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 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

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.

 

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 2nd slice and the other 3 issues at the 3rd 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.

 

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. Thanks for your comments.

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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 3rd 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 3rd 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 3rd 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.

 

With regards to SPX and NDX, they both are pointing down as you can see for yourself when you scroll down to the graphics. I will let you draw your own conclusions. Good luck and stay tuned.

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Monday, August 11,2008

If you think back to Friday, you may recall that all 4 issues ended the day in the green. We also saw that reversals to red were forecast to occur on Monday at the 1:30 slice or the 4 pm slice. On Monday we saw that this was a good decision. So let’s look at the graphics and see what happened today (Monday). If you look at the S&P 500, the reversal was delayed and it is now assumed to occur Tuesday morning (10:30 am slice). You should note that even though the last real slice (the 4 pm slice) is shown as green, it may be revised to red IF the move is judged by the model to be sufficient to warrant this. A number of individuals have asked me to compute this threshold value, and I have. The value is 1304.7.  The SPX closed on Monday at 1305.3. So if the SPX is down by 0.6 or more by 10:30 am the reversal (the red slice) will be pinned on the 4 pm slice on Monday (and not the 10:30 am slice on Tuesday).

 

Meanwhile, the NDX reversed at the close on Monday (4 pm slice). The NDX closed at 1941.2. So how much would NDX have to be at 10:30 am on Tuesday to move the reversal from Monday to Tuesday. The answer is 1954.2. Thus, if the NDX is up less than 13.0 points by 10:30 am the reversal at Monday’s close stands.

 

What about AAPL and GOOG? They are comparable to the NDX. Both of them went red at the close (4 pm slice) on Monday. Remember, there are 3 slices in a day (10:30 am, 1:30 pm and 4:00 pm). So, for the next few days all 4 issues will be in down (red) trends. Enjoy. And come back soon.

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Friday, August 8,2008

On Thursday I talked about the importance of executing the plays. Today (Friday) that is indeed an appropriate statement. We went into Friday thinking it would be a red day. The S&P was supposed to reverse at the end of the day (assuming ‘neutral’ movement). Guess what, it reversed at the beginning of the day instead because of the upward momentum at the open.

 

As I said, on paper that is a brilliant move but in reality it is difficult to accomplish this performance. The half hour model at the close on Thursday had the reversal to the upside pegged for Friday morning before knowing what was to happen on Friday. Why am I bringing this up? Because I am coming to the realization that what I am missing to be successful is an exit strategy. I have the other components but the exit has alluded me. Unfortunately, without a good exit, I don’t think I can succeed (I have just realized this – ouch). As we all know, getting in is no problem (think Iraq). The problem is when and how to get out. I think it is actually as simple as that. So what’s needed is a good exit strategy that can be easily carried out. I’ve spent the last year worried about when to get in and when I went in I didn’t bother to think about the exit strategy. Have you heard this before? It was the attitude of ‘I’ll worry about that when the time comes’. And when the time came, I typically froze – like Friday morning. It has taken me years to learn this. I bet it is human nature.

 

Today’s move really opened my eyes. You cannot win if you do not have a sound exit strategy. So how does one create a good exit strategy. As soon as I find that answer I will start My Journey to 1 million. However, I do have several ideas. One of these ideas focuses on the use of Stops. I did Stops a couple of times a while back – it worked well and then I got carried away and forgot about it. The way I see things now is that the Stop can be a part of the exit strategy. And so from now on I plan to use the Stop. I have made many trades during the year, yet I have not been able to do really well. I have made a bit (the broker has done well) but.. Let’s just say I’ve stayed afloat but my forward progress has been limited. Most of the moves I initiate are winning moves. The problem is that at some point there is a turn and the winning position tends to evaporate. Why is that? Just look at the markets this past year (up-down-up etc..).

 

I can’t blame the model. It’s right on. It’s ME. I don’t seem to be able to pull the trigger when I have to close the position. That’s why I think the use of Stops may make the process ‘mechanical’. I hope it works out. Because if it does – I can see success straight ahead. 

 

If you have your own ideas I would be interested in hearing from you. I am convinced it can be done but how. And, of course, a Stop requires 2 decisions (at least). One is when to place the Stop and the other is at what price should the Stop be at.

 

Now to the markets. As I stated, the model reversed all 4 issues to the up side on Friday morning. In fact, the half hour model was right on. So we closed on Friday with all 4 issues pointing up. Now what. The model is still looking for red and so it has all 4 issues going back into red on Monday. Notice that the S&P and the Nasdaq 100 are now almost identical in the future window. So it looks like Friday’s rise has now re-aligned the 2 markets and that the next few days will trend down. The conclusion I draw from this is that the bounce on Friday was another one of those oscillations and not a real reversal.

 

Good luck. Stay tuned and come back soon. And don’t forget to give the exit strategy some thought.

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Thursday, August 7,2008

For those who haven’t heard me say it before “I think the model is enchanting”. I am thrilled with what it can do. But that in itself does not guarantee success. For the football fans out there, the model is like a really good quarterback with a really good play book. Is that enough to win? Maybe. But, you still need to execute the plays. A lot of things need to fall into place. You call a great play – like the model can call a great move, but you then need to execute the play. You get the idea. Right now I am hitting my stride. The market has been very difficult. It’s up one day and down another. That’s OK but what is difficult is the size of the moves, 200 or 300 point moves in opposite directions are no longer the exception. So, to win requires great plays and great execution. I am almost there.

 

Let’s get back to the markets. On Wednesday evening I said: “So all things being equal, on Thursday morning all 4 issues will be pointing down.” Incidentally, all my daily comments for 2008 can be found by scrolling down this page. So there is no hiding. Not that I want to hide. I am here to prove a point. As Obama says: “Yes We Can”. Or if modified to fit my case: “Yes I Can”. My objective is to go from $5K to 1 million in 2 years. And then I want to use that performance to launch a hedge fund that will knock the socks off some of the existing funds.

 

The S&P 500 market is confused. Look at the graphics below. Let’s start with the past. We have about 2 days of red and then 2 days of green and then 2 days of red. The model is projecting that the same pattern will persist in the future. So when you look at the future window, you have on Friday at the close that the SPX will reverse to the up side.

 

For the NDX (or QQQQ if you like) and AAPL and GOOG, the market is more well behaved. There is less green overall. In fact, the green spans from the Monday close to the Thursday (today) open. Beyond that we have red for a part of next week. But on next Thursday (Aug 14) the model is projecting that all 3 issues will go into an up trend. Remember next Friday is option expiry. So if there is a reversal next Thursday morning there will be an excellent opportunity to take advantage of this.

Stay tuned and come back soon.

 

PS. Yesterday (Wednesday) the site http://www.americanbulls.com  issued buy signals for both the S&P 500 and the Nasdaq 100. Meanwhile I issued the opposite signal. This evening (Thursday) the ‘bulls’ issued a ‘sell-if’ signal for Friday. That’s what happens when you a linear model that follows linear trends. You end up chasing the perceived trend. My model has cyclical capabilities so it doesn’t do that (as you may have noticed). Enjoy.

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Wednesday, August 6,2008

Yesterday (Tuesday evening) I wrote: “What you now see when you look at Wednesday is red that enters around mid-day for the S&P 500 and by the close for NDX and AAPL and GOOG.” And sure enough that’s how Wednesday evolved. By the close, the S&P 500 had reversed at the close to the downside. The 3 others (Nasdaq 100, AAPL and GOOG) are all set to reverse to the downside Thursday morning (at the 10:30 am slice). So all things being equal, on Thursday morning all 4 issues will be pointing own.

 

What is interesting is the amount of red that appears in the future windows. If you look at the 3 technology issues, you find that they are all virtually identical. SPX is only slightly different but also points down. There are 2 green slices but they will probably disappear shortly. So we are in for a period of down movement. When we reverse after the down move you will find (90% probability) that the issues are at lower prices than they are now. This is especially important to note if you hold August options. If you hold puts, hang in there and if you hold calls, consider doing something to reverse your position. While no system is perfect, you want the odds on your side. 

 

Yesterday (Tuesday) I referred to the web site http://www.americanbulls.com and I told you that they like most other services follow the trend. Given the sharp increase in the market on Tuesday, ‘bulls’ issued a buy-if signal and then on Wednesday they confirmed a buy for the S&P 500 and the Nasdaq 100. Meanwhile, I have had all 4 issues on the buy side for Tuesday and Wednesday but on Thursday morning all 4 will be pointing down (sell signals). That shows the difference between a linear model and one that is not. The model I have developed has cyclical features. Enough already.

 

Enjoy the results and remember give some serious thought to your situation if you hold August options. Good luck and stay tuned. Come back soon (and tell your friends). There is plenty of room for all of us.

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Tuesday, August 5,2008

I’ve had several inquiries from people who have just seen this site for the first time. It seems one of the regular readers posted a link on a Google board. I want to thank him for doing so. It is always gratifying to know that people appreciate what I am doing. OK. Let’s get to their comments. Most centered on ‘How can a model predict the future?’

 

The simple answer is that the model – let me change the word ‘predict’ to ‘project’ – projects the ‘path of least resistance’. The model is not your typical linear model that tracks a linear trend. If you want to see what I mean go check out http://www.americanbulls.com and you will find that all the 4 issues I track were ‘sells’ going into Tuesday and then because of Tuesday’s rally, they issued ‘buy if’ conditions for the 2 indices as we go into Wednesday. For AAPL and GOOG they kept the sell designations. On the other hand I had the 4 in up trends as we started Tuesday and now as we go into Wednesday the model is saying that the path of least resistance will be to the down side as Wednesday evolves. Americanbulls is a fine service – I like it. I am only highlighting it to show the differences that exist between them (and many others) and myself.

 

The model has cyclical capabilities as you will see based on what I will say for tomorrow (Wednesday). And it is important to note that as new data is entered, the landscape changes. That is the way life is. Politically, some call such behavior flip-flopping. I call it a dose of reality. Today (Tuesday) the markets exploded upward (almost 3%). So you would think the model will continue with the green. Unfortunate, that is not the case. Today’s large up move was too much, too quickly (that’s how I interpret the results). What you now see when you look at Wednesday is red that enters around mid-day for the S&P 500 and by the close for NDX and AAPL and GOOG.

 

How things change. Yesterday, we were looking at green in the entire ‘future window’ for GOOG. And now it has become predominantly red. These will be an interesting few days.

 

There is another comment I would like to make. The SPX, NDX and AAPL have several green slices on Friday (Aug. 8) and Monday (Aug. 11). You should note that if those issues decline before Friday, those green slices may become red. I do not know if that will happen. I try to refrain from making such suggestions. But given today’s events I think it is warranted.

 

On a personal level, I think we are going back into a down trend on Wednesday afternoon and that applies to all 4 issues (including the markets). So, stay tuned. Good Luck. And come back soon (tell your friends – there is room for everyone).

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Monday, August 4,2008

It is Monday evening. I have made a change to the presentation. I have removed the half hour graphics. I am now only posting the ‘daily’, overall graphics. For each day a snapshot is taken at 10:30am, 1:30pm and 4:00pm. You can see the past 5 days and what the model sees for the future 5 days. Naturally, slices in the future are continuously updated as new data is entered.

 

And, as a special favor to several readers, I will continue to feature AAPL and GOOG. So if you scroll down you will see the graphics for these 2 favorites in addition to SPX (S&P 500) and NDX (Nasdaq 100).

 

Let’s get down to business. Where do we stand at the close on Monday? If you look at NDX, AAPL and GOOG you find that green is filling all the future windows. That’s quite something. So technology is looking good for the next week. It has been beaten down and it should now bounce back.

 

Meanwhile, the model was looking to have the SPX reverse this morning but that didn’t happen. The model has now set the reversal at 4:00pm today. One thing to note is that the last ‘real’ slice can change if the incoming slice causes it to. So if Tuesday morning the market (at 10:30 am) is down enough, the model may take the last green slice on Monday and make it red. The last slice is always subject to change because it is computed assuming the upcoming ‘future’ slice has zero change in price. That is the only catch. Otherwise the model is right some 90% of the time. Check it out. Enjoy and come back soon.

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Friday, August 1,2008

Friday was a quiet day. To know how the day evolved, look at the half hour graphics below and look at Friday. For the SPX we started the day with red (down trend) and at 12 pm it reversed to green. For the NDX, the day started in the red and around 11:30 am it reversed to green. Incidentally, both came into Friday from red trends that started Thursday afternoon. The half hour model sees the green extending into mid-day Monday.

 

With regards to the overall trend, the Nasdaq 100 (NDX) has run its course of selling and is now looking at green for the next week. This is an interesting development. For the S&P 500 (SPX), we also have green directly ahead. There is a small pocket of red on Wednesday but look at the green that is coming. Stay tuned and good luck.

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Thursday, July 31,2008

This is what I wrote yesterday (on Wednesday evening): “But look at the overall graphics and you find that the green in the future window is now gone. The model is saying that the up trend has run its course for now. The model has cyclical features to it. You can now see what I mean. The Dow goes up 400 points and the model says it is time to reverse. Isn’t it amazing. Look at the sequence of 5 graphics for SPX and you can see how the green moved across and how red has now come into the picture (strongly). The other point I want you to note is that the half hour model tells you how the 2 past days actually played out. See what the model said about Tuesday and Wednesday. Stay tuned and good luck.” Did you see what happened on Thursday? I will refrain from comments tonight. You pick up the ball and run with it.

 

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).

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Wednesday, July 30,2008

Wow, another up day. In reality, today was not all up. Look at the half hour graphics for SPX and you find that there was red between 11:30 and 2:00 pm. But overall it was a nice up day. And when coupled with Tuesday, we have a nice streak. But look at the overall graphics and you find that the green in the future window is now gone. The model is saying that the up trend has run its course for now. The model has cyclical features to it. You can now see what I mean. The Dow goes up 400 points and the model says it is time to reverse. Isn’t it amazing.

 

Look at the sequence of 5 graphics for SPX and you can see how the green moved across and how red has now come into the picture (strongly). The other point I want you to note is that the half hour model tells you how the 2 past days actually played out. See what the model said about Tuesday and Wednesday. Stay tuned and good luck.

 

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).

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Tuesday, July 29,2008

Isn’t this shaping up to be quite a week! It’s more of the same. Wild moves both up and down. The model is enjoying the action. It is doing very well. I, on the other hand, am simply hanging in. I am still trying to get my act together and follow the model. Normally, I get hammered whenever I waiver and hesitate and say something like – It will reverse soon – let me wait. By the time it reverses and I get realigned with the model I’ve lost a bundle. But I am working on getting my act together.

Let’s go to the markets. I won’t delve on the NDX because it is somewhat confused. When you look at the model you see that it is oscillating up and down. Meanwhile, the S&P 500 (SPX) is much more stable in that it moves smoothly – look at the graphics for the last 5 days. Last week we had red boxes move through the graphics of the SPX and now we have green boxes that have started to move through. So we are now in an up trend.

Let me spend a paragraph to describe what strategy I am currently focused on. I trade short term (a day or two in length). I trade the half hour trend. My objective is to trade only in the direction of the overall trend. The plan is to sit out moves wherein the half hour trend and the overall trend differ. One point I have realized – things are typically easier said than done. But I am going to give it my best shot. I am happy with the model (in fact, I am thrilled). Now I have to get to the point that I am happy with my trading style.

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).

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Friday, July 25,2008

This has been quite a week. We moved up sharply and we moved down sharply. In the end we were little changed. But for traders it was wild. I am referring to the S&P 500 (SPX). The NDX (Nasdaq 100) behaved somewhat differently. In fact, this week we saw the divergence of the 2. When you look at the graphics you can see it. Moreover, the divergence is looking to continue for some of the upcoming week. There seems to be a fair degree of uncertainty in the NDX. It is oscillating up and down. Meanwhile the SPX is moving more smoothly whether it be up or down.

 

Let’s get back to the S&P. For those who have been paying attention we have had waves move through time. Last week it was red and then on Friday we went into green. You get the idea. I’ll leave it with you. Good luck.

 

Given that I want to 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). If you have some interesting way of presenting the data. I value the comments I receive.

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Thursday, July 24,2008

There is not much to say. The markets are wild. They are gyrating, they are confused, they are irrational. So where are we? Let’s focus on the S&P 500. The past 5 days show red. But on Friday we will get back into green mode. I can’t wait. The half hour model reversed today around 1 pm and the green feeds into the overall model.

 

What does the model think of today. Basically nothing. Today’s action changed nothing. We were in a down trend which is about to reverse to the upside on Friday. Good luck and come back soon. And to those who recall my comments about the S&P at 1255 (and at 1277). Isn’t it something to see what has happened (thus far).

 

Given that I want to 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). If you look at the bottom of the list (the oldest) you see that we had green directly ahead. BUT a couple of days later (move up the list) red entered the ‘picture’. We still have some red directly ahead.

 

Good luck to all and come back soon. And let me know if you have some interesting way of presenting the data. I value the comments I receive.

