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Poker, just when things look really ugly, it is surprising how they can turn it around, isn't it? You just can't dismiss the propensity for some traders to continue throwing good money after bad. However, between LOD and current levels, that is not a bad day's work, *if* you had the CO Jones to trade it. It is not unusual to get a bounce and end on a positive note going into a "feel good" holiday. I believe the early retail numbers (Black Friday and Cyber Monday) will determine whether we rally into the EOY or just limp along within this relatively broad trading range as the subprime credit mess continues to unwind.
According to the daily Sloshing Report...
http://www.gmtfo.com/reporeader/omops.aspx
even though there was a big auction with $37B accepted, due to expiring coupons, the net add was only $2.75B, which still may be enough to give the market an underlying bid. Of course, if it is only reported that $37B was added, that could have a psychological pumping effect, bringing into question the agenda of the reporter.
...maybe today.
After such a hard day down, I suspect will will get a bounce/relief/holiday rally tomorrow.
This is turning into a nice little example of one of Poker's famous ACD patterns, except that he didn't walk out on to the cliff this time, just shot up and shot right back down.
The bigger man takes the high road...
TMG Update...
As has been noted on other boards, the live trading strategy on C2 was changed as of ~ mid-October. We now use full margin, 4% of QQQQ price stops, and may include cash positions at times. The following is an update of the System Description:
TMG is an Excel-based quantitative analysis trading program that utilizes a proprietary rule weighted algorithm consisting of numerous price-based and breadth-based technical indicators to generate a daily signal for trading the Powershares QQQ ETF (Symbol: QQQQ, formerly Nasdaq 100 Trust) and related derivatives. The system backtesting maximizes the historical and statistical correlation to Truth for optimal performance for a once daily EOD signal/NDO trade against the NDX since Jan 2000. More simply stated, the system algorithm is designed to capture the actual movement of the NDX over the backtest period as closely as possible and to take Long and Short positions at each day's open that would have been most beneficial based on the previous day's end of day signal. Due to any number of exogenous influences, there is never a guarantee that the market will react exactly the same to a similar set of circumstances the next time, but this approach results in a daily signal that is accurate ~ 2 out of 3 times over the backtest period, and which produces profitable trades (entry to exit) at slightly greater percentages. Signal length varies from one to several days, and over the back test period, there have been 873 round trip trades, so commission costs, while not reflected in the above numbers, should not be excessive. Algorithm enhancements are made periodically as a part of an ongoing continuous process improvement program. System returns are characterized by normal statistical variations over the backtest period and therefore going forward are non-deterministic. What this means to a potential subscriber is that over any arbitrary time frame that you might choose (e.g. the period of your membership), returns may be greater or less than the statistical norms. To avoid unrealistic or unrealized expectations, every prospective subscriber should carefully consider whether or not they possess the patience and discipline to stick with the system through flat-to-down periods that the historical statistics virtually guarantee will occur.
The equity curve shown is the result of actual trades since going live ~ one year ago, and do not reflect the benefit of several improvements that have been made in the algorithm in the intervening time. In stating the system performance, we believe it is more important to focus on the backtested returns of the current version, since those should be more representative of performance going forward. The downturns we have experienced have been primarily the result of periods of extreme short term volatility characterized by successive daily or more frequent market reversals that have followed major disturbances in the market, and with which any once-a-day signal/trade system is simply not designed to cope. Even though similar periods have occurred previously in the backtest and the system has always recovered, there appears to be little or no tolerance by subscribers for trading through them in real time with real money, so if you are not prepared to deal with those, you should save yourself the trouble of subscribing. In almost eight years of backtesting, there have been 2 instances of 5 incorrect signals in a row, while there have been 115 instances of 5 or more correct signals in a row, including 1 correct string of 23. By logical extension of the Nyquist/Shannon Sampling Theorem, one must sample (and be willing to trade if necessary) at twice the highest frequency of the market reversals in order to capture them accurately, which of course is simply not possible with a once-a-day signal/trade approach. Going forward, when these periods of high volatility are detected, the signal will still be published, but a recommendation will be made to go to Cash until the period of extreme short term volatility has subsided.
