What a slaughter today. The market blew chunks as the heavyweights found the path of least resistance.
Gary B. Smith used to joke to his readers to sell the market whenever he made his way to New York for the Bulls & Bear show. Maybe I need to warn everyone to sell the market when I post my annual performance. Ha!
Looked at a house today. The house is a foreclosure. The house is nice but has an odd configuration. I guess, not really odd...evolved is a better word. The original house is your basic traditional style...but small. So, they added an office/playroom/bathroom onto the house and enclosed the deck. These are all nice additions...but are afterthoughts to the original house plan. As a result, the house doesn't flow as nicely as it should.
We'll probably put in a lowball offer hoping they'll come down a bit. For the right price and a little money...it could work. And hey, it would make a great rental someday.
Daily System Updates
The QQQQ (TrueRange) will have to be closed at Wednesday's market open due to the disaster stop being hit. But, then due to today's range expansion...I received 4 new QQQQ triggers at Wednesday's market open. So, the TrueRange system will be closed with a loss...but my actual QQQQ position will remain open due to the new system triggers.
The 4 new QQQQ system triggers are the Tii100Low, BBLower, ATRBreakBB, and the TrueRVolume. I've posted the backtested results on the Tii100Low and BBLower before. Here's a breakdown on the other two:
ATRBreakBB:
Win Ratio: 85.71%
Average Profit/Loss: +2.67%
Average Days Held: 6.79
TrueRVolume:
Win Ratio: 83.33%
Average Profit/Loss: +3.03%
Average Days Held: 8.38
Current Open 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.
Tuesday, January 04, 2005
Blind Media and Studies
James Altucher beat me to it. I've been trying to clear space to test this same idea the media is bantering around all over the place. Blindly blabbering the study without really knowing it's validity.
So, kudos to James for demistifying the Five Days In January Effect. Read here.
You can see from his posting that the first five days in January are no different than any other five day period. But, there are some points to ponder for the month of January as James points out.
There are many studies, notions, and generalities about the market that when the pencil hits the pad are proven wrong, invalid, or just flat out stupid. Other studies might have been true at one time...but change as market participants take advantage of the inefficiency.
Take for instance the buying of the Dogs of the Dow. Typically you buy the first trading day in January. But, over time, people figured out you could buy the underperformers earlier...sometimes as far back as October to supercharge your gains. So, the strategy changes or shifts. And sometimes it comes back full circle.
That's the problem with date or time specific trading strategies.
So, kudos to James for demistifying the Five Days In January Effect. Read here.
You can see from his posting that the first five days in January are no different than any other five day period. But, there are some points to ponder for the month of January as James points out.
There are many studies, notions, and generalities about the market that when the pencil hits the pad are proven wrong, invalid, or just flat out stupid. Other studies might have been true at one time...but change as market participants take advantage of the inefficiency.
Take for instance the buying of the Dogs of the Dow. Typically you buy the first trading day in January. But, over time, people figured out you could buy the underperformers earlier...sometimes as far back as October to supercharge your gains. So, the strategy changes or shifts. And sometimes it comes back full circle.
That's the problem with date or time specific trading strategies.
Monday, January 03, 2005
2004 Annual Review
Time to tackle the annual performance review. Why, when I type that, do I picture me sitting in some obfuscated conference room undergoing a checklist of what I did and didn't accomplish for the prior year? Then receive my performance bonus or lack thereof. Ha!
Here we go. I posted a 26% gain for the year. This marks the 4th consecutive year of gaining 25% or more on the market. Most of the returns came from my systems. The account being measured does not use margin and does not trade options. All positions taken for the year were U.S. Stocks and the QQQQ. The overwhelming majority of those stocks are listed on the Nasdaq Stock Exchange.
Here's the breakdown:
Three losing months for the year. Two of those occurred back to back. The worst month was a -0.77% loss in July. Second worst month was a -0.68% loss in April.
Nine profitable months for the year. Five of those occurred back to back. My best month was a +6.14% gain in October. Second best month was a +3.79% gain in December.
Overall, a really good year. But, thanks to the big intuition mistake I made back in November...it cost me about 8% in overall equity gains. In other words, I posted a gain of +2.61% in November...if I wouldn't have liquidated my system positions and sat out that one week...my gain for November would have been 10% or more. What a difference a week makes.
On a lighter note...
My year was made when I found out my performance topped Rusty's. Maybe I will get that bonus after all. :)
Daily System Updates
One long trigger for QQQQ at Tuesday's market open. The TrueRange system generated this trade. This system has a 78.43% win ratio with an average profit of 3.67% and an average loss of -2.22%. This system is based on an expansion of the average true range. Not one of my favorites since the average profit isn't much larger than the average loss.
One long trigger for WAG at Tuesday's market open. The BreakUp system generated this trade. I'm sorry, but do not have the performance statistics available for this system tonight. Too tired...going to bed. :)
Closed the following positions today at market open:
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 we go. I posted a 26% gain for the year. This marks the 4th consecutive year of gaining 25% or more on the market. Most of the returns came from my systems. The account being measured does not use margin and does not trade options. All positions taken for the year were U.S. Stocks and the QQQQ. The overwhelming majority of those stocks are listed on the Nasdaq Stock Exchange.