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Tuesday, July 22,2008

What a game! Some days it’s: What a nightmare! Can you sense my frustration? Last evening there was free fall. And then on Tuesday morning there was some semblance of stability and then with an hour to go the markets took off. I didn’t actually see today’s action but I saw the graphs.

 

Today was a tough one for the model – I’m referring to the overall daily one. The half hour model caught this jump but I’ve decided as I have already stated that I will follow the overall trend. Let’s look at the SPX and NDX. Both are in down trends. Today’s trading data did not change that. As you can see from the graphs that follow, they have several more days of red left. So what happened today? Simple answer. I don’t know. But there was plenty of news which I suspect distracted traders from the overall trend. When I look at the results for this move I see the model has scored well with NDX but it has done badly with SPX. Now mind you, the poor performance is only due to today’s move. Since the move is not over and SPX went into a down trend at about 1255 (today it closed at 1277), then I strongly suspect that the SPX will give back all of today’s gain (and more) before the model closes this move out.

 

The model is not often wrong and an error of 20 points on the SPX is rarely seen. But, while not likely it is still possible. It certainly will be interesting to see where the SPX is when the model reverses the trend.

 

Given that I want to 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). If you look at the bottom of the list (the oldest) you see that we had green directly ahead. BUT a couple of days later (move up the list) red entered the ‘picture’. We still have some red directly ahead.

 

Good luck to all and come back soon. And let me know if you have some interesting way of presenting the data. I value the comments I receive.

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Monday, July 21,2008

Not that much happened on Monday and then after hours all hell broke lose. The model is tracking the overall market very well. We still have some red directly ahead. But by the end of the week we can see some green. Enjoy.

 

Given that I want to 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). If you look at the bottom of the list (the oldest) you see that we had green directly ahead. BUT a couple of days later (move up the list) red entered the ‘picture’ and we now have a string of red directly ahead. But, don’t despair because by Friday the green will be back. Naturally this time frame can change as a result of market action. A good example is the trading from last Wed. We had green directly ahead and then the market went up some 250 Dow points. What did the model do? It replaced several green boxes with red ones.

 

Good luck to all and come back soon. And let me know if you have some interesting way of presenting the data. I value the comments I receive.

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Friday, July 18,2008

I won’t comment on today’s market action besides stating that there was both up and down movement. Before describing what the model sees, let me state that I am still trying to figure out how to trade – the strategy in trading that is. One time I’m trading on the half hour results and another time I’m trading the overall model. What I have found is that trading the half hour model has very good potential BUT (note the capitals) there are several pitfalls. In a nutshell, the trades happen too quickly for my liking. I don’t think I can do it. Moreover, I don’t have the time to do it. So what is the alternative?

I think I have to trade the overall trend. Sometimes it is hard to ignore the half hour model because it is accurate BUT it is hard to be consistent with it alone. What I want to do is to use the half hour model to set the entry and exit points for the overall model. For the last couple of months I have chased after too many moves. I have had successes and I have had failures. Not long ago I was over $9K. Today I am at about $7.5K. One reason is the market volatility. Because I don’t watch the markets ‘continuously’ I miss moves and end up on the wrong side. I then hesitate to make a move and before you know it I incur losses. So I need to trade less and let some of the intraday moves go without reacting to them. Anyway that is my problem. As I have said in the past without a viable trading strategy success will be elusive.

Let’s now look at the SPX and NDX for next week. The overall model shows that both indices are in down trends which are projected to extend into most of next week. If one was to follow my proposed strategy, one would have sold on Thursday according to the half hour model. The short would then be held until the end of the trend. The timing of the exit would be fine tuned with the half hour model. I don’t know if this is the strategy I will settle on but I am obviously running out of options. I need to come up with a strategy that I can deal with. I had considered this strategy a few months back but I got carried away as I saw the intraday moves and the greed factor kicked in. So I quickly jumped ship. In hindsight, I think that was a mistake.

Given that I want to focus on the overall (call it daily) trend, I tabulated the graphics for this past week. Immediately below you can see the 5 snapshots that were generated this week for the overall graphics of both the SPX (first column) and the NDX (second column). If you look at the beginning of the week you saw green directly ahead. And now at the end of the week if you look ahead to next week you see red. Enjoy.

Good luck to all and come back soon.

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Thursday, July 17,2008

The roller coaster ride continues. Up, down, up – stop, I want to get off. I bet many of you feel that way. I know I do.

 

So where are we with the markets? The overall model shows red boxes for the next 5 days. The red starts Friday morning. However, it is very likely that the last slice on Thursday which shows as green will be flipped and it will likely become red because of the drop in the after hours markets.  If that is the case, then the overall model will have the reversal to the down side starting at the close on Thursday. If you look at the half hour model you see that the S&P 500 and the Nasdaq 100 both closed out Thursday with red and the red extends into Friday.

 

So the bottom line looks like a reversal to the downside began sometime on Thursday. For the SPX it happened at 10:30 am while for the NDX it took place at 2:30 pm. Good luck and stay tuned.

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Tuesday, July 15,2008

A Life in the fast lane – what a treat – not. So, how many more times are we going to have these ‘massive’ moves up and down – and in the same day. It has become so bad that all I look at is the half hour model (the bottom graphic of each pair). Trying to pin down the trend one week from now is a losing proposition. Now mind you, I am not complaining because the half hour model is doing wonders. I am thrilled. I am back to $9.4 K. I could have been at double that level but it has been difficult to stick to my trading strategy – too many distractions. But I am getting the hang of it – heck, I am even using stop orders.

 

So let’s look at the markets by first considering the half hour model. One thing is obvious when you look at the S&P 500 and the Nasdaq 100 – they are identical. On the surface I find this amazing especially if you consider today’s data when the S&P was down and NDX was flat. Let’s analyze the 3 days (Mon & Tues that are in the past and Wed which is in the future). Monday was all red. The trend was down throughout the day. Then we have Tuesday. The down trend continued for the first hour and then we got green. However, the down trend resumed late in the session (around 3:00 pm) and this down trend was projected to carry forward on Wednesday. So for Tuesday we had 2 red slices, and 8 green slices and then 3 red slices.

 

Let me clarify what the Wednesday forecast of red means. Simply put, the model is negative for Wednesday. BUT, one must realize that there are 13 data points in a day. So the red we see is subject to change depending on how the trading evolves. Come back tomorrow to find out what happened to the red.

 

I’ve brought this up because I am considering posting a parallel page to this one where I would simply post what I am seeing as the trading day is evolving. As an example, let’s consider today – Tuesday to illustrate my point. This morning I traded the up move and did well and then late in the afternoon I went short. I was following the evolution of the trend during the day. But, let’s take a step back. Let’s pretend it is Monday evening and we are looking at Tuesday. What did we have on Monday evening. The forecast for Tuesday was 4 red boxes and then 9 green boxes. In actual fact today we had 2 red boxes which were followed by 8 green boxes and the day ended with 3 red boxes. So you can see that the forecast gets modified as actual trading data is fed the model.

 

Do you have an opinion about me posting updates during the day. Would it be of value. Would it help you. What is your opinion. Good luck and stay tuned and let me know how you feel about the proposal I have made.

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Monday, July 14,2008

After today’s drop the markets look rosier than they did on Friday. On the overall model the rest of the week is green. So I have turned positive for the next few days. I use the half hour model to time my positions in the futures. It has been difficult because of the wild swings. If the markets were more stable, life would be really nice. But they aren’t and so it is somewhat difficult to do well. Stay tuned and good luck.

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Friday, July 11,2008

Friday was wild. The swings were amazing and scary. Instability is everywhere. The markets are wild. But when I look at the model I find that it sees a good (green) week coming up. You should also note that the S&P 500 and the Nasdaq 100 are virtually identical. I think this week will be ‘much’ better than last week. But these markets are volatile and they can be easily distracted by rumors, tidbits of news etc..

Stay tuned and good luck.

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Thursday, July 10,2008

I will leave the analysis to you. Remember a move starts with the half hour model and works into the daily model. The end occurs by starting looking at the daily model and then combining with the half hour model to determine the exit point. Since I trade the futures I focus predominantly on the half hour model to determine the entry and exit points. I also take into account the overall trend and try to align with it. I have been shafted a number of times by not doing that. I hope to improve on that aspect. As you know the markets are wild. At this time we have a couple of green days directly ahead and they are followed by guess what – a few red days. Such is life.

Stay tuned and good luck.

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Wednesday, July 9,2008

Yesterday I said: “The S&P 500 is wobbly (up-down-up-down)…. There is uncertainty in the air for the overall market.” Well, I guess that sums things up. Life is rough. So if you are trading you need a strategy. What about the markets after today’s sharp drop?

From today’s snapshot, we have the S&P 500 having 4 good days starting tomorrow (Thursday). Naturally, we revise our outlook everyday. But at the close today (Wednesday), we see the half model positive for Thursday and then we have 3 green days (Fri, Mon and Tues) from the overall model. And what about the Nasdaq 100. It is similar but only has 3 days of positive (green from the half hour model for Thursday and then Friday and Monday are green from the overall model).

Stay tuned and good luck.

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Tuesday, July 8,2008

I am pleased with how the model is doing. Look below to review what I wrote on Saturday. The S&P 500 is wobbly (up-down-up-down) for the next 5 days. There is uncertainty in the air for the overall market. What about the Nasdaq 100?

 

The next 5 days contain 15 slices. It only has one slice that is green. It is the first slice (covers the 9:30 to 10:30 am time frame). The remaining 14 slices based on the data up to the close on Tuesday is red. So the Nasdaq 100 will be abit more unstable. It will tend to go down more. Come back soon to see how all this has played out. Good luck.

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Thursday, July 3,2008

It is Saturday evening as I write this commentary. Things are not straight forward. Five of the 6 issues are showing green in the first part of the coming week and red in the second half. The exception is AKAM. It is basically green all week. Let’s take this opportunity to review each issue. Let’s look at what the issue did during the past week and let’s also look at what the model is looking to happen to each issue in the coming week.

 

The first issue is SPX (S&P 500 index). Monday and Tuesday were mostly green (except for the red slice on Tuesday morning). And then Wed and Thursday were red. The cycle is projected to repeat into the future. Monday and Tuesday of next week are projected as green and then Wed and Thursday are shown as red.

 

The Nasdaq 100 (NDX) is similar to SPX. Monday and Tuesday were green and Wed and Thursday were red. And next week is shown mostly as green except for next Thursday. So NDX is looking like SPX.

 

Now let’s look at the Dow. It is interesting especially given the grim news that is plastered everywhere you look. Last week the Dow only had one red slice (in a total of 11 slices). It happened on Wednesday – the second slice. The slice was red meaning sell at 1:30 pm and buy at 4:00 pm. At 1:30 the Dow was at 11,347 and at 4:00 it was at 11,216. So the Dow dropped 131 points on Wednesday afternoon. For the week the Dow went from 11,346 at the close on Friday, June 27 to 11,289 at the close on Thursday, July 3. So the Dow dropped 57 points for the week. Now you know why the model had the week as green. For next week the Dow will join the other 2 averages. We will have green for the first 2 days and red follows for the rest of the week.

 

Now to AAPL. Last week it was like the NDX. Green for the beginning of the last week and red for Wed and Thursday. Like the others, next week looks unsettled. Some green at the beginning of next week and then red follows.

 

What about GOOG you ask – I’ll assume you are asking. GOOG is just like the Dow. GOOG had a good week. It was all green except for the red slice on Wednesday (like the Dow). And for next week we have Monday and Tuesday showing up as green while the rest of the week is red. As with last week, the coming week is just like the Dow.

 

And finally we have AKAM. Last week AKAM was like the market averages (NDX and SPX). However, next week AKAM is mostly green. So AKAM is looking to ‘break away’ from the markets.

 

Stay tuned and good luck. Do I need to tell you that the markets are unstable. I didn’t think so. Come back soon.

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Tuesday, July 1, 2008:

At the close on Monday I wrote: “The markets showed some stability. I know it’s only one day.” Today that stability went out the window. Another wild day has come and gone. This time I did very well. I am back at $10K. ( I was at about 5K around the end of May). I am really getting better at both assessing and executing the moves. Enough about me. What about the markets?

 

There is little to say. Today’s data was in line with the model’s expectations. So the overall model is looking at the SPX and the NDX to continue in an up trend until later on next week. Incidentally you should note that the S&P 500 and the Nasdaq 100 are virtually identical when viewed on the graphics. I realize that today NDX was up more than SPX. But on Monday the reverse was true, so on average they can be the same. Good luck to all and see you on Wednesday.

 

By the way look at the half hour data and you can see how today evolved. The first half hour (slice) was negative. The next hour (2 slices) were positive. Then we had 3 slices (1.5 hours) that were negative, and then the rest of the day was positive. The final positive stretch began with the 1 pm slice. And what about tomorrow? The half hour model has the day (slices) painted red. BUT remember the overall trend is up – that is important to note.

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Monday, June 30, 2008:

What pleasant relief. The markets showed some stability. I know it’s only one day. But I take it one day at a time. I am presenting only SPX and NDX for now. Both are identical. We have green that started at the close last Friday (the 27) and it extends into July 8. So let’s see what will happen. Stay tuned and good luck.

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Friday, June 27, 2008:

What a week. Everyone is saying it. However, I am not one of them, anymore. When you look at the market graphics below you see that Monday was red and then Tuesday and most of Wednesday was green. Thursday was red (that was one nasty day) and then Friday was red for the first 2 slices but closed with a green slice. And what about next week? At this time all the future days are green. Be brave, hang in there. Things will improve.

 

You may have noticed that I have included the graphics for all 6 issues I follow. I find it amazing that all 3 indices were identical this past week. We started with red, went to green, dropped into red and closed the week in green. You need to know that the last slice is always subject to change. It is not really in the past – think of it as the present. So if Monday morning the market drops, it is possible that the reversal as signaled by the green on Friday becomes red. Such is life. But if the 10:30 am slice is green, then the reversal holds. And even if the last slice is converted to red, there is green in the future window that is pushing hard to take hold.

 

You will note for the half hour model that I am now presenting 2 past days and 1 future day. I think this is better. Let’s look at the S&P half hour graphic. Look at Thursday and Friday. You will actually see that those 2 days had nasty pockets of red but there was also green. In fact there was more green than red. The news media is spreading fear. I don’t see it and neither does the model. I agree that oil is a factor. One reason why it is increasing so much is because the markets have been down. But sooner or later that bubble will burst. Once the market stabilizes, oil will drop. But this is for the future. Oil is currently not priced based on supply/demand, it is priced by speculation. Large amounts of money are hedging declines in the equity markets by going into commodities.

 

What about the 3 stocks? Well, the 3 stocks have behaved for the past week much the same as the markets. And the future looks quite green. So I am positive about next week even though it is hard to be given the pessimism that surrounds me (and you). As I write this, I noticed that http://www.MarketWatch.com is quoting a market strategist who is referring to the upcoming week as a ‘dangerous’ week. Stay tuned and good luck. It promises to be exciting. Remember, if Monday morning the market holds its own (even if it is down a bit), there will be green throughout the week.

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Thursday, June 26, 2008:

Yesterday I described the market as crazy. Today, we saw more of the craziness. I don’t have a problem with a down day – but 3%, that’s excessive. On a personal note I broke even today. I made some and then I gave it back. Let me explain what happened because it will help all of us better understand the model.

 

Let’s start with the half hour model. Before going any further, I will tell you that I will change the presentation of the graphic. For those who are regulars, you know I have 1 past day and 2 future days. I am considering showing 2 past days and 1 future day (or perhaps one past day and 1 future day). I also want all to know that the past day is normally quite accurate. You should pay close attention to it because it is like the nightly news cast. It tells us what happened. Let’s look at today’s trading as an example. Look at the S&P and you have the half hour model saying to buy at 12:30 pm today (Thursday). Look at the Nasdaq 100 graphic (NDX) and you have the model going green at 12 noon today – Thursday. In reality it was a bit odd because prices were lower later in the afternoon – but such is life. I actually followed the model and went long the S&P futures (I had no position at the start of the day). I also bought back the QQQQ calls (July 47) I had shorted yesterday. I kept the July 48 calls (long position).

 

So why did the half hour model think that mid day was a buying opportunity. I don’t know. But in all fairness it was the last half hour of trading that accounted for most of the additional drop (relative to mid-day). In fact the SPX was at 1294 at 12:30 pm and at 3:30 pm the SPX was at 1291. With regards to the NDX, it was at 1878 at noon and then at 3:30 it was 1868. Thus, the 3:30 numbers were in line with what one might expect on those ‘rare’ occasions BUT the closing numbers were bad. Now mind you there is an interesting point to note and that is that the model was not shaken by the drop at the close because we see the green extend into Friday.

 

And what about the overall trend model. Yesterday it had a string of red directly ahead in the future window. This morning the model put the red to the Wednesday close and has it extending into Friday (mid-day). What follows after that is all green. So today’s drop has consumed the red and we now have green. What a flip-flop! What’s the bottom line.