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We maintain a Members Only community forum for all TMG subscribers at http://finance.groups.yahoo.com/group/themerlingroup/. Members have devised several profitable methods to trade the signal which are tailored to the specific investment vehicle of their choice.
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Poker, agree it may be a bit premature. Breadth is exceptionally strong today (compared to the last several), so this may take a day or two to run its course. The retail bears didn't do a very good job of selling it off over the Boys' lunch break.
Found this on the iHub QQQQ board...
John Bollinger, CMT, of Bollinger Capital Management, pointed out that we can quantify this narrowing by examining weighted and unweighted measures of the same index. He found that the Nasdaq-100 ETF (also called PowerShares QQQ Trust ), which represents a market-capitalization weighted compilation of stocks, was up nearly 25% year to date but the unweighted version of this ETF is up only 18%. Performance in the bigger Nasdaq stocks has masked the lesser performance of the rest.
Alan Newman, editor of the Crosscurrents newsletter, added that one third of the advance in the Nasdaq-100 is due to just two stocks, Apple and Google. These are the types of statistics that can put the market in a precarious position. If something were to go wrong with only a few of the leading stocks, then indexes would be hurt. But on the other side of the argument, as long as these leaders remain strong so, too, will the market.
Pick your poison. Place your eggs in a narrow basket or bet against stocks that are just plain powerful. Either way, risk is elevated and picking the right stocks is critical. Forget the dart board and keep a very close eye on the Nasdaq-100. There is your rainmaker.
Is it any wonder tne NDX/QQQQ performance at times is so inexplicable?
Re: S&R fib lines, interestingly, after yesterday's LOD, the first rally was turned back precisely at the 23.6% line, which was subsequently breached, and then the second rally was turned back precisely at the 38.2% line. So far today, having trouble breaking through the 0% line.
Playing only one side is like going into a battle of wits with half a load.
Make that 53.12, according to my QT. 50% would be 52.68.
Poker, only as a point of interest. However, since so many traders and trading programs do use them as S/R levels, to some extent they tend to become self-fulfilling.
Poker, a 61.8% Fibonacci of the drop from HOD yesterday to LOD today would be ~ 53.14.
Poker, we've bounced off the 50EMA for the Qs twice now, so we might now get a day or two retracement. However, I do not see us setting a new high.
Added a total of $32.75B today, so we are now just $1B below where we opened the week.
Poker, it works just like a checkbook, albeit with electronically created money, but the thing that irks me is the blatant misreporting, like that previous story from the idiot AP reporter. I sent them a friendly little note at their feedback mailbox, but of course got no reply.
The Fed bumped up the OB by $8.75B yesterday, but so far today have added just $9B, and so will need to come up with ~ $23B more to maintain the status quo. If the borrowers don't get it, or perhaps knew yesterday that they wouldn't get it, that could have been a major contribution to yesterday's sell-off.
The Fed needs to pump ~$40B today just to keep the patient alive, but the action (i.e. net add of ~ zero) will no doubt be widely misreported (or not reported at all).
Poker, maybe all the idiots who were buying like crazy after the last two Fed rate cuts are now beginning to understand that irresponsible monetary policy is a two-edged sword. A rate cut leads directly to a weaker dollar, which in turn makes oil and every other world-priced commodity more expensive, which in turn drives up the price of imports *and* the cost of domestic production, which by anyone but the Fed's definition, is inflationary.
Futures down *huge* this AM. Hard to understand what can be so bad that was so good through the close yesterday. Always the conspiracy theorist, with all this back and forth, you have at least to entertain the possibility that much of it is *purposefully* random movement driven by the MMs to create trading opportunities in an otherwise range bound market. In that regard, one could normally expect to see a good gap closing move in the early trading.
I suspect it will be more of the same. Two steps forward and one back, and then one forward and two back. Not sure what trend you are looking at, but the NDX one day chart shows a pretty constant uptrend since the August low, with only a few teaser down days briefly dipping below the 20 EMA. Also, the 10 EMA has not even crossed below the 20 since ~ 8/30. The crash may still be coming, but it isn't here yet.
So, why not just go Long???