Here's the breakdown:
Three losing months for the year. Two of those occurred back to back. The worst month was a -0.77% loss in July. Second worst month was a -0.68% loss in April.
Nine profitable months for the year. Five of those occurred back to back. My best month was a +6.14% gain in October. Second best month was a +3.79% gain in December.
Overall, a really good year. But, thanks to the big intuition mistake I made back in November...it cost me about 8% in overall equity gains. In other words, I posted a gain of +2.61% in November...if I wouldn't have liquidated my system positions and sat out that one week...my gain for November would have been 10% or more. What a difference a week makes.
On a lighter note...
My year was made when I found out my performance topped Rusty's. Maybe I will get that bonus after all. :)
Daily System Updates
One long trigger for QQQQ at Tuesday's market open. The TrueRange system generated this trade. This system has a 78.43% win ratio with an average profit of 3.67% and an average loss of -2.22%. This system is based on an expansion of the average true range. Not one of my favorites since the average profit isn't much larger than the average loss.
One long trigger for WAG at Tuesday's market open. The BreakUp system generated this trade. I'm sorry, but do not have the performance statistics available for this system tonight. Too tired...going to bed. :)
Closed the following positions today at market open:
- Closed 1 QQQQ (BBLower) long with profit of +1.24%;
- Closed 1 QQQQ (Tii100Low) long with profit of +1.73%.
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, January 02, 2005
Weekend Update
Sorry, I've been lazy today. Snacking on all the X-mas candy and watching plenty of TV. I think I'm movie'd out and candy'd out. Actually, ready for the work week to begin. Ha!
If you're looking for a sweet movie to see with your significant other...check out Raising Helen. Pretty good...for a chick-flick. :)
I've installed the XM Satellite radio. Gotta say...it's another Tivo experience. Don't know if I can go back to normal radio again. It's that good. It will definitely improve the daily commute.
Trying to compile a list of the different trends that I believe will play out over the next few years. It's been harder than I thought to get my thoughts down into a semi-readable format.
It will be interesting to see how this market starts out trading for 2005. With everyone back...will the heavyweights start selling into this market? Or buying? I'm not smart enough to know. But, I'd be careful for the first couple of days until the market finds its new groove.
Have a great week!
Daily System Updates
Closing the QQQQ (BBLower & Tii100Low) positions at Monday's market open. These sell triggers are due to system time limits.
Weekly System Updates
Closing the SPDE (PennyLag) long position at Monday's market open. This sell trigger is due to the position not being profitable enough to warrant further holding.
Current open system positions:
If you're looking for a sweet movie to see with your significant other...check out Raising Helen. Pretty good...for a chick-flick. :)
I've installed the XM Satellite radio. Gotta say...it's another Tivo experience. Don't know if I can go back to normal radio again. It's that good. It will definitely improve the daily commute.
Trying to compile a list of the different trends that I believe will play out over the next few years. It's been harder than I thought to get my thoughts down into a semi-readable format.
It will be interesting to see how this market starts out trading for 2005. With everyone back...will the heavyweights start selling into this market? Or buying? I'm not smart enough to know. But, I'd be careful for the first couple of days until the market finds its new groove.
Have a great week!
Daily System Updates
Closing the QQQQ (BBLower & Tii100Low) positions at Monday's market open. These sell triggers are due to system time limits.
- 1 QQQQ (BBLower) long with current profit of +1.32%;
- 1 QQQQ (Tii100Low) long with current profit of +0.83%.
Weekly System Updates
Closing the SPDE (PennyLag) long position at Monday's market open. This sell trigger is due to the position not being profitable enough to warrant further holding.
Current open system positions:
- 1 QQQQ (SimpleUp) long with current profit of +5.16%;
- 1 QQQQ (TurtleTrader) long with current loss of -0.52%;
- SPDE (PennyLag) long with current profit of +10.00%;
- AATK (PennyLag) long with current loss of -12.70%;
- VNWK (PennyLag) long with current profit of +0.87%;
- EGHT (PennyLag) long with current loss of -4.01%;
- ZICA (PennyLag) long with current profit of +65.90%;
- CARN (PennyLag) long with current profit of +2.85%.
- HAUP (PennyLag) long with current loss of -0.49%.
Saturday, January 01, 2005
Election Year Review
Wanted to post a close to the election rally effect posted back in November. You can read the first post on the study here. And a follow-up on the study here.
For those who don't remember, this study assumes 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. Here are the results of the study encompassing prior election years:
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%
So, how did this election year compare?
The S&P 500 moved 3.86% from its October close and the DJ-30 has moved 3.99% accordingly.
The S&P 500 just about nailed its average profit of 3.85%. The DJ-30 missed its average profit of 5.63% by 1.64%. Overall, not a bad year for the study.
I hope all is well for everyone this New Year's Day. That you're home safe and recovering well from the New Year's Eve festivities. And hopefully, not too tired and stressed from the bowl games (especially if you're team lost!). What is up with my Aggies?!?
For those who don't remember, this study assumes 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. Here are the results of the study encompassing prior election years:
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%
So, how did this election year compare?
The S&P 500 moved 3.86% from its October close and the DJ-30 has moved 3.99% accordingly.
The S&P 500 just about nailed its average profit of 3.85%. The DJ-30 missed its average profit of 5.63% by 1.64%. Overall, not a bad year for the study.