 

Assuming Friday morning the market stabilizes, we will be looking at a green stretch – yes the next five days. But that is subject to change as conditions change. I went long because I saw these results at mid-day. I think the model will prove to be right and that there was a short term buying opportunity today. Time will tell if the model is right. Nonetheless, I did make a mistake. I went long with the overall model pointing down and with the reversal only appearing for Friday. In hindsight, I should have waited. I didn’t because I felt the half hour would lead into the overall results. Friday will be an important day because it will give us some insight into how the model is performing.

Stay tuned and good luck.

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Wednesday, June 25, 2008:

What an afternoon. I went to watch around 2 pm to see what the Fed effect would be. Initially, there wasn’t much and then things went crazy. The market took off. And then the market dived and then it took off… It was wild. But I don’t think it was the Fed because after the close the market continued its down move – especially the Nasdaq. It’s earnings time again – blame RIMM (apparently).

 

Before we discuss this crazy market let me tell you what I did. First of all, I am back in the options game and I continue with the futures. So I am doing both. I started the day (Wed) with a long position in S&P futures. I had also acquired July calls on the QQQQ (the 48 strike). The overall model was pointing up. This morning the market had a nice run up and by mid-day (around 1 pm) I closed out my long futures position (did not go short). That turned out to be a good move. But what I am thrilled about is my long QQQQ position. I did not close it. Instead, I sold short the next lower strike (the 47 call). This created a bearish call spread (credit). So that put me in a bearish position but because it is a spread, the moves are dampened. To go back to a bullish trend all I have to do is buy back the calls I shorted.

 

So what is the bottom line to the strategy with options. Simple, really. Buy calls or puts depending on the overall direction. Create a credit spread when the half hour model signals a reversal inside the overall trend. OK enough about me and my strategy. What about the markets? Well, for starters the rosieness is evaporating quickly. Look at the graphics below. Note that the S&P 500 and the Nasdaq 100 are identical (both the past 5 days and the future 5 days). The selling however should be done on Friday because the half hour model is not aligned. I plan to go long the S&P on Thursday morning (if I have the opportunity). This is based on the half hour model and then to reverse to the down side on Friday. I will also try to buy back my short calls on Thursday and keep the long calls until Friday when I will sell them and buy puts. There is excitement in the air. Stay tuned and good luck.

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Monday, June 23, 2008:

Monday was quiet after Friday’s storm. If you look at the graphics below for the S&P 500 and the Nasdaq 100 you find striking similarities for the overall trend data. Both SPX and NDX turned red at the 3rd slice on Thursday, June 19. However, they are looking to go back into the green. In fact, both are looking at 5 days of green. The SPX got its first green slice at the close on Monday. Meanwhile, NDX is set to get its green slice at 10:30 am Tuesday morning. Because these are the first slices in a new trend, their position on the graphic is not yet fixed. For example, SPX has a green slice at 4 pm Monday. If SPX is up tomorrow morning, the green slice will stay. However, if SPX is down, it is possible that the last slice will become red and green will start on Tuesday. This is one of the reasons I use the other data (half hour model) to fine tune the reversal.

 

So let’s consider the half hour model. In both cases we ended Monday with red slices. And we know that the overall trend is on the verge of green. So when is the half hour model turning green? The answer is 11:30 am Tuesday for both SPX and NDX. Thus all things considered, Tuesday morning looks like an excellent short term buying opportunity. Let’s revisit this analysis on the weekend and see how we did. Good luck and stay tuned.

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Friday, June 20, 2008:

What a difference a day makes. On Friday I started the day long the S&P 500 and short GOOG. The GOOG position was an expiring spread which was already worth about zero. But the S&P was a big loser because I lost dollar to dollar. So what happened. Easy. At the close on Thursday we had green for Friday. Not so fast. The overnight trading was so negative that the model changed the last slice on Thursday to red and kept red on Friday. I decided to stay with my long position and took a hit. At the end on Friday I was at $8.9K. Such is life. When you scroll down you will find that I have now replaced the GOOG graphics with the NDX graphics (QQQQ, if you like). The reasons will become apparent in the following commentary.

 

On Friday I did something else. I opened up a small bullish credit put spread on the QQQQ. As many of you know, the QQQQ is a clone of the Nasdaq 100 index. I shorted the July 48 put and bought the 46 put. The QQQQ closed around 47.5. So the spread has an intrinsic value of 50 cents. I got a credit of 75 cents. I may have jumped the gun a number of months ago when I dismissed options. There is one significant advantage to options and, in particular, credit spreads - they move more slowly. It is easier to sleep at night. But the profit potential is very good. If you read what I wrote the last few days, you see that I was trading options only in expiry week. My modification will be to trade the entire month. I will continue to trade volatility (like GOOG and AAPL) in the expiry week and indices like QQQQ and SPY the rest of the month.

 

What about the markets? Well, Friday was a mini-disaster. But on Monday the overall trend will go back to the upside for the S&P 500 and the Nasdaq 100. And, in fact, the up move based on the half hour model started on Friday afternoon. Incidentally, that’s why I got the bullish QQQQ position. At this time, I would not read much into Friday’s drop. It happened – case closed. When you look at the half hour model for Friday for both indices you see green at the end of the day. The last point I want to make is that while the overall trend is up at the 4 pm slice on Monday, the red in the Monday box can be wiped out if the S&P is at 1326 at the 10:30 am slice on Monday morning. So a rise of 8 points (about 64 Dow points) and the model would advance the green to the point that the last Friday slice would become green.

Come back soon. Stay tuned and good luck.

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Thursday, June 19, 2008:

Today I got my account back to $10K. I am thrilled. It has been an amazing ride. I was reviewing what I have written this year. I am referring to the collection of commentaries at the bottom of this page. In particular, look at Wed. Feb. 13, 2008. If you read it you will find that I was at $6.2K and I had come back from $2.9K. You will also note my reference to Barack. And then on Friday March 28 I mentioned that my account had gone to $7K. And a month later on Thurs. May 1, I was down to $5.9K. It has been tough but I now am comfortable. I am confident and I’ve learned to better appreciate the model.

 

With regards to the S&P 500 and GOOG, we have both in up trends. GOOG is clear while the S&P has a small red patch. However, the red is only marginal. So green may overtake the red or maybe the reverse will happen. Let’s watch and pay attention and not try to second guess. The red is in the Monday slice – we have time to refine our analysis.

 

Before I leave you, I wanted to answer an e-mail I received a few days ago (from John?). I acquired a bearish call spread on GOOG on Tuesday morning. At the time GOOG was at $575. So I sold the June 580 call and I bought the June $590 call. I received a credit of $3.40. The total liability for this spread is $10. Thus, I had to have $6.60 in my account. The question related to why I did this. Why did I not simply buy a put. First of all, I do not buy options. It is too easy to get ‘shafted’. The premiums are simply too high to win consistently. My only play in the options arena is credit spreads. Incidentally, I only trade spreads in the expiry week. During the rest of the time I trade futures on the S&P 500. Look at the spread I got. To break even (i.e. give back the $3.40 I received) GOOG would have had to have gone from 575 to 580+3.40=583.40. In other words, to break even GOOG would have had to have risen 8.40 in 4 days. Tomorrow (Friday) is the last of those 4 days. At the close on Thursday GOOG is about 561. The spread is worth about 20 cents. I plan to let it expire but we will see. I do not do much analysis regarding the spread I will enter. On the weekend I was looking at the 570/580 combo. And then on Monday GOOG went up while I waited for the model to reverse to the down side and so I moved up my spread. Had I stayed with the 570/580 combo I would have made 50% more and risked 30% less. But that is with hindsight. I am pleased with what I did.

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Wednesday, June 18, 2008:

I don’t have much to say about the results of the model. You judge for yourself. Yesterday’s comments still hold. But, let me tell you about what I am doing in my trades. First, let me tell you that at this time my account is up to $9.7 K. Today was a good day. I came into Wednesday short GOOG and the S&P 500 futures.

 

Around mid-day I closed my short S&P and went net buy. So I am now long the S&P. And if you look at the overall trend as depicted by the top graphic, you see that the S&P is now looking at green for the coming 5 days.  With regards to GOOG, I plan on holding my position until Friday’s expiry. And finally I want to thank all those who have written me. I enjoy your comments and, yes, I appreciate your criticisms. Stay tuned and good luck.

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Tuesday, June 17, 2008:

As I stated the last 2 days, I went short the S&P 500 futures and I also got a bearish call spread on GOOG. If you look at the graphics below, you will see (hopefully) what I am seeing. I will go long the S&P 500 on Wed. morning. I am currently short (opened the position on Tuesday morning). I will reverse my position for a day.

And for GOOG, I will continue to hold the spread. My plan is to hold it until expiry. But each day is a new day. Good Luck and stay tuned.

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Monday, June 16, 2008:

I don’t have much to say today. What I said on the weekend still holds. I am about to short the S&P 500 and I am going to short GOOG via a June credit call spread. For details see what I wrote on Friday. And given my focus on GOOG (for this week) I will continue to feature its graphics. Incidentally, the graphics tell the story. There is red for the rest of the week (overall model). So good luck and stay tuned.

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Friday, June 13, 2008:

Friday was a terrific day. The market followed the model very well – or should I say the model followed the market very well. At this time I am not sure – the model is doing such a good job. It has lifted my confidence greatly. I was out of the market on Friday – just missed getting in and then I was tied up most of the day. But that is irrelevant. What is important to me is the model’s performance. And that is something I am very happy with. I remain at $7.8 K.

 

What about Monday (and the week)? For starters, when you look at the graphics below you will find not only the S&P 500 but also GOOG. Why GOOG? Because. There are 3 reasons: 1) GOOG, in the coming week, will look much like the S&P – both will trend down, 2) it is the week of options expiry, and 3) a bearish call spread is an interesting and potentially quite profitable play for GOOG in the above environment.

 

So the bottom line is this. I plan to get in on Tuesday morning with a bearish call spread on GOOG and a short position on the S&P futures. The spread I am planning to get is (tentatively, of course): a) short the June 570 call ($10.00-10.30) and b) go long the June 580 call ($5.50-$5.70). The spread should be worth a credit of about $4.50 or so at last Friday’s evaluation.

Stay tuned and good luck. It promises to be exciting.

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Thursday, June 12, 2008:

Today (Thursday) was a nice day. We went up in the morning and pulled back some in the afternoon. I was pleased. I was long going into Thursday and then I used the half hour model to close the long to hold no position. Why no position? Because the overall trend is up. So my account is at $7.8 K.

 

What does the model see for Friday and beyond? If you look at the top graphic you see that the overall model is pointing up. In fact, this morning the model took the last slice in the Wednesday window and made it green. So Thursday is all green. And at this time the green is one week long. Meanwhile the half hour model is looking to become green again (first slice on Friday). It is important to note that the green can move to the last slice on Thursday or it can move to later, on Friday. That depends on how the market does. The future slices you see are computed for a FLAT market. If the market moves up, the last slice (on Thursday) will become green. Otherwise, the green will be delayed. Stay tuned and good luck.

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Wednesday, June 11, 2008:

Ugly. That’s how Yahoo described today. I agree. I got caught long and took a hit. My $8.2K went to $7.1K. Ouch. OK, enough talk – I will survive. What is important is to understand what happened and how to take this into account in the trading strategy. Let’s get down to business.

 

If we turn the clock back we find that at the close on Tuesday we had the half hour model in down mode but with an even market it would go green on Wednesday morning at 10:00 am (the first slice). Well, guess what happened – it did not go green at 10 am. It eventually went green at the 12 pm slice. You can see this if you look at the half hour graphic below (the second graphic).

 

What about the overall model. What happened. Let’s review. Tuesday at 4 pm the model had the last slice green. Now mind you the model did so by assuming the next slice (Wed 10:30 am slice) would correspond to a FLAT market. When the 10:30 am data was entered into the model. The last slice on Tuesday was converted to red (we had it initially as green). As I say, such is life. And the red persisted. We will have green at the 1:30 pm slice tomorrow (Thursday). So today was nasty because things happened too quickly. It was difficult to react.

 

As I was writing this I asked myself what was the problem. Initially, I told myself my trading strategy was the problem. After some thought I concluded – not so fast. The problem was the green slice the overall model put at 4 pm on Tuesday. It did so in good faith. There was nothing wrong with that. By 10:30 am both models (daily and half hour) were pointing down. But I held my long instead of going short. Had I gone short it would have been a neutral day. So I am at fault and not the model. Days like today are unavoidable. We have to learn to deal with them.

 

What about Thursday? Well, things are looking good for the next few days (5). I know I said that yesterday and the market tanked. But I will not back down from reporting what the model is saying. And I am investing as best I can with the model. Stay tuned and good luck.

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Tuesday, June 10, 2008:

Tonight as I write this, I decided that we should explore a few new things. So I want you to focus on the half hour model graphic that follows this commentary. In the graphic, the left box tells you what happened today as decided by the model. The model had green (up trend) until 1:30 pm. Then for the 2 pm slice we see it colored as red. At the close on Monday we had Tuesday as green all day. However, as the trading data on Tuesday was fed into the model, it reversed to the down side by 2:00 pm. This down trend continued until the end of the day. Incidentally, I resisted getting out of my long position for reasons that I will tell you later in this commentary. Note that on Wednesday (all things being equal) there is some green.

 

Meanwhile, the overall model (top graphic) has green in the future window for the next 2 days. My struggle in formulating a trading strategy is how to couple both models. I have yet to satisfy myself that what I’m doing is the best strategy. In fact, I don’t think it is the best. When I finalize my strategy I will start My Journey. I am not here to lose, I am here to succeed. Incidentally, all this flip-flopping by the market has left me at $8.1 K. I hope to get to $10 K by the time I start My Journey. So stay tuned and good luck and thanks for your messages.

 

But, before I leave you I want to share another graphic with you. It is from the half hour model and it shows the results of the last 4 days. I also show the corresponding moves that the half hour model indicated. I’ve tried to trade these short moves but.. My conclusion is that it is too difficult, too time consuming and too stressful. I am leaning to using the half hour results only to fine tune the entry and exit points for the overall trend. If you look at the overall trend you find that the trend went to the down side at the end of the day on Thursday June 5. Thus, according to the half hour model I should have shorted at 1396.7 on June 5 at 12:30 pm (the first red slice). The short should have been held until Monday June 9 when one could see that the overall model would go green by the end of the day. Thus, looking at the half hour results, I should have closed the short and gone long at 3:30 pm on Monday June 9 with the S&P 500 at 1354.7. This, I think, will be the trading strategy I will adopt. When I do I will let you know.

 

 

 

 

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Monday, June 9, 2008:

We saw some relief on Monday. It was welcome after Friday’s nasty drop. If you look at the half hour graphic below you see that the model was pointing up (green) until 1 pm when it went into down (red) mode. The red persisted until 3:30 pm when it became green again. And the green persists into Tuesday. So this is positive for the market.

 

Now let’s look at the daily model (top graphic). We see that today (Monday) at the 4 pm slice the trend turned green. I should also point out that the red in the June 12-13 is only marginally on the verge of red. It can easily become green. So the next week or so is looking good for the market.

 

What do you think. Let me know. I will make an effort to answer you on this site. So stay tuned and good luck.

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Friday, June 6, 2008:

Wild! That describes Friday. Those who follow what I write (and what I do) know that even though the market had been up over 200 points on Thursday, the model had told us that there was little up side left. The model said to go short with any sign of weakness on Friday morning. As it turned out, the model was right. Now mind you I hate this market. It is difficult to be consistent. I went into Friday short the S&P 500, however at mid day I closed the position and went long. The Dow was down 270 points at the time. That was not a mistake because that is what the half hour model was saying. I am still long because I decided not to follow the short signal. The reason can be found when you examine the graphics that follow.

 

Look at the half hour model below and you see 2 days of green. You also see some green coming up on Monday in the overall model. So the model is saying to expect some relief. We can expect some up side movement. Naturally, this is based on Friday’s data and with Monday’s data things may change. But we should not second guess. We should take things one day at a time.

 

On a personal note, I am now at $8.4K. I am getting closer to starting My Journey. But I want to continue to refine my trading strategy. I am getting there but I need a bit more time. And finally, I received several emails about my political comments. I will skip the rhetoric – I am an Obama/Clinton supporter. Case closed. I gather a number of readers do not like my judgment. Obviously, I can say the same. So it is a draw. Let’s move on.

 

While the markets were scary on Friday, the model is telling me that we are seeing volatility and not to panic. Friday was marked by a culmination of a bunch of negative news. Such is life. Monday is a new day. Stay tuned and good luck.

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Thursday, June 5, 2008:

Thursday was quite a day. The S&P 500 was up 2%. The overall model had green as of this morning but the half hour model had gone green Wed. afternoon. I was long as we started the day. However, because the day started strong, the last slice (4 pm) of Wed. went from red to green. That happens because the last slice in a sequence is controlled to a certain extent by the next slice. Such is life.

