Engineering Professor (EngProf6)

Engineering Professor (EngProf6) ©

Hybrid Timing Model for Analyzing Stocks and Indices ©

Date: Friday, October 10, 2008 (after the close)

Find out during the day on this new page an update of the Nasdaq 100 Index (NDX) and the S&P 500 (SPX). The support I have received (as of Nov. 24’08) and the positive feedback has been more than I would have imagined. Thanks to all and enjoy.

Please Note: I have decided to suspend updating this page for the near term. However, I am updating the Nasdaq 100 Index on new page. If you are following AAPL or GOOG then you should be checking out what NDX is up to. And if you are following the S&P 500, then the NDX is also for you. The correlation between the two is very high. I update the other page throughout the day. Enjoy and good luck.

About This Web Site:

This site focuses on predicting the short term trends of 2 market indices (S&P 500, and Nasdaq 100) and 2 stocks (AAPL, and GOOG). Below you will find ‘graphic’ trend maps that show the overall daily trend (5 past days and 5 future days). I also showed the trends based on half hour data. These trends are presented for the past 2 days and for the coming day, however, I have removed them for now. The graphics are found by scrolling down a bit. They show you where we have been and, more importantly, where we are going. I am impressed at how accurate they are proving to be (and yes I developed the algorithms they are based on). Learn to read them – they may help you make better trading decisions. I will use these graphics to start My Journey at the beginning of December as I try to convert $5K into 1 million. If you have comments or suggestions, please drop me a line.

My Thoughts About Friday:

The model is looking for a rebound for SPX, NDX and GOOG similar to what AAPL did today. They are all pointing up and have been doing so for the last week. However, up moves have been few and far between. Hopefully we will see some up action this week. Meanwhile, I am focused on the half hour model. It has done very well.

The ‘new page’ has become quite a success. Many of you are looking at it as far as I can tell. Do you have any comments. Many thanks to those who have emailed me. I answer what I can. Good luck to all.

Given that I focus on the overall (call it daily) trend, I tabulated the graphics for the past 5 days. Immediately below you can see the 5 snapshots that were generated for the overall graphics of both the SPX (first column) and the NDX (second column).

No graphics for Thursday, Oct. 9

About My Work

If you scroll down a few lines you will see the graphics as posted on this page. You can also download a copy of the PowerPoint file that generated the graphics.

Please Note: I have created a link that accesses my Power Point File which contains the graphics. I will post this everyday.

I am working on developing an algorithm that couples with the model and carries out complete investment decisions. In the end, I would like to develop a mechanical system that contains enough rules to literally decide on when to trade and at what price. Stay tuned. Best to all and thanks for your messages.

Power Point File of Today's Graphics (Click Here)

Power Point File of Thursday (July 3) Graphics for all 6 Issues (Click Here)

COMBINED MODEL (Daily/Half-Hour):

Choose one of the following links to branch directly to it:

1) Why Is EngProf6 Doing This? (Last Updated: Nov 10’07) ©

2) Acknowledgements (Last Updated: Nov 10’07) ©

3) A New Beginning (Last Updated: Jan 7’08) ©

4) Yes We Can (The Model) (Last Updated: Feb 24’08) ©

5) Instructions for Reading the Individual Graphics (Last Updated: Mar 27’07) ©

6) Summary of Moves Starting in March 2008 (Last Updated: Mar 3’08) ©

7) (How To) Grow Your Wealth Quickly (Last Updated: Nov 10’07) ©

8) Disclaimer (Last Updated: Nov 10’07) ©

Thanks to those who asked that I make changes. As you can see, I have listened and I have done ‘something’. Your comments are always appreciated – especially if they are constructive. I will update the various pages as time permits me.

Questions, Comments, Suggestions or whatever else you may fancy are welcome. I can be reached at:

engprof6@hotmail.com

This site is copyright protected. No portion can be reproduced in whole or in part without the consent of engprof6. Moreover, the name engprof6 (or direct references to it) is protected by copyright law. Those individuals making slanderous statements that may be construed as libelous, irrespective of whether they reference engprof6 directly or if they show the intent of doing so, may become the subject of legal recourse.

PAST POSTS (The Comments I Have Made):

Thursday, October 9,2008

A Special Note (Friday morning):

The market volatility – no the market collapse has made it difficult to do well. The one thing which I’ve noted has been that the half hour model has been on top of the action. It has tracked the movements very nicely. But the question is how to trade with it. I don’t have the answer except to once again point at futures.

I did not update this page on Thursday evening but I did update the ‘new page’ which allows one to see the evolution of a move in the NDX. For those who are wondering where we stand, the daily model sees green for the next week, once we get out of the initial red on Friday morning that has cascaded from Thursday. Needless to say the market is extremely oversold. Good luck

There was one good thing about today. The moves were limited to plus or minus 200 as opposed to 500. Let’s hope we survive to fight another day. Enough rhetoric, let’s look at the markets. Today at 1:00 pm we had the combined model reverse to the upside. I call it the combined model but in fact it is the combined graphic that shows the results of the 2 models. The regular readers know it is for NDX. The others have just been informed. Today’s 1:00 pm reversal was a reasonable call by the model. As of 3 pm it actually looked quite good. But then the wheels fell off and the market tanked once again. It did so in the last hour. So what does the model say. For SPX, AAPL and GOOG you can decide for yourself. I will focus on the NDX.

The NDX is in up mode (started on Wed at 1 pm). This up trend will continue until the combined model finds a reversal. As we go into Thursday we have red on the top row but not on the bottom row. So the up trend remains intact.

Today marked the first day I posted a new page that allows you to see the evolution of moves during the day. Given my schedule I cannot tell you when I will post during the day, however, I will do so as often as I can and/or is warranted. Even though I’ve only had the combined graphic for one day, I am pleased with it. The key to success is to have a strategy and to have discipline. While I tell you that these are necessities, I have until now failed to some degree to master that aspect. But I continue and sooner or later I will get it right. Good luck to all and don’t forget the other page (the link is at the top of this page).

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Tuesday, October 7,2008

Just when I thought things couldn’t get worse, they didn’t get worse – they got MUCH worse. Another terrible day. Even the model scrambled to get things straight. Let me focus on NDX (or if you like QQQQ). Both AAPL and GOOG are in the NDX (Nasdaq 100 Index). And as for the SPX, it is moving with the NDX (in the current market environment). Yesterday at the close there was green that appeared at 4 pm (i.e. market close). Because of the way the model is set up that green carried into today (Tuesday) until 10:30 am when new data was entered. At 10:30 am the model went from the green that originated at 4:00 pm Monday to red. The next analysis at 1:30 pm also generated red. And then at 4 pm the model generated green. The green is for tomorrow morning (9:30-10:30 time slot). At 10:30 am tomorrow (Wednesday) I will generate the color that will fill the 10:30 to 1:30 pm slice. In the meantime, I am also running an equivalent half hour model for NDX.

My biggest problem has been how to apply the results from the model (strategy) and not the model itself. I have worked hard to develop the model. It has taken me years. I am happy with it. If I am failing, I am to blame. And the primary reason is not getting a good hold on how to get into positions and how to get out of positions, or if you like when to act – to be decisive. I think that part of the blame lies in how I present the data. To that end I would like to try an experiment. I want to try something with NDX whereby I couple the data together on the same graphic and I use an improved time scale.

