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Poker - Marty Chenard (www.stocktiming.com) says that in spite of yesterday's runup, the Boys are still in net distribution. Except for this AM's futures head fake, not much conviction/carryover today.
Kind regards,
-CAPT J
"What would you attempt to do if you knew you could not fail?"
...that's (fat fingers!)
Poker - Yes, that't right, but with some fancy footwork was able to minimize the damage to marginally down. Although the NQs have pulled back a bit AH, the strength into the close today points to possible continuation, unless of course, some exogenous event, like a spike back *up* in the price of oil if anyone in the supply chain sneezed, should occur. Today, there was obviously pent-up broadbased buying demand, but what released it was the downward spike in oil. Without that, I would have expected the rally to fizzle mid-PM.
Kind regards,
-CAPT J
"What would you attempt to do if you knew you could not fail?"
Poker - Yes, I believe the market outlook for the foreseeable future is best viewed through brown-tinted glasses. And, as you know, we go both Long and Short in all kinds of markets, based on the guidance of the Master Sorcerer...
Steve - So, is this a contrarian indicator, saying that a bottom is in, or the harbinger of more pain for Longs?
Nirv - There's nothing like holding a position to reveal your true convictions. The thing about today that concerns me the most is the relatively light volume, so I suspect that this was mostly driven by pent-up retail demand. Normally when the Boys are playing, the moves are much more vertical. Let's see if it is enough for the elephants to follow suit, or is just a nice little one day bull trap. I also suspect we'll see some of the weak Longs heading for the exits here shortly, not yet willing to hold overnight.
Webmaster needed - We're looking for someone to be our webmaster in exchange for a comp membership in TMG. If you have good website development skills and are interested, please let us know.
Not quite time for the Fat Lady yet, and one day does not a rally make. We will see within the next day or so if this has legs, which I doubt. Still, nice gains so far if you had the CO Jones to go full in at the open. If I were in that camp, I would be looking to lock in some of those before the bear takes them away.
It seems every time we start patting ourselves on the back a little too much, we catch a crab. A trade isn't over until closed, but it always feels better to be above water.
Does anyone have or know where to find historical CME SPX Pit Traded Options volume data?
That should be:
https://www.themerlingroup-inc.com/
Rainbow - When evaluating systems on C2, you need to be careful about comparing apples to oranges. Many only seem to focus on the posted annual returns, but you also have to consider the risk/reward equation. Using *exactly* the same signal and trading strategy, a system trading a 2X vehicle (or greater if using margin) will have much higher returns than a system trading at 1X over the same period, but also be exposed to much higher drawdowns. An approximation of the annual 2X return is given by ((1+X)^2)-1, where X is the 1X return, so 50% at 1X would be ~ 125% at 2X, primarily due to daily compounding. Compare MVP3, which trades the MVV/MZZ 2X ETFs, sometimes with margin, to TMG II, which trades 3K shares of QQQQ (~ 1.1X), or even better, compare TMG II to TMG II Futures, which currently trades just *one* NQ contract (~.8X).
Kind regards,
-CAPT J
"What would you attempt to do if you knew you could not fail?"
So, you were Long today expecting carryover?
Back to back *huge* days for Merlin. We may give a little back on the NDO trade, but up 4.71% at 1X in two days...
Rainbow - That is why it is called a market...
The last time our R3 rule was at -3 was 5/20 - 5/21. On 5/21, the NDX closed down 51 pts.
Poker's wave three washout may be closer than anyone suspects. Markets are rallying off the pullback in oil, but Alcoa kicks off the earnings season tomorrow, and I can't imagine that energy costs have not had an impact on most companies' bottom lines. Our adaptation of Scamman's Rule of Three for P/C ratios is at -3 intraday (and the DJX is at a whopping 10.91), so something is definitely up. Today may be nothing more than a sucker's rally...
JLS - Good for you.
Poker - Please check your PMs on your Chat Board...
JLS - Thanks for your reply. I am familiar with the method and understand *in spades* the patience and discipline that are required to be successful trading a mechanical model. It will be wrong frequently, but if the statistics say that *over time* it is a winner, then you have to be in all the time to allow the statistics to work in your favor and to realize the gains. Re: the scientific method, it is rare that any experimental outcome is ever widely accepted on the basis of a single experiment, and normally requires independent verification from several other experimenters to be given validity. The "cold fusion" case comes to mind, and as in the case of global warming, you always have to be suspicious of the motivations and/or agendas of the experimenters. Many research scientists will endeavor to prove anything you want if you will agree to continue funding their research. If global warming is indeed for real, then it has been underway for a long time. The last ice age came to an end ~ 10,000 years ago, far in advance of primitive mankind making any sort of measurable impact on the environment, so something much larger, and moreover, a totally *natural* phenomena must have been at play. To say that A caused B simply because B followed A is just bad science.