I hope all is well for everyone this New Year's Day. That you're home safe and recovering well from the New Year's Eve festivities. And hopefully, not too tired and stressed from the bowl games (especially if you're team lost!). What is up with my Aggies?!?
Friday, December 31, 2004
Happy New Year!
I'm busy with my research on the big trends for the upcoming years. It's taking longer than I thought with the research...so please forgive me for not getting it to you before this year is up. I hope to have the first part of the article posted this Sunday. Kinda open year 2005 with a bang. We'll see.
TraderMike posted his 2005 prediction for the market...here. But, I'm still waiting for his 2005 resolution(s). :)
My prediction? I tend to agree with Michael. How the heck can anybody know what's going to happen in a year? And if they did...would anybody believe them?
I think the best thing one can do in gearing up for a new year is determine what major trends took place in the prior year. Better yet...what major trends have been taking place for the past few years. Trends continue until they don't. The likelyhood of the start of a new year being the end of a major trend is very small. Large trends takes months and sometimes years to unwind. So, identify the major trends and gear yourself towards them.
The next best thing to do for a new year is evaluate what you did right and wrong in the previous year. And of course, do more of what you did right and less of what you did wrong.
Here's the major thing I did wrong in 2004. Second guess my systems. Selling out my system positions, letting my sidebet overcome my entire portfolio was a stroke of idiocy. But, it taught me a lesson. A lesson I've been needing to learn. Trust my systems.
The major thing I did right? Realizing I made a mistake in selling out my system positions and buying all of them back, at higher prices to boot. Did that hurt? Yes! But, it taught me something. Don't compound a mistake you made by sticking with that mistake to the bloody end. Cut your losses and move on.
So, enjoy the New Year everyone. I hope you have a Happy, Safe, and Prosperous One!
See ya in 2005!
Daily System Updates
Current open system positions:
TraderMike posted his 2005 prediction for the market...here. But, I'm still waiting for his 2005 resolution(s). :)
My prediction? I tend to agree with Michael. How the heck can anybody know what's going to happen in a year? And if they did...would anybody believe them?
I think the best thing one can do in gearing up for a new year is determine what major trends took place in the prior year. Better yet...what major trends have been taking place for the past few years. Trends continue until they don't. The likelyhood of the start of a new year being the end of a major trend is very small. Large trends takes months and sometimes years to unwind. So, identify the major trends and gear yourself towards them.
The next best thing to do for a new year is evaluate what you did right and wrong in the previous year. And of course, do more of what you did right and less of what you did wrong.
Here's the major thing I did wrong in 2004. Second guess my systems. Selling out my system positions, letting my sidebet overcome my entire portfolio was a stroke of idiocy. But, it taught me a lesson. A lesson I've been needing to learn. Trust my systems.
The major thing I did right? Realizing I made a mistake in selling out my system positions and buying all of them back, at higher prices to boot. Did that hurt? Yes! But, it taught me something. Don't compound a mistake you made by sticking with that mistake to the bloody end. Cut your losses and move on.
So, enjoy the New Year everyone. I hope you have a Happy, Safe, and Prosperous One!
See ya in 2005!
Daily System Updates
Current open system positions:
- 1 QQQQ (BBLower) long with current profit of +1.52%;
- 1 QQQQ (Tii100Low) long with current profit of +1.04%.
Wednesday, December 29, 2004
Something about Nothing
Good news! I've purchased the Roady 2 XM Satellite Radio. I'll test it out and let you know the results in the coming weeks.
Stopped by Barnes & Noble...
Daily System Updates
Current open system positions:
Stopped by Barnes & Noble...
- Bought the latest copy of Active Trader magazine. Looks like there's an interview with James Altucher. Should be interesting.
- Read the latest issue of Technical Analysis of Stocks & Commodities magazine showcases a mechanical penny stock system. My PennyLag system shares some of the core premises with their system. Especially, the part about volatility being a useful tool for the mechanical systems trader. Funny, how we use different tools to identify the same concepts.
- Running Money looks like a good read. About a hedge fund manager's perils through Wall Street. Might have to add that to my reading wishlist.
Daily System Updates
Current open system positions:
- 1 QQQQ (BBLower) long with current profit of +1.60%;
- 1 QQQQ (Tii100Low) long with current profit of +1.11%.
Tuesday, December 28, 2004
The Variant Perception
Another fund manager after Bill Miller's record. I like the fact that Schier operates his fund from Topeka, Kansas. Read here.
The majority of my equity is in my mechanical systems. A small portion (5%) is reserved for what I call "side bets". These side bets are used to satisfy my trader side. Satisfying my trader side allows me to patiently ride my systems ups and downs. Well, at least sometimes. Ha! My current side bet was placed on GSH a few weeks ago.
I've been thinking that in addition to my side bets...further diversification is warranted. Except for the PennyLag system...most of my stock positions are in mid caps and small caps exhibiting the tight-riser effect. Tight-risers are stocks in extremely strong uptrends with low volatility. Part of this idea was obtained from Gary Smith in the book, "How I trade for a living". Granted Smith used mutual funds and I'm using stocks...but the idea is nevertheless the same.