My first attempt is shown in one of the graphics below. The upper portion of the combined graphic is the half hour data and the lower portion is the ‘daily’ data (even if it isn’t really daily data, I have chosen to call it that). When you look at the graphic, you see both models starting with green. The green in the first slice of the daily model comes from the close on Monday. At 10:30 am the daily model reversed to red. Meanwhile, the half hour model stayed with green until 11:30 am when it too went red. At this point one would sell because the 2 are aligned. At the top of this page is a link where I will update the NDX graphic throughout the day. This is an experiment. And I hope the new graphic format helps us to better execute the moves.

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Monday, October 6,2008

Just say to yourself – This is a bad dream. Today was another nightmare. But you know that. So let’s analyze what happened. Let me start by recalling what I said on the weekend. I was expecting that this morning (Monday) we would reverse to the upside. On Friday at the close all large arrows were red but a reversal to the upside at 10:30 am (Monday) was a possibility if the market held its own. We know that because the model had the 10:30 am slice as green. To arrive at that, the model assumed a flat price between Friday’s close and 10:30 today. What a joke. By 10:30 the market had tanked and was even lower than what we had later on at the close. Obviously, the model painted the 10:30 am slice as red and then it also painted the 1:30 pm slice as red. But, as for the 4 pm slice, it was painted green.

So the S&P 500 and the Nasdaq 100 both reversed at the close today. A word of caution, that last green slice will only be official (i.e. cannot be changed) once we have the 10:30 am slice completed and it confirms the green status. Nonetheless, as I said on the weekend, there is green directly ahead, so be brave and hang in. And come back soon.

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Friday, October 3,2008

Today was a one day wonder. As we saw yesterday (Thursday) we were looking to the upside for Friday. And up went until lunch time. Then, by the 1:30 pm slice we were reversed to the down side. A ‘one slice wonder’. This is a very rare occurrence. But, it happened today. And in the process we saw a 400 point swing. What a week this has been. So the House passed the rescue bill and we get slammed. Why? I don’t know.

The half hour model picked up the reversal at lunch time. But I (and you) don’t use the half hour model. Meanwhile the daily model reversed at the 1:30 pm slice but the reversal (I saw it happen) was projected to be short – like over by Monday. So I did nothing – in all fairness it would have been difficult to react. It all happened to quickly. Anyway, life must go on. Let’s look at Monday.

The good news is that this down draft is ‘artificial’. What I mean is that we may be pointing up again Monday morning. The slide in prices we saw on Friday afternoon was not expected. It came from nowhere. The model has written it off and it sees a resumption of the up trend on Monday. I haven’t mentioned any specific issue because all 4 are similar. They all experienced the ‘one day wonder’ on Friday and they are all looking to jump back into up mode. I will not be surprised if next week is a strong up week. Hang in there. Good luck and come back soon.

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Thursday, October 2,2008

I missed a day and it ends up being a big one (350 points – down). Again the model was right on. Look at SPX and NDX for the last 5 days. You find last Friday (Sept 26) and Monday as red and then Tuesday and Wed (Oct 1) were green and then Thursday was red. This distribution is what the model saw last weekend. I’m impressed. What is your view? I would be interested to hear it.

So what now? Things are looking up. You can see the red extending into the start of Friday but as the regular readers know the red will move to the left if the market is showing strength or it may move a bit to the right with a weak market. So to get some additional insight I look at the half hour model (13 one-half hour slices make up one day). And it has green for the entire day - Friday with the first green being the 10 am slice. So assuming a reasonable open (flat or better) we are going into 3 days of green. That will be followed by 1 day of red and then green again. Thus, for the near term I am now optimistic. I get the feeling that a positive House vote is what is being reflected in the data. Or maybe it’s just the market cycle showing its head. Regardless, the market is now looking good until Wednesday. Enjoy. You deserve it.

And finally a word about AAPL and GOOG. They are similar to the markets. They too are looking to turn positive for the next 3 days or so. AAPL has red across the future window, excluding the first slice. And that first slice can easily become green as can the last real slice (i.e. the last slice – 4pm of Thursday). Remember, the last real slice is not nailed down until the next real data comes in.

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Tuesday, September 30,2008

On Friday, September 19’08 I wrote the following which you can find if you scroll the page and which I have cut and pasted here.:

This was a memorable week. It was crazy. It was wild. It was unpredictable. It was all of the above. Last January I wrote a piece about “A New Beginning”. It is link #3 below. At that time I referred to Barack Obama as the next President. I still think it will happen. I meant it then and I mean it now. But on Thursday Sept 11’08 I entered ‘A New Beginning – Part 2’. For those following Obama, you too will probably have noted that he too has had ‘a new beginning – part 2’. And today a week later I feel really good. I feel confident. I am back on track and I’m focused on investing in options (no more futures for me at this stage). Yesterday, I told you I have formulated a trading strategy. It involves the outright buying of options, the selling of credit spreads and the buying of calendar spreads. Bear with me as I try to get to $10K so that I can restart My Journey.

Guess what. Today (Monday) I closed at $10.1K. I am thrilled. My situation changed when 1) I gave up on futures, and 2) I made a serious effort not to second guess the model and 3) to use options and option spreads.

Now let’s get to the market. Today’s rally has caused the model to bring in red on Thursday and Friday. This is true for all 4 issues. The problem I have with Wednesday is that the half hour model for NDX has it all red. Assuming that’s the case, the rally of Tuesday will reverse itself for the next couple of days. So you have to be very careful. This is a very volatile market – there are many margin calls – there is much liquidation. Don’t let one day cloud your perspective. Personally, I think the rest of this week will be negative. This is simply my view. Time will tell and tomorrow evening I will revise my opinion as warranted.

Yesterday I wrote: “And finally stay calm, stay tuned and keep your head up high. I see a lot of sun shining into this tunnel. Come back soon.” It all holds today. Good luck.

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Monday, September 29,2008

Today was wild. We went into Monday with the 10:30 am slice (Monday) as red. That was the case for all 4 issues (S&P 500, Nasdaq 100, AAPL and GOOG). At the start of trading it looked bad for all 4 issues. By 10:30 am the model had pushed the reversals to the end of the day. Then 2:00 pm came along and we had an additional 400 point drop in 5 minutes (as I was told). That pushed the reversal (the green) the model was anticipating for Monday into Tuesday. So now we are looking at mid-day (as early as 10:30 am) on Tuesday. Again this assumes a flat market. One should note that the reversal will happen sooner if the market stabilizes early or it goes up a bit.

Do not despair because there is a high probability that a reversal to the upside will happen tomorrow (Tuesday). And this statement applies to all 4 issues. So if you are looking at AAPL or GOOG, this is a good starting point. It also looks like the reversal to the up side will be fairly decent in size.

For those who noticed on the weekend, I am including in the graphics the results from the half-hour model for NDX. At this time, I want to point out that the half hour model is secondary, relative to the daily model. What I have learned is that it should only be used to fine tune between 2 slices of the daily model. Let’s consider an example. Assume it is 10:30 am and the current slice is red but the 1:30 pm slice is green. So one would be looking to reverse in what amounts to 3 hours. The half hour model would then be used to fine tune the trading point within the 3 hour window. It has taken me months to come up with this simple formulation.

And finally stay calm, stay tuned and keep your head up high. I see a lot of sun shining into this tunnel. Come back soon.

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Friday, September 26,2008

This was quite a week. It had its downs and a bit of ups. From the S&P 500 and the Nasdaq 100, we can look at the graphics and see how it played out. What is amazing is that the SPX and the NDX graphics for 10 days (5 past days and 5 future days) are identical.

