am I bearish? And why if I'm a system trader would I give up all my hard-earned years of research for a hunch? I'll answer that in one word...EDGE.
I create systems to capture an edge in the market. The only way I make money is to find some edge or inefficiency to exploit. What happens when the edge I rely on is known by many participants? Does the edge vanish? I believe so. That's why I cashed out. I cashed out because the edge I was trading was gone. And there's another edge available to trade. I believe this new edge is rested on the fact that so many traders and hedge fund managers are leaning the same way. They are all using the same research and trading the same edge. They all know this bullish news. And they have been positioning themselves for this bullish news for the past few weeks.
What will happen when the market sirens stop singing? The answer to that question is the edge I'm looking to exploit.
Until then...
Random Links
"You make money on wall street by being very selective and being patient, waiting for those opportunities that are irresistible, where the percentages are very heavily in your favor." -- Seth Glickenhaus
Random Links to keep you procrastinating about the work you really need to get done.
Jerry Grantham is on a tear. Believes we'll see a big drop immediately following the presidential election. Read on...
The top 100 TiVo Season Passes. Two of my favorites are on the top 10...The Apprentice and Survivor. I'm a little surprised by Joey coming in at number 6. I loved Joey in Friends...but just couldn't get into the Joey series. Am I wrong here? Read on...
Interesting story on Columbian coca farmers and how they outsmarted Clinton's Plan Columbia, an anti-narcotics package that supplements the Columbian government with crop dusters and the herbicide Roundup. The original intent was to spray drug crops and stop the cocaine export before it ever started. Now, it looks like the US government is spraying weedkillers on Columbian drug crops for free. Not a bad deal for Columbian farmers. Read on...
Interest chart and analysis of presidential elections from The Big Picture blog. Read on...
Enjoy!
Election and Market Sectors
Interesting study of sector movements and the Bush election contracts. To summarize, the author found:
Read on...
Natural Resources and Utilities to do well when Bush's contract fell.
Healthcare performed well when Bush's contract rose.
Read on...
Sunday, October 31, 2004
Second Guessing Your System
System trading can be difficult. I'm at all-time equity highs with my trading accounts. My systems have performed extremely well during the month of October. But, sometimes you get torn between your personal feelings about the market and your systems direction.
I've read many blogs expecting a post-election rally. Then on Bulls & Bears I noticed every person on the show from Gary B. Smith to Tobin Smith are expecting a post-election rally. This concerns me greatly. Because you know what? I'm expecting a post-election rally too. What happens when everyone leans to one-side? The other side is the place where money is made.
Normally the market is forward looking. But, every so often the market condenses the length of its viewpoint. Instead of looking 6 to 9 months ahead...a single event draws the market's attention...distracting everyone away from the big picture. I'm afraid that's what is happening now. All market participants are focusing on the Presidential Election...and that's it. Every since I noticed that everyone was leaning to one side...I've been asking myself, "What will market participants have to look forward to after the election?"
I've searched my brain all weekend for the answer to that question. And I keep coming back to oil prices. I'm afraid once the election is over...the fog will clear and everyone will then see the real effects of high oil prices. Earnings will be effected. Period. Consumer spending will be effected. Period. There's no denying this. Whoever is elected President cannot change what has already happened. High oil prices have effected our economy. In the next few days investors will again turn their attention to this matter.
Of course, this goes completely against what my systems are trading. Heck, I have 5 systems long the QQQ right now. All expect a minimum of a 5% up move in the QQQ. Only .60% move has occurred since the systems have been triggered. So, we still have a ways to go system wise.
Due to the confusion of my hunch and my systems I reviewed the Nasdaq, S&P 500, and DJ-30 charts. I wanted to see where they were trading in relation to their trendlines. You'll see in the following 3 charts that 2 of the 3 are hitting the top of their downtrend channels.
After reviewing these charts, the chances for a mid-term rally after this election look bleak. In fact, analyzing the charts did nothing but confirm my hunch that we're in a top in the market...loaded with many players on the wrong side.
I'll be the first to admit...my strength is my systems. I'm a good trading system developer. In fact, 98% of my equity performance over the past 3 years have come from my systems. My trading instincts do not perform as well. So, my initial impression is to keep my systems going and let them do their job. But, it sure smells like a nice little opportunity to cash out near the top of my equity curve, short the market, and buyback my systems at a much better price. Of course, many system traders have fallen prey to this exact syndrome of second guessing. Can I stay strong? Or do I know better than my systems? Looks like I'll find out in the next few days.