Re: market behavior and trading systems, the fortunes of trading systems ebb and flow as the character of the market changes over time, and the system or algorithm that worked well at times in the past may not work well at all today. There was a marked shift in market behavior in 2000, which was perhaps due to the widespread proliferation of online trading (i.e. a massive number of relatively inexperienced traders learning the ropes), and the historic volatility levels made gains of over 80,000% possible, *if* you had gotten every single day's call correct. That level of volatility moderated by 2003, but there was another distinct shift in the market's trading behavior in July last year with the elimination of the Uptick Rule. It took a few months to recognize that the existing models were no longer working as well as previously and needed "tweaking", but the observed effect was very real and was widely reported in the quantitative trading world.
Re: EW and/or Fibonacci ratios, I for one do not believe that the market is preordained to behave in any particular way as those methods suggest, but if 6 out of 10 traders believe in Fibonnaci ratios, use them to set S/R levels, and actually base their trades on those levels, then there will be a statistical clustering of trades at that level, proportionate to the number of traders using them, which might be sufficient frequently enough to turn the overall market at that level. Hence, for those using the "method", it has a tendency to be self-fulfilling and therefore self-reinforcing.
JLS - "There was a famous experiment over 20 years ago that proved, rather spectacularly, that in trading it’s all science and not art."
Just like with all the global warming mumbo jumbo, one experiment proves nothing. If that particular method is still so spectacular, why isn't everyone using it? My observation was simply allowing for the human factor that is an unavoidable (and some might say desirable) part of every trading strategy. I don't believe there are many traders who can honestly say that they never *ever* deviate from their method, and quite frankly, I would always want to preserve that option as well, to avoid driving off a cliff just because your system said so. If your system said to go from Short to Long and Israel bombed Iran overnight, I for one would let the Short ride.
Yeah, right up there with the Bear Stearns stockholders being given $2/share for stock that had been trading at ~ $80/share. I guess they eventually agreed that was too low and upped to ~ $10/share, but still a major screw job. However, if they had let it go under Chapter 11, it would be years before they saw their money, if any at all. Of course, with all the worthless subprime paper they were holding, it wasn't worth $80/share either.
JLS - It has always amazed me that people will accept as truth that which they believe in most passionately, even though it may contradict other beliefs or that there is no proof one way or the other. They only need to see a correlation once to accept that the relationship is always true, and completely dismiss the notion that it could have been a mere coincidence. If they are religious, the survivors of a catastrophe will invariably attribute their salvation to divine intervention, when in fact it may have been just dumb luck. Ask anyone if they believe in ghosts and they will likely say of course not, but it is a central tenet of most of the world's religions.
Regarding trading systems in particular, they are generally more art than science, but what counts is the ability to use them consistently for profit, so what does it really matter if they require a leap of faith? Also, the degree to which a particular methodology is utilized, e.g. Fibonacci ratios as S/R lines, can be self-fulfilling.
JLS - Don't believe for a minute that I am a proponent of EW. I am more in the camp that believes as Newton did, that an object in motion tends to stay in motion, unless/until acted upon by an outside force (i.e. the trend *following* philosophy). It is analogous to driving at 60 mph by looking in the rear view mirror. As long as there are no obstacles or sharp turns ahead, you will be fine. It may be a matter of how you interpret and/or view the data, but anyone who claims to be able to predict the next market movement is drinking their own bathwater. However, that said, it is possible to take positions that are favored statistically from an historical perspective based on what the market has actually done. It doesn't guarantee that the market will react/behave exactly the same this time, but it is verifiably statistically better than a flip of the coin.
Kind regards,
-CAPT J
"What would you attempt to do if you knew you could not fail?"
Okay, I think I am in...
Well, even though they were banned here, they would make their derrogatory comments publicly elsewhere, with the full knowledge that they would be seen.
Kind regards,
-CAPT J
"What would you attempt to do if you knew you could not fail?"
Actually, I was referring to some of Poker's past antagonists, a few of whom appear on the banned list. They all used to frequent a board which shall remain unnamed (although it seemed to be the "Bull Pen"), where the favorite sport was kicking whomever had the audacity to be opposite them, and their *very* favorite person to kick was our beloved Poker. Of course, between ~ Aug of last year through mid-Jan this year, the market gave them plenty of opportunities to gloat. Funny that we don't hear much from them anymore...