I don't know if you would necessarily call it logical, but I believe the market's behavior is a composite of statistical behavior that is reasonably predictable (and why TA works part of the time), and a random component that is driven by fear and emotion that almost defies any attempt at pronostication. In periods of low volatility, the statistical behavior seems to prevail, where the market moves methodically between mild OB and OS extremes, but in periods of high volatility, everyone is second guessing themselves and everyone else, and trading on raw fear and emotion based on the apparent spin of the latest tidbit of information that they believe might give them the edge. Following a major market disruption (or in the case of an event that unbalances the normal market forces, e.g. the Sep Fed announcement that cut the legs from under the bears), it can be a period of weeks until the reverberations settle out, very much like the response of an underdamped control system. I don't think it is ever all one way or the other, but the ratio definitely changes, from say ~ 70/30 rationale to 30/70 irrational. I just counted the number of reversals the last two trading days -- 7 on Fri and 5 today (counting that little pullback into the close). So I leave it to you to venture a guess as to which period we are in.
In the face of yet undisclosed billions in writedowns, the bulls still refuse to give up.
Isn't it nice to be so revered? You might become a legend in your own time (or, might that be "a legend in your own mind???). :)
Could this be a part of why we are selling off???
http://www.gmtfo.com/reporeader/omops.aspx
Net add (so far) today is *minus* $5.75B.
If the Qs (1X) were 100 and went down 1%, that would be a 1.00 decline, and if QID was half of that and went down 2%, that would also be a 1.00 decline. The 1X/2X ratio is not always precise on any given day due to how the 2X vehicle is constructed (options, futures, etc.)
Glen, no, it is based on *percentages*, and since QID is so depressed, the actual price doesn't change as much based on a 1X/2X ratio. I show a -1.64% change on QQQQ and a +2.94% change on QID.
Right, but the nice thing about the Sloshing Report site is that he keeps a running balance, so you don't get snookered by an operation like today where on its face, it looks like they added a *huge* amount, when the fact was they weren't even adding enough to keep it even.
BTW, they will have to add $12B tomorrow just to maintain the status quo. If they add significantly less, that will spark more selling to generate the cash for the payback. The day's auction results are normally available by ~ 0950 ET.
Poker, did you not read The Sloshing Report for today???
http://www.gmtfo.com/reporeader/omops.aspx
The $41B that was added today was to replace the $42.5B that was expiring, for a net change of *minus* $1.5B. You have to be careful, My Bearish Friend. This is a prime example of how the talking heads deliberately mislead the public. They want everyone to think the Fed *still* has their backs so they will happily keep buying.
The reporter is obviously an idiot...
I think they are possibly politically motivated, and don't want to give the Dems (i.e. Hillary) yet another major issue (i.e. a raging recession) to run against. Unfortunately, I think they will fail.
Except that with this cut, they basically told the market, "That's all we can do", and from this point on, it will be on its on. We'll see if that is really the case when the market threatens to throw yet another tantrum if it doesn't get more cuts. Seems to be reacting just that way today, but the Fed can still pump vast quantities of liquidity at the now lower rate to try to keep things afloat. According to The Slosh Report:
http://www.gmtfo.com/reporeader/omops.aspx
they have added a net ~ $7B over the last three days.
No, not surprised a bit. There are often morning after regrets after a wild night of binging...
Bummer. Seems someone left a floater in the punchbowl.
Thanks, but that wasn't really my question. I know what it stands for, but I just don't see the point. Does it add some level of clarity or understanding that normal punctuation does not?
I apologize for not being more net saavy, but does "eom" serve any particular purpose that a period, exclamation point, or question mark does not?
I have been there in a macro sense for over a year, and in that time seen the NDX march 600 points higher, with only a couple of minor shake-ups and one relatively modest "correction" of a few weeks' duration. I believe the piper is yet to be paid, but until he is, all the spinners and talking heads who have a vested interest in the Long side will continue to blow of the bad news and accentuate the good news, and the herd will dutifully follow until it charges right off the cliff. Until that happens, though, the herd *is* the market, and you go counter to them at the risk of getting trampled in the stampede.
The thing is, wherever you go, there you are...
Except that the bulls don't believe any of it, and that whatever the Fed decision, Bennie still has their backs. Qs at new 6 year high...