Until then...
I've read many blogs expecting a post-election rally. Then on Bulls & Bears I noticed every person on the show from Gary B. Smith to Tobin Smith are expecting a post-election rally. This concerns me greatly. Because you know what? I'm expecting a post-election rally too. What happens when everyone leans to one-side? The other side is the place where money is made.
Normally the market is forward looking. But, every so often the market condenses the length of its viewpoint. Instead of looking 6 to 9 months ahead...a single event draws the market's attention...distracting everyone away from the big picture. I'm afraid that's what is happening now. All market participants are focusing on the Presidential Election...and that's it. Every since I noticed that everyone was leaning to one side...I've been asking myself, "What will market participants have to look forward to after the election?"
I've searched my brain all weekend for the answer to that question. And I keep coming back to oil prices. I'm afraid once the election is over...the fog will clear and everyone will then see the real effects of high oil prices. Earnings will be effected. Period. Consumer spending will be effected. Period. There's no denying this. Whoever is elected President cannot change what has already happened. High oil prices have effected our economy. In the next few days investors will again turn their attention to this matter.
Of course, this goes completely against what my systems are trading. Heck, I have 5 systems long the QQQ right now. All expect a minimum of a 5% up move in the QQQ. Only .60% move has occurred since the systems have been triggered. So, we still have a ways to go system wise.
Due to the confusion of my hunch and my systems I reviewed the Nasdaq, S&P 500, and DJ-30 charts. I wanted to see where they were trading in relation to their trendlines. You'll see in the following 3 charts that 2 of the 3 are hitting the top of their downtrend channels.
After reviewing these charts, the chances for a mid-term rally after this election look bleak. In fact, analyzing the charts did nothing but confirm my hunch that we're in a top in the market...loaded with many players on the wrong side.
I'll be the first to admit...my strength is my systems. I'm a good trading system developer. In fact, 98% of my equity performance over the past 3 years have come from my systems. My trading instincts do not perform as well. So, my initial impression is to keep my systems going and let them do their job. But, it sure smells like a nice little opportunity to cash out near the top of my equity curve, short the market, and buyback my systems at a much better price. Of course, many system traders have fallen prey to this exact syndrome of second guessing. Can I stay strong? Or do I know better than my systems? Looks like I'll find out in the next few days.
Until then...
Friday, October 29, 2004
Friday's Update
Today's a pretty tight range day. Market's afraid to move one way or the other for too long. I'm sure the upcoming election has something to do with it. So, be careful out there. Once this election pressure is removed...the market is sure to surge. Question is...which way?
Here's some random news links to keep you occupied and away from the market today:
A black swan event? Hobbits are real? Read on...
Canaries smarter than humans? Who woulda thunk it? Read on...
Investing in waves? Adam Hamilton from ZealLLC.com does a great job in showcasing how the market moves in waves.
Think how lucky the people were who entered their main investing years back in 1982 and basically just hung on for the ride. I'm afraid our generation will not be that fortunate. Read on... or click on the graph above.
Jim Rogers interview. Looks like he's a strong believer in the future of China and that we're in a secular bull market for commodities. And he's writing a new book to prove it, Hot Commodities.
And finally, Happy Birthday Dad. You were born just two years before Black Tuesday, the day the Dow Jones shed 11.73% and the mark of the Great Depression. What an interesting and hard time you grew up in. Amazing the changes that have transpired. To think you grew up in a time before television and are now reading this on the Internet via DSL. Boggles the mind.
Happy Halloween everyone. And to my cousin Mysti and her new husband Chip...I wish ya'll all the best!
Here's some random news links to keep you occupied and away from the market today:
A black swan event? Hobbits are real? Read on...
Canaries smarter than humans? Who woulda thunk it? Read on...
Investing in waves? Adam Hamilton from ZealLLC.com does a great job in showcasing how the market moves in waves.
Think how lucky the people were who entered their main investing years back in 1982 and basically just hung on for the ride. I'm afraid our generation will not be that fortunate. Read on... or click on the graph above.
Jim Rogers interview. Looks like he's a strong believer in the future of China and that we're in a secular bull market for commodities. And he's writing a new book to prove it, Hot Commodities.
And finally, Happy Birthday Dad. You were born just two years before Black Tuesday, the day the Dow Jones shed 11.73% and the mark of the Great Depression. What an interesting and hard time you grew up in. Amazing the changes that have transpired. To think you grew up in a time before television and are now reading this on the Internet via DSL. Boggles the mind.