If we look at the past week we see that Monday and Tuesday were both red. And then Wednesday and Thursday were green. Finally, Friday was red. As we go into next week we have green for almost 3 days. And then for Thursday and Friday we have red again. You may wish to watch how the past window was populated on a day by day basis during this past week. It was something to behold. Good luck to all and come back soon.

On a personal note, I will go long the QQQQ on Monday as the model reverses to the up side. But I use both the daily model and the half hour model to time my entry and exit points. From what I can see I will reverse to the up side later on in the day (as a guess, the last hour) but I will see what the half hour model says as the day progresses.

After posting this page I decided that given I told you I also use the half hour model to time my QQQQ trades, I would post the results of the half hour model for the NDX (or if you like QQQQ). So, as you can see when you scroll down that the half hour model follows the daily model. But remember the future window is computed assuming a flat price projection. So, for example, if Monday morning NDX is going down, the red slices will tend to move to the left and if NDX is up, then the green will tend to spread to the right.

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Thursday, September 25,2008

This is amazing. What is amazing, you ask? Why, the model (of course). We are in a situation where there is turmoil – there is chaos. While the markets have trended down, we have had both ups and downs. Last week was surreal. We had 4 days with gains and losses of 400 points or so on each day. We had 2 of each. Now look at this week. We lost 500 points on Monday and Tuesday and then on Thursday gained back 200 points. And a lot of this trading seems to be irrational. So I am pleased with myself because I have survived the meltdown of 2008 (and I hope you have too). In fact, I have done quite well. Today I got out of a futures position that I should not have been in. That’s my last futures trade for the foreseeable future.

As we close on Thursday we leave behind 2 days of green and go into red. On a personal note I am only trading QQQQ (the Nasdaq 100 or NDX if you like). I am buying calls and puts, I am using credit spreads on both and I am also using calendar spreads. I am happy with the way things are going. I use the half hour model to fine tune entry and exit points that the daily model computes.

So if you consider NDX you will see that there is a red slice tomorrow morning (Fri. at 10:30 am – the first slice). That calculation is based on a flat price projection for Friday. If the market is down Friday morning, the model can reverse the last slice on Thursday from green to red. The latest slice is always in play. But I digress because I also track the NDX on a half hour basis. And today (Thursday) the half hour model went into red mode around lunch time. At that time I went long puts for Oct. So as we end Thursday I hold 84 contracts. 27 are short calls and another 27 are long calls. The remaining 30 are long puts. Enough about me – when I get to 10K, I will start My Journey and share my trades with you.

Back to the markets. The model is tracking them better than I thought it could. My problem has been that I have tried to outguess it too often. That has got me in trouble on a number of occasions. So I have spent a lot of time fighting fires I started.

As I write this I have noticed that the futures (Thursday night) are showing sizable losses (over 1%) as we head into Friday. At this point, things are not looking good for the market on Friday. I have it as red (started Thursday afternoon) and the futures are also red. Before I close, I want to stress that the markets now appear to be cycling with a half cycle of 2 days. Thus, you see 2 days of red and then 2 of green etc.. There is much volatility, instability, uncertainty and fear. The bottom line – be careful. Stay tuned and come back soon.

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Tuesday, September 23,2008

So where do we stand. First let’s review the last 2 days. Both Monday and Tuesday were red. The model told us on the weekend that there was ‘red’ coming. Now it is Tuesday evening. The Dow has gone down over 500 points in the first 2 days. If you look at the graphics for SPX and NDX you can see that all of Monday and Tuesday were red. Now what? Some green is directly in front of us. As early as tomorrow morning. And because of the way the last slice is computed, it is possible that the last slice on Tuesday could be converted to green if there is a good start by 10:30 am on Wednesday. I have computed what is required at the 10:30 am slice of Wednesday to cause the 4:00 pm slice of Tuesday to be converted to green from the red you see below. So here is what I found. For the SPX a price of 1201 or more will cause the last slice of Tuesday to become green. For NDX the value is 1663. For AAPL the price is 129.80. And for GOOG, it needs to be above $431.50 at 10:30 am to cause the start of the up trend to be pegged to the last slice on Tuesday.

Once we reverse to green we will have a couple of days of green and then a bit of red (Friday/Monday window). And then some green again. That’s the bottom line. Stay tuned and good luck.

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Monday, September 22,2008

Another one (i.e. day) bites the dust. This is crazy and I’m convinced it is ruining a few people. I’m not going to go on. I think we are becoming emotionally drained. So let’s move on to the markets and what the model sees.

On the weekend I said all the 4 issues were about to turn red. And that they did this morning (Monday). What followed was another ravaging of the markets. So how did the model take the drop. It cut back on the red in the future window. When you look at the 4 graphics you find that there is green now showing up on Tuesday. This means that the market now places the path of least resistance to the up side. Note there are a couple of red slices (on Tuesday morning) that need to be dealt with first.

What’s the bottom line? For short term players a stabilization in prices Tuesday morning will signal the start of a short term recovery. The length is unknown but as a guess it should take us to Thursday. Stay tuned and good luck.

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Friday, September 19,2008

Now let’s look at the markets for the coming week. Unfortunately, as of the close on Friday and after a large move up on Friday (and Thursday) the cyclical capabilities of the model are kicking in and what do we have? Look at the graphics below. We have red starting on Monday. And for 3 of the 4 issues (SPX, NDX and AAPL) it extends for the week. GOOG is similar but has a bit of green in between. I want to caution however that this scenario is based on using the current prices in the model. Things may change as actual data comes in. Look at what happened when the Friday data came in.

On a personal note, I will be going short the QQQQ (buying puts and selling credit call spreads) sometime on Monday. And when the model reverses back to the up side, I will convert the puts to credit spreads (put based) and go net call options. I am inspired. Stay Tuned. Come back soon. And Good Luck. Remember to keep you head high even if new storm clouds appear. Because they will be followed by sunshine …

Before I sign off you may want to look at the ‘past’ window. Look at all 4 issues. The past window (comprises 5 days) tells you what happened last week. Given the kind of week it was it is a worthwhile exercise. Consider SPX. Monday was red, the latter half of Tuesday then went green. On Wednesday we were red until the end and then Thursday and Friday were green. Of the 15 slices last week for SPX, we had 6 red slices and 9 green slices. So last week was, on a time basis, more green than red. For next week we have (at this time) 1 green and 14 red. Now please note that this view will be modified each day to reflect real data as it comes in.

For NDX last week we had 9 red and 6 green. So NDX was more negative last week than the S&P 500. When we look at next week we find 1 green and 14 red (like we found for SPX). This is not the best of news. And what about AAPL. It had 7 red and 8 green last week. So it was between SPX and NDX in performance. For the future window, it has 1 green and 14 red. That is consistent with SPX and NDX.

And for GOOG, last week it went with the markets (as did AAPL). We had 8 red and 7 green which is just between AAPL and NDX. For the future window it has 11 red and 4 green slices.

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Thursday, September 18,2008

What a day. I’ve been saying this all week long. It has been wild. And maybe it will continue to be wild. Yesterday (Wed evening) I said that all 4 issues were about to reverse to the upside. They did. They had their future windows populated with green slices. So now all 4 are pointing up but the future window is now a mix of green and red. In fact, all 4 issues look very similar. They all have green for Friday. Then on Monday at some point they will go into some red for 1 or 2 days. This is followed by a bit of green and in a couple of cases we can see a slice of red at the extreme right. So it looks like today’s large move will bring us more volatility. It was too large. We need to have some consistency. This week has been a mess. These last 2 days have been spooky. Down 450 followed by up 410. Remember, the model has cyclical capabilities. That’s why we are seeing what we are.