 

So what about Friday (tomorrow)? As we start Friday we should be long. The long position should be converted to a short position around 11 am Friday. For those who are really paying attention you will recall that on Wed. we were looking at 4 days of green directly ahead. And why are we not seeing green after Thursday’s trading. Simply put, today’s strong up move is interpreted by the model as satisfying, to some extent, the up movement it was looking for. So for now we have some red taking hold of the situation. In fact, if we have a drop of about 40 Dow points after the first hour of trading, the model will move the down reversal point to today’s last slice (i.e. 4 pm Thursday).

 

There is a lot of instability in the market of late. It makes the forward analysis that much more difficult. But in the end, if one puts aside one’s emotions, success will follow. I am still working on controlling my emotions. And speaking of emotions I had someone write to tell me that I should keep my political comments to myself. They show ‘poor judgment’ I was told. It was likely sent by a Republican who is not thrilled with Obama. Must be someone who wishes to continue our Iraq adventure. Someone who would not talk to Ahmadinejad, Castro etc.. Incidentally, any good meeting to be fruitful requires preparation and a detailed agenda. This is what Barack advocates but John, well let’s just say he is caught in a time warp. He is still reliving Vietnam. Can someone find out if he supported our withdrawal from Vietnam.

 

And what about this little known event? On March 2 and 3 of 2008, someone visited Iraq and Baghdad. Guess who. I will give you some clues. He was given the red carpet treatment. He was greeted with a marching band. He was driven from the airport and he was not protected by our soldiers – only Iraqis. He held hands with the Iraqi Prime Minister Nuri al-Maliki. Don’t know – I suggest you ask John McCain. McCain insists that Obama visit Baghdad to find out what’s going on. Senator McCain may I suggest that you open your eyes and take a virtual visit down memory lane. Google for example ‘Iran President visits Baghdad’ or hit this link http://www.dawn.com/2008/03/03/top9.htm to get a summary. John, you are wrong about Iraq. Your foreign policy is a continuation of Bush’s which was a big flop.

 

And let me finish off by telling you about our neighbor to the north, Canada. Canada was never in Iraq. It continues to enjoy huge budget surpluses. Five years ago the Canadian dollar was worth about 70% of a US dollar. Today, it has surpassed 100%. It has national health care. It is a friend of Cuba. In fact, about 1 million Canadians a year vacation in Cuba. Young educated people support Barack because he looks to the future. John McCain looks at the past. Experience is something acquired in the past. The key to experience is whether it is good or whether it is bad experience. The one with the most experience right now is GWB – 8 years as Governor and almost 8 years as President. However, most would agree that his experience is nothing to write home about.

 

And finally, this is my site. I pay for it. I maintain it. You are free to visit or not BUT don’t tell me I can’t express my political views on it. It’s called freedom of speech.

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Wednesday, June 4, 2008:

As we went into Wednesday (today), the model was showing green (started at 4 pm on Tuesday). Well, we stayed green at the 10:30 am slice but by 1:30 pm (2nd slice) the overall model was back in red (down) mode. You can get a magnification of what happened by looking at the bottom graphic (half hour model). You can see that the red started at 12:30 pm today. You can also see that the half hour model turned green at 3:30 pm. This would be a buying opportunity as the overall model is green as of Thursday morning.

 

As a final point, you can see that the model is constantly adjusting as new data is analyzed. I trade the overall trend but I also use the half hour model to time my entries and exits. In addition, I may trade the overall trend several times by getting in and then closing the position (based on the half hour model) and then re-establishing the position. I have learned that the trading strategy is very important. But it is not always easy to be disciplined because of emotions. For example, I should have closed out my long position today at 12:30 pm but I did not because of my emotion. And then I held the position until the end of the day because I was looking at a ‘green’ Thursday. Stay tuned and good luck.

 

On a personal note, I am doing much better. I am getting control of my emotions. I am following the model. As a result I closed out today at $7.4 K. If this keeps up I will soon restart My Journey. Stay Tuned. I am now looking at June 16.

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Tuesday, June 3, 2008:

Congratulations, soon to be President, Senator Obama. I always believed in you. And to Hillary – you were impressive. I do hope you are chosen as the VP candidate.

 

Now let’s look at the market. Don’t let today distract you. The model picked it off nicely. And now the model has green for the next 5 days. While things can change, we need to take them as they come and adjust as warranted. For those who are regular readers, I would guess you have a very good idea about how to read the graphics. When you look at the overall trend (top graphic), you see that the trend is now up. Stay tuned. And good luck.

 

On a personal note, I am doing much better. I am getting control of my emotions. I am following the model. As a result I closed out today at $7.4 K. If this keeps up I will soon restart My Journey. Stay Tuned. I am now looking at June 16.

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Monday, June 2, 2008:

Monday was an interesting day. If you read my comments on the weekend, you would know that all 6 issues were in down trends as we went into Monday. The market took a hit which is in line with the model but what is really interesting is that the strong down draft on Monday seems to have cleaned out the negativity. If you look at the S&P 500 graphic, you will find that by the end of Tuesday (based on the overall trend) or by early Wednesday (based on both the half hour and daily models) we will reverse to the up side. So this down trend was strong but it looks to be short lived.

 

On a personal note, I am doing much better. I am getting control of my emotions. I am following the model. As a result I closed out today at $7.1 K. If this keeps up I will soon restart My Journey. Stay Tuned. I am now looking at June 16.

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Friday, May 30, 2008:

It is Sunday. I have run all 6 issues through the model. You will find all the results (the graphics) below. You will also find a link to get the complete PowerPoint file. So how does it look for the coming week? For starters all 6 issues have red arrows as of Friday. At this time this week is starting in a down trend. For most of the issues a reversal to the up side will occur on Friday. A couple of them are looking at Thursday. These comments also apply to AAPL and GOOG. Enjoy the graphics and plan accordingly. Good Luck. And come back soon.

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Thursday, May 29, 2008:

For those who are new to this page, let me say a few words about what you can find here. Following my daily commentary (this section) you will find 2 graphics. The top one is what I refer to as the daily model. In fact the term daily is not correct because the model considers 3 snap shots during the trading day. These are taken at 10:30 am, 1:30 pm and 4:00 pm (NY time). So when you look at the output you find 3 slices for each day.

 

You should also note that the graphic is divided in 2. The left portion is the past and the right is the future. The past shows you where we have been (as computed by the model). The future tells us where the model expects us to go (in terms of trend only). So if we consider today’s graphic, we see that the 5 past days were all colored green to indicate an up trend. And then we have on Friday (around mid day) red taking hold. The red extends across the 5 day viewing window. This implies the market is reversing to the down side. In fact, the reversal seems to have already taken hold. I say this based on the lower graphic. It shows the day divided into 13 slices (each half hour starting at 10 am). The graphic shows 1 past day and 2 future days.

 

If you look at the half hour graphic carefully you find that today (Thursday) around 1 pm green turned to red and the red stretches into Friday. I use the half hour model to time the start and end of the overall moves. That’s why I have the reversal pegged at lunch time on Thursday. I should add however that the results from the half hour model can tend to change as new data is entered and so they are not of that much use to you (because you cannot see the updates throughout the day). For example, as we started today the reversal was looking to happen around 11 am. But because of the market moving up, the model delayed the reversal until 1 pm. The overall model is much more stable. It has been focused on Friday for the down side reversal for the last few days. Why am I telling you all this? Because, you should be focused on the overall model. In fact, if I was you, I would not worry about the half hour model, for now. Your comments are welcome. Good Luck.

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Wednesday, May 28, 2008:

I’m sorry about yesterday. I forgot to upload this web page. I only realized it this morning. Well, I’m early this evening – I want to make it up to you. So let’s look at the S&P500. The overall model (top graphic) based on 3 data slices shows green going for 1 more day and then on Friday we have red coming into the picture.

 

If you are looking at the half hour model to time the reversal to the down side, note that it looks like the down turn will start on Monday. I say this because Friday afternoon is green (half hour) and red (daily). To initiate a move, the 2 models should be aligned. This should happen on Monday. My plan is to go short on Monday according to the models. But we still have some time before the reversal, so stay tuned. Good luck to all. And thanks for your comments.

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Tuesday, May 27, 2008:

As I’ve stated (yesterday) I am using a very slightly modified version of the model. I am not going to show the ‘old’ results. I will only show the ‘new’ results. You can judge for yourself where we are going. Stay tuned and come back soon. Good luck.

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Friday, May 23, 2008:

It is holiday Monday evening and before the trading week kicks off I want to share a couple of points with you. Given the day, I want to thank all the military personnel who are risking (and have risked) so much. Many have sacrificed their lives and many more have been wounded. You are the heroes. On a personal level I have been against the Iraq ‘situation’ from day one. But this has nothing to do with the military. This was George and Dick’s fight (and now John’s) and you were told to execute their wishes. God bless all of you.

 

One point I want to share with you is that I have made a small adjustment to the model. The reason for doing this was to reduce fake outs. Remember, my objective is to succeed. So I need a strategy that reduces fake outs because they are what keeps me from success.

 

My plan is to go with the ‘new’ (it is not new – it is simply modified) model for both the daily and half hour versions. On another note someone asked if I could publish a threshold level for the upcoming slice of the daily model. That is a good idea – so here it is for Tuesday. Remember, I am focused on the new model. On Friday the S&P500 closed at 1375.9. For a reversal to be initiated on the first slice (i.e. 10:30 am) of the overall model would require that the S&P500 be below 1373.8 at 10:30. However, for the reversal to take hold would require the S&P to continue dropping. It should be noted that there are 3 slices in the daily model. They are at 10:30 am, 1:30 pm and 4:00 pm. So a reversal can happen at 3 times and not just in the first slice. Such is life. Stay tuned.

 

On Thursday I mentioned that data in the future window can change as new trading data comes in. That’s what happened on Friday. If we recall Thursday, we closed out the day thinking that Friday would be the start of an up move. Well when Friday began we had a strong down draft. It put the green on hold. Friday’s early trading caused the last slice on Thursday to become red and the first slice on Friday to also become red. But even with Friday’s sharp drop, the model is un-nerved. The coming 5 days are all green. So we are in an up trend that based on the past window began at the second slice (1:30 pm slice) on Friday.

 

I should point out that it is very useful to pay some attention to the past window. It gives us a very good idea of what has been going on. If you recall, last weekend the model was looking to the week to be a down week. Now look at the past week once analyzed by the model. What we see is that the red began at the 1:30 slice on Monday and turned green at the 1:30 slice on Friday. And yes we had a fakeout – the 1:30 slice on Thursday.

 

Now, as we go into the week of May 27 we have green – let’s see where this takes us. Stay tuned and good luck.

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Thursday, May 22, 2008:

Today. the model reversed to the up side. If you look at the future window all you will see is green. Need I say more. Now mind you, the boxes are green – as of today. But they are subject to change as new trading data comes in. Stay tuned and good luck. Remember, on the weekend I will analyze all 6 issues.

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Wednesday, May 21, 2008:

Yesterday I thought we would not see much more down side. At the close on Tuesday the overall model was still pointing down but it was looking to reverse at the close on Wednesday. Well, today’s down action has pushed the reversal to Thursday morning. And the half hour model is in agreement. We now have in the future window 5 green boxes. So the down trend is about to end for now.

 

Before I leave you, I wanted you to know that the model is dynamic. Whatever you see in the future window is computed based on little change. If however there is strong change taking place, the model will react accordingly. One of the more interesting features of the model is its cyclical ability. For example, consider Tuesday and Wednesday. The market has been battered (the Dow lost over 400 points in 2 days). On the weekend the model said that this would be a ‘red’ week. But now as we go into Thursday the model is reversing itself. It is looking for green come Thursday morning. Remember I am pointing to the morning based on relatively flat performance. If the market takes a drop on Thursday morning the reversal will be pushed a bit further out. Stay tuned and good luck and let’s see what this reversal will bring us.

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Tuesday, May 20, 2008:

I will skip the commentary today. But, I will tell you that the model did very well at picking the bottom today. It keeps on amazing me. But of course there are negatives. One is that the model readjusts as each new piece of data is analyzed. Thus, on Monday evening it looked like the reversal on Tuesday would happen early on. It actually happened around lunch time. This was in part a result of the down market. The model held off. Before I let you go, I would like you to note that the red in the future window almost disappeared today. I guess the drop was large enough that the model now thinks there is not much left on the down side. Good luck.

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Monday, May 19, 2008:

Monday was unbelievable. The upswing at the start of the day caused a revision to the closing Friday results. So we now have green at the close on Friday and that extends into Monday. But, by mid-day Monday the trend was red again. We were premature with the start of the down trend. It now looks like it started today (Monday) at mid-day. Note the future window is all red. So in the short term we are looking at a down market for the next week or so. It was amazing to watch the model today as it picked off the reversal point (yes, before it happened). Stay tuned and good luck.

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Friday, May 16, 2008:

As I stated a few days ago, I will analyze all 6 issues on weekends when I have a bit more time to spare. So if you scroll down you will find graphics for all 6 issues – yes that includes AAPL and GOOG.

 

Let’s look at the 6 issues. The overall trend for the S&P 500 is down until Thursday. Before I continue all must understand that the projections are constantly being re-evaluated. And we know that the model will react if it is warranted. When we look at the Dow Industrial Avg. we find the equivalent results as those for the S&P. And the 3rd index is the Nasdaq 100 which is virtually identical to the other 2 indices.

 

As for the stocks we have AAPL and GOOG with a couple of days of red boxes. By Wed morning they are looking to reverse. And finally we have AKAM. It is now the weakest of the bunch. AKAM went into a down trend on Friday and for the coming week all we see is red. So AKAM should give back some of its gains (which were sizeable). Come back soon and Good Luck.

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Thursday, May 15, 2008:

Yesterday, I called the model ‘enchanting’. I mean it. Today I used the model to time my trade. I have struggled of late because of a lack of discipline and because of a lack of trading strategy. But I feel good this evening because I think I am starting to master my emotions.

 

Let me replay what happened today. I started today (Thursday) short the S&P 500 futures contract. Yesterday I had the half hour model looking at a down draft for Thursday starting at about 11:30 am. Meanwhile, the daily model had us in a down trend. So I followed the half hour model and closed my position (did not go long). Meanwhile, the daily model at 1:30 pm (there are 3 points in the daily model) went positive but it was clear it would be a short lived ‘one-day’ rally.

 

When you look at the daily graphic below you will find that Thursday was in fact green and this coincided with the half hour model. But on Friday morning both are going red. Yesterday it looked like it was a part of the down trend and then today the model made it a one day up trend. So today was one of those days. What I am really thrilled about is how the model tracked the data. It was something to see. I want to go short the S&P again on Friday morning and will do so if I can get to use my computer (I will be traveling).

 

My strategy is coming together. I use both models. I am not always invested. I use the daily model to decide whether I will be long or short. I then use the half hour model to create a position and to close it and then to reopen it. For example, on Friday morning (assuming I can) I will go short based on the half hour model which will validate the daily model. When the half hour model reverses (say on Monday) I will close my short and wait. I will not go long if the daily model is still pointing down. This was my big mistake of the past. I will not make it again. Stay tuned and good luck.

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Wednesday, May 14, 2008:

Today, I believe was a turning point for me. You have listened to me (patiently, I hope) about formulating a trading strategy. As I’ve stated on a previous occasion, the model is ‘enchanting’. Yes, that is the word I will use to describe it. However, I have also complained about the fact that I have yet to master how to use it. Well, today I took a big step forward. I won’t go into the details at this time but I feel I am on the verge of having found a viable trading strategy. Stay tuned because I think you will find the model/strategy interesting.

 

Before looking at today’s trading, I want to thank all of you who have written to me. I know there are quite a few who follow AAPL and GOOG. That made me think. I am not updating them because of time constraints. However, I do have some time on the weekend. So guess what. I will update all 6 issues on the weekends. I will also make accessible the Power Point file for the entire week. While it is not the best solution, it is a partial alternative, nonetheless.

 

What about the markets, you ask. If you look at the graphics, you will find that today (mid-day) we had a reversal to the down side. The model advanced the reversal to the down side because of the sharp opening up move. Remember, the model has elements of analyzing ‘cycles’. If you look at the daily model (top graphic) you can now see that the future window is completely red. This means that the up trend we have experienced during the last few days has come to an end. Good Luck to all and come back soon.

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Tuesday, May 13, 2008:

Before looking at the market at the close on Tuesday, let’s look at it as of the close on Monday. Following this paragraph is my graphic from Monday. There is also a graph I found on MarketWatch which shows the hourly moves of the S&P as of the close on Monday. So, both graphics end at the close on Monday. The comparison of the 2 is interesting

Enough with the past. Let’s come back to reality. Today’s graphics (Tuesday) are found in the usual place. Look at the daily graphic (the top one). You can see that the green slices are moving from the future window to the past. Red is about to fill the future window. So come Thursday we will enter a down trend. Now isn’t this interesting. Good Luck.

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Monday, May 12, 2008:

As we saw on the weekend, the daily model is looking for some up movement. Today, we got some relief with the Dow up 130 points. This up trend started on Friday and is now extending into Thursday. You will note that I now show the daily model with 3 slices. These are generated at 10:30 am, 1:30 pm and 4:00 pm New York time. I find that it is easier to manage the moves with 3 slices.