Happy Halloween everyone. And to my cousin Mysti and her new husband Chip...I wish ya'll all the best!
Thursday, October 28, 2004
Another QQQ Trigger
A new QQQ system trigger was issued for Friday's market open. A little disconcerting because this has not happened to my systems before. Very odd to receive 5 seperate system triggers for the same security within two days.
I think it's safe to say these 5 systems are now up for review. Need to identify the differences between systems and verify whether they are still valid. I'll let you know the outcome.
Now, on to the good news. The QQQ is up .76% from today's open. So, those 4 systems are currently profitable and still long the QQQ. The new system will enter at tomorrow's open and has a backtested win percentage of 83%.
So, here's to a good trading day for Friday. It has to be good...because Friday is my Dad's birthday. Happy Birthday Dad!!!
I think it's safe to say these 5 systems are now up for review. Need to identify the differences between systems and verify whether they are still valid. I'll let you know the outcome.
Now, on to the good news. The QQQ is up .76% from today's open. So, those 4 systems are currently profitable and still long the QQQ. The new system will enter at tomorrow's open and has a backtested win percentage of 83%.
So, here's to a good trading day for Friday. It has to be good...because Friday is my Dad's birthday. Happy Birthday Dad!!!
Playing Moneyball?
Usually when making investments, it is implicit that investors believe they have some degree of knowledge about the future. So Wall Street has more fortune tellers than any other industry. I feel I've had an advantage over the years because I am clear about a couple of things: 1) it is part of the nature of life itself (and markets are simply manifestations of people's expectations) to trend, and 2) I will never have a complete or full understanding of anything. Therefore, all investment decisions should be based on what can be measured rather than what might be predicted or felt. -- John Henry, famous commodities trader and Boston Red Sox owner
One of the difficulties in trading system development is idea generation. I have several notebooks around the house, the car, and the office so when an idea for a new system hits...I'm ready. And then you have the problem that when the ideas start coming...you can't write them down fast enough. This can go on for weeks. And then you crash. You hit a dead end.
I guess, it's a lot like writer's block. You're completely out of ideas and you don't think you'll ever have another good idea again. But, then get recharged from the strangest things.
After the movie last night I stopped by the local bookstore and picked up Moneyball by Michael Lewis. I read just a few chapters and I can already tell it's a classic. A book that every system trader should have in their investment library.
The story of Billy Beane and the Oakland A's is amazing. And the field of Sabermetrics is pretty cool. The story is a great idea generator for system traders. It makes you feel great about what you do. And gets you excited about finding more systems out there in the market.
On a special note: Bill James is the founder of Sabermetrics. For years he received little or no respect in the field of baseball. With the record of Billy Beane's Oakland A's and the Moneyball book...that respect slowly came. In 2003, Bill James was hired by the great commodity trend follower and Boston Red Sox owner, John Henry. The rest as they say is History.
Congrats Red Sox on your historical World Series win!!!
The Scary Grudge
I saw one scary a*s movie last night. The Grudge. Man, that was scary. It's a bit different because it was filmed in Japan. A Japanese story. Japanese director. I belive Spiderman's Sam Raimi was the producer.
Scary? You bet. I have several images just burned into my brain. And that dang, "Uuuuhhhhhhhhh"...is enough to drive you crazy. And the eye! That dang eye just gives me the creeps. Take a look and check out the site...it's just as scary even more so after seeing the movie:
So, if you're into scary movies...it's a must. If not, run...stay away...cause those who encounter it will be consumed by its fury. Uuuuuhhhhhhhhhhhhh....
Scary? You bet. I have several images just burned into my brain. And that dang, "Uuuuhhhhhhhhh"...is enough to drive you crazy. And the eye! That dang eye just gives me the creeps. Take a look and check out the site...it's just as scary even more so after seeing the movie:
So, if you're into scary movies...it's a must. If not, run...stay away...cause those who encounter it will be consumed by its fury. Uuuuuhhhhhhhhhhhhh....
Wednesday, October 27, 2004
QQQ System Triggers
I received QQQ triggers from four of my trading systems to go long at Thursday's open. All four systems are based on the following technicals that occurred today:
Then all three diverge in the hopes of finding a small edge in trading the QQQ.
All four are short-term daily systems. Backtested win percentages of 78%, 83%, 87%, and 94%. Should be an interesting next few days.
Truerange greater than 1.5 times the average true range.
and
Volume larger than 1.5 times the average volume.