As an aside, I want you to know that I kicked the futures habit last Thursday (Sept. 11). I am only trading options. Even with these wild markets, I have done well. But even better – I have formulated my trading strategy. (Remember, I have traded options for a ‘long’ time). I am pleased with the way things are going. Obviously, the markets leave a lot to be desired but I not only survived the week, I did well. Had I been in the futures game, I may have been ‘wiped out’ with these crazy intraday moves. There may have been margin calls. Options is definitely the way to go. BUT you need a strategy. Simply buying calls and puts (only) will not work. For now I will not disclose my strategy. I will eventually do so when the time is right. And finally I want to remind you that the main driver for the trading strategy is the model. Good luck and come back soon.

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Wednesday, September 17,2008

What a day. What a week. Let’s focus on the future. Obviously, this is a volatile situation and no model can handle the anxiety. But sooner or later things will calm down. When? I don’t know. Let me try to cheer you up. Things are now looking better. All 4 issues are about to reverse to the upside. AAPL is looking at the 2^nd slice and the other 3 issues at the 3^rd slice.

So we may see all 4 issues pointing up sometime tomorrow. Given the critical juncture we are at, I looked at the model to see if I could determine what price is required to have the model reverse to the upside at 10:30 am (first slice).

For SPX it closed today (Wed) at 1156.4. If at 10:30 am SPX is 1160 or higher, the first slice will become green.

For NDX it closed today at 1632.5. If at 10:30 am NDX is 1649 or higher, the first slice will become green.

For AAPL it closed at $127.83. If at 10:30 am AAPL is at $128.50 or more, the first slice will become green.

For GOOG it closed at $414.49. If at 10:30 am, GOOG is at $426.70 or more, the first slice will become green.

So hang in. Don’t despair. Things will get better. Good luck.

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Tuesday, September 16,2008

After Monday’s ‘disaster’ the model was looking for a reversal to the upside on Tuesday. We got it today. The markets closed up. But on Thursday there is red coming back in. However, there will be green 1 or 2 days after that. So the volatility persists. Unfortunately, at this time the key word is uncertainty.

What about GOOG I was asked. GOOG became green on Tuesday morning. It goes back to red by mid-day Wed and that persists for a few days. One of these days GOOG will go down. The model seems to be fixated on GOOG going down for a few days. And finally AAPL is now looking good. It turned around at the 1:30 pm slice on Tuesday and the green continues. Good luck to all. And come back soon.

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Monday, September 15,2008

What a day! You don’t need to hear it again. Did I see it coming? Did the model? No, we don’t predict the future. But I had 3 of the 4 issues reversing Monday morning. I was short today the QQQQ with an option spread. I went short Friday afternoon based on the half hour model which anticipated a red trend today (but not 500 points). Anyway, that’s not the point. I am glad I have left futures. I was always worried about large moves that can wipe one out at the blink of an eye. So I am back into options and feeling good. And there is so much more strategy one can plan.

So what about the markets? Look at the graphics below and you may find some ‘good’ news. Take NDX as an example. Yesterday, I had red across the future window. Today (Monday) it is mostly green. However, we need to get by tomorrow (Tuesday) morning. Both NDX and SPX look the same. And AAPL looks similar to NDX. You should note that the model put AAPL in the red at the first slice on Monday. But on Tuesday it is looking to reverse to green.

The final issue is GOOG. It’s ‘red’ continues. It is interesting because today GOOG did much better than the market. Now the model is looking for the market to do better than GOOG.

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Friday, September 12,2008

Look at NDX and GOOG. They both have red in the future window. So for the time being – the trend is about to reverse to the down side for the Nasdaq 100 and GOOG. They are identical. As for AAPL, it is the opposite. Its future window is green. As a guess this has probably to do with the fact that AAPL has taken a beating while GOOG has struggled back up. Remember the model is not linear although it will handle a linear situation if that’s what it is. The model has cyclical capabilities. You can see this with the data for AAPL and GOOG. Essentially we have the model saying that AAPL has gone down too much and is due for a bounce. Meanwhile GOOG has recovered a fair amount and will tend to give back some of the gains. Now, remember and this is important, my comments are for the next ‘few’ days. They are not relevant for 2 weeks from now.

The last issue is SPX (S&P 500). It comprises a combination of red and green. Directly ahead we have some red and then a couple of days of green and then red. And finally, let me reiterate, the color does NOT represent the price change even in the past window. The color represents the trend. Good luck and come back soon.

But before I sign off, I want you to compare AAPL and GOOG during the last few days. Here is what we had for GOOG from the model:

Date	Action	Price
Wednesday, Sept. 3	Sell	$468.51
Tuesday, Sept. 9	Buy	$424.40
Monday, Sept. 15	Sell	???

And here is what we had for AAPL from the model:

Date	Action	Price
Tuesday, Sept. 9	Sell	$158.22
Wednesday, Sept. 10	Buy	$151.96
Wednesday, Sept. 10	Sell	$151.61
Thursday, Sept. 11	Buy	$147.91
Monday, Sept. 15	Remains a Buy	(148.94)

Note above, GOOG became a buy on Sept. 9 at a price of $424.40. On Friday, it closed at $437.66. The model is now looking to sell GOOG on Monday. Meanwhile, AAPL became a sell on Sept. 9 at a price of $158.22. And then on Thursday, Sept 11 it became a buy at 147.91. On Friday AAPL closed at 148.94. So now the model is looking for AAPL to continue to move up (or at least hold its own) and GOOG to go down (or hold its own).

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Thursday, September 11,2008

Today’s (Thursday) rally has caused the model to introduce a fair amount of red in the future window. Yes that’s correct. The fact that the market was up today takes away from the potential of the upcoming days. The NDX had a nice run up. Yesterday, the entire future window was green. Today, 4 out of 5 days are red. Read the following paragraphs to find out more. The same applies to GOOG. Meanwhile, SPX and AAPL are similar in their own right.

Let me explain a bit about the model. The key feature is that it has cyclical capabilities. This means that it leads as opposed to the typical mathematical model which follows the market. When someone says they are looking at a moving average, then that individual is following a trend. If that stock has been going down then the model will continue to have it going down. Let’s consider GOOG as an example. Wednesday evening I wrote:

And finally, I want to address several emails that asked about the green and red for AAPL and GOOG. The colors represent trends – they do not represent actual moves. The real closing prices are shown so you can see what happened to the prices. Look at GOOG below. We have 3 red boxes and the prices shown go from $450 to $419. Then we have 2 green boxes and GOOG went from 419 to 414. Both these days GOOG price was down but the model has the boxes as green. The green signifies that the trend was green (up) and that the trend continues into the future. It allows us to visualize the moves. The model is accurate more than 90% of the time. So when GOOG reverses to the down side its price will be at least $419. Anyway, again for clarification, the colors have nothing to do with the actual daily changes.

Notice that the model had painted GOOG green on Tuesday and Wednesday and it had green for the future days. However, it was clear that as we started Tuesday GOOG was going down. That’s one of the differences between my model and your typical ‘linear’ model. And yes a model that uses exponential moving averages is also linear (or if you like a first order model).