So, the majority of my money is in the same type of stock and strategy. To combat this effect, I've been paying attention to mutual fund managers and newsletter authors with great records and strategies much different from my own. My hope is to allocate a small portion of my equity to a few of these investors...allowing me to participate in other opportunities in the marketplace...and at the same time smoothing out my equity curve a bit.
I'm still in the process of finding great funds and in particular great fund managers. As well, as newsletter authors similar to the post I wrote yesterday.
This is why Jim Schier interests me being from Topeka, Kansas. I like investors who are out of the so-called Wall Street grapevine. As Doug Kass often opines...I'm looking for the variant perception.
Daily System Updates
Current open system positions:
The majority of my equity is in my mechanical systems. A small portion (5%) is reserved for what I call "side bets". These side bets are used to satisfy my trader side. Satisfying my trader side allows me to patiently ride my systems ups and downs. Well, at least sometimes. Ha! My current side bet was placed on GSH a few weeks ago.
I've been thinking that in addition to my side bets...further diversification is warranted. Except for the PennyLag system...most of my stock positions are in mid caps and small caps exhibiting the tight-riser effect. Tight-risers are stocks in extremely strong uptrends with low volatility. Part of this idea was obtained from Gary Smith in the book, "How I trade for a living". Granted Smith used mutual funds and I'm using stocks...but the idea is nevertheless the same.
So, the majority of my money is in the same type of stock and strategy. To combat this effect, I've been paying attention to mutual fund managers and newsletter authors with great records and strategies much different from my own. My hope is to allocate a small portion of my equity to a few of these investors...allowing me to participate in other opportunities in the marketplace...and at the same time smoothing out my equity curve a bit.
I'm still in the process of finding great funds and in particular great fund managers. As well, as newsletter authors similar to the post I wrote yesterday.
This is why Jim Schier interests me being from Topeka, Kansas. I like investors who are out of the so-called Wall Street grapevine. As Doug Kass often opines...I'm looking for the variant perception.
Daily System Updates
Current open system positions:
- 1 QQQQ (BBLower) long with current profit of +0.99%;
- 1 QQQQ (Tii100Low) long with current profit of +1.47%.
Monday, December 27, 2004
Late night Readings
- Ed Yardeni's 2005 predictions. To put it simply, he's bullish on the US Markets. He's a believer in growth stocks and buzzword plays such as RFID and anti-virus companies. Also recommends coal companies...similar to Tobin Smith's mention on Bulls & Bears this past weekend. Check out his 2004 predictions...the recommendation to stay away from pharma was spot on.
- Big Bonuses on Wall Street? How are the high-end retailers doing?
- Silver is the new white? If so, could this bring more demand to the shiny metal?
- Satellite radio? Yes, I'm seriously thinking about getting one. I live in a rural area and the lack of choice and quality on my commute to and from work is spurring this decision. It seems all the buzz is with Sirius. But, after my product research...it seems XM Satellite has the better product. Plus, it's cheaper. And I believe the XM Satellite Roady 2 is the only one offering customized stocks lists. Hey, after I saw that...I knew I had to have one.
- Top performing newsletters of 2004 and their stock picks. The Turnaround Letter and BI Research are the ones sounding most interesting to me. Read here.
- Alan Farley proposes his trader's resolutions for 2005. He's dead on with the weekly trading.
- Interview with Darren Clifford. I like how he treats each trade as an independent business. The trading pairs strategy has given me some interesting system ideas to test.
Daily System Updates
Current open system positions:
- 1 QQQQ (BBLower) long with current profit of +0.03%;
- 1 QQQQ (Tii100Low) long with current profit of +0.51%.
Weekend Update
I've been taking it easy this weekend. Not much tinkering with the systems. Hope to get back to the normal routine this week.
Daily System Updates
Current open system positions:
Weekly System Updates
Long system trigger for HAUP at Monday's market open. The system that generated these trades is the same system that generated CARN, EGHT, ZICA, VNWK, 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.
Current open system positions:
Daily System Updates
Current open system positions:
- 1 QQQQ (BBLower) long with current profit of +0.45%;
- 1 QQQQ (Tii100Low) long with current profit of +0.94%.
Weekly System Updates
Long system trigger for HAUP at Monday's market open. The system that generated these trades is the same system that generated CARN, EGHT, ZICA, VNWK, 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.
Current open system positions:
- 1 QQQQ (SimpleUp) long with current profit of +4.77%;
- 1 QQQQ (TurtleTrader) long with current loss of -0.90%;
- SPDE (PennyLag) long with current loss of -10.38%;
- AATK (PennyLag) long with current loss of -17.46%;
- VNWK (PennyLag) long with current loss of -1.16%;
- EGHT (PennyLag) long with current loss of -9.20%;
- ZICA (PennyLag) long with current profit of +45.08%;
- CARN (PennyLag) long with current profit of +9.90%.
Friday, December 24, 2004
Merry Christmas!
Hope everyone is enjoying the holidays. Be careful....between the cold and the crowds...it's dangerous out there. And it's getting weird. I had a friend call from Galveston...informing me that it's snowing. Can you believe that? Galveston?
Sorry for the lack of posts. But, I've been very busy at work. And really don't have time to post now. Just wanted to...
Wish everyone a Merry Christmas and Happy New Year!!!
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.
Sorry for the lack of posts. But, I've been very busy at work. And really don't have time to post now. Just wanted to...
Wish everyone a Merry Christmas and Happy New Year!!!
