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Engineering Professor (EngProf6)

        Hybrid Timing Model for Analyzing Stocks and Indices

 

Date:  Wednesday, November 8, 2006     (after the close) 

 

 ‘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. (Hint: it is above $5K.)

               Click Here to Link to ‘My Journey’

 

Check out my mailbag for new postings (as of Nov 5)

 

            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.

 

 

 

On Wednesday (Oct 18) I introduced version 4.0 with a filter. I now strongly believe “This is it”.

 

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 Wednesday (November 1):

 

Yesterday, we had little fanfare. Well, today was the opposite. The markets were down substantially. This is happening in a primary up trend. But, remember we have turbulence plus the hourly model was looking for 2 days of downtrend at the end of yesterday. But by mid Thursday the hourly results will start pointing up. I should stress that we should not put too much emphasis on the hourly model. What we should pay some attention to is the ‘turbulence’ (daily model) because turbulence can detract from the primary trend. I have been asked by a number of people what to do in turbulence. The answer is you either stick with the position or you close it out. You should not go against the primary trend. For example if we look at AAPL or GOOG or the Dow we find that they are all in primary up trends. However, they are all facing turbulence. I teach fluid mechanics and turbulence to one in this field implies a level of randomness, a level of unpredictability. I use this label to describe the performance of a stock in a similar light.

 

Going back to AAPL and the other issues in similar situations, what should one do. First of all, one should not establish a bearish position. Since the underlining trend is up, one should only engage in bullish strategies. When turbulence does occur, one can consider closing out the position and staying on the sidelines. One can reinstate the position when the turbulence is dissipated.  You will need to look at the circumstances to make the decision.

 

On a personal note, today, as you can see in the My Journey page, I was hit with a charge of $579 to my account for an incredible mistake I made in Sept. That has reduced my account to $4.6K. So I started on Nov 1 (today) with less than $5K. But that’s life. I am not complaining. Things could be worse. When ever you have a bad day or you have something ‘negative’ happen to you, remember that things could be worse. Be positive – use the opportunity to try to understand why something has happened – try to figure out how to avoid a similar scenario at some future time.

 

With regards to some of the issues, we have DIA, SPY, QQQQ and OEX all with 3 days of turbulence left before shifting back into the primary up trend. AAPL and GOOG have about 9 or 10 days of turbulence at this time in a primary up trend. And then we have OIH and STX that are in down cycles (without turbulence at this time). And finally we have AKAM which is in a primary up cycle. Remember, sooner or later I will be writing that we are in a primary down trend. When that time comes, it will be an opportunity to really see how version 4.0 of the model is working. I look forward to it, but I do not see a reversal yet on the horizon. I will certainly let you know when I do.

 

My Comments after Thursday (November 2):

 

I said enough in yesterday’s comments. Today, I did not trade and the markets did little. The markets are 2 days away from resuming their ‘clear’ up trend. Stay tuned. I will let you know how the turbulence that is attached to the markets is dissipated. The markets seem to be aligning with the up side.

 

One last point is that EWJ, the Japan Fund Holders, today reversed to the up side. It had gone into a down cycle on Oct. 6. But now it is in an up cycle and the US markets are about to join it on Monday. Given this, I feel the Dow will set a record high in the upcoming cycle – but that is just speculation. What is quite clear is that the up cycle is about to resume and the duration is projected to be about 3 weeks. Keep your eyes on the ticker.

 

My Comments after Friday (November 3):

 

I made no trades today. I am long AKAM and it was down. I am short OIH and it was way up and I am long QQQQ and it was down. So today I was 100% wrong. I paid the price. My 5K was down to 4K. On the previous Friday my account was $5.45K. One week later I am at $3.96K. Part of the drop in value was the result of a deferred dividend of $579 that was deducted from my account. I ended up paying for a mistake I made in Sept.

 

Am I disappointed? Of course, however, I am determined, I believe in the model and I am confident that I can get back on track. Naturally, there will be days like today when the model and I are made to look like…., however, time will tell. Remember, it is much easier to lose than it is to win.

 

The markets are all about to go into ‘clear’ up cycles at the close on Monday. At this time, the daily model is projecting cycles of about 3 weeks duration. The hourly model refines the buying point a bit further by projecting that the buying opportunity is in the Tuesday afternoon – Wednesday morning window. Regardless, the following indices that I’m following: DIA, SPY, QQQQ, OEX and IWM are all about to shed their turbulence on Monday.

 

My Comments after Monday (November 6):

 

All the market indices starting with that for Japan, IWJ, and DIA, SPY, QQQQ, OEX, and IWM all got free of the turbulence they were under the influence. They are now in ‘clear’ up cycles. Naturally, things can change from day to day – nothing is set in stone.