And here is one last point about the model and how I use it. When I show the color of the future days, the calculations have assumed that the last actual closing price populates the entire future window. In reality that will NOT be the case. So when you look at the future window, keep this in mind. Suppose we have 5 green days in the future window and then we have a large up move, you will find that the model may react by reducing the amount of green that is upcoming. The impressive feature of the model is its ability to stay with a trend (and sometimes lead it). Good luck and come back soon.

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Wednesday, September 10,2008

Let me go out on the limb. The markets are starting to stabilize. Today (Wed) we did not see it because the trading data shows instability and volatility. However, I am making the statement based on my model. It is showing a fair amount of green in the coming days. But when you look at the past days you see a lot of flip flopping between green and red. So I am somewhat positive in the short term.

What about the separate issues? We have GOOG still looking good (5 green future days). Don’t let today’s down move fool you (or distract you). And AAPL is now similar to GOOG.

As for NDX, it too is seeing green but there is red coming in a few days. And SPX has green in the future window with 1 ½ days of red (Mon & Tues). So stay tuned and good luck.

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Tuesday, September 9,2008

Things are bad. Is there good news? I hope so. When you look at the graphics below you see that GOOG was green all day today. The other 3 issues were mostly red. Let’s look at the 4 issues one at a time.

The NDX should reverse to the up side Wed. morning. And so should AAPL. GOOG, as I stated is already green. That leaves us with SPX. It should reverse Wed. afternoon.

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Monday, September 8,2008

Monday was something. I saw little of it but an examination of the trading after the close made my jaw drop. I am going to refrain from commenting. We started the day with all 4 issues in the green. However, GOOG was green only by one slice and since the last slice is not nailed down, the trading in GOOG by 10:30 am changed Friday’s last slice to red.

At the close on Monday, NDX, AAPL and GOOG will look similar. They all have green for the next week. SPX is looking more volatile (some red and some green). I guess Monday’s trading is partly responsible. Stay tuned and good luck and watch that volatility.

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Friday, September 5,2008

Once again, the model was right on. It reversed all 4 issues at the second slice (1:30 pm) on Friday. That was welcome relief. The model now has all 4 issues pointing up. Moreover, all 4 issues have all their 5 ‘future’ days painted green. This outcome of having all the future boxes painted one color (green or red) does not happen often. So I am pleased and I look forward to next week which should be a good week for the longs. On a personal level I went from being long 3 contracts to being long only one contract of NDX. I was forced to liquidate (at these low prices) because of a margin call. I’m now at about 4K. But I’ve actually become quite optimistic. Why? One reason is because I really enjoy the model. It has now earned my complete confidence. So I have diverted my energy from the model and am putting it on my trading performance. But… I’ve rediscovered that futures can be ‘deadly’ because of margin calls. I was forced to liquidate 2 of my 3 contracts for big losses at a time when the model is now pointing up. My losses were based on 3 contracts but my gains (let’s assume there will be some) will be based on 1 contract. So this is a big issue in my mind.

The other problem I have is that if the markets had a melt down one can lose a lot more than one has in the account. So if something dramatic happened you could go from +5K in your account to -5K (yes minus) and you would have to pay this. That is OK with 5K but what about if it’s plus a million versus minus a million. I can’t deal with that. This issue coupled with the wild volatility has me rethinking what I’ve been doing. Guess what. I am back focusing on options. I’ve traded options extensively so I am up to the challenge.

The trading of options can be much more exciting because there are so many strategies (especially those that include credit spreads). And you cannot lose more than you have (at least in theory). The other point is that you are not put in the position of closing out positions at low prices like happened to me. Anyway, I’ve said this in the past, success is achievable but it requires a viable trading strategy. At this time I don’t think I have what it takes to succeed with futures. Do I have it for trading options? I don’t know but I am about to find out. My target is to go from 4K to 10K by December. At that time I will start My Journey and post my trades as I reach for the million.

I guess it is human nature that major events in our lives have the ability to change us. Look at 9/11 or oil etc.. Thursday opened my eyes as to how I am trading. And I do not like what I see. So to succeed I will need to modify my trading strategy. I think that my modified trading strategy will focus on options. Stay tuned. Good luck and come back soon.

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Thursday, September 4,2008

How do I start? Let me confess – there is no BS here. Yesterday, I was at about 8K and today I am looking at 4K. Ouch. What happened? First of all I have no one or nothing to blame but myself. If you read what I wrote on Tuesday and on Wednesday you will see that around the close on Tuesday I went long 3 contracts of the Nasdaq 100 (NDX). As an aside a reader pointed out that I wrote ‘short’ instead of long. That was a mistake, I went long. Why?

Because I used the half hour model to jump the gun. And then on Wednesday NDX did not reverse to the upside (it stayed red) and I ignored both the daily model and the half hour model. Again, because all I could see was the green. If you recall the driving analogy, I was starring too far ahead and not paying attention to what was directly ahead. And guess what – I hit an ice patch. The car went out of control. I smashed the car and broke a leg. Otherwise, I am fine. It will take me some time to recover from this accident. And yes I consider what happened to me today an accident because it should not have happened. I should have been paying attention. I should have been short and, of course, I should have liquidated my long position – at the latest – this morning (Thurs.). I did none of the above.

I continued to hold the bag (of 3 contracts). In fact, I held all 3 contracts into after hours. And NDX dropped some more. I sold one contract and still hold 2 contracts. Meanwhile, I have a margin call. I will not put any money into this account so on Friday morning I will need to sell one contact to balance the margin call. I will stay long the other contact. Why am I doing this? Because the model has a reversal to the upside for 10:30 am tomorrow morning. I know you have heard this before but the odds at this time certainly favor a reversal – or am I whistling in the wind.

On another note, I forgot about stop losses. I ignored my own rules. I went against the model. I guess I deserve to be shafted. In all fairness, I have a pretty good idea why I blew it. I had 2 models showing red and I sat and waited for the green to come. Well it never did. Enough complaining.

What do we have now? We have a lot of green and we have it for all 4 issues. So things are looking good. BUT to get to the green we have to get by tomorrow (Friday) morning. Because at the close on Thursday all the ‘big’ arrows are pointing down. I have run the model for all 4 issues to see how much we need at 10:30 am to make the first slice green. Here are the results:

For NDX it closed on Thursday at 1774.8. For NDX to turn green at 10:30 am on Friday it needs to be above 1773. If it is lower, the reversal will be delayed.

For SPX it closed on Thursday at 1236.8. For it to reverse at 10:30 am on Friday, SPX needs to be above 1236. Otherwise, the reversal to the up side will be delayed.

As for AAPL, it closed at 161.22. It is set to reverse at 1:30 pm. However, if at 10:30 am it is above $162, the upside reversal will move up to the 10:30 slice.

And, finally for GOOG it closed at $450.26. It is set to reverse at 10:30 am if it can be at $450 or higher at 10:30 am otherwise, the reversal will be delayed to the next slice or beyond.

So as I sign off, I have learned one heck of a lesson today. It’s put me back months, but I will do my best to come out of this stronger and wiser than ever. I imagine there are many of you who also suffered today. I wish you well and I urge you to take a deep breath and get back in the game. The market is wild. We all need to be vigilant and to stay alert. I wish I had done so. Good luck.

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Wednesday, September 3,2008

Wasn’t Tuesday something! Yes! And wasn’t Wednesday something! This market is treacherous. Yesterday I jumped a bit ahead of the model and today I paid the price. NDX was down today. I went short at 1852 and today it closed at 1835. But I have confidence in the model. However, because NDX was going down today, the model held off on the anticipated reversal at 10:30 am and has now pinned the reversal on the 10:30 slice but for Thursday! After that the model still sees 5 days of green. So I expect to exit this trade on the positive side of the fence (i.e. above 1852!). On another note, AAPL did reverse at the 10:30 slice today (Wednesday) and it has the next 5 days also as green.