Daily System Updates
Current open system positions:
- 1 QQQQ (BBLower) long with current profit of +0.45%;
- 1 QQQQ (Tii100Low) long with current profit of +0.94%.
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, December 21, 2004
Happy Holidays!
Busy day today...haven't had time to continue my seasonality studies. Hope to post one more time this week. If I miss you...have a happy and safe holiday season!
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.
Daily System Updates
Current open system positions:
- 1 QQQQ (BBLower) long with current profit of +0.25%;
- 1 QQQQ (Tii100Low) long with current profit of +0.74%.
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, December 20, 2004
Seasonality of the Market II
Continuing on yesterday's post on best performing months...I figured I would post the worst performing months.
DJ-30:
Worst months of performance were September (14x. -8.91%), October (12x, -8.68%), March (11x, -7.25%), and August (11x, -6.04%).
Data included years 1915 - 2004.
S&P 500:
Worst months of performance were August (8x, -6.45%), October (7x, -7.00%), and February (6x, -4.33%).
Data included years 1962 - 2004.
Nasdaq Composite:
Worst months of performance were March (3x, -5.85%), February (2x, -15.54%), July (2x, -8.32%), and September (2x, -6.08%).
Data included years 1990 - 2004.
Now, we're heading somewhere. There's a slight pattern developing here. February, March, August, September, and October are months to watch out for. The next step is to test the scenario of exiting out of the market during these weak months. Another scenario to test is entering the market only during these months...in essence...buying seasonal weakness.
More tomorrow.
Daily System Updates
Received another QQQQ long system trigger. This one is for tomorrow's market open. The name of this system is Tii100low. Backtested win ratio is 92.50% and the average profit is 4.03%. The system holds the QQQQ for a max of 8 trading days. The system is based on a new 10 day low, above average volume on the decline, and a strong mid-term uptrend in place. Finally, a trigger from one of my better systems.
Closed 1 QQQQ (Harami) long position with +0.20% profit.
Current open system positions:
* 1 QQQQ (BBLower) long with current loss of -0.96%.
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.
DJ-30:
Worst months of performance were September (14x. -8.91%), October (12x, -8.68%), March (11x, -7.25%), and August (11x, -6.04%).
Data included years 1915 - 2004.
S&P 500:
Worst months of performance were August (8x, -6.45%), October (7x, -7.00%), and February (6x, -4.33%).
Data included years 1962 - 2004.
Nasdaq Composite:
Worst months of performance were March (3x, -5.85%), February (2x, -15.54%), July (2x, -8.32%), and September (2x, -6.08%).
Data included years 1990 - 2004.
Now, we're heading somewhere. There's a slight pattern developing here. February, March, August, September, and October are months to watch out for. The next step is to test the scenario of exiting out of the market during these weak months. Another scenario to test is entering the market only during these months...in essence...buying seasonal weakness.
More tomorrow.
Daily System Updates
Received another QQQQ long system trigger. This one is for tomorrow's market open. The name of this system is Tii100low. Backtested win ratio is 92.50% and the average profit is 4.03%. The system holds the QQQQ for a max of 8 trading days. The system is based on a new 10 day low, above average volume on the decline, and a strong mid-term uptrend in place. Finally, a trigger from one of my better systems.
Closed 1 QQQQ (Harami) long position with +0.20% profit.
Current open system positions:
* 1 QQQQ (BBLower) long with current loss of -0.96%.
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, December 19, 2004
Seasonality of the Market
I had a rather interesting conversation with my wife today about market timing. Specifically, the peculiar way markets tend to surge just a few days/weeks a year. The rest of the time...the market just churns.
We were trying to determine if there would be a way to reduce the number of days to have funds in the market. In a typical year you have approximately 250 trading days. If you could figure out a pattern when most surges occur...take steps to ensure you were 100% invested during that timeframe. And possibly step out of the market during the churn cycle. Similar to the Sell in May, walk away adage.
So, I started testing. Looking for the best months of each year in the DJ-30, S&P 500, and Nasdaq Composite. Here's some results from the study.
DJ-30:
Best months of performance were April (13), July (13), November (12), and October (10).
Data included years 1915 - 2004.
S&P 500:
Best months of performance were October (6), March (6), May (5), and January (5).
Data included years 1962 - 2004.
Nasdaq Composite:
Best months of performance were April (2), March (2), May (2), August (2), and December (2).
Data included years 1990 - 2004.
In the above examples, the DJ-30 April month acheived the best gain of the year 13 times during the years of 1915 - 2004. The S&P 500's best month was split between October and March. And the Nasdaq Composite split its best performing months between Spring months (March - May), a late summer month (August), and a winter month (December).
After just a quick review of this data...it looks like the old adage of Sell in May, walk away might not be as simple as it sounds. But, of course, more studies of the data needs to be done.
More to come in tomorrow's post.
Until then...
Daily System Updates
Received a close trigger for the QQQQ Harami long system at Monday's market open. But, this weekend received a long system trigger for the QQQQ from a different system (BBLower). As a result of this...I'll continue to hold the QQQQ position until the new BBLower system issues a closing trigger.