In all fairness, My Friend, you spelled it *both* ways.
Poker - It would seem that by and large you (or perhaps with the help of the market) have silenced your detractors, but relative to how you trade and what you did or didn't do, a public record is indispensible and irrefutable.
It doesn't have to be so much of a "system" as a defined trading strategy. Call it anything you want, e.g. "Poker's Frog Entrails Trading", pay your listing fee and enter your trades *as they occur*. C2 then maintains your publicly verifiable trading record. You can choose to accept subscriptions or not.
Poker - The homepage is here:
http://www.collective2.com/
The link to our primary system is here:
http://www.collective2.com/go/tmg2
Our listing that trades futures (the NQ) is here:
http://www.collective2.com/go/tmg2futures
Yes, with the exception that the current trade is not yet closed (publicly viewable stats are 72 hours delayed).
Rainbow - I appreciate your interest and will answer all questions, but please send me a private email at: TMGSignal@comcast.net
It is not my purpose in trying to contribute Poker's board on occasion to engage in too much self-promotion. There is a lot of information available at:
http://investorshub.advfn.com/boards/board.aspx?board_id=7383
Well, I am one of the Merlin developers/owners, so I might not be the most impartial one to render an opinion, especially since I do not know the inner workings of MVP, but I think it is fair to say that they are very different systems, primarily in the signal time frame, frequency of trades (more trades = higher total commissions), and the time a losing trade may be held open. Also, MVP focuses on the SPX as a tracking index and trades SPX related vehicles (MVV?), while Merlin deals exclusively with the NDX and applicable NDX related vehicles (QQQQ, QLD, QID, NQ futures). Both systems are ranked in the top eschelon for stock trading systems on C2, with MVP's system drawdown higher, but also with a higher overall profit margin. If you are considering subscribing to one or the other, I think it would be safe to say that you will be happiest with the one that best matches your individual trading style. I have "known" the MVP developer for some time, consider him to be a friend, and IMO is a person of the highest honor and integrity, so you would definitely not go wrong by giving him your business.
Steve, if you read this, please feel free to jump in and correct any misstatements or mischaracterizations.
Maybe they should also add in the 3K+ Americans who died on 9/11, more American deaths in a single day than Pearl Harbor or D-Day. How many *civilian* deaths have we had since then, other than the hapless few who managed to get taken hostage while choosing to work in a war zone?
Poker - Merlin goes day by day and we don't set specific target levels, but rather how OB or OS the rules say we are based on the market internals (price, breadth, and options volume). Right now, our ST RSI is bouncing around the low 20s (clearly OS territory), the Fri low seems to have formed a nice ST "V" bottom, and the bears were not able to take it back there for a retest this AM. The market just endured a pretty brutal week/month and unless oil spikes another 5 bucks or so, there seems to be sellers' fatigue setting in and the market *wants* to go up. Even in the worst of bear markets, ST snapback rallies can be vicious. EOM/EOQ considerations (window dressing and new 401K $$$ coming in) also point to a modest rally. As we enter earnings season, expectations have been so lowered that it won't take much to beat them, and any positive reports will be interpeted by the herd as a reason to jump back in. 1375 would represent a 6.7% recovery from the current level of ~ 1288, but that is certainly doable, unless more bad news surfaces (e.g. more housing woes, the impending collapse of consumer credit, major bank failure, etc., etc.)
Updated live trades equity curve posted in the iBox, accurate through market close on 6/27.
JLS - I think I agree with Poker that you are just a disagreeble sort...
"That a single news event, or a Bernanke fart could be a conspiracy?"
Your meaning was clear to me, but anyone else can judge for themselves.
Regarding my view of the market, just because the market *can be* event driven on any particular day does not mean there is not value in attempting to discern the deeper trend, not unlike the splash and waves caused by a rock tossed into a slow moving stream. The event driven effects are very real and can cause real pain if you are on the wrong side, and you can expect to be right no more than 50% of the time on those occasions, but if you can get the other part of the market behavior right more than wrong, you will be a winner.
If you take issue with any of this, just put me on "ignore" and spare us the drama.
JLS - No, I didn't say it was a conspiracy. You tend to infer an awful lot from what people post here. I am only saying that sometimes the least little thing can cause the herd to react, like setting a firecracker off in their midst, or yelling "fire" in a crowded theater.
JLS - The only observation I would add is that it doesn't necessarily take an a priori consensus to get the market moving in a particular direction. How frequently have we seen substantial moves begun on a single positive or negative earnings report, or alternately, Bernanke passing wind loudly?
Kind regards,
-CAPT J
"What would you attempt to do if you knew you could not fail?"