As for SPX, it reversed today at 1:30 pm and as to the future 5 days, it has 4 days of green and 1 of red. With regards to GOOG, there is a lot of volatility. I’ll let you decide what to make of it. Good luck. Come back soon. And keep your eye on the Nasdaq 100 because it will recover in the coming days. I anticipate that the model will reverse it to the upside on Thursday morning.

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Tuesday, September 2,2008

Wasn’t Tuesday something! I went short the S&P 500 at the ‘absurd’ level of 1284 near the close on Wednesday. I was looking to get out today (Tuesday). The model had SPX as red but it also had a reversal to the up side by the close on Tuesday. During Monday night, SPX shot up to 1300. The Dow was up 200 points. I checked the model – it still maintained the red. Moreover, it continued to look for a reversal to the upside at the 3^rd slice (i.e. 4 pm). Meanwhile, the market started to go down. By the end of the day, the reversal was pushed to Wednesday at 1:30 pm. I closed my short position after the market close at 1276. Incidentally, the futures trade 23 ¼ hours a day.

Let me explain why I closed the short position. The half hour model had both SPX and NDX reversing to the up side at 3:30 pm Tuesday. So I closed the short SPX and went long the NDX (the Nasdaq 100 futures). As to AAPL and GOOG, they are both following in the footsteps of the NDX. This means that they are reversing to the up side. Their reversals were delayed today. Take a good look at the graphics. They hold the key.

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Friday, August 29,2008

Indecision and volatility – that’s what we have. I’ve been telling you this for some time. I see it in the graphics I generate. If you are a new reader, let me tell you that I generate graphics (scroll down to see them) for 4 issues: 1) SPX (the S&P 500), 2) NDX (the Nasdaq 100, e.g. QQQQ), 3) AAPL and 4) GOOG.

The model is doing very well as it navigates the treacherous market waters we are in. Friday was a bad market day. The model had anticipated it. Meanwhile, Thursday was a good day and again the model was on top of the action. Now let’s look at the future for the 4 issues. Let me start with NDX (Nasdaq 100). From the graphics, we see that NDX went red on the 3^rd slice on Thursday, Aug. 28. The 3 slices represent the times: 10:30 am, 1:30 pm and 4:00 pm. So NDX went negative at 4 pm Thursday. The model maintained the red on Friday and it is holding the red in place for most of Tuesday. However, note the 3^rd slice is green. So for now the model sees NDX returning to green on Tuesday. Moreover, the model sees green for the rest of the week. With regards to AAPL, it is looking very similar to NDX. So AAPL will shed its red on Tuesday and go green. Now remember, the forecast for Tuesday is based on not having a sharp drop at the beginning of the day. The reversal to the upside is pinned to the 1:30 pm slice. I have analyzed the results and found that the reversal will move to the 4:00 pm slice if AAPL is slightly lower at 169 (closed Friday at 169.53). And if on Tuesday morning AAPL is below 168, the reversal moves to Wednesday morning. Get the idea – there is a lot of instability. But, all things being equal, AAPL will reverse to the upside.

For the SPX, it too is looking to go green late Tuesday. However, the reversal will be less ‘powerful’ than that of NDX. I guess the reasoning is that NDX has dropped more than SPX – but that is just a guess. And what about GOOG. It is being sucked into the market down draft. At the close on Thursday I thought Friday would be green however when the model started using the read data on Friday GOOG went red. But on Tuesday, it too will go green. So the bottom line is that Tuesday all 4 issues should reverse back into green territory (for a couple of days anyway).

Remember, the model has cyclical capabilities. It anticipates reversals. It doesn’t follow a trend. It takes the lead ahead of the trend. Look at Friday, we were down 170 points but yet the model was looking at the upside. Meanwhile, many other models are not capable of doing this. As a final point, I want to thank several readers who have posted some mention of my work on discussion forums. Whenever that happens, I get some emails with questions. As I told one reader, my work is not really for a long term investor. It’s more for traders and option players. So if you want to add a bit of clarity to your view keep reading this site on a regular basis.

What my model does is the equivalent of what you do when you drive. Your car shows the future and the past. Looking at the back window you can see what you went through. And when you look at the front window you see what you are up against. But there may be unknown surprises ( a squirrel running into the road…). The view is relatively short – a block or 2. That’s how the model works. It looks at the front window and says – things are looking good or perhaps – things are looking bad. But keep in mind, the view is limited. The model does not have access to a helicopter or a satellite to give you a bigger picture. (Let me know if you have found someone who has one.) But, like the driving analogy – the model can do very well if you keep your eye on the road (i.e. market). Good luck and come back soon.

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Thursday, August 28,2008

At the close on Wed. we had all 4 issues still pointing up. Then, on Thursday morning the markets opened strong and some reversals like that for SPX were delayed. By the close on Thursday 2 issues had reversed to the down side. They are NDX and AAPL. NDX reversed at the 4:00 pm slice while AAPL at the 1:30 pm slice. As for the other 2 issues, GOOG remains green - a reversal today was not anticipated and it did not happen.

The last issue is SPX and it is the one I am trading. SPX was looking to go red today but it did not happen. It is now looking at the 10:30 am Friday slice to reverse to the down side. If it does, it will join NDX and AAPL. The holdout for now is GOOG.

As a final note, you may have noticed that the model was right about AAPL and GOOG. Of late the model has been positive on GOOG and negative on AAPL and today – that’s how things worked out. Good luck and come back soon.

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Wednesday, August 27,2008

It is too late for me to write much (2 am). I updated the graphics at airports. You will note that SPX and NDX are now aligned. The future windows for the 2 are identical (as of the close on Wednesday). We have had a couple of days of green. And now we are looking to have a couple of days of red and then a couple of days of green. As I’ve said for the last while, we have indecision.

AAPL is now similar to the indices. The next couple of days are red (like the markets). And finally what about GOOG. Good news. After its decline of the last few days, GOOG is looking to go back up. The future window is all green. Good luck and come back soon.

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Tuesday, August 26,2008

Today (Tuesday) the markets performed as the model had said. In the afternoon the SPX and NDX became green. I went long the SPX at around 2:30 pm and by the close my $8K was at $8.4K. I am pleased. I am sticking to the script (model).

The 4 issues all reversed this afternoon. They are all pointing up at the close on Tuesday. And that includes GOOG. It reversed to the upside at the close (even with its sizable loss). As I’ve stated in the past, I also use the half hour model to fine tune the beginning and the end of a move. You can’t see that data, but I think the daily data (3 slices: at 10:30 am, 1:30 pm and 4:00 pm) is sufficient to do well.

As a final point, I want to mention that the future window shows a lot of indecision. We have green and red mixed up together. Unfortunately, the markets are volatile – they make navigating them difficult. But, I am really impressed at how well the model is tracking this volatility. I am determined to follow the script that the model is writing. Good luck to all. And come back soon. If you scroll down a bit you will find all the commentaries I have written in 2008.

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Monday, August 25,2008

First of all, let me start by stating that today my account closed out at 8K. And I have no position at day’s end. This afternoon I closed my short (based on the half hour model). Enough already – let’s get to the results. We went into Monday with all 4 issues pointing down. The half hour model put them in the red on Friday afternoon and then this morning (Monday) they were all made red. What followed was a rather nasty day. So how is the ‘cyclical model’ taking this?