The BBLower system is based on the Bollinger Bands. Specifically, a pricebreak below the lower Bollinger Bands. This is not one of my favorite systems. It has an 80.10% win ratio and an average profit of 1.81%. I typically do not like to use such a low average profit on a system. As a result, this system is still under evaluation. There's a good chance this system could cycle into the "Not Ready for Primetime" folder. Unless I can find some way to improve it's performance.
Weekly System Updates
Long system trigger for CARN at Monday's market open. The system that generated these trades is the same system that generated EGHT, ZICA, VNWK, 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.
Current open system positions:
We were trying to determine if there would be a way to reduce the number of days to have funds in the market. In a typical year you have approximately 250 trading days. If you could figure out a pattern when most surges occur...take steps to ensure you were 100% invested during that timeframe. And possibly step out of the market during the churn cycle. Similar to the Sell in May, walk away adage.
So, I started testing. Looking for the best months of each year in the DJ-30, S&P 500, and Nasdaq Composite. Here's some results from the study.
DJ-30:
Best months of performance were April (13), July (13), November (12), and October (10).
Data included years 1915 - 2004.
S&P 500:
Best months of performance were October (6), March (6), May (5), and January (5).
Data included years 1962 - 2004.
Nasdaq Composite:
Best months of performance were April (2), March (2), May (2), August (2), and December (2).
Data included years 1990 - 2004.
In the above examples, the DJ-30 April month acheived the best gain of the year 13 times during the years of 1915 - 2004. The S&P 500's best month was split between October and March. And the Nasdaq Composite split its best performing months between Spring months (March - May), a late summer month (August), and a winter month (December).
After just a quick review of this data...it looks like the old adage of Sell in May, walk away might not be as simple as it sounds. But, of course, more studies of the data needs to be done.
More to come in tomorrow's post.
Until then...
Daily System Updates
Received a close trigger for the QQQQ Harami long system at Monday's market open. But, this weekend received a long system trigger for the QQQQ from a different system (BBLower). As a result of this...I'll continue to hold the QQQQ position until the new BBLower system issues a closing trigger.
The BBLower system is based on the Bollinger Bands. Specifically, a pricebreak below the lower Bollinger Bands. This is not one of my favorite systems. It has an 80.10% win ratio and an average profit of 1.81%. I typically do not like to use such a low average profit on a system. As a result, this system is still under evaluation. There's a good chance this system could cycle into the "Not Ready for Primetime" folder. Unless I can find some way to improve it's performance.
- 1 QQQQ (Harami) long with current loss of -.05%.
Weekly System Updates
Long system trigger for CARN at Monday's market open. The system that generated these trades is the same system that generated EGHT, ZICA, VNWK, 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.
Current open system positions:
- 1 QQQQ (SimpleUp) long with current profit of +4.03%;
- 1 QQQQ (TurtleTrader) long with current loss of -1.60%;
- SPDE (PennyLag) long with current loss of -13.08%;
- AATK (PennyLag) long with current loss of -18.25%.
- VNWK (PennyLag) long with current profit of +8.12%;
- EGHT (PennyLag) long with current loss of -4.10%;
- ZICA (PennyLag) long with current loss of -1.00%.
Thursday, December 16, 2004
Late Night Readings
Congrats to Kelly for his win on The Apprentice. Kelly's a stiff...but he gets the job done.
Next season's Apprentice looks like a good one. The Book Smarts vs. the Street Smarts. Oh, the drama!
Well, the house deal didn't work out. Everything was great except for the school zone. So, had to cross that one off the list. Heck, after last month's 13.1% plummet in U.S. housing starts...maybe I need to wait.
A really great interview from SmartMoney.com with Ronald Muhlenkamp of The Muhlenkamp Fund (MUHLX). Interesting points made by Mr. Muhlenkamp:
Daily System Updates
Current open system positions:
* 1 QQQQ long with current profit of +1.14%. - forgot to update this last night.
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.
Next season's Apprentice looks like a good one. The Book Smarts vs. the Street Smarts. Oh, the drama!
Well, the house deal didn't work out. Everything was great except for the school zone. So, had to cross that one off the list. Heck, after last month's 13.1% plummet in U.S. housing starts...maybe I need to wait.
A really great interview from SmartMoney.com with Ronald Muhlenkamp of The Muhlenkamp Fund (MUHLX). Interesting points made by Mr. Muhlenkamp:
- I've now been through five or six recessions, and what I've learned is that every now and then the public shifts its spending. In the 80s, people were spending their money on BMWs and housing. In the first half of 90s, people bought financial stuff, like stocks. When they change their spending habits, it tends to occur across a recession. Now, it's anything related to the home.
- When you get a shift, it takes a lot for people to change their patterns.
- Back in the 60s and 70s, we expected a recession every three to five years. The first one is traumatic. The second one, you think, I've been through this before. We've only had two recessions in 20 years. We had a generation that had never been through a recession. I compare it to wintertime in Pennsylvania. You know it's going to be cold during certain months. We think of the business cycle the same way as we think of a seasonal cycle.
Daily System Updates
Current open system positions:
* 1 QQQQ long with current profit of +1.14%. - forgot to update this last night.
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.
Wednesday, December 15, 2004
Survivorship Bias
Survivorship Bias comes in all forms.
This time it came with a buy-out. One of my newest stock trading systems received a long trigger for MTCH at Thursday's market open. But, this little devil is getting acquired from AMAT.