Then all three diverge in the hopes of finding a small edge in trading the QQQ.
All four are short-term daily systems. Backtested win percentages of 78%, 83%, 87%, and 94%. Should be an interesting next few days.
Tuesday, October 26, 2004
The Buffett System
Great interview of Moneyball author Michael Lewis. Moneyball continues to receive high praise. I guess, it's time I get my act together and read it. :)
Michael Lewis asserts being a contrarian isn't always about going against the grain. Being contrarian is about asking why something is done and finding out if there is a better way. Sometimes there is...and sometimes there isn't. He gives a great example on how Bill James discovered the error in errors and how conventional wisdom was right in ERA's. Read more...
The best part of the interview is where Michael Lewis shows his contrarian side in questioning the role Warren Buffett plays in the investing world and whether there is a way to profit from it. Here's the excerpt:
Great stuff!
Michael Lewis asserts being a contrarian isn't always about going against the grain. Being contrarian is about asking why something is done and finding out if there is a better way. Sometimes there is...and sometimes there isn't. He gives a great example on how Bill James discovered the error in errors and how conventional wisdom was right in ERA's. Read more...
The best part of the interview is where Michael Lewis shows his contrarian side in questioning the role Warren Buffett plays in the investing world and whether there is a way to profit from it. Here's the excerpt:
Michael Lewis: I hate to use this example because he is so successful, but Berkshire Hathaway's (NYSE: BRK.a, BRK.b) Warren Buffett. My God. Warren Buffett has been a wonderful investor. He has been a wonderful influence on American life. But I can't believe Warren Buffett is always right.
And that means that if you can find a position that you can take with some conviction and certainty and it is the opposite of something that Warren Buffett is doing or saying, there is probably a huge opportunity in it. You may have to weather a little storm along the way. But with the markets following whatever he says and does almost instantly in a way that may be unprecedented in financial history, there are definitely inefficiencies being created.
Since the Internet bubble burst, he was right about that in a way. His reputation was already huge, but since what was it, January 2000 or thereabouts, his influence in the market has been out of all proportion to any wisdom that a human being could have. What he says is taken as pure gospel so there is an opportunity in that for someone.
Great stuff!
Trading Personalities
The Innerworth newsletter focuses on the psychological aspects of trading. While I think too much emphasis is placed in this area...every so often these guys write something that hits home. Today is such a day.
Today's newsletter states there are 3 types of traders: data-oriented, intuitive, and impulsive.
The article then breaks down each category. Read on...
While my trading instincts have improved over the years...I still consider myself a data-oriented trader. Don't know what I would do without the ability to backtest my ideas and strategies.
Today's newsletter states there are 3 types of traders: data-oriented, intuitive, and impulsive.
The data-oriented trader focuses on concrete evidence and is extremely risk averse. He or she tries to seek out as much supporting data for a trading decision as possible.
The intuitive trader is the opposite of the data-oriented trader. He or she bases trading decisions on hunches and impressions rather than on clearly defined data.
The impulsive trader allows his or her decisions to adversely influence trading decisions. Rather than looking at information logically and analytically, information is discounted completely.
The article then breaks down each category. Read on...
While my trading instincts have improved over the years...I still consider myself a data-oriented trader. Don't know what I would do without the ability to backtest my ideas and strategies.
Monday, October 25, 2004
Robotics and Assisted Living
The buzz is getting louder for Robots. Cnet's article provides some background to my post last week that Robots are being hailed as the answer to our nation's rising senior population.
One of the key issues for robotic senior assisted living will be funding. President Andrew Silverthorne of PALS Robotics believes "Every month you delay an older American's entry into a nursing home, you save the system thousands of dollars." Thus, Silverthorne, believes Medicare will soon provide support to this burgeoning field.
You make the call. But, whatever your decision...the buzz for robotics is growing. Read on...
Check out RoboticTrends.com for further information on this exciting new field.
One of the key issues for robotic senior assisted living will be funding. President Andrew Silverthorne of PALS Robotics believes "Every month you delay an older American's entry into a nursing home, you save the system thousands of dollars." Thus, Silverthorne, believes Medicare will soon provide support to this burgeoning field.
You make the call. But, whatever your decision...the buzz for robotics is growing. Read on...
Check out RoboticTrends.com for further information on this exciting new field.
Friday, October 22, 2004
Boone Pickens Interview
Short but sweet interview with BP Capital's Boone Pickens. Mr. Pickens believes we've seen $40 oil for the last time. And makes a very interesting case for the Canada's Tar Sands. Read on...