For SPX and NDX the model has used today’s drop to erase some of the red it had posted after Friday’s rally. We are back to the way we were before Friday. Remember on Friday the Dow was up about 200 points and today it was down about 240 points. So we are back to indecision. We have a couple of days of green and then a couple of days of red. Such is life. I will go long the SPX late Tuesday or early Wednesday when the half hour model aligns with the daily model. Given you can’t see the half hour model you should focus on the daily model. Because I have 2 presentations on Wed., I may not be able to make the trade. Regardless, I will certainly evaluate my strategy whether real or only on paper.

As for AAPL and GOOG, there is some good news. AAPL’s drop today has taken out a lot of the red. Once AAPL gets into Tuesday afternoon it is looking good. And for GOOG, it is following the S&P 500 and the Nasdaq 100. Once it passes Tuesday morning, it then has a couple of green days. And then a couple of red days. Good luck and come back soon.

Incidentally, if you check out http://www.americanbulls.com you will find that they entered today with GOOG as a sell and the 3 other issues as buys. However, today’s down draft has knocked them for a loop. Naturally, GOOG has remained a sell but AAPL, SPX and NDX were all made “sell-if” at the close on Monday. As I say, that’s the problem with linear models. They are reactive – they are not proactive. They follow, they don’t lead.

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Friday, August 22,2008

Some Thoughts as I am Flying on Sunday, Aug. 24’08

You may recall, I am away the next 3 days. I am traveling (flying) and on my way to a conference. While I will try to update each evening, it may happen that I may be tied up on some evenings. In such cases you can use the small graphics that cover a week (in evolution). For those who may not be aware, the model I work with has cyclical capabilities. This is an important aspect of the model. It is a feature that few others have in their models. Why is that? The simple answer (my opinion, of course) is because it is not a simple task. Moreover, to do so with accuracy is a very difficult task indeed.

I am writing this on a plane – flying high at 36,000 feet. I teach fluid mechanics and it never ceases to amaze me how the curvature at the leading edge of the wing can create lift. Bernoulli put together this scientific principal about 250 years ago. Simply put, kinetic energy is increased by reducing pressure energy on the top of the wing. People like Newton, Bernoulli, Reynolds and Einstein were truly remarkable scientists. I salute them.

Let me take a few moments to tell you about cyclical phenomena. Most things around us have a cyclical component. Even as I sit on this plane as it flies through the sky, I am experiencing cyclical motion. The plane is shaking. The weather is cyclic, night and day – a cyclic event, life itself is cyclic. A car engine is cyclic and so is a power plant. In fact, these processes are referred to as cycles (Rankine cycle, Otto cycle etc..). What I am trying to say is that cyclic processes are all around us – even the electricity we use at home is cyclic. You’ve heard of one having ‘ups and downs’ – in other words one is going through a cycle.

I bring this up because the market is cyclic. In fact, it has many cycles, some are more pronounced while others are not. Thus, you cannot decipher what is going on in the markets without bringing in cyclical behavior. That is my firm belief. The market is a complicated ‘beast’ because it represents the overall behavior (views) of ‘millions’. Why is their behavior cyclic? Well, it’s not for all. But, just think about it. Some are buying and some are selling and tomorrow or next week or next month, their roles will be reversed. If everyone was buying then life would be simple because we could use a linear model that would simply follow the trend. Predicting under those circumstances would be simple. But life is not simple. In fact, 2008 has been a difficult year because of all the volatility. If someone is to analyze the markets especially in the short term, the analysis (the model) must have cyclical capabilities.

The model I have been working on has cyclical capabilities. Like most good research some aspects were planned but many others were not and, in fact were not even anticipated. I have been testing the model for quite some time. It has been ‘enchanting’. As a scientific researcher, I am almost embarrassed to say this but that is how I feel. I have made several hundred trades this year. In mid Jan’08 I was at 2.5K. Today I am at 7K. But I’m just getting warmed up. To succeed requires a strategy in addition to a model. You need discipline and you need to reduce the anxiety level. Pulling the trigger at the time the model says to is something that has taken me a long time to get a handle on. It’s not easy. Human nature has us (read me) second guessing so often. While I am still fine tuning my strategy, I now see the light in what proved to be a very long tunnel.

I realize that many of the readers are looking at other models. And that’s the way it should be. Ask yourself or those who run those models what are the cyclical capabilities of their models. If their models are linear, then don’t expect much from the markets during the coming months. In fact, the odds are against you. Linear models were great for the late 90’s when cycling behavior was hibernating. When it woke up, many took a bath.

As I entered this commentary in my computer I noticed that someone I interact with on a ‘frequent’ basis (once or so a week) had posted the link to this site on the GOOG discussion forum because that caused several on the forums to email me. One individual suggested I revamp the Web site. Another wondered when I would post my trades and yet another thought I was like Barack Obama – naïve, inexperienced and doomed to fail. Such is life. Let me address the last comment. I have no intention of failing and neither does Barack. However, both of us need to adhere more closely to our game plan.

As to my web site, I have little time to improve it at this time. My objective is to succeed – to grow 5K into 1 million in 2 years. The web site is not a priority at this time. With regards to the other comment about posting my trades and the value of my account, I will do so soon. My target is Oct. 1, ’08. But, in reality, I want to do so when my account has grown to 10K. So my immediate goal is to go from 7K to 10K. Can I do it by Oct 1? I think so and if I do I will be well on my way on My Journey. Stay tuned and come back soon. And remember when you look at an analysis ask yourself about its cyclical capabilities. Good luck.

When I look at what has happened the last couple of days, I am pleased. For the past 3 days the model has been green for SPX and NDX. And that strategy has worked well. But now as we go into Monday, the model is posting red for all 4 issues.

For SPX the reversal is early Monday morning (10:30 am slice). In actual fact if SPX is 1289 or lower at 10:30 am Monday (it closed at 1292 on Friday) then the down reversal gets pinned to the 4 pm slice of Friday. For NDX the reversal is also scheduled for Monday (afternoon). And then there are AAPL and GOOG. They too have reversals set for Monday (let’s say mid-day).

So, given Friday’s 200 point rise, the markets are setting themselves up to give some if not all of this gain back. Stay tuned. It promises to be exciting. Incidentally, the graphics for SPX and NDX are looking ‘good’ at this time. They are showing less indecision.

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Thursday, August 21,2008

The S&P 500 is caught up in a cycle of a couple of red days followed by a couple of green days. Tomorrow (Friday), SPX is looking to start the couple of red days cycle. How exciting. Meanwhile, the Nasdaq 100 (NDX) is putting together a longer green streak. It has six green days in a row. Two have been used up but 4 remain.

And what about GOOG and AAPL? Glad you asked. GOOG is following the NDX. It has 5 days of green ahead. Meanwhile AAPL is more like the S&P 500 (the overall market). It is undecided. It has a couple of green days directly ahead and then it has a couple of red days. Hang in there, things will improve.

Before I close off, I want to repeat what I said a few days ago. It has been difficult to do well in 2008. The swings have been too violent. When you look at http://www.americanbulls.com you find that the S&P 500 money tree was at $155 on Dec. 20, 2007 and today Aug. 21, 2008 it stands at $158. So even ‘ab’ on paper has not been able to make a profit with the S&P 500. Meanwhile for NDX the money tree was also at $155 on Dec. 6, 2007 and today it is at $167. Thus, as you can see, it has been one heck of a year. As for myself, let me share a couple of milestones with you. Around Jan 10, 2008 my $5K sank to a low of $2.5K after I made a serious blunder. I recovered and went up but around May 20, 2008 I was only at $4.5K (again I was dogged by some serious blunders). Almost sounds like a political campaign – doesn’t it?