Thus, the ticker symbol MTCH will soon cease to exist. And that's why I cannot take this trade. Because my system was built and backtested on stocks that are currently active. Any stocks it might have traded in the past that were bought out do not show up in my backtest.
So, you have a frustrating situation. A system trigger for a type of trade not tested by the system.
Trading just a few of these exceptions to the rule can really impact the expected outcome of your trading systems. That's why I do not automate my systems 100%. Human intervention is still needed from time to time.
Daily System Updates
Current open system positions:
* 1 QQQQ long with current profit of +2.10%.
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.
This time it came with a buy-out. One of my newest stock trading systems received a long trigger for MTCH at Thursday's market open. But, this little devil is getting acquired from AMAT.
Thus, the ticker symbol MTCH will soon cease to exist. And that's why I cannot take this trade. Because my system was built and backtested on stocks that are currently active. Any stocks it might have traded in the past that were bought out do not show up in my backtest.
So, you have a frustrating situation. A system trigger for a type of trade not tested by the system.
Trading just a few of these exceptions to the rule can really impact the expected outcome of your trading systems. That's why I do not automate my systems 100%. Human intervention is still needed from time to time.
Daily System Updates
Current open system positions:
* 1 QQQQ long with current profit of +2.10%.
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.
Late Night Readings
Sorry, for missing the post last night. Looks like blogger is having problems posting to domain names. So, I've had to use the backdoor so to speak.
Excellent post by Roger Nusbaum on covered call index funds. I can't get over the dividend yields on the two funds he mentions. Will be nice to see these funds after a few years of historical data. Might offer some added bonus to an index market timing system.
Neal Berger interview post. Insight into running a hedge fund. Nice missive on capital raising: "I have seen many a successful trader not be able to get off the ground and not be able to make any head-way simply because they are not really good marketing people." A great marketer trumps talent any day. An ugly but truthful fact of life.
Daily System Updates
Current open system positions:
* 1 QQQQ long with current profit of +2.48%.
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.
Excellent post by Roger Nusbaum on covered call index funds. I can't get over the dividend yields on the two funds he mentions. Will be nice to see these funds after a few years of historical data. Might offer some added bonus to an index market timing system.
Neal Berger interview post. Insight into running a hedge fund. Nice missive on capital raising: "I have seen many a successful trader not be able to get off the ground and not be able to make any head-way simply because they are not really good marketing people." A great marketer trumps talent any day. An ugly but truthful fact of life.
Daily System Updates
Current open system positions:
* 1 QQQQ long with current profit of +2.48%.
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, December 14, 2004
Mid-day Readings
Took an early lunch to meet with the real estate broker today. Might have found a house. Not 100% sure...but the house has potential. Wouldn't be a big upgrade from our current house...but would get us closer to civilization...and more room for the little curtain-crawler.
Now, on to business. Some interesting articles today that run the gamut:
Later trades...
Now, on to business. Some interesting articles today that run the gamut:
- Blockbuster removing the late fee? Finally, they realize how hard it is to stop watching TV, get off the couch, and take a dang movie back.
- Interesting chart from Infectious Greed on holidays and deaths. Paul's speculation that people would rather die than mess up their holidays is probably more true than we think. My mother died a day after Christmas in 2001 after a long battle with Leukemia. She decided being home with the family during the holidays was a much much better choice than being stuck in a hospital.
- Raymond Mason honored as CEO of the Year by CBSMarketWatch.com.
- Not finished Holiday shopping? Send someone a FAT bastard.
- Chuck Jaffe's Lump of Coal Awards. My favorite winners are Chris Lahiji and Doug Fabian. But, let's admit...kudos must go to Fabian. Promising a 100% return in 365 days? Now, that's moxie!
- The Bunny Portfolio? Check out Tesoro's rocket-like comeback from oblivion. Tesoro's stock plummeted below $2.00/share back in 2002 when the crack spread was at its narrowest. Now, the stock trades above $30.00/share. Wow! Maybe I need to watch the new low list more often.
- Interesting little history lesson on the German mark and hyperinflation by Jonathan Hoenig. Read here.
Later trades...
Monday, December 13, 2004
Oracle buys Peoplesoft
While everyone is focusing on Orasoft...I'm wondering what SAP AG is thinking right now? SAP could perceive this as a huge win or a death blow.
Huge win?
Daily System Updates
1 QQQQ (Harami) long with current profit of +1.97%.
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.
Huge win?
- The troublesome merger between Hewlett-Packard and Compaq marked the end of their dominance in the PC market. And opened the gates wide open for a strong and focused player like Dell.
- While Orasoft is struggling to combine the two companies and their product offerings...will a strong and focused player like SAP AG step in like Dell? Already 50% of the world's GDP flow through SAP systems.
- 70% of SAP applications run on Oracle databases.
- How uneasy will the relationship between Orasoft and SAP AG become over the next few years?
- Will the marketing efforts on SAP AG's / MYSQL's MaxDB increase? MaxDB is a SAP-certified open source database.
- Will this open up the market for newcomers in the ERP field? Newcomers and existing players in the database field?
- Are CIO's feeling uneasy about their administrative IT systems being in the sole hands of a vendor? Could we see a resurgence in homegrown IT systems? If so, will companies like EDS and Perot Systems see a boost?