 

AKAM had a nice run up today. However, I was surprised to see how the model responded. The model is looking for a clear reversal to the down side within 3 days. Given that I am ‘long’ AKAM, I will have to do something about my position. Do you have any ideas? Drop me a line.

 

My Comments after Tuesday (November 7):

 

Little has changed from Monday. Today, Tuesday, saw the markets go up again. My positions did well. Even oil services co-operated. All my positions are November options, so during the next week I have to liquidate them.

 

I will be looking at AAPL and GOOG. You may have noticed that I am trying a variety of issues and strategies. I am giving the model a ‘work-out’. I am impressed with its real time performance. For example, look at STX. The model was calling for it to go down and today STX was down – it was downgraded.

 

I know that a number of you are interested in AAPL. I hope to trade it shortly.

 

My Comments after Wednesday (November 8):

 

Not much to report today. AKAM and QQQQ went up which was good because I have long positions. My other position in OIH which is a short was a loser today. At this time I am reviewing my strategy for investing in options. Given that I have an hourly model, I have noticed that the timing of decisions can be improved by considering both models. The question is how to do this.  If written a bit about some possibilities in the link to ‘My Journey’.

 

With regards to the markets, little has changed. They are in up cycles.

 

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.

 

 

 

 

ETF                     Forecast

 

DIA        Primary Direction: UP   Started on   xx    Days Remaining: 14 

              Starting Price:   xx       Current Price:     121.83   

Clear Up Trend

Dow Industrials Fund (DIA) is in a primary UP cycle. There is no turbulence. The length of the current up cycle is 14 days. Other averages have also rid themselves of turbulence.

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: 14 

              Starting Price:   xx       Current Price:     138.91

Clear Up Trend

S&P 500 Fund (SPY) is in a primary UP cycle. There is no turbulence. The length of the cycle is now 14 days, like DIA. 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: 5 

              Starting Price:     xx     Current Price:       43.03 

Clear Up Trend

NASDAQ 100 Fund (QQQQ) is in a primary UP cycle. As with the other market averages, there is no turbulence on the near horizon. After the 5 days remaining, there is turbulence at that point, and not a reversal. Stay tuned.

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

 

 

OIH        Primary Direction: DOWN   Started on   xx    Days Remaining: xx 

              Starting Price:     xx     Current Price:       139.92 

Turbulence          Days Remaining:  2

Oil Services Holders (OIH) is in a primary DOWN cycle. This cycle has now been hit by turbulence for the next 2 days. Beyond that, the model has 5 days of down cycle and then there is the possibility of a reversal. Keep watching.

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

                                     

 

SMH      Stay Tuned.

 

 

IWM       Stay Tuned.

 

 

OEX      Primary Direction: UP   Started on   xx    Days Remaining: 3 

              Starting Price:     xx     Current Price:       645.36                

Clear Up Trend

The S&P 100 Index (OEX) is in a primary UP cycle. While the length appears as 3 days, it is substantially longer because there are a couple of days of turbulence that separate the 2 segments.

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

                   

 

EWJ      Stay Tuned.

 

 

XLF       Stay Tuned.

 

 

       

                  

 

 

Stock                  Forecast

 

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

              Starting Price:  xx        Current Price:  82.45

Turbulence          Days Remaining:  6

Apple Computer (AAPL) is in an UP cycle according to version 4.0. AAPL is now faced with turbulence for the next 6 days. The model held the length at 6 days today. You should note that AAPL resembles GOOG.

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

 

AKAM   Primary Direction: UP   Started on   xx    Days Remaining: 3

Starting Price:  xx        Current Price:  50.64 

Clear Up Trend

Akamai Technologies (AKAM) is in a primary UP cycle according to version 4.0. AKAM is in a clear up trend for 3 more days. Keep watching.

The large jumps of the past few days have the model now saying that AKAM will shift gears. It is now looking like AKAM will avoid reversing and instead continue in an up trend with turbulence. This should be interesting.

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

 

ET         Stay Tuned.

 

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

              Starting Price:    xx        Current Price:    475.00       

Turbulence          Days Remaining: 6

Google (GOOG) is in a primary UP cycle according to version 4.0. GOOG is now faced with turbulence in an up trend for the next 6 days. Naturally, this length can change on a day by day basis. GOOG now resembles AAPL. Turbulence means that the up trend will be moderated for the next little while because of the opposing influence of the turbulence. Stay tuned.