Now, on Aug. 21, 2008 I am at $7.1K. It has been tough but I am now really feeling comfortable. I think I have improved my control and discipline sufficiently to succeed. I am not shy to pull the trigger and to use stops. I hope I do not have a relapse. The bottom line is that I am having a good time. I hope to be at $10K by the end of Sept. and will then start My Journey. Good luck to all. And thanks to those who email me with a variety of topics. I enjoy it. Keep it up.

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Wednesday, August 20,2008

I won’t say much tonight. I am much too busy. I will be at a conference the first part of next week. OK, now look at the comments I made on Tuesday evening. I just re-read them and I actually found them ‘refreshing’. So what is on tap for Thursday and Friday? Let’s start with the S&P 500. It reversed Wed. morning (10:30 am slice). It now has a couple of days of green and then there is some red. I should add that the red is far enough out and it is weak enough that it may change.

As for the Nasdaq 100, it is green and it has green showing for the entire future window. On Wednesday the model did not really like the NDX and judging from the results, the model is looking for it to make up for lost time relative to the SPX. GOOG is similar to the NDX – the future window is all green. GOOG was down today, so it looks like the model wants it to catch up. And finally we have AAPL. It went green early on Wednesday. It now is looking like SPX. It has some green directly ahead and then there is some red. So in summary, SPX and AAPL went up today as anticipated. As a result, the model will bring in some red in a couple of days. As for NDX and GOOG, they did not do as well today and so the model is keeping green for them. In the next couple of days, NDX and GOOG have more upward potential than the other two. Good luck.

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Tuesday, August 19,2008

On Monday we were down 180 and on Tuesday we were down a further 130 points. Good news, the model has the rest of the week as green for the S&P 500 and the Nasdaq 100, so don’t despair, there is hope. Now mind you the model did have Monday and Tuesday as red. It’s been an exciting ride.

Let’s look at the 4 issues and how things look for Wednesday. I’ll start with AAPL because it is a bit different from the rest. At the close on Monday it looked like AAPL would reverse on Tuesday. However, it did not. Instead, the model has moved the reversal for AAPL to Wednesday morning. For those who have been following AAPL you will recall that the model kept on looking for AAPL to drop even when it was $179. And drop it has.

Now on to the market averages (SPX and NDX) and GOOG. All 3 are very similar. There is a reversal to the up side on Wednesday morning. At this point I should add that depending on circumstances, it is possible that the reversal can be pinned to the 4:00 pm slice of today. That can happen if tomorrow morning the market is up. What is interesting is that even with the sharp drops of the last couple of days, the model will reverse the issues. In addition, the model is posting green across the future window.

For those of you who are not familiar with the model I manage, I want you to know that it’s not your typical linear model. Most models follow a trend. If the market is down they continue to point down. It is only when there has been a significant recovery that a linear model reverses direction. Few models would signal a reversal in trend after drops of 180 and 130 points (you can use http://www.americanbulls.com as an example). But that is what the model is now saying. Why? Because the model I manage has cyclical capabilities. This is an important distinction. As I’ve stated in the past, the only thing that is slowing me down is my discipline in applying the model. But, I must say that I am making good progress. I expect to start My Journey in a month and I hope to be at $10K at that point.

I’ve put it in my head that I want to grow my 5K to 10K before I start. I want it to be a confidence boaster and I also want to have some leverage. I plan to trade only futures (e.g. S&P 500 index) like I’ve been doing for the last couple of months. I’ve convinced myself that this is the way to go.

As I close, I want to go on the record that I really enjoy watching the model perform. I don’t know how it stacks up with other models, but I am thrilled with it. Even with the wild markets of late and with my lack of control and discipline, I am up 50% from the end of May. As I say, Stay Tuned. This is just the beginning. Good luck.

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Monday, August 18,2008

Sorry about the Friday update. I could not do it but if you read what I wrote on the weekend you know that we were looking for some down action. On Monday we got some. The Dow was down 180 points. So what about Tuesday and Wednesday? Look at the graphics below. All 4 issues are now similar. They all have reversals to the up side for Tuesday afternoon (the second slice is at 1:30 pm and the third slice is at 4:00 pm). AAPL is set to reverse (all things being equal) at 1:30 while the other 3 are at 4:00 pm. Enjoy and good luck. Pay attention to the model. It may save you a few bucks. Come back soon. And don’t forget to email me. I read each and every one of them. Is there something you would like to see on this page? Let me know.

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Thursday, August 14,2008

I will say little today. I’ll let you judge for yourself. As for AAPL the model continues to look for it to go down. I am actually finding it amazing at how tenacious the model is with AAPL at this time.

As for the NDX, today (Thursday) was green and tomorrow morning is set to green but then it is all red.

And now for SPX and GOOG. They are similar if you compare the graphics. There is both red and green. Today (Thursday) was green as we expected and the green goes into Friday. Then we have a stretch of red (about 1.5 days worth) and then 2 days of green and then red again. Certainly, this is not an exciting situation. Anyway, good luck.

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Wednesday, August 13,2008

If you examine the graphic, you find for the SPX and NDX that there is confusion. We don’t seem to be able to put together a move of some duration. All we have are 1 or 2 day moves. If you look at the SPX you see that it is red at the 10:30 am slice. However, keep in mind that the last slice on Wed which shows as red could become green if the SPX has a move up. I use the half hour model to gauge this probability. For your info the half hour model is looking at 11:00 am to reverse to the up side.

Finally, I checked the overall model to see how the last Wed red slice can become green, the SPX needs to be at 1288 at 10:30 am. It closed at 1285.8 on Wednesday. So it is a close call. Let’s see how it does Thursday morning. If it’s weak, the reversal will happen around mid day. If it is positive (i.e. 1288) then ‘officially’ the reversal is pegged to the close on Wednesday.

For the NDX we have some red going into Thursday and then 3 green slices and then some red again. You judge where we are going. With regards to GOOG its future window is virtually identical to NDX. And finally for AAPL we have red across the entire window. The model is not being influenced by AAPL’s up move. I maintain that when AAPL goes green there is a 90% probability that it will be below 177. Take this for what it’s worth. Good luck and stay tuned.

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Tuesday, August 12,2008

Go back and read yesterday’s comments. I won’t repeat them here except to say that the model pinned today’s moves very nicely. And that goes for AAPL and GOOG too. Let’s start with GOOG. On Tuesday the model had all 3 slices on red. Even if GOOG didn’t go down (it was up slightly), the next 5 days are all red at this time. And AAPL is similar. The first red slice today was at 1:30 pm. The next 5 days are all red. Remember the red indicates the trend and not necessarily the actual price movement. So the bottom line is that AAPL and GOOG have made some good up moves of late. The model is now looking for them to give back some of the gains. This is interesting given the upcoming option expiry in 3 days. If you hold calls you should seriously considering taking some action to protect yourself. As I have said in the past the model can be quite accurate (90%), so the odds are high that on Friday AAPL and GOOG will be lower in price than what they closed out today (Tuesday). As I’ve stated in the past, the model has cyclical capabilities. This should be clear in the case of AAPL and GOOG.