State of the Oil Industry
Wonderful article on the state of the oil industry. Key points in the article:
- Mark Pease, senior vice-president of exploration and production for Anadarko Petroleum Corp., believes "There really is a lot of potential and reserves to be found in North America. There's going to be a lot of increase in activity."
- "I've been in the industry for 23 years now, and I certainly believe that the industry fundamentals are the strongest I've seen in my career." mentioned Mark Urness, Merrill Lynch director of oil services and drilling research.
- "Our forecast shows drilling activity reaching the highest level in 20 years. And we expect sustained growth in 2005-06 as long as [global] economic growth remains strong." again noted by Urness.
- In the Gulf of Mexico, said Danny McNease, chairman and CEO of Rowan Cos. Inc., drilling rigs are in short supply, and a spate of lease expirations looms.
Thursday, October 21, 2004
Robots
Investors looking for the next big wave should pay attention to the growing utilization of robots. As this article states...falling component prices are increasing demand for automation. The use of robots is predicted to rise sevenfold over the next few years.
The leader in automation is Japan with approximately 400,000 industrial robots currently in use. Japan is leading this movement partly due to their aging population.
Many believe robots will become the caretakers of our aging seniors in the years to come.
The leader in automation is Japan with approximately 400,000 industrial robots currently in use. Japan is leading this movement partly due to their aging population.
Many believe robots will become the caretakers of our aging seniors in the years to come.
Tuesday, October 19, 2004
Oil Spending Growth
Oil equipment stocks fully priced? The first of many articles forecasting increased spending in the oil patch. Read on...
Oil Prices and Rig Counts
The charts from yesterday's post inspired me to map oil prices onto the US Rig Count Chart. Keep in mind the chart below reflects inflation adjusted oil prices.
Data provided by Baker Hughes, Inc. and inflationdata.com
Record highs in oil prices and rig counts occurred the same year...1981. While the record low in oil prices struck in 1972...one year after the record low in rig counts.
Oil prices have risen 130% since their 1998 bottom. While rig counts have only risen 28% since their 1999 bottom. Compare this to 1978 when oil prices rose 70% from their 1972 bottom and rig counts rose 140% from their 1971 bottom.
My father worked as a field engineer for Schlumberger back in the 60's, 70's, & 80's. He remembers quite fondly the various mom and pop oil companies that popped up in those days. Very similar to the dot com's of the 90's.
Most of the mom and pop drillers are long gone. The remaining companies are hesitant to increase drilling dollars for what they believe is a temporary situation in oil prices. The longer oil prices remain over $40/barrel...the less hesitant these companies become. Until then be prepared for higher oil prices.
Data provided by Baker Hughes, Inc. and inflationdata.com
Record highs in oil prices and rig counts occurred the same year...1981. While the record low in oil prices struck in 1972...one year after the record low in rig counts.
Oil prices have risen 130% since their 1998 bottom. While rig counts have only risen 28% since their 1999 bottom. Compare this to 1978 when oil prices rose 70% from their 1972 bottom and rig counts rose 140% from their 1971 bottom.
My father worked as a field engineer for Schlumberger back in the 60's, 70's, & 80's. He remembers quite fondly the various mom and pop oil companies that popped up in those days. Very similar to the dot com's of the 90's.
Most of the mom and pop drillers are long gone. The remaining companies are hesitant to increase drilling dollars for what they believe is a temporary situation in oil prices. The longer oil prices remain over $40/barrel...the less hesitant these companies become. Until then be prepared for higher oil prices.
Monday, October 18, 2004
Oil Rig Counts
I decided to chart the World and United States Oil Rig Counts...due to the recent spike in oil prices.
Yearly Worldwide Oil Rig Count Averages...
Yearly United States Baker Hughes Oil Rig Count Averages...
United States oil rig counts began trending upward in 1973. Their 1981 peak occured just one year prior to the start of the 18 year US equities bull market. US Oil rig counts hit their record low in 1999...one year prior to the conclusion of the 18 year equities bull market.
Yearly Worldwide Oil Rig Count Averages...
data provided by Baker Hughes, Inc.
Yearly United States Baker Hughes Oil Rig Count Averages...
data provided by Baker Hughes, Inc.
United States oil rig counts began trending upward in 1973. Their 1981 peak occured just one year prior to the start of the 18 year US equities bull market. US Oil rig counts hit their record low in 1999...one year prior to the conclusion of the 18 year equities bull market.
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