Daily System Updates
1 QQQQ (Harami) long with current profit of +1.97%.
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, December 12, 2004
Survivor Winner
Congrats to Chris for winning Survivor! I thought he played the game extremely well. The odds were stacked against him. And thanks to his great talent in telling people what they want to hear (the BS factor) ...he now has a million dollars to spend. What would you do with a million dollar landfall?
I would take care of the normal things....house, debt, family, etc. But, allocate some travel money for two things:
Daily System Updates
Weekly System Updates
Long system triggers for EGHT and ZICA at Monday's market open. The system that generated these trades is the same system that generated VNWK, 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.
Current open system positions:
I would take care of the normal things....house, debt, family, etc. But, allocate some travel money for two things:
- Hawaii - my wife has always wanted to see Hawaii and take the helicopter ride and just have the full experience.
- Alaska - I've always wanted to fly into a remote log cabin on a mountain lake. Fish for trout, salmon, etc. Just enjoy the scenery.
Daily System Updates
- 1 QQQQ (Harami) long with current profit of +0.86%.
Weekly System Updates
Long system triggers for EGHT and ZICA at Monday's market open. The system that generated these trades is the same system that generated VNWK, 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.
Current open system positions:
- 1 QQQQ (SimpleUp) long with current profit of +5.22%;
- 1 QQQQ (TurtleTrader) long with current loss of -0.47%;
- SPDE (PennyLag) long with current loss of -11.54%;
- AATK (PennyLag) long with current loss of -17.06%.
- VNWK (PennyLag) long with current profit of +8.70%.
Thursday, December 09, 2004
Blade Review
Blade: Trinity did not impress. I was expecting a continuation from the first two movies. This one took off on a different path. Reminded me of the old Bruce Willis action movies...this time Ryan Reynolds played the whiny wise-cracking "tough" guy.
Ryan Reynolds clearly stole the show. The guy was hilarious. You might remember him from the Two Guys, A Girl, and a Pizza Place sitcom. His wisecracks had the entire movie audience rolling in their seats. The "silent but deadly" crack was brilliantly funny.
Jessica Biel looked good...but suffered from lack of dialogue.
Parker Posey played one strange, cool, ugly vampire.
Overall, the movie was okay. But, I missed the old Blade.
Daily System Updates
Current open system positions:
Ryan Reynolds clearly stole the show. The guy was hilarious. You might remember him from the Two Guys, A Girl, and a Pizza Place sitcom. His wisecracks had the entire movie audience rolling in their seats. The "silent but deadly" crack was brilliantly funny.
Jessica Biel looked good...but suffered from lack of dialogue.
Parker Posey played one strange, cool, ugly vampire.
Overall, the movie was okay. But, I missed the old Blade.
Daily System Updates
Current open system positions:
- 1 QQQQ long with current profit of 1.39%.
Wednesday, December 08, 2004
Daily System Update
Sorry about the oil chart formatting in the previous article. I'll try to fix the problem tomorrow morning.
Daily System Updates
Received a long system trigger for the QQQQ for Thursday's (12/08/2004) market opening. This system has an 82% win ratio with an average profit of 3.55%. The system holds the QQQQ for a max of 7 days. This system is based on a two-day pattern: a range expansion day followed by a range contraction. A trend filter is thrown into they mix as well.
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
Received a long system trigger for the QQQQ for Thursday's (12/08/2004) market opening. This system has an 82% win ratio with an average profit of 3.55%. The system holds the QQQQ for a max of 7 days. This system is based on a two-day pattern: a range expansion day followed by a range contraction. A trend filter is thrown into they mix as well.
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.
Oil Rigs & Prices Update
Posting an updated chart on US Oil Rig Counts versus Crude Oil prices.
Data provided by Baker Hughes, Inc. and inflationdata.com
To learn more about this chart...read the original post here.
Mark December 10th & 11th on your calanders or Tivo it. Roger Nusbaum from Random Roger's Big Picture will be on Your World with Neil Cavuto (Friday) and Forbes on Fox (Saturday). Roger is a good guy...wish him luck!
There is a long story to my shoulder situation...but I'll give you the short explanation. They had me down with the wrong shoulder injury. They could have really messed me up...but the surgeon and physical therapist think all is okay. I attended my second therapy session today...and much much better. The pain is finally gone from Monday's torture treatment.
In fact, I might sneak out and see the new Blade: Trinity flick. I'll let you know if its a winner or a stinker.
Thanks for everyone's well wishes and concerns!
Data provided by Baker Hughes, Inc. and inflationdata.com
To learn more about this chart...read the original post here.
Mark December 10th & 11th on your calanders or Tivo it. Roger Nusbaum from Random Roger's Big Picture will be on Your World with Neil Cavuto (Friday) and Forbes on Fox (Saturday). Roger is a good guy...wish him luck!
There is a long story to my shoulder situation...but I'll give you the short explanation. They had me down with the wrong shoulder injury. They could have really messed me up...but the surgeon and physical therapist think all is okay. I attended my second therapy session today...and much much better. The pain is finally gone from Monday's torture treatment.
In fact, I might sneak out and see the new Blade: Trinity flick. I'll let you know if its a winner or a stinker.
Thanks for everyone's well wishes and concerns!
Monday, December 06, 2004
New Kind of Pain
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!
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!
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...
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