 

On a personal note I am coming to realize that I cannot trade the half hour trend. I thought I could – but I can’t. So my next step is to trade the daily trend and to use the half hour model to refine the timing for getting in and getting out. This will reduce my trading and should make it easier to perform. As I’ve stated so many times, succeeding requires discipline and a strategy (in addition to a model). I have really worked on the model and I am happy with it. Now, I need to work on ‘me’. I am targeting June 1 as the start of My Journey. Stay Tuned and Good Luck.

 

Before I let you go, I want to share one of my conclusions with you. The markets move too quickly and too abruptly. To reduce this effect requires that one trade over a longer time frame. The trades generated by the half hour model are typically less than a day in length. That is too fast. So as I stated above, I will now trade the overall trend and will enter and exit each trade with the help of the half hour model. The next couple of weeks should tell me if this is the strategy I am looking for. I hope it is because I am running out of ideas.

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Friday, May 9, 2008:

It is Saturday as I write these comments. Friday was an interesting day. The markets were down but it could have been worse. I am convinced, more than ever, that what I need is discipline. For me the model is now ‘enchanting’. It does not cease to amaze me at how well it picks up the trends and, even more importantly, how well it maps them into the near future. If I do not succeed, I will not be able to blame the model.

 

Some have asked me to bring back the analysis for AAPL, GOOG, etc.. I cannot at this stage. I am overloaded with work. Maybe in a few months when my situation is more stable. I want to thank all those who have written with comments and suggestions. I didn’t think there were so many readers.

 

As of today, I have updated the results you see from the daily model. While I refer to it as the daily model, it is in fact a model that assesses the data 3 times per day. You should note that the half hour model looks at the day at 13 different times. Up to now I was showing the results on a daily basis but, in reality, the day was cut into 3 segments. So I will show the complete results. The first slice is analyzed at 10:30 am, the second slice is analyzed at 1:30 pm and the third slice at 4:00 pm. These are all New York times. So when you look at the daily model you will get a better idea of when things happened (or will happen). As an example, let’s consider Friday. We have the daily model reversing from the down to the up at 1:30 pm (the second slice). The values of the index that are shown are closing values. As before, the half hour model is used to show the ‘secondary’ movements within the primary trend. Stay tuned and good luck.

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Wednesday, May 7, 2008:

Oh, what a day. I went into Wednesday short the S&P 500 (at 1422). I am following the bottom graphic which is generated by the half hour model. Things were looking good. The market was down about 90 Dow points around noon, and it looked like the model would reverse in an hour (or 2). So I jumped the gun and went from short to long. Well, guess what? The model did not reverse (and you probably know why). It reversed only at the close (assuming a stable open tomorrow). Note the green half hour slice at the close on Wednesday.

 

My worst enemy has been not following the model and jumping the model. I am upset with myself because I see so much potential but I seem to waste the opportunities because of my lack of discipline. Even with today’s shave I am at $6.4K. However, I will not start My Journey until I have the confidence in myself. At this point I have confidence in the model. As for myself, I need a bit more control over myself. I need to improve my discipline.

 

Enough about my problem, let’s get back to the market and specifically to the S&P 500 as of the close on Wednesday. Well the daily model is starting to look real good. As a matter of fact if we couple the daily and half hour models we can see that the coming 5 days will be in an up trend. So don’t let today’s drop fool you. The trend is just reversing to up. Take advantage of it and come back soon. Good luck.

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Tuesday, May 6, 2008:

I will defer from making comments tonight. I am caught up with the Dem. primaries. My congratulations go out to Barack. Some of the regular readers know I strongly support him. Good luck to all.

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Monday, May 5, 2008:

Monday was a ‘strange’ sort of day. From what I can see, the market was up early and then it was down and it stayed down. As we went into Monday we had the overall trend as down and then up on Tuesday and down on Wed. etc.. The markets are confused and it is showing on the fluctuations in the overall trend. At the close on Monday we have for the overall trend in the future window 2 green boxes and then red boxes. So we still have fluctuations.

 

Now when we look at the half hour model we find that Tuesday and part of Wednesday are red. So the daily model says up and the half hour model says down. Someone wrote to me and asked about this. All I can say is, such is life – there is instability. On a personal note I am now following only the half hour model as I trade the S&P 500 futures. Trying to follow both is simply not possible – that’s my conclusion. Stay tuned and Good Luck.

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Friday, May 2, 2008:

Today is Sat. May 3 as I write this commentary. As I stated on Thursday, I am revising what I am posting. For the time being I will only cover the S&P 500. For my rationale, read what I wrote on Thursday.

 

I am very close to starting My Journey. I am nailing down my trading strategy. It now looks like I will simply trade based on the half hour (HH) model. I will not use the daily model. But note, not because I don’t like the results because I do like them. However, when trading futures and when one is trying to optimize performance, I will need to trade in a refined manner hence the HH model.

 

On a personal note, I am very confident. I think that once I get myself aligned in the next couple of weeks, the sky will be the limit. So stay tuned. And many thanks for your comments. They are much appreciated. Suggestions are very helpful. Thanks again.

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Thursday, May 1, 2008:

Today was May 1. I think it was a turning point for me. I was at home and I had the opportunity to watch the market and assess my performance. Let me start with myself. I blew it. Why? Because, I did not take my own advice which I wrote on this page yesterday. Look below at what I wrote on Wednesday. I held onto my short all day – a costly mistake. But as the day was unfolding I realized that I am trading short term and I am being blinded by the daily model. The daily model was wrong as we went into Thursday, but the half hour (HH) model had it right.

 

In fact, the half hour model is rarely wrong. It is quick to align itself to the current trend. I didn’t reverse my position this morning because the daily model was pointing down. I said to myself “Forget the half hour model. The daily model is pointing down.”  Had I reversed my short this morning and gone long, I would be at $8K. Instead I am at $5.9K. incidentally, this has happened to me a number of times during the last time. Today’s was one of the more vivid examples.

 

I have been struggling with developing a trading strategy. Today opened my eyes. I reached several conclusions today:

1)       I will only follow the S&P 500. Many of you probably realize that it represents the other issues quite well.

2)  I will only generate the graphic for the half hour model. This will simplify my life tremendously at a time when I need to    devote more time to my trading strategy.

3)   I will trade the S&P futures based on the HH model.

 

I believe that this strategy will allow me to be most productive. If you look at the HH graphic for the S&P that I produced on Wednesday you see that the model had green taking hold at 11 am on Thursday and extending into Friday. The revised graphic produced at the close on Thursday is immediately below this commentary. What we find is that the model advanced the down reversal to 3 pm Thursday afternoon and is looking for all of Friday to be red. On Friday (or whenever the model says to) I will reverse my short position into a long position. I hope that today I finally nailed down a viable trading strategy. Remember, I am not looking for an investment strategy, I am looking for a trading strategy.

 

My objective remains to take 5K and build it into one million by trading. As soon as I have finalized my strategy I will officially begin My Journey. I have resisted doing so because I realize that I have yet to develop a strategy I am happy with (comfortable). However, I do hope that what I learned today will form the basis of the strategy I am looking for. Stay tuned and Good Luck.

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Wednesday, April 30, 2008:

It is Wednesday evening. The model told us that we have some red directly ahead. Today we saw a sharp runup in the market and then we saw it given back. In fact, if you look at the half hour model you see that someone who is using the 2 models in coupled mode would have gone short at lunch time. That’s what I did. And given the half hour model I will close the position Thursday morning. I am also contemplating going long at that point in accordance with the half hour model. And then on Friday morning I will reverse my position and go short. This kind of trading is proving to be an interesting strategy. I hope to make it my dominant strategy for trading futures.

 

Let’s look at the 6 issues and summarize where we stand. The Dow and the S&P500 are essentially identical. They are looking to reverse to the upside on Tuesday May 6. Meanwhile, the Nasdaq 100 has red until the end of next week. AAPL is like the Nasdaq 100 and so is GOOG. And finally we have AKAM and it too is like the Nasdaq 100. So AAPL, GOOG and AKAM have at least 5 red daily boxes in the ‘future’ window. Now isn’t this exciting. Stay tuned and good luck.

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Monday, April 28, 2008:

When you look at the top graphic for each issue you see that the next five days are basically red for 5 issues. The exception is GOOG. It has a couple of green boxes before red appears. So the current week is not shaping up as a good one for the longs. Stay tuned and good luck to all.

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Friday, April 25, 2008:

Because of a very busy schedule this weekend I will defer my comments to another time. I will let you may your own conclusions. Good Luck and come back soon.

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Wednesday, April 23, 2008:

Thanks to everyone who wrote to me. I was actually surprised at how many there were. I received many useful comments. I will try to act on them soon.

 

At this time the markets are confused. I am actually having difficulty trying to figure out what is happening. We are see changing attitudes. As an example look at the Dow. We had green for Thursday but then we are looking at red on Friday (and Monday) and then we have one green and then one red, one green and … There is indecision in the air. Stay tuned and good luck.

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Tuesday, April 22, 2008:

We went into Tuesday with me saying that we are in a down trend. That’s what I said and the markets were down a fair amount today. However, the consequence of today’s decline is that the remaining down trend has been shortened. If you look at the graphics, you can see that the daily model only has 2 red days remaining. You probably know that this does not mean the days will be down – it simply means that the overall trend is down. So by Thursday afternoon we are back into an up trend. The green starts in the half hour model and continues in the daily model.

 

What about the 3 stocks – you may be asking. AAPL’s drop today (Tues) has changed AAPL’s fortunes. It is negative on Wed but then after the earnings AAPL will be positive (on Thursday) like the markets. GOOG and AKAM are comparable. The daily trend will reverse to the up side on Monday. Today GOOG was up a fair amount. According to the model that was not justified. So we may see GOOG give back some of the gains it made today.

 

And finally you may recall that I said yesterday that AAPL’s gain was not justified. Well, today it gave back the gain as I had suggested it should. The good news for AAPL diehards is that AAPL is about to reverse to the up side. Stay Tuned.

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Monday, April 21, 2008:

I will be brief. Today, the daily model took hold of red. Now mind you, based on the half hour model, the down trend started on Friday afternoon. But now it is in full swing. It will last until the end of the week. When we look at the individual issues we have them all in a similar position and that includes AAPL. However, today AAPL shot up dramatically (up $6). But, the model has not changed its outlook for AAPL. So how do I interpret this?

 

I think AAPL will give back today’s gain and more. I think it will go down after the release of earnings (and maybe before). The model is saying down. I believe it. So don’t expect much from AAPL in the coming days. Today’s up move is one of those events (upgrade) that is not predictable. But now that the model knows of it, the model is maintaining a down trend for AAPL. Good Luck and Stay Tuned.

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Friday, April 18, 2008:

Isn’t it impressive. Last Friday we were down in the dumps. The market was down 250 points in part because of GE. Everyone was worried. This is a portion of what I wrote then – the 11th (scroll down to see the entire text):

For the 3 indices we have green in the overall trend (top graphic for each issue) for the entire week. Friday’s drop has been digested by the model. Its response has been to increase the length of the up move. So my interpretation of what happened on Friday is that it was a drop that occurred in an overall up trend and NOT the resumption of the down trend. My guess is that by the end of the week the Dow will have recovered all of Friday’s drop (and probably more).

So when you look at what I wrote last Friday evening you find that I said this week would be green. And furthermore the drop of 250 points would be recovered during the coming week. Well, I was right. So let’s move on and analyze the current state of affairs.

 

This morning (Friday -18th) was interesting. The model was showing a reversal to the down side Friday morning (half hour model). The daily model had signaled at the close on Thursday that a reversal was being formed. But then Friday morning came along. The up move was strong enough that the reversal got pushed to lunch time. So what we ended up with was a reversal to the down side for all 6 issues. The red started on Friday (lunch) and it carries into Monday when the daily model takes over.

 

This has been a truly amazing ride (the last month or so). I am finalizing my trading strategy. I will put aside options and only focus on futures (for the indices, especially S&P500). At this time I am very confident that I can do what I set out to do. When I start My Journey I will post my trades on this web page. You will get the opportunity to see in real time my progress (and I hope it will be progress and NOT a lack of it).

 

And finally I want you to be aware that the coming week is populated by a string of red. So we will give back some (maybe even all – this time I do not know) of the gains that were made this week. Incidentally, even GOOG is in this boat and so is AAPL. The down trend for all 6 issues started around lunch on Friday. Based on what we can see the down trend will dominate throughout the week. How strong will the down trend be. I don’t know. However, it is clearly visible. Let’s revisit these statements next weekend. In the meantime, Stay Tuned and Be Brave.

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Thursday, April 17, 2008:

Today (Thursday) was a quiet day for a change. But then after the close GOOG blew the lid off. Earnings as you are aware can cause large swings. I do not take positions in stocks when earnings are to be released. Let’s put this aside and move on.

 

The 3 market indices I follow today went into down trends. In actual fact they will go into down trends on Friday mornings if we use the half hour model (bottom graphic for each issue) to pinpoint the move. In addition to the 3 indices, we have AAPL which is virtually identical to them. It too goes into a down trend Friday morning. That leaves us with GOOG and AKAM. Based on the daily model they will go red on Friday. You can use the half hour model to pin point when in the day. I realize these are just estimates but they are better than nothing.

 

So the bottom line is that on Friday all 6 issues will be pointing down. Now isn’t that exciting. Stay Tuned and Good Luck.

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Wednesday, April 16, 2008:

Think back to last Friday. Everything seemed to be falling apart. The Dow was down 250 points. And what did the model say: ‘Don’t worry – be happy’. Well not quite. But it did say that the coming week would be dominated by green. And today (Wednesday) the market shot up by a similar amount to what it lost on Friday.

 

Timing is so important to succeed. It is so important if you want to keep your sanity. The model is doing so well – it has me baffled. Enough already, let’s discuss what the model now sees. First of all, today’s sudden jump has caused a significant change to the outlook for the coming days. Yesterday it looked like the reversal would occur early next week. But now (as of Wednesday evening) the reversal to the down side is set for tomorrow – Thursday. In addition, if you look at the half hour model (bottom graphic for each issue) you will see that the reversal to the down side is set to occur around lunch time on Thursday. This applies to all 6 issues. Even GOOG which is slightly different also has a sell on Thursday afternoon. So the current up move has run its course. We are now starring at a down trend for the next few days. Stay Tuned and Good Luck.

 

Finally, I noticed that someone on the AAPL (Google board) made a reference to my work. Actually, (s)he gave me a whole thread. Thanks for the plug. And, keep your eye on AAPL. You may find that Risky (a poster on the board) will have something to cheer about in the next few days. I hope that someone reads this and tells him that this is coming but that does not mean the end of the world. We take things one day at a time. Remember, yesterday I told you to enjoy the upcoming up side. Today, we got our up side. Now we need to stand up and deal with the down side. Hopefully it will be shallow and short lived. Be Brave.

 

On a personal note, I will short the S&P500 futures at lunch time on Thursday.

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Tuesday, April 15, 2008:

On Tuesday the markets were up and then down but ultimately finished up. The swings were modest. On Monday evening I posted the updated graphics but no commentary, so you had to make up your own. I hope that was alright.

 

If you recall after last Friday’s close I said that this week would be dominated by green daily boxes. I am glad Friday’s decline did not continue (for now anyway). When we look at the graphics below (the top one for each issue) we find that green extends until about Tuesday of next week. So relax and enjoy the upside – you deserve it. And don’t forget another wave of selling is only 4 days or so away. Such is life. However, I cannot comment on the size of the moves – just the direction. At this stage though I have become very much at ease with myself (and the model). In the next couple of weeks I will restart My Journey. Stay Tuned and Good Luck.

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Monday, April 14, 2008:

I do not have time to add my comments now. Will try to do so later. Meanwhile enjoy the graphics. Good luck and come back soon.

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Friday, April 11, 2008:

Friday was a disappointment for the longs. And given that the model (daily) had the overall trend as up, the drop on Friday was ‘painful’. However, you simply cannot use one day of data to describe a model. Incidentally, the half hour model was pointing to a drop in the afternoon. But let me not look for excuses. Let’s be honest and say it the way it is. The model had the indices in up trends but the move on Friday was down. So the model was wrong BUT it was wrong for the day and NOT for the overall trend. That decision has yet to be made. An overall trend comprises both up and down days and is defined by the net overall change – not micro changes. Enough rhetoric. Let’s look at the coming week. 

 

For the 3 indices we have green in the overall trend (top graphic for each issue) for the entire week. Friday’s drop has been digested by the model. Its response has been to increase the length of the up move. So my interpretation of what happened on Friday is that it was a drop that occurred in an overall up trend and NOT the resumption of the down trend. My guess is that by the end of the week the Dow will have recovered all of Friday’s drop (and probably more).

 

I received an email from someone who asked me if I could expand the half hour results to show results for TWO days into the future. Excellent idea. I decided to keep one day in the past window and have 2 days in the future window. So I went back to my previous post of the page and amended it to include the new graphics (and of course this paragraph). Enjoy.

 

And what about AAPL, GOOG and AKAM? Guess what. All 3 are comparable to the indices. There is green for the entire week. All in all the coming week looks good. I know that is contrary to most other views. But, I trust my model more than any other I am aware of. In fact, I noted a site http://www.alphaking.com that pointed to a reversal to the up side on Thursday for all the six issues that I follow and then by the close on Friday did a flip-flop back to the down side for all 6 issues. So we have alphaking with all 6 issues pointing down and I have all 6 issues pointing up (in the near term). It will be interesting to see how this plays out.

 

How do the other 2 models stand after Fridays drop. The results are shown below. Stockpickreport made no changes to its 6 ratings as a result of Friday’s down draft. Now mind you, 4 of the 6 ratings were ‘sell’. They had ‘buy’ ratings for GOOG and AKAM and they remained. Meanwhile, americanbulls had a ‘buy’ label for the Dow and the S&P500. On Friday they added a ‘sell-if’ to both for Monday. Also, AAPL had a ‘sell’ with a ‘buy-if’ going into Friday. Well you guessed it, the ‘buy-if’ got wiped off. Meanwhile, the Nasdaq100, GOOG, and AKAM remained unchanged with ‘sell’ ratings. It looks like I may be standing alone as early as Monday. AB could easily have all 6 issues pointing down if Monday morning is down, and SPR may also be predominantly down (only GOOG and AKAM were pointing up at the Friday close). And, of course, alphaking has all 6 issues pointing down. Wow. This is really quite a challenge. I will make it a point to review this posting next weekend to see how things went. What do you think will happen? I read, on occasion, the AAPL (Google board) but do not post there. However, if you want to post your comments there, you are welcome to do so.

 

 

Hybrid Timing Model

americanbulls

stockpickreport

Dow Industrials

UP

buy (sell-if)

sell

S&P500

UP

buy (sell-if)

sell

Nasdaq 100

UP

sell (buy-if)

sell

AAPL

DOWN

sell

sell

GOOG

UP

sell (buy-if)

buy

AKAM

UP

sell

buy

 

 

If you have been following my graphics for a while, I would be very much interested in knowing what you think and how you are using the info. Be Brave. Good Luck. Stay Tuned.

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Thursday, April 10, 2008:

If you are one of those who has been following the graphics for the past few weeks you may have noticed how accurate the model has become. It has me fascinated. I am thrilled. And, I am grateful to the Almighty for giving me the insight (and perhaps even helping me – if that is possible – although I can choose to believe that it is). I am just about at the point where my investing is mechanical. My aim is to do that. Anyway, let’s get to the markets.

 

I am finding it truly amazing how all 6 issues are similar. They are all in up trends until late next week. The 3 market indices and the 3 stocks are all moving together.

 

Now let’s look at tomorrow. We have red coming into the picture in the afternoon (check out the bottom graphic of each issue). But some will say, we are in an up trend. Correct. But within the overall trend we have pockets of opposing trend. If you trade futures (on the market indices), this is a terrific feature that I am pinning high hopes on. 

 

If you have been following my graphics for a while, I would be very much interested in knowing what you think and how you are using the info. Good Luck. Stay Tuned.

 

Before leaving I want to compare what I was saying at the close on Thursday with several others. I have mentioned 2 commercial websites that generate analyses for stocks (and indices). At the close on Thursday (April 10’08), this is how the ‘Hybrid Timing Model’ stacked up against the 2 other models on the web. I will leave you to draw your own conclusions.

 

 

Hybrid Timing Model

americanbulls

stockpickreport

Dow Industrials

UP

buy

sell

S&P500

UP

buy

sell

Nasdaq 100

UP

sell (buy-if)

sell

AAPL

UP

sell (buy-if)

sell

GOOG

UP

sell (buy-if)

buy

AKAM

UP

sell

buy

 

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Wednesday, April 9, 2008:

Yesterday I said: “I will be brief today – I have a cold.” Well I am still sick. But life goes on. Today was a good day. I closed out my shorts and am back at $7K. I am getting my confidence back and I am applying the model with less emotion.  If you have been following the graphics for the 6 issues I analyze, you will know that a reversal to the upside ‘officially’ occurred today (Wednesday).

 

All 6 issues look quite comparable. For some of them there is a bit of instability (indecision) for Thursday – but that’s the market for you. And now as we go into Thursday all 6 issues are pointing to the up side. Now isn’t that exciting. Good Luck. Stay Tuned.

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Tuesday, April 8, 2008:

I will be brief today – I have a cold. If you have been following the graphics for the 6 issues I analyze, you will know that a reversal to the upside will ‘officially’ occur tomorrow (Wednesday).

 

The first 5 issues (the Dow, the S&P 500, the Nasdaq 100, AAPL and GOOG) are all similar. What we find is that the half hour model will go to the up side around lunch time tomorrow (Wed.). That green will carry us into Thursday where we find green in the daily boxes.

 

The only issue that is slightly different is AKAM and that is because the half hour model flashed a buy (green) at 1:30 pm today (Tuesday). That green carries across Wed. and bridges with green of the daily model. So as we started Tuesday all 6 issues were pointing down. And now as we go into Wednesday all 6 issues will reverse to the up side. Now isn’t that exciting. Good Luck. Stay Tuned.

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Monday, April 7, 2008:

Monday was another one of those days that featured indecision. The market went up and then came back to the baseline. As we entered Monday, you may recall the model had the markets in a down trend. Moreover, the half hour model made the point that the markets are confused with green at mid-day and red by the end of the day. While the forecast was not perfect, it was reasonable.

 

Let’s look at Tuesday. If we look at the 3 indices we find that they are looking at a trend that has 2 more red daily boxes. And then on Thursday the indices will go into up mode. But for now we are facing red. Moreover, the half hour model (bottom graphics) has red across Tuesday. Based on what I see in front of me, I would anticipate a sizeable drop during the next 2 days to make this move a ‘winner’. If you look at the daily graphic for the Dow you can see that this down move so far has yielded little. It is for this reason that I can see a drop of a couple of hundred points in the remaining 2 days. But that is pure speculation on my part. It is simply based on past observations in similar circumstances.

 

Now let’s move on to GOOG and AKAM. They are comparable. They each have 3 red daily boxes directly ahead. Both are looking to reverse to the upside on Friday. On Tuesday, GOOG is all red based on the half hour model. For AKAM we have green Tuesday afternoon.

 

And finally, what about AAPL? Its red stretches for the rest of the week. Don’t let Monday’s up move throw you off. For Tuesday, the half hour model is also red. So AAPL has gone up a fair amount and it will linger and give back some of these gains during the week.

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Friday, April 4, 2008:

Another interesting week has come to an end. I am glad that it has because it has been tough. There is much volatility and indecision. Let’s put it behind us and let’s look at next week.

 

The 3 market averages (the Dow, the S&P 500 and the Nasdaq 100) I follow are almost identical. In fact, the Nasdaq 100 is a bit stronger in that when you look at the top graphic for each issue you find it has 4 red boxes while the other 2 have 5 red boxes. But all 3 indices are looking to reverse to the up side next Thursday (the 10th). They are currently in down trends. Another point to note is the bottom graphic of each of the 3 issues. This graphic is based on half hour data. What you find for Monday is red with a pinch of green (3 or 4 green half hour boxes) followed by red. Again this shows the indecision. In fact, we had a similar scenario on Friday with the exception that the green stretch of boxes in between the red was longer. The model actually predicted this on Thursday evening. And on Friday the market actually performed this way – in a notable way.

 

Let’s now look at AAPL. In the overall trend, its green ride has run its course. You can see starting Monday, 4 red daily boxes and then when you look at the bottom graphic based on half hour data you see that AAPL turned red at 2pm on Friday. The red extends into Monday. Thus, a strategy might be to short AAPL starting Friday afternoon until next Thursday or Friday (tentatively, of course). Alternatively, one may simply sell some holdings with the hope of buying back at a lower price.

 

Looking at GOOG we can see that the overall trend turned negative a couple of days back. And the red continues until next Thursday. On the short term model (bottom graphic) we had GOOG as green on Friday (as of 10:30 am). The green extends into Monday morning but then the red takes hold again and GOOG resumes its down trend.

 

And finally we have AKAM. On the overall trend (top graphic) it is like AAPL. In addition it is also like AAPL on the half hour model (bottom graphic). So naturally that is interesting – to have AKAM latching onto the AAPL trend. On Friday at 3 pm AKAM turned negative in the half hour model (bottom graphic). This down turn carries it into Monday. When we look at the overall trend, we see that AKAM like AAPL has 4 red daily boxes coming up.

 

So the bottom line is that we are in a down trend (all 6 issues) that will take us to the end of the week (let’s say Thursday close). Beyond that I don’t know but if you come back on a daily basis you will be able to follow the progress. Finally, I am putting off the ‘official’ start of My Journey until May. In the market, patience is a virtue. I wish I had more of it. But, I am working on it. Good luck to all and Stay Tuned.

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Thursday, April 3, 2008:

At the close on Thursday we have the indices showing as red in the overall graphics (top ones). The first green appears in the next Thursday (10th) box. With regards to Friday based on the half hour model, you will see that the day has red, then goes green and then finishes with red once again. There is indecision in the air. On a personal note, I will hold my short S&P position (entered at 1375.25).

 

What about AAPL? Much has happened to it in the last 3 days. On Monday it was at 143 and by Thursday it was at 152. The overall graphics show some red next week but there is not a strong pattern. Moreover, the half hour model has both green and red. Once again, there is indecision in the air. With regards to GOOG, it is like the market averages. The trend is down until the end of next week. And finally for AKAM, it is in an up trend that will come to an end later on Friday (the 4th). At that time the lower graphics turns red going into Monday and then on Tuesday the overall trend turns red. So AKAM has had its run up and is now ready to take a break for a few days. Good luck and stay tuned.

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Wednesday, April 2, 2008:

The graphics are now up to date. You will note that the current up trend for the markets is looking to come to an end on Thursday (the 3rd). In reality, the down move started today (Wed) around lunch time. This is because when you look at the half hour model (the bottom graphic for each issue) you see that red appeared on Wednesday (around lunch) for all 3 issues.

 

Meanwhile, GOOG is like the market averages. The reversal to the downside started today (Wed) around lunch time. AAPL is a little bit different but not much. By Monday we will be looking at a reversal to the down side. And finally we have AKAM. It is like GOOG. The reversal to the down side started around lunch time on Wed. The overall trend is about to reverse to the down side.

 

On a personal note I am still short the AAPL call spread. This afternoon I shorted the S&P500 futures. The half hour model flashed the short term down – and the daily model is looking to reverse to the down side tomorrow. However, when the half hour model reverses, I will close my futures position and wait to get back into the position when the half hour model gives the signal. Naturally, I am assuming that the daily model is cooperating. So I will wait and see where I will go. Stay tuned and good luck.

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Friday, March 28, 2008:

To close off this week, I would like you to go to the comments of Tuesday, March 25 that you can find below. At that time, I told you that the rest of the week did not look good. Those that follow the markets know that was the case. So what’s the outlook for next week. Keep reading.

 

Let’s start with the 3 market indices. I follow the Dow, the S&P500 and the Nasdaq100. What I am seeing is that the overall trend continues red for most of the coming week (first week of April). But there is hope. The first green box in the overall trend has now appeared in the ‘future’ window. It is located on the Friday April 4 box. So we have to get by 4 red boxes first. Below each of the daily trend graphics (top one for each issue) is the half hour graphic. It gives you an idea of how the upcoming day is shaping up. Moreover, it gives you an opportunity to ‘fine tune’ an entry and an exit from a position. If you look at the Dow or S&P you see that a good part of Monday is looking green based on the short term half-hour model. This data is of use if you trade on a daily basis. If you don’t, then this half hour model is of use only when you initiate or close a position. For example, if we look at next Friday and see green we can time that with the half hour model. The actual buy may come on Thursday, Friday or Monday. Typically, we should look at the green in the half hour model to validate the daily model. So, if on Thursday afternoon at 2 pm the half hour model goes green and the daily will be green on Friday, then the buying point would be on Thursday afternoon.

 

Now what about AAPL. Incidentally, I shorted AAPL a couple of days ago when AAPL was at $145. I did so by getting into a credit call spread (the April 145 and 150). I am short the 145 call and long the 150 call (only 5 contracts of each). I received a credit of $2.30. I have watched AAPL go up and I’ve watched it go down. But, in the end AAPL is moving with the markets – look at the overall trend graphic. It does not necessarily align on a daily basis. Look at Friday, AAPL was up and the market was down. But then if you look at Thursday, AAPL was down substantially and the market was flat. At this point, my account is at about $7K. I went back into the archive on this page to see what I wrote and found that on Wed Feb 13 below I was at $6.2K. So the last month and one-half has not been kind. As I said, I am now only at $7K. Such is life. The volatility has been too extreme. Nonetheless, I survived and if I can get a better handle (become more comfortable) on how to use options (coupled with futures) I will be on my way.

 

What about GOOG. On Monday, it takes on the appearance of the markets. By the end of the week, it too will reverse back to green. And finally, AKAM is similar to GOOG on the overall trend. It like GOOG and the markets are looking to a red week with green appearing on Friday. So while the coming week doesn’t look good, it will become better by the end of the week. Stay tuned and luck.

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Thursday, March 27, 2008:

Unfortunately, I am tied up this evening and will not write this column. However, I have updated the graphics. I will let you draw your own conclusions. But you should note that today’s action is simply an example of what the model has been saying. The next week or so will bring more of the same. You know as well as I do that there will be up days and there will be down days. The overall trend is precisely what the label implies – it is the dominant trend. And at this time the overall trend is down (for the markets).  So, stay tuned and good luck.

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Wednesday, March 26, 2008:

As I stated in the past, this market is not for the faint of heart. There is way too much anxiety. Many are in some state of ‘shock’. They are under pressure and they are acting irrationally.

 

Speaking of acting irrationally, let’s look at Hillary and J.P. Morgan. Hillary was ducking bullets as she ran off the runway with her daughter in toe. She joins fellow NY’er – say one thing but do something else. When are these people going to get their acts together. And even her daughter Chelsea disappointed me. She was asked about the Monica incident – her reply – none of your business. The Clintons are looking like a bunch of buffoons. When Bill was in power, I strongly supported him but now, I have lost respect for all 3 of them. They are simply power hungry and don’t seem to care about the rest of us. The Bosnia affair is serious. She, like Spitzer, can’t seem to appreciate that it is possible that they may be the subject of scrutiny. She didn’t mention bullets once – she has done it at least THREE times in this campaign. I know I would remember a situation where I was dodging bullets. She was lying to pad her CV. Now that may be OK but what else is she lying about?? All I can say is ‘Go Barack Go!” He is truly an honest man.

 

And what about J.P. Morgan? They too were claiming to be dodging bullets coming from Bear Stearns. Well, there’s another example of misrepresentation. They valued BS at $2 and then turn around and offer $10. What the hell is going on?? This is outrageous. You can’t trust anyone any more. Bill was playing with cigars in the White House. Hillary was dodging bullets. Chelsea tells us it’s none of our business and J.P.M. is ripping off Bear S. shareholders (with Ben B’s blessing and funds). Meanwhile GWB is playing with ‘rabbits’ while our soldiers are being taken out. And McCain, well he doesn’t understand the economy and he doesn’t understand the cost (both financially and morally) of the Iraq occupation. And no it is not a war – we are NOT at war with Iraq. Is Iraq at war with the US. Of course not. Let’s stop this insanity. So who are we at war with?? This is the equivalent with the ‘war’ we waged on drugs – now there’s another war we are also winning (just give it another 100 years). Someone ask McCain if we should have left Vietnam when we did. What do you think he would say? We need a ‘fresh’ group in Washington – not stall leftovers which had their day but now no longer stack up. 

 

At the close on Tuesday (yesterday) I wrote: “After Monday’s close I said that we should not expect net up side movement for the rest of the week. We have the daily model being populated in the ‘future’ window of the graphics by red boxes. And as this is happening we have the half hour model holding on to red. This is true for the indices and AAPL. GOOG is a close cousin and AKAM is only slightly different in that it is a bit delayed in its behavior.

It would appear that we are being set up for another wave of selling. I have no idea of the magnitude. It may be a non-event or it may be sizeable.” Today (Wednesday) I feel the same. We are entering a period (5 to 8 days) where the overall trend is down. Be patient.

 

Someone (Z) sent me an email asking me to activate link#5. Thanks for the heads up. As soon as I have the time I will do so. Stay tuned and good luck.

 

If you spend some time with the graphics and try to understand what they are saying, you will see that there is much to be gained. If you know of a system that I can compare my results with, let me know. I would be grateful. As I stated a few days back, I am using these couple of weeks to determine whether My Journey is viable with the model I am using. So far it is looking great. I plan to restart My Journey in early April. Stay tuned and visit often. Yes it is possible to grow one’s wealth very quickly. Just watch me.

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Tuesday, March 25, 2008:

After Monday’s close I said that we should not expect net up side movement for the rest of the week. We have the daily model being populated in the ‘future’ window of the graphics by red boxes. And as this is happening we have the half hour model holding on to red. This is true for the indices and AAPL. GOOG is a close cousin and AKAM is only slightly different in that it is a bit delayed in its behavior.

 

It would appear that we are being set up for another wave of selling. I have no idea of the magnitude. It may be a non-event or it may be sizeable. Today I will refrain from making an analysis of the 6 issues I follow. What really would be nice is if you were to generate your own interpretation and to then e-mail your analysis to me. Anyway, that is just a thought. Stay tuned and good luck.

 

If you spend some time with the graphics and try to understand what they are saying, you will see that there is much to be gained. If you know of a system that I can compare my results with, let me know. I would be grateful. As I stated a few days back, I am using these couple of weeks to determine whether My Journey is viable with the model I am using. So far it is looking great. I plan to restart My Journey in early April. Stay tuned and visit often. Yes it is possible to grow one’s wealth very quickly. Just watch me.

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Monday, March 24, 2008:

These are interesting times. Monday was a great day. It caused the model to become more green. However, there still remains a fair degree of instability. If you look at the Dow and the S&P500 and focus on the half hour model (bottom graphic for each issue), you see red for the indices. But then when you look at the daily (top graphic) model you find only 2 green boxes. So the Dow and the S&P have little room for up movement after Monday’s run up. The next week or so does not look very good.

 

Now for the Nasdaq 100, we have a bit more breathing room (it is a day behind the Dow). However, there is red coming to the forefront. AAPL is similar to the market averages. GOOG is offset by a couple of days. It has more upward potential. And finally AKAM is comparable to GOOG.

 

Things are definitely interesting. Stay tuned and come back often. Soon I will start documenting My Journey. You will then get an idea of the type of strategy I am developing (and starting to use).

 

If you spend some time with the graphics and try to understand what they are saying, you will see that there is much to be gained. If you know of a system that I can compare my results with, let me know. I would be grateful. As I stated a few days back, I am using these couple of weeks to determine whether My Journey is viable with the model I am using. So far it is looking great. I plan to restart My Journey in early April. Stay tuned and visit often. Yes it is possible to grow one’s wealth very quickly. Just watch me.

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Thursday, March 20, 2008:

Yesterday I said: “The volatility just keeps increasing. On Tuesday, we were up 420 points and today we were down 300 points. This market is not for the faint of heart.” And on Thursday the market was up 260 points. This is unbelievable. On Wednesday I told you there would be volatility. But honestly, this is ridiculous. Anyway, let’s try to make the best of it.

 

Let’s look at where we stand at the end of the week (Thursday evening). First of all the 3 indices and AAPL are in the same boat. What I say about one issue applies to the rest. So let’s use the Dow as the example. On the top graphic we have red but on the half hour (bottom) graphic we have green. Thus, one should be sitting out this segment of the move. Now look at Monday the 24th. Again we have red in the top graphic and green in the bottom graphic. As red enters the bottom graphic we see green entering the top graphic. So there is too much volatility. At this time my guess is to wait until Thursday (27th) when red re-establishes itself in the daily graphic. This strategy covers 4 of the issues.

 

Now on to GOOG. Its graphics are almost identical to those of the indices. The difference I see is that the 27th box is green. So I went back to the data and I found that the 27th box was almost a red box. There was only a minor difference. The bottom line is that GOOG is also in the volatile category.

 

This leaves us with AKAM. If you look at the overall trend you see all of next week as green and going into Monday we have green in the bottom graphic. So AKAM looks to be a long – in fact the buy actually started on Thursday (20th) at 3pm based on the start of the green in the half hour results. At that time, AKAM was at $30.24.

 

As I close out this column, I want to point out that the model missed the 260 point jump on Thursday. However, in all fairness, Thursday needs to be coupled with Wednesday because the down leg of the down move includes the 2 days. On a personal note, I did very well but I went short on Wednesday morning before the market dropped. Thursday’s rise simply cancelled most of the down leg from the previous day. Such is life. Stay tuned and good luck.

 

If you spend some time with the graphics and try to understand what they are saying, you will see that there is much to be gained. If you know of a system that I can compare my results with, let me know. I would be grateful. As I stated a few days back, I am using these couple of weeks to determine whether My Journey is viable with the model I am using. So far it is looking great. I plan to restart My Journey in early April. Stay tuned and visit often. Yes it is possible to grow one’s wealth very quickly. Just watch me.

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Wednesday, March 19, 2008:

The volatility just keeps increasing. On Tuesday, we were up 420 points and today we were down 300 points. This market is not for the faint of heart. All things considered, I am thrilled with the model’s performance in this market environment. Let me review why.

 

On Tuesday we were long the market for the big jump. Last night (Tuesday) the model said to look for a reversal today around noon for all 6 issues. And today that’s what happened. We now have all 6 issues pointing down. But look at the graphics and study them because they are telling a story. There will be instability in the coming days because we have 2 red days, then 2 green days and then a red day. That’s the volatility for you. So pay attention or you will be taken for a ride.

 

With regards to myself, I am finally getting the hang of how to follow the model. Today at around noon I shorted GOOG as I mentioned I might last night (via a credit call spread). At the time GOOG was about $444. I got $4.95 for the $10 spread which expires tomorrow. At the close today, the spread was worth about 60 cents. Now that’s a home run. Anyway, let’s see how the model does in the coming days. On another note, I am gearing up to start My Journey. When I start I will tell you what I am trading and how. At this point I can see that I will be trading both futures and options. I have come to realize that options do have a place in my investment strategy. The question that remains is how to use them. But, I am working on it. Good luck and Stay Tuned.

 

If you spend some time with the graphics and try to understand what they are saying, you will see that there is much to be gained. If you know of a system that I can compare my results with, let me know. I would be grateful. As I stated a few days back, I am using these couple of weeks to determine whether My Journey is viable with the model I am using. So far it is looking great. I plan to restart My Journey in early April. Stay tuned and visit often. Yes it is possible to grow one’s wealth very quickly. Just watch me.

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Tuesday, March 18, 2008:

Oh, what a day. The Dow was up over 400 points – but I bet you know that. What is amazing is what has been going on of late. Sunday evening the markets were in freefall. There was gloom and doom around the world. As trading started on Monday morning in North America there was fear in the streets. Remember, on Friday the Dow was down 200 points. Let me review what I (the model) have been saying. First of all the overall trend for the markets has been up. And then when we look at the half hour model (bottom graphic for each issue) we had the model pointing down as we started Friday. Then at 11 am the half hour model reversed to the up side. And then at 3:30 pm on Friday it went back into the red (in reality it was a ‘no’ position time frame because the daily was green and the half hour was red). So we started Monday in down mode. And then at 1:30 pm on Monday the model said to go long again. That brings us to Tuesday (today). And what a terrific up day.

 

OK, so we are now at the close on Tuesday, what now? Good question. Let’s start with the 3 indices. They are all virtually identical. If we look at the overall trend (top graphic for each issue) we see a reversal for Thursday (in reality it is for Thursday morning). But when we look at the half hour trend (bottom graphic for each issue) we see that there is a reversal to the down side around lunch time on Wednesday. The question is what to do. On a personal note, I will go short with the half hour model and keep my eyes on the daily model. My guess is that the half hour model will lead the daily model into a reversal to the down side. I may actually go short GOOG (or maybe AAPL) by getting a credit call spread (bearish) for the March options which expire at the close on Thursday. I will let you know Wednesday evening.

 

Now mind you the down trend at this time appears to be of short duration (2 or 3 days). But given the market gyrations, you simply don’t know what that will mean in size. I am trying to follow the model as best I can. I must admit given the wild swings, it has been difficult (nerve-racking). But a large positive from all this is how right the model has been. I am excited and encouraged and I am now working on extending my futures trading to include options again. Good luck.

 

If you spend some time with the graphics and try to understand what they are saying, you will see that there is much to be gained. If you know of a system that I can compare my results with, let me know. I would be grateful. As I stated a few days back, I am using these couple of weeks to determine whether My Journey is viable with the model I am using. So far it is looking great. I plan to restart My Journey in early April. Stay tuned and visit often. Yes it is possible to grow one’s wealth very quickly. Just watch me.

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Monday, March 17, 2008:

Yahoo called today a ‘remarkable day’. I agree. The gyrations were wild. I was tied up most of the day and only caught a few minutes during the day. But what I did see was something. Let’s recap where the model was at. The overall trend for 5 of the 6 issues I follow is up. The exception is AKAM. However, since nothing goes up in a straight line, I have the half hour model that provides some guidance on timing intraday moves. At the close of last week, the model said that the S&P500 and the Nasdaq100 had turned red in the last half hour on Friday. The red was to continue until early Monday afternoon (around 1:30pm). And sure enough that is basically what happened. I am really taking comfort with the model.

 

Now let’s look at Tuesday. First of all, for the 5 issues (excludes AKAM) the overall trend is up but we are now faced with a reversal to the down side on Wednesday. The good news is that this upcoming down move is looking to be only about 3 days in length. But that doesn’t mean the market can’t go down a thousand points in that time span (just kidding).

 

And what about the short term trend (half hour model). Look at the bottom graphic for each issue. What you will find is that the first 5 issues (Dow, S&P500, Nasdaq100, AAPL and GOOG) are all pointing up as we go into Tuesday. The green remains for the entire day and it looks like it will become red on Wednesday. This will coincide with the reversal of the overall trend. So far the model has done very well. I am most definitely pleased. Given the difficult market conditions, it has been on top of what is going on. Not only has it done well with the indices, it has also done well with the 3 stocks. In addition, it has been able to pick up that AAPL and GOOG are simply following the market where the market encompasses the S&P500 and the Nasdaq100.

 

With regards to AKAM, the model has reserved some additional red for it. And we now see why. AKAM is now below $30. If we look at Monday at 2:30 pm for AKAM we see green in the half hour model. At that time the trader would close a short position in AKAM and sit back and wait. For Tuesday, the overall trend is red and the half hour trend is green – thus do nothing. On Wednesday AKAM will probably be in short territory like the other issues.

 

On another note, I have looked for comparable trading systems to my hybrid timing model. I have already mentioned several of them, however, I am convinced my results are more accurate. As an example, look at americanbulls.com and what they have at the close on Monday. They posted a ‘buy confirmed’ for the Dow and at the same time a ‘sell confirmed’ for the S&P500. If you look at the graphics below you will see that I have the Dow and S&P500 in identical scenarios. Doesn’t that make more sense?

 

If you spend some time with the graphics and try to understand what they are saying, you will see that there is much to be gained. If you know of a system that I can compare my results with, let me know. I would be grateful. As I stated a few days back, I am using these couple of weeks to determine whether My Journey is viable with the model I am using. So far it is looking great. I plan to restart My Journey in early April. Stay tuned and visit often. Yes it is possible to grow one’s wealth very quickly. Just watch me.

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Friday, March 14, 2008:

This has been a wild week. The market gyrations are unbelievable. Stops are being triggered and creating even more pain. Many are taking a bath. Let’s review what is going on. At the beginning of the week we had a 400 point rise. And then on Friday we were down almost 300 points in the afternoon – with a close of about 200 points down. The model had the indices pointing up this week. The model was doing well until Friday came along. Does that say something negative about the model? Not really. Because the overall trend has superimposed on it a short term trend curve. (Look at link #4 where I use the weather as an analogy.)  Let me explain this by digressing a bit and looking at my specific example. I use the combined model that includes the half hour model (bottom graphic). Because it was red I had closed out my long position a day earlier and was waiting until 11:30 am Friday morning to go long again. That is what I did. At the time when I went long, the Dow was down about 170 points.

 

By the end of the day (Friday) I was only slightly negative. But what to do now? Let’s review the issues by starting with the 3 indices. The overall up trend remains in place (until Wed. March 19). This is indicated by the top graphic for each issue. In addition, AAPL and GOOG are in the same boat. Now let’s look at the half hour model. We had green for most of Friday. In reality, this is interesting because if you check out these issues at 10 am, for instance, on Friday and compare them to their closing values, you find there is little difference. So the issues dropped early on and then gyrated the rest of the day on Friday.

 

The all important question is ‘What about Monday?’. Well, in all fairness, we have red for the first half of Monday and then after lunch we go back to green. Now I realize that forecasting on a half hour basis is virtually impossible, nonetheless, we can do so because the model is mathematical. Incidentally, the 5 indices are all in similar positions. Check out the graphics below. With regards to myself, I am long as we go into Monday. On Sunday evening I will decide if I should close the position and wait until Monday afternoon. At this time, I am not sure.

 

The last (6th) issue I am following is AKAM. It is moving against the markets. It has been in a down trend but will reverse to the up side on Tuesday. Something seems to be going on with AKAM. I do not know what. Stay tuned and good luck.

 

Before leaving I want to compare what I was saying at the close on Friday with several others. I have mentioned 2 commercial websites that generate analyses for stocks (and indices). At the close on Friday (March 14’08), this is how the ‘Hybrid Timing Model’ stacked up against the 2 other models on the web. I will leave you to draw your own conclusions.

 

 

Hybrid Timing Model

americanbulls

stockpickreport

Dow Industrials

UP

sell (buy-if)

buy

S&P500

UP

buy (sell-if)

buy

Nasdaq 100

UP

sell (buy-if)

buy

AAPL

UP

sell

buy

GOOG

UP

sell

buy

AKAM

DOWN

sell

sell

 

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Thursday, March 13, 2008:

Another wild day has come and gone. The markets were taking a beating at the start of the day. But then they recovered to end the day – up. Let’s review how this fits in with the model. The overall trend is up until late next week – so a positive close was welcome. The short term (half hour) model had red for today. Let me explain what that means. Given the overall trend (top graphic) is green and the bottom graphic was red, it was a signal to sit out the move. As I said yesterday this is what I did. Think of the weather analogy (you can read about it in link #4 below).

 

I am now looking for the half hour model to turn green and align with the daily model. That should happen on Friday morning around 11 am. I realize it is impossible to pin point a time – but this is a mathematical projection (just like forecasting the weather). When that happens I will go long (once again).

 

With regards to the 3 stocks, 2 of them are more or less identical to the market indices. These are AAPL and GOOG. They are pointing up and the short term model will reverse to the up side on Friday morning. The last issue is AKAM. It is somewhat different from the rest. It is moving against the markets. Its overall trend is down (for the next couple of days). So it will reverse shortly to the upside but the markets will be reversing to the down side. All I can conclude is that there are other forces at play with AKAM besides the overall market.

 

Let’s see how we do with this move. So far this week the model has done very well even with the wild market gyrations. I am pleased. Will I feel this way tomorrow night? Stay tuned. As I stated a few days ago, it is important that the model proves its worth before I restart My Journey. Good luck.

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Wednesday, March 12, 2008:

The market continued its climb this morning and then faded in the afternoon. Why am I starting with this statement. Because that is what the model said yesterday that the market would do. So what does the model say about tomorrow (Thursday). If you look at the graphics that follow below you can see that the overall up trend remains intact until the end of next week. However, this afternoon we entered a pocket of weakness (turbulence). If you look at the graphics (the bottom half hour ones) for the 3 indices, you will find red for tomorrow.

 

By the end of Thursday (tomorrow) or early Friday our short term model should be flashing some green and the daily model will also have green. I plan to re-establish my long position at that time. My strategy is to hold a position (regardless of whether it is long or short) when the 2 models are aligned.

 

With regards to the 3 stocks, we have both AAPL and GOOG behaving like the market averages. Like the markets, they were both up this morning as the model had suggested. And they both declined in the afternoon. They are both in up trends but they are now facing downward turbulence. The last issue is AKAM. It is in a down trend however it has had green in the half hour (short term) model. It is now facing red in both the half hour and daily graphics. Thus, AKAM is now looking at a down pocket. At this time, when you look at the overall trends you find that AKAM is moving against the markets.

 

Come back tomorrow for an update. Let’s see if the model can nail a few of these moves in a row. If it does, it will be a time for celebration. Stay tuned and Be Brave.

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Tuesday, March 11, 2008:

What a day! If you were long, it was truly fantastic. I am thrilled. I went long last night after posting the update. It is amazing to see, after the devastation of the last few weeks, a day like today. So much had been liquidated and there is so much money on the sidelines that a spark can set it off. If you look at yesterday’s comments you see that the model was calling for a reversal (the magnitude is not predictable). As we started the day we had 5 issues pointing up and one pointing down. At the end of the day (Tuesday) we had the same distribution. All are pointing up except for AKAM.

 

So where do we stand. That depends. If you are looking at the ‘longer’ term trend which is indicated by the top graphic for each issue, the trend is up (except for AKAM). However, if you look at the half hour model (the bottom graphic) then we can see some red creeping into tomorrow afternoon. In trading futures, I closely follow the bottom graphic. It allows me to get out of a position and wait to get back in.

 

Let me focus on the 3 indices. Their overall trends are all up (top graphic). But the short term trend (half hour model) will turn red around 1 pm on Wednesday for the Dow and the S&P500 and around 3 pm for the Nasdaq100. These are just mathematical estimates and should be taken with a grain of salt. When the short term turns red, I will close out my long position and wait for the red to pass. I will then, once green reappears, reopen a long position. It is that simple. And with futures there is no hassle and a trading window of about 23 hours.

 

Anyway, I am not here to sell you on futures trading. I am here to develop and test a viable trading algorithm that can grow one’s wealth. I am here to document My Journey. And for those who do not know what it is, let me restate it. It is to grow $5K into 1 million in 2 years.

 

My first 15 months were not successful. However, I survived and learned along the way. I am now up to the challenge. On April 1 I will start showing my trades and my worth. I will use the next couple of weeks to straighten myself out. One thing I have realized is that it takes more than a model to ‘make it’. That’s why I want a few more weeks before I launch ‘My Journey’. Good luck to all and Stay Tuned. The fun is just beginning.

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Monday, March 10, 2008:

Today’s strong down draft had the model scrambling to reassess the situation. There is some good news. All 3 indices are green as of Tuesday morning. If you look at the graphics you now see green in the future boxes. You also see green in the half hour model (bottom graphic) as Monday came to a close. So the indices will now be pointing up.

 

So what about the 3 stocks. Let’s start with GOOG. It, like the indices, has green in the future window and it has green as of 12:30 pm on Tuesday March 11 in the half hour model. So GOOG is also looking up as of Tuesday.

 

With regards to AAPL, it too is about to reverse to the up side tomorrow morning (Tuesday). And finally we have AKAM which now has red across the future window. Now isn’t this exciting. Stay tuned.

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Friday, March 7, 2008:

I am glad this week is over. I am sure many of you are in agreement. Sometimes we are faced with obstacles that are thrown our way as we move along the path that leads us to our objective. Look at Barack or look at Hillary or look at me. We are all having our ups and downs. Enough about politics. Let me focus on my results and specifically about the model.

 

This was a week for reflection. We went into this week and I was saying that the week would be up. Wrong. So I asked myself: Why was I wrong? Being wrong is not the issue. But being in engineering, one always looks back at data when one is wrong. You have to ask: Why? In most cases, there is no definitive answer. But once in a while there is something to be learned.

 

I did that on Friday and I came up with something that has me kicking myself in the butt. About 10 days ago I re-configured the combined model and I put aside the criteria (filter) for confirming the overall trend. Well, that was a big mistake. When I looked at the data I realized that I should never have done that. In fact, I don’t know why I eliminated the confirmation (i.e. filter). I had done well with it in place and I will again do well by re-instating it. So today, March 8th, the confirmation filter is back in place. The overall effect is that the up trend for the markets last week was not real. Ouch. So be it. Live and learn. I can feel that I am rapidly converging on a viable model. In fact, if pressed, I would go on the record as stating that by the end of March I will be in full swing. I will be starting at the end of March to grow $5K into 1 million in 2 years. I now am convinced I can do it. And more importantly I will do it.

 

For the past year I have worked hard to get back on my feet after an initial burst of success. The model is substantially better than it was last year. Even though I did well, there were several factors. One was that the market was more predictable. As the market grew volatile during 2007, it became increasing difficult to succeed with the ‘old’ version of the model. At the beginning of 2008 I came up with the combined model which was working well. And then as I introduced the half hour model, I neglected a key filter. The result was the model was pointing up while the indices were taking a beating. That should not have happened (I am referring to the model) and I think in the future you will see ‘terrific’ performance. So stay tuned and keep reading. I want you to succeed (almost as much as I want to succeed).

 

Let’s use some of this space to review what the model is now saying. And yes this is the model with the filter. Given the update (i.e. inclusion of filter) I have made to the model, let’s look at each issue individually. If you look at the top graphic (daily model) for the Dow index, you see that the overall trend is down. The past five days are all red boxes and the future 5 days have red boxes. Now, let’s look at the bottom graphic which is based on the half hour model. You can see that there was red coming into Friday. So someone who is doing fast trading (futures and options) would have been short on Friday until 3:30 pm. At that time the half hour model went green and it went against the daily model. Thus, at that time the short position was closed and no position was initiated. When the half hour model becomes red again (and assuming the daily is still red) then one should initiate another short position.

 

With regards to the S&P 500 and the Nasdaq 100 indices, they are virtually identical to the Dow. So we are in down trends and we were short going into Friday. Towards the end of the day, we closed the short position and sat on the sidelines. Based on what we can see, we should remain with no position until Tuesday (at least). When the half hour model shows red again, we can then initiate a short position (assuming the daily model remains red).

 

Now, let’s look at GOOG. It is virtually identical to the market indices. The overall trend is a string of 10 red boxes. The half hour model went green at 2:30 pm on Friday. At that time one would close out short positions. When the half hour model becomes red again, then one would re-initiate a short position.

 

The last 2 issues are AAPL and AKAM. They are both in up trends (green boxes). Meanwhile the half hour model is just going green. So on Friday we would have been out of AAPL and AKAM because the daily and half hour models were at odds. As we go into Monday we have both models in green mode. This implies that we would re-instate a long position on Monday morning in AAPL and AKAM. We would close the position when the 2 models disagree.

 

So let’s summarize the outlook for Monday. We closed out (late Friday) our shorts in the Dow, the S&P 500, the Nasdaq 100 and GOOG. As we go into Monday we hold no position. Meanwhile, we opened long positions in AAPL and AKAM at the close on Friday. As a final comment, one who does not want to trade ‘so frequently’ would simply follow the overall trend (the top graphic). However, I would use the half hour model to get into the position initially and I would use it to get out of the position. Good luck to all.

 

I think the next 3 weeks (the rest of March) will tell the tale. The model will be making a number of moves in a difficult market environment. If it does well – I will resume My Journey. The current model (including filter) is what I will use. I will not change it. I will stand by it and at the end of March will issue my judgment. I am convinced that the conclusion will be that the model is performing well – go for the million. Stay tuned and Enjoy. This time I think you really will enjoy the performance. But in the event that things do not work out by the end of March, I may call it quits.

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Thursday, March 6, 2008:

Ouch. I can feel the pain that is out there. Long term analysis is out of my league. I don’t know where ultimately we are headed. All I can tell you is about the short term (as measured in days).

 

I have graphics that are shown below for 6 issues. Three are for market indices and 3 are for stocks. I will refrain from an analysis of the stocks. You can do your own analysis on the graphics today. But, to help you along, let’s look at one of the indices and detail what happened.

 

Let me choose the S&P 500 because that is the index I focus on. When you look at the top graphic for the S&P you see that its overall trend is up (even after today’s drop). However, it is set to reverse to the down side in a few days. Because of today’s drop, this move is showing a sizable loss. But, the move is not over yet. I thought this week was going to be positive. At this point (Thursday evening), it does not seem likely.

 

Now, let’s look at the results of the half hour model for S&P (the bottom graphic). We had (as was anticipated yesterday) a localized down draft that was to end today (Thursday) at 1:00 pm. And sure enough, the half hour model maintained that signal and today (Thursday) at 1 pm the model said to re-establish a long position. You will note that someone following the model had no position going into Thursday.

 

At 1:00 pm the S&P was at about 1314. The afternoon was a tough grind but by 3:30 pm the S&P was still at 1314. However, in the last half hour the S&P lost 10 points. Ouch. At the close today the model (half hour) has the S&P in an up trend that is aligned with the daily model for essentially all of Friday.

 

I hope that the model will be able to recoup some of the loss it incurred in today’s final half hour. By the way, the Dow and the Nasdaq 100 are in similar positions. So, stay tuned.

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Wednesday, March 5, 2008:

I have taken your comments and your interests into consideration. I have brought back the graphics for AAPL, GOOG and AKAM.  When you look at the graphics that follow below, you see for each issue a top graphic and a bottom graphic. The top graphic is based on daily analysis. It indicates the overall trend. The bottom graphic shows the short term trend which is derived from a half hour analysis.

 

There are 2 ways to use this data. You can simply use the top graphic and follow the overall trend. The other possibility is to use the half hour model for trading the overall trend. So when the 2 models are at odds, you sit the move out (hold no position).

 

Let’s consider today’s data for the Dow (or the S&P500). You can see that the overall trend went into up mode on Tuesday March 4. If you could see the data (half hour) you would find that the reversal to the up side occurred at 2:30 pm when the Dow was at 12,060. Now if you look at the half hour graphic, you see that there is a ‘close the long position (NOT short)’ at 12:30 pm the following day (Wednesday the 5th) when the Dow was at 12,296. So the long position is closed and it leaves one with no position. A new long position is to be established at 1:00 pm on Thursday, March 6 (tentative, of course).

 

You should note that since the overall trend is up, only long positions will be opened and closed. Once the overall trend reverses to the down side, then only short positions will be opened and closed. This is an especially good strategy for trading futures. Others may use the data to fine tune their entry and exit points.

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Tuesday, March 4, 2008:

Aren’t the markets something. Yesterday (Monday) the model issued a ‘go long’ (buy, if you like) for the 3 indices (the Dow, S&P500 and Nasdaq100) that I follow. And then today (Tuesday) came along. I was tied up most of the day but when I looked I saw the Dow down 200 points. Things were not looking good and then in the last hour there was a wave of buying that cancelled out a large part of the losses. So the model hung in there nicely.

 

At the close on Tuesday, what does the model think? It maintains the up trend (the daily model). Moreover, the half hour model also remains pointing up. As I’ve stated before, I trade the futures on the indices. The daily model (top graphic) sets the overall trend. The half hour model is what I trade. For example, if you look at the S&P 500 index daily graphic, you see that the overall trend is up. So, I am long while the half hour model points up. When the half hour points down, I simply close the position and wait for the half hour to realign with the overall trend. When it does I will go long again. The strategy is relatively simple. Now let’s see what I can do with the model in my sail. Stay tuned.

 

Incidentally, I am planning to bring back AAPL, GOOG and AKAM. I have received a number of messages about this situation. I am however dropping the Russell 2000 Index (IWM). Good luck to all.

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Monday, March 3, 2008:

Last Friday after a drop of 315 points, the model said ‘Look to the next week with an eye to buying beginning on Monday’. The model today (Monday) took the 3 issues, the Dow, the S&P500 and the Nasdaq100 and reversed them to a short term buy.

 

If you look at the graphics, you see green on the daily graphic starting on Tuesday. However, the half hour model is used for fine tuning and for filtering out contradictory moves. Thus, the buys started on Monday at lunch time because the half hour model is leading the way.

 

Given that I trade futures, the trades are relatively short in duration and there is typically a no position segment between moves. I have entered the moves into link 6. You will note I used the label ‘open long’ which is a term used in futures trading. When I close it out (i.e. sell it), the label will be ‘close long’. And when I go short, the label will be ‘open short’.

 

And finally, I have received a number of emails from readers who are asking me to bring back AAPL, GOOG and AKAM. Given the outpouring of emotion, I am planning to do this in the next couple of days. Stay tuned.

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Friday, February 29, 2008:

Today (Friday) was a special day – only exists every 4 years. The markets are wild – hope every 4 years also applies. We have huge swings in both directions on consecutive days. If you have read what I’ve written in the last few days, you may recall that I am formulating a trading strategy that focuses on index futures (S&P500, for example). In addition, the strategy is geared towards short moves (a day or 2 in length) and it allows for sitting out (holding no position) a day or so between moves. I am in the process of starting to trade this way. 

 

I am telling you this because this site is supposed to reflect my strategy. And so starting today, it does. I can tell you one thing. If this strategy works out – it will be phenomenal. Anyway, let’s wait and see to determine how the model performs. Remember, I have the combined model which incorporates 2 models. The first is what I refer to as the daily model. Those are the graphics I showed in the past and I will continue to show them. However, I will also show some of the results from the other model (half-hour basis). So for each issue there will be 2 graphics. Given I only trade the indices, I am removing 4 of the issues I was following. I am leaving only the Dow, the S&P500 and the Nasdaq100. Whether or not I will bring back the 4 issues will depend on your feed back. On a personal level, I do not trade them. So, for now let’s focus on the 3 indices and see how they do.

 

Let’s consider the graphics for the second issue (the S&P500) which is what I trade. If you scroll down and look at the graphics for the S&P500 you will now see 2 graphics. The top graphic is like the one I have shown in the past. It shows the past 5 days and the future 5 days. It gives us the overall trend. Confirmation by the half-hour model is no longer the issue it was in the past.

 

Below the ‘daily’ graphic we have another graphic that is based on the half hour data (i.e. 10am, 10:30am, 11am …. 4pm). There are 13 data points in a day. This graphic shows how I trade. My strategy is to trade when the two models are aligned. In other words, they are confirming each other. If you could see the data, you would find that the half-hour model became red at 12 pm on Wed. Feb. 27 when the S&P was 1388. At that time, the daily model also had Wed as red. Thus, I would have shorted S&P at that time had I been following the model. Now look at what is coming up for Monday. We have green in the Monday box and we have green in the 12:30 pm half-hour box. So on Monday, the forecast is for a reversal to the upside at lunch time. Naturally, this is a dynamic analysis and subject to adjustment as new data comes in Monday morning.

 

Another point worth noting is that the results of the half-hour model for all 3 issues are identical – a reversal to the up side at 12:30 pm. In addition, all 3 daily models are comfortable with this. Even the Dow which has green on Tuesday in the daily model qualifies for a reversal at 12:30 on Monday. The logic is simple. The half hour model is more dynamic and is the fine tuning for the daily model. So if the Dow shows green (daily model) for Tuesday, then it is fair to begin the move on Monday and have it carry into Tuesday because the half hour model extends into Tuesday.

 

Before I leave you to assess this new format and to send me your comments and to see if you can use my approach to make a profit, let me tell you what I have done in my trading account. Because I am in the process of nailing down my strategy to achieve My Journey, I haven’t done as well as I could have, but I have certainly survived and held my own. Now let me tell you what I am holding.

 

On Friday afternoon around 2 pm I went long the S&P 500. I had been short the S&P but closed it too early Wed evening because I was still studying my approach. I did not initiate a new position then. One reason I bring this up is because the half hour model had the reversal for about 2 pm on Friday. But because of the sharp drop in the market, the model started to delay the reversal and as you know it is now set at 12:30 on Monday. Such is life – as they say: ‘You can’t always get what you want’. The bottom line is that next week is looking better for the markets. Note the green daily boxes in the ‘future’ windows. If you look around, all you find is gloom and doom. The hybrid model does not see it that way for next. Here we go again – another great test of its capabilities.

 

I think I feel like Obama. Each day seems to bring the immediate objective a bit closer. We are fine tuning and adjusting but we are making progress. Stay tuned and let me know what you think. Good luck (and to you too, Barack).

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Thursday, February 28, 2008:

It is Thursday evening. Another wild day at the market. I did not see it myself but the charts look like there is a lot of instability – maybe even a touch of panic. I have held my own with all this. I could have done better but I am glad to be at 6.0K all things considered.

 

I did not update the graphics with Thursday’s data. There were too many things going on. From a personal perspective, I am 95% convinced that the trading of futures on the S&P500 is the best strategy for me. Some of the reasons are: 1) it trades over 23 hours a day, 2) the commissions are very low, 3) the spread between bid and ask is usually only one tick, 4) the trading volume is very high, 5) the time premium is almost negligible, 6) the leverage is very large (deposit is about 5%) and 7) the index is more predictable to trade than a stock.

 

Over the last month I have tried to refine my trading strategy. Initially, I focused on option spreads but now I find that I don’t have the nerve to trade them. At this time, my strategy has evolved to the point that the daily model sets the overall trend while the half-hour model determines when I should be invested in the overall trend. So if the overall trend is up – I only go long and I do so with the half-hour model. When the half hour model reverses against the overall trend, I sit out the move. I am keen about this strategy and it appears to be as good as it gets. My problem at this time is that I get too excited and inevitably make decisions that are counter productive. But I am on my way to altering my way of doing things. I figure if I can get a grip on myself, I will succeed in My Journey. The potential is there. Stay tuned.

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Wednesday, February 27, 2008:

I was busy tonight and did not have enough time to write an exhaustive analysis. What I can say is that nothing reversed today – even if I thought the reversals would have happened today. We still have 5 issues pointing up and 2 issues pointing down. Now mind you, a number of issues can reverse to the down side as early as tomorrow (Thursday). But, we will only know once we get some more data. So stay tuned and come back tomorrow to find out. Good luck.

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Tuesday, February 26, 2008:

The last couple of days have been good to the markets. For the last little while we have had all 4 indices pointing up and that was appropriate given the moves we have had. But we also had GOOG pointing up and that turned out to be a bad strategy. BUT the move is not yet complete. In fact, none of the moves are complete because I did not enter (today) any reversals in the table in link #6.

 

Let’s review where we are at. At the close on Tuesday we had 5 issues pointing up and 2 pointing down. Tomorr