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

 

 

STX       Primary Direction: DOWN   Started on   Wednesday, November 1    Days Remaining:  11 

              Starting Price:    22.26        Current Price:    23.09        Loss:  0.83

              Clear Down Trend

Seagate Technologies (STX) is in a primary DOWN cycle. STX should be going down. This move started at $22.26 and here it is over $23. The model is still looking for STX to go down. The problem has been (if I can speculate a bit) that on an hourly basis STX went into up mode yesterday. But, ultimately, the primary trend will dominate. Stay tuned.

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

 

 

WMT     Stay Tuned.

 

 

 

 

SPECIAL SECTION (under construction)

 

 (How To) Grow Your Wealth Quickly

and, after I complete my objective,

Anyone Can Make a Million Quickly

 

Introduction

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.

 

Methodology

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 4 which I would like to share with you.

 

 

Message #1:

Header:    Read your site

Time:     October 22, 2006 1:11:54 AM

Text:

Have you ever tested your models with trading futures?  ES, ER, YM etc.?  The leverage that futures can give you could help with your journey.

 

My Reply to Message #1:

There is no doubt that the model can handle futures just like it can handle stocks and indices. I traded futures with a friend in the past (about 15 years or so ago). You are right. Futures are a nice way to use the model. And yes, I have not forgotten about doing so. The leverage is great. However, the catch is that you don’t know how much you can lose. Things can move a bit too fast versus options. In the future, I may get back into futures (like the S&P500), to some degree. But, I do worry about the ‘margin’ calls.

 

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Message #2:

Header:    Godspeed Professor!

Time:     October 22, 2006 2:16:09 PM

Text:

I just discovered your website and I looked it over carefully. I'm impressed with your knowledge of market trends and models.

 

I am a criminal justice professor at a rural university. I teach law courses as well as courses in the sociology of law. I have a few years of experience investing in stocks, then just five weeks ago I began trading options. I've turned $2500 into $9600 in that short time--thanks to the huge moves in Goldman Sachs and in Google.

 

As a professor myself, I do wonder how you manage to keep up with your university obligations-- namely publications. I'd much rather watch my stocks than write articles. I continue to enjoy teaching very much; nevertheless, I'd be happy to switch to a full-time job playing the stock market if I could find a reliable way to create a secure income.

 

I am thrilled to get to follow your journey as it commences. I wish you all the best, and I hope it leads you to a best seller!

 

My Reply to Message #2:

Your comments are well stated. Thanks for sharing them. Even though I am in engineering and not in a finance related field, I am using my engineering ‘skills’ and applying them to the markets. I don’t consider that I am straying too far from my profession. Regardless, there comes a point in time when one gets the urge to try something else. I really enjoy what I do but I (like you) also feel that I need to use my acquired knowledge to challenge the markets.

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Message #3:

Header:    Re: Ready for Nov 1st?

Time:     October 23, 2006 10:06:10 AM

Text:

Hi -- still don't know your name.  I have one question about how you will invest in spreads.  You would have to sell (short) a put or call

as part of the credit or debit spread, right?  To do that, you have to own the stock to sell the option against.  Do you own stock in another account?  If not, how will you write puts or calls?  Or.. am I misunderstanding and you will be writing "naked" options?  If so, I am out of luck because my broker won't let me do that.

 

My Reply to Message #3:

I have a broker that has the software to place debit and credit spread orders as one package. You enter a price for the spread. The order when executed is resolved into the constituents – i.e. this was bought at x and this was sold short at y. I do not use any stock as collateral. 

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Message #4:

Header:    5K to 1M Journey

Time:     October 23, 2006 10:20:43 PM

Text:

I happened to see your comments in the AAPL comments section in Google Financial and I'm glad I did.  I have been an Investools student since April of this year yet there is so much to learn.  I have been trading on paper since then and have grown 5K into about 8K which seems a little slow.  At this rate I could make more money in a fund of some kind and not worry too much about it.  But I have learned some valuable lessons from it without losing real cash like not trading against the trend so it is teaching me to become a better trader.  I am interested in what you are saying.  I have just begun to get interested in the index's and possibly in making my trades with those instead of stocks.  I wish you the best of luck in this endeavor and plan on watching your progress.  I'll be back to ask questions as they come up.  Talk about the little guy, I don't even have 5K of real cash yet though I am working on ways to make it in my spare time.  I can't wait to see what comes next.

 

My Reply to Message #4:

Many thanks for your message. I think you are going about investing in a good way. You need to trade on paper first. Trading is not easy. There are many obstacles besides getting the direction ‘correct’. Good luck.

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Message #5:

Header:    options

Time:     October 30, 2006 2:53:34 AM

Text:

my name i dave and i am like-minded in your quest. I have a loss of $3,500 in 2 months. my current balance is $550. I hold two call positions. 2 gop c 530 adj cost base 1.80 and

1 xba c 32.50 adj.cost base 0.85. I have a margin left over of $68. