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Engineering Professor (EngProf6)

        Hybrid Timing Model for Analyzing Stocks and Indices


Date:  Thursday, November 30, 2006     (after the close) 


Because of some personal issues, I was not able to update this page today (Thursday). I did however update the My Journey page. I made several trades today. Go see what they are. I also plan to make several other trades on Friday as I pick myself up and regain my composure.


 ‘My Journey’ has been initiated. Click on the following link to get to see my account and trades. Find out what trades I am making and where the $5K is at.

               Click Here to Link to ‘My Journey’


Check out my mailbag for new postings (as of Nov 26)

For some reason people seemed to have stopped writing to me. I wonder why. Let me know if there is something I can do.


            You will find some interesting questions and comments. You may even find something you wrote. The Mailbag is located near the end of this web page.


I have now implemented version 4.0 with a filter. The tabulation of results in the tables are without the filter. The day to day comments are based on the results with the filter. Note that the number of moves in the tables (no filter – raw data) are reduced to as little as ¼ when the filter is implemented. In addition, I am also using hourly data to increase the resolution of my trading moves.




On Wednesday (Oct 18) I introduced version 4.0 with a filter. It is now Nov 27 and I still strongly believe “This is it”   (more than ever).


During the month of Oct I developed a firm hold on the modeling work I am conducting. The results you will see and which I will use on my journey are looking great. In addition, I have now successfully adapted the model to an hourly basis. This will make investing (on a short term basis) so much easier. You should note that there are 2 modes for a primary direction (i.e. move): 1) red – down, or 2) green – up. In addition, for each there is also the subsets of 1) turbulence or 2) clear trend. So there are a total of 4 possibilities. If we are in a primary up trend, we can be in ‘clear’ mode or ‘turbulence’ mode. The same applies for the primary down trend. The label turbulence is used to signify the presence of an opposing force that is trying to suppress the primary trend. 


I have reinstated the countdown. Several wrote to tell me that this feature is important. I agree. I had only taken it off for maintenance. The countdown can appear at 2 locations. If the trend is ‘clear’, then it appears on the top line with the primary trend. If the trend is being influenced by turbulence, then the countdown refers to the turbulent portion and is shown on the line with the turbulence label.


If you are new to this site, be patient, scroll down a couple of pages and you will find what the model is forecasting for the following 15 issues:

DIA, SPY, QQQQ, OIH, SMH, IWM, OEX, EWJ and XLF  {these are based on specific market averages} and,  AAPL, AKAM, ET, GOOG, STX and WMT






Check out the links at the bottom of this page.     


There are 2 classes of investors I would like to reach, in particular. If you are involved with options, you should consider what I have to say. You are in the first category. If you trade on the short term (a couple of weeks on average), then you are in the other category of investor I am interested in. I would like to hear the ideas and opinions from members of both categories.


One feature of my analysis is that I have a count down to a reversal for each entity. Thus, if we consider stock XYZ, my model tells you the current trend direction of the stock. Moreover, it tells you how many days remain before the current trend for XYZ reverses. This information can help you plan upcoming moves.


Some comments about technical models and how they perform as compiled by ‘tradingmarkets’. Click here.






          My Comments on the Markets



My Comments after Friday (November 24):


On Friday, I held my positions. I have a bearish call spread on AKAM which I will continue to hold. The position is breaking even. I am also holding a put position on OIH. I wanted to get the spread which would have been bullish but my greed-haste-inexperience whatever it is, got the better of me and I ended up on the wrong side of the direction according to the model. So what did I do. Nothing! I obviously mismanaged this position. Now, the all important question “What will I do”. Surprise. Nothing. After looking over the data, have decided to take my chances and hold on to the puts on Monday and Tuesday when the models are in up mode. OIH has gone up quite a bit already – I hope that on the tail end of the move (the next 2 days) it will not go up. After that I will have another week or more to decide as the daily model goes into turbulence mode. I still may get the opportunity to set up a bullish put strategy or I may simply liquidate the long put position.


With regards to the markets, most of the market barometers are now in turbulence mode. While the primary trend is up, there is the possibility that the turbulence may be transformed to a down cycle. I say this because the turbulence stretch is quite long (about 2 weeks). So, at this point, December does not look encouraging for the longs. Even the strong performers like AAPL and GOOG will go into turbulence in a couple of days. Stay tuned.


My Comments after Monday (November 27):


Today was not pretty for the longs. Some have asked “What is turbulence?” Today was a good example of strong turbulence. It is an opposing force that distorts the primary trend. The extent of the distortion is not possible to predict. Today was an example of an extreme case. Remember, the up trend for the markets is still intact. A reversal has not taken place. In fact, a reversal may not happen. It is amazing what today’s drop has done to the status of the markets. Yesterday I thought the turbulence would be prolonged and that a reversal was likely. After today’s action, the level of turbulence has been reduced by a fair amount and a reversal is not as likely. Naturally, ever day can lead to a change in the outlook. I don’t know what will happen besides what I have stated. I have a feeling that today’s drop does not mark the start of the reversal. That will come ‘soon’ but at this point I do not know when.


My positions are what I had going into the week. I was short AKAM and I had puts on OIH. Today’s market drop made those positions improve my account balance. My plan is to keep my AKAM position for the time being. I am still struggling with my OIH position. My intent is to go long OIH by the close on Thursday. I plan to do this by shorting the Dec 135 put. At this time I am long the Dec 130 put. OIH is now around 138. 


My Comments after Wednesday (November 29):


I really blew this one. I am referring to my OIH position. Today, I sold all 20 puts. I took my loss and walked away. I should have done this much sooner. I should not have been holding this position. The model was correct. In fact, the model is usually correct. My second guessing the model has cost me quite a bit. I will survive. I feel so much better after I got rid of OIH today. My account is now at $4.7K. I can live with that. I will come back. I feel like I have been rejuvenated. As I said on Monday, the drop on Monday cleansed the market. All systems are go (up). I cannot see when a reversal to the down side will occur.


Good luck to all.



SPECIAL SECTION (under construction)


 (How To) Grow $5,000 into $1 Million, Quickly


See how my trading is taking shape – click the link below. Send me your feedback.

                Click Here to Link to My Journey’


Stay Tuned. You will get the opportunity to follow me as I embark on ‘my journey’ to grow $5 thousand dollars into One Million Dollars – Quickly.


The starting date was initially set for Oct. 1, 2006. However, given the revised version of the model (3.5) which I am trying to implement for all 15 issues, a more realistic starting point is Nov. 1. I will announce the starting date one week in advance.




I have decided to remove the next day outlook. It is too much work for me to write. It detracts from the analysis because you the reader do not see all the data. So, in an effort to simplify the presentation, I am going back to the way it was – only focused on the primary trend.  


You should note that the tables that follow for some of the issues will only be updated on weekends. On Nov 26, I updated the tables and there was an addition for AKAM.



ETF                     Forecast


DIA        Primary Direction: UP   Started on   xx    Days Remaining: xx 

              Starting Price:   xx       Current Price:     122.29   

Turbulence        Days Remaining:  1

Dow Industrials Fund (DIA) is in a primary UP cycle. The turbulence will end on Thursday and DIA will return to a clear up trend. Stay tuned.

CLICK HERE  --- to view the results for DIA as generated by the model (version 4.0) for 2006 



SPY       Primary Direction: UP   Started on   xx    Days Remaining: xx 

              Starting Price:   xx       Current Price:     140.44

Turbulence        Days Remaining:  3

S&P 500 Fund (SPY) is in a primary UP cycle. The turbulence will end on Thursday. SPY is similar to DIA. The comments for DIA apply to SPY. On Monday I wrote: “Monday’s drop seems to have changed the outlook for SPY (and DIA) dramatically. The outlook is looking more positive.” Stay tuned.

CLICK HERE  --- to view the results for SPY as generated by the model (version 4.0) for 2006 



QQQQ  Primary Direction: UP   Started on   xx    Days Remaining: xx 

              Starting Price:     xx     Current Price:       44.07 

Turbulence          Days Remaining: 7

NASDAQ 100 Fund (QQQQ) is in a primary UP cycle with turbulence. On Monday, QQQQ  fell behind DIA and SPY.

                             CLICK HERE  --- to view the results for QQQQ as generated by the model (version 4.0) for 2006 



OIH        Primary Direction: UP   Started on   Wednesday, November 15    Days Remaining: 5 

              Starting Price:     140.82     Current Price:       145.90          Profit:  5.08

Clear Up Trend

Oil Services Holders (OIH) is in a primary UP cycle. OIH is now in a clear up trend for the next 5 days. Wednesday’s rise in OIH has extended the up cycle. Keep watching.

                             CLICK HERE  --- to view the results for OIH as generated by the model (version 4.0) for 2006  [New Nov 18]



SMH      Primary Direction: UP   Started on   xx       Days Remaining: xx 

              Starting Price:     xx     Current Price:       34.25 

Turbulence          Days Remaining: 7

Semiconductors Holders (SMH) is in a primary UP cycle but it is now in the state of turbulence.



IWM       Primary Direction: UP   Started on   xx       Days Remaining: xx 

              Starting Price:     xx     Current Price:       78.06 

Turbulence          Days Remaining: 7

Russell’s 2000 (IWM) is in a primary UP cycle but with the influence of turbulence. Stay tuned. 


OEX      Primary Direction: UP   Started on   xx    Days Remaining: xx 

              Starting Price:     xx     Current Price:       650.12                

Turbulence          Days Remaining: 1

The S&P 100 Index (OEX) is in a primary UP cycle. The turbulence should end on Thursday. OEX is just like SPY and DIA. So, OEX is now in line with other market averages.

              CLICK HERE  --- to view the results for OEX as generated by the model (version 4.0) for 2006



EWJ      Primary Direction: UP   Started on   xx    Days Remaining: 4 

              Starting Price:     xx     Current Price:       13.68                  

Clear Up Trend

The Japan Fund (EWJ) is in a primary UP cycle. For now, the turbulence is gone.


 XLF      Primary Direction: UP   Started on   xx    Days Remaining: xx 

Starting Price:     xx     Current Price:       35.78 

Turbulence          Days Remaining: 1

The Finance Index (XLF) is in a primary up cycle. The turbulence should end on Thursday. XLF is now in line with the market averages at this time. Stay tuned.





Stock                  Forecast


AAPL    Primary Direction: UP   Started on   xx    Days Remaining:  xx

              Starting Price:  xx        Current Price:  91.80

Turbulence          Days Remaining: 12

Apple Computer (AAPL) is in a primary UP cycle but is now under the influence of turbulence for the next 2 weeks. On Monday, AAPL took the lead over GOOG. So, now GOOG resembles AAPL (and not vice versa).

CLICK HERE  --- to view the results for AAPL as generated by the model (version 4.0) for 2006    [New  Nov 18]


AKAM   Primary Direction: DOWN   Started on   Thursday, Nov 9    Days Remaining: 1

Starting Price:  48.02        Current Price:  48.60           Loss:  0.58

Clear Down Trend

Akamai Technologies (AKAM) is now in a primary DOWN cycle. AKAM is at the point where it may flip to the up side or it may simply be turbulence. It is touch and go at this point. Let’s wait another day. However, the hourly model now has AKAM going into a down cycle that will carry forward until at least the end of Friday. So, stay tuned for updates.

CLICK HERE  --- to view the results for AKAM as generated by the model (version 4.0) for 2006  [New  Nov 25]


ET         Primary Direction: DOWN   Started on   xx       Days Remaining: 2

Starting Price:  xx        Current Price:  23.75          

               Clear Down Trend

E*Trade (ET) is in a primary DOWN cycle. A clear reversal to the up side should happen on Friday. I plan to go long.



GOOG  Primary Direction: UP   Started on   xx    Days Remaining:  xx 

              Starting Price:    xx        Current Price:    484.65  

Turbulence          Days Remaining: 4

Google (GOOG) is in a primary UP cycle according to version 4.0.  You should note that GOOG resembles AAPL (and not vice versa). Stay tuned.

CLICK HERE  --- to view the results for GOOG as generated by the model (version 4.0) for 2006   [New  Nov 18]



STX       Primary Direction: DOWN   Started on   Wednesday, November 1    Days Remaining:  9 

              Starting Price:    22.26        Current Price:    25.66        Loss:  3.40

               Clear Down Trend

Seagate Technologies (STX) is in a primary DOWN cycle. The turbulence has dissipated.

CLICK HERE  --- to view the results for STX as generated by the model (version 4.0) for 2006     [New  Nov 18]



WMT     Primary Direction: DOWN   Started on   xx       Days Remaining:  13 

              Starting Price:    xx        Current Price:    46.89       

               Clear Down Trend

Wal-Mart (WMT) is in a primary DOWN cycle that has 13 days of length remaining.




SPECIAL SECTION (under construction)


 (How To) Grow Your Wealth Quickly

and, after I complete my objective,

Anyone Can Make a Million Quickly



I have invested over the years but I’ve had difficulty making a good return. In retrospect, I didn’t have the discipline or a model to be ‘successful’. All this changed when I started to use a model of price movements. It just so happens that I developed what I refer to as the hybrid timing model which evaluates cyclic price movements in the financial markets.


My past investment universe included stocks, options and futures. Again, in retrospect, I could not succeed because I was not able to get a handle on the time trends of the issues I was investing in. So about 7 years ago, I stopped my active investing strategy (except for a few buy and hold stocks). During this time, I fiddled with mathematics to try to get a handle on how short term moves occurred in the markets.


In early 2006 I came to the conclusion that the model I had developed was of sufficient accuracy to be of value in the short term investing arena. During the last 4 months I have been posting some of the real time results from the model on this web site. I am very pleased with the results. Recently, I started to invest (with real money) in some of the issues I follow (in particular, the market barometers). I started with stocks (or ETF’s) but I have now moved to options for my speculation funds.


My Target

I have set a target for myself. My objective is to convert $5,000 into 1 million dollars in 2 years. Hence, the title of my work: ‘Grow Your Wealth Quickly’. My plan is to use options to carry this out. My official starting point for this endeavor is Oct. 1, 2006 (revised to Nov. 1’06). I realize this is a lofty goal but I feel I am up to it. I will report my progress on this site. It will be one heck of a show, in real time. You will get to see with real money what can be accomplished with the model.



Based on what I have learned, I have concluded that one needs to use options (or futures) to make money quickly (or to loose it quickly). One problem with the simple buying of call and put options is that this practice is a bit like buying lottery tickets. The odds are stacked against the buyer. Investing in stocks is much safer but too slow for accumulating wealth quickly. Thus, several conclusions I have made, regarding my speculative funds, are:

1)    I will not invest in stocks,

2)    I will invest in options,

3)    I will focus on credit option spreads.


So what are option spreads? Simply put, an option spread is a strategy (in its simplest form) that involves 2 calls (or 2 puts). The investor buys 1 call and sells short another call with a different strike price. For a credit spread, the investor sells a more valuable option and buys a cheaper option for a net credit to one’s account. This can be done with both calls and puts.


Examples of Credit Spreads

Let’s consider the SPY ETF that mirrors the S&P500. I am writing this on Sunday, July 30’06. Let’s consider the August 2006 contracts. Credit spreads can be created with calls if you think the trend is down. Credit spreads for an up market would be created with puts.


Consider the following credit spread involving calls (down SPY trend):

Buy:  August 129 SPY   @  $1.10

Sell:  August  127 SPY  @  $2.35

The cash SPY when these option prices were retrieved was $127.98.

In this case you would be credited with $1.25 (less commissions). The maximum loss that you can incur is $2.00. Thus, in initiating this spread, you would be required to deposit $0.75 which would be coupled with the $1.25 credit for a total of $2.00 (the maximum loss). The spread has an intrinsic value of $0.98. If by expiration (in 3 weeks), the SPY has dropped to 127 (or lower), you pocket the credit of $1.25 you received. If the SPY closes at expiration at 128, you get to keep $0.25 of the $1.25 credit. If SPY closes at $129 (or higher), you give back the $1.25 credit plus the $0.75 you deposited. The bottom line is that you are risking $0.75 to have it become anywhere from zero to $2.00. If you are good at identifying trends, you will be a winner.


Another credit spread involving calls of SPY is:

Buy:  August 130 SPY  @  $0.70

Sell:  August 128 SPY  @  $1.65

This spread would yield you a credit of $0.95. The intrinsic value of this spread is zero. You would risk $1.05 to enter this spread. If the SPY remains unchanged (or goes down) by expiration, you pocket the entire $0.95.


Why a credit spread and not a debit spread. My simple answer at this point is because of the eventuality that the market (SPY) reverses. Let’s assume the SPY has just entered a down trend. You decide to sell the Aug 127 at $2.35 and buy the Aug 129 at $1.10 for a credit of $1.25. The cash SPY is 128. Let’s further assume you were right with the trend and 2 weeks later the SPY is at 127 (a drop of 1). At that point in time, there may be an issue you will need to deal with. Expiration may (for arguments sake) be 1 or 2 weeks away. You need to go into a credit spread involving puts. So what does one do with the call spread. With regards to the calls you can close the spread completely or you may buy back the call you shorted (and hopefully you will be able to buy it with the funds you received as credit). If you only buy the call you shorted, you would be left holding the call you bought. If you are right about the reversal to the up side, that call will increase in price. At the same time, you would initialize a credit spread with puts.


Food For Thought

A $1,000 investment if doubled ten times in a row would be worth over 1 million dollars. Can it be done? Yes – maybe not 10 in a row, but… What you need is to have a good handle on the trend. I plan to do it. This is my Tour de France. Stay Tuned. Naturally, your comments are welcome.


To Be Continued….






                                    MY MAILBAG


I have received some mail as of Nov 26 which I would like to share with you.


 Message #1:

Header:      McGillEngStudent01

Time:         November 21, 2006 12:48:41 AM


 I would just like to say i find your website to be very interesting. It has become one of my daily visits since i recently got interested in the stock market. As an engineer yourself you can understand the appeal it has to me, a system of numbers all governed by such simple rules as supply and demand, yet such complex results. I myself have worked up a rather crude trend indicator with excel and some visual basic script, based on cycles and rates of change, using *gasp* calculus (my goodness it actually has a use!!!)


As a student the majority of my trading has been limited to the paper variety, as well as to the competitions we have at McGill. Perhaps when i am not so loaded with work i will get into the markets as i think i should.


I wish you the best of luck in your endeavor, and i truly hope you do succeed. I was wondering if you could recommend any books or sources of information for a newcomer to the markets, interested namely in the technical analysis of stocks and the trading aspects? Anything that has helped you understand the nature of the markets to a greater degree?


Thank you so much for your efforts, they are inspiring.


My Reply to Message #1:

How nice of you to write. You are an engineering student at McGill – I know it is in Montreal, Canada. I have several colleagues who are profs at McGill. I was there recently. I bet you are looking forward to getting your ‘iron ring’.

At this point, I have little doubt that the model is a viable tool for trading and yes it is 100% mathematical. The biggest obstacle I am encountering is ‘myself’ and my second guessing the model. My behavior has landed me in several situations that I did not want to be in. I am in one of them right now – my OIH position. I need to ‘straighten myself out’. I will get control of myself and then we will see what can really be done.

With regards to books, I really don’t have anything to recommend. I have formulated my own ideas and much of what I have done is based on my engineering background. With the web, there is no lack of information. Some of the brokerage houses also provide good background literature.

Good luck and keep in touch.



Message #2:

Header:    amkor & chipmos

Time:     November 24, 2006 12:03:24 PM


Hi, I know at one time you covered amkor and then decided to drop it.  What are your thoughts on the recent upswing of this stock?

 Also, I would really appreciate any imput you might have on IMOS.  I just can't figure out why this stock never seems to advance.

 Thanks for all of your hard work.  I for one appreciate all of your work.


My Reply to Message #2:

Ay yes, AMKR – it does bring back memories. Unfortunately, I cannot cover it. I don’t have the resources at this time. I can tell you that AMKR does tend to move with the SMH index (semiconductor index). The big difference is that the magnitude of the moves for AMKR are much bigger (both going up and going down). Keep you eyes on SMH and see if that helps you out. It is no different than looking at SPY or DIA to assess the market direction and then investing accordingly. Good luck.








Forecasting the markets is like forecasting the weather. Our knowledge base (I am referring to mankind) is such that the only reliable forecasts are short term. Long term forecasts for the weather or the markets are simply beyond our reach at this time.


Remember last year, the forecasters got caught up with the unusual number of hurricanes we were having. As a result their forecasts for 2006 were worrisome to say the least. We were told there would be as many and more. They weren’t forecasting, they were simply extrapolating. Now as we approach the 1 year anniversary of Katrina, we haven’t had any hurricanes to speak of.


Yes there is Ernesto on the horizon, but as I write this, he doesn’t know whether he should be a tropical storm or a hurricane. Try forecasting what will happen in the next 3 days. It’s not easy, even for the pros.


As I said, long term forecasting is beyond man’s capability at this time. Long term forecasting of the markets parallels that of forecasting the weather. It cannot be done with any degree of accuracy. It boils down to ‘A Random Walk Down Wall Street’. These are my personal views.


So what about short term forecasting? Well that is a different story. We can all agree that short term forecasting of the weather is a reality. It is within man’s grasp. Five or even ten day forecasts are generally quite accurate.


What I do is short term forecasting of the markets (without any detail). The model tracks the cyclic, short term trends and tells us what to look for. It assigns no magnitudes (not yet anyway). Remember, money management is equally important as the forecasting component. If you are careless and lose all your worth on a wrong move, then being right 80% of the time will amount to nothing. You need to be WISE. Good luck to all.








The following is an introduction as to what I am planning for the near future.


There are several reasons why I am publishing this web site. Two of them are: 1) to discipline myself when it comes to investing, and 2) to find a viable, winning strategy for investing in options. My unofficial name for this work is (How To) Grow Your Wealth Quickly. I will be using this heading more frequently in the future and it will be the title of a book I will write on the subject.


At this point, I am working on the ‘how to’ part of the program. I have already formulated a preliminary strategy which I am testing with my own money. The strategy is focused on options and more specifically the combination of buying credit spreads and the buying of straight calls and puts. I won’t say any more at this time besides stating that 90% of a winning strategy is centered on getting the direction of the move right. Given that the model can do this about 80% of the time, I am finding that being successful trading options is viable and is, indeed, quite profitable.


Soon, I will write more about my progress and my plans. Stay tuned.





Do you want to see past issues of this page? Click the link below.


                            Past Postings of This Page – Click Here



Questions, Comments, Suggestions or whatever else you may fancy 

are welcome. I can be reached at:


Please Note This Disclaimer:  The above results are generated from a mathematical model. It provides some insight into what may be expected in the short term (2 to 4 week cycles).  While reliability is of highest importance, life is such that the model is not always correct. Neither is past performance necessarily indicative of future performance. Stocks, markets, and options can change greatly in value in short time spans because of unpredictable events. The model cannot foresee such events. When they happen, the model’s performance will be poor and in some cases - wrong. The user is advised to be cautious and to try to couple the results for individual stocks to those for the market averages.

One last point I wish to emphasize. The accuracy of the model is also dependent on the entity that is analyzed. Some entities are more amenable to the type of analysis the hybrid timing engine performs. Others (especially those with elevated volatilities and/or irregular trading volumes) may not match the anticipated performance. It is up to you to satisfy yourself that the performance is adequate and to draw your own conclusions. 




          [[ Find Out About the Model – click ]]


                            [[ See Past Postings of This Page – Click ]]



                 Why Are There Events That Go AGAINST the Model? – Click Here


          Interpretation of Signals - Click Here.


                   Find Out What Timing Did For AAPL - Click Here


You may have noted that what I originally called a mathematical model is now called a hybrid timing engine. The term hybrid comes about because of the method of conducting the analyses. It combines several techniques into one package. The term engine refers to ‘computational’ engine – a terminology that is frequently used by researchers. Thus, the model will henceforth be referred to as the ‘hybrid timing engine’ or the ‘hybrid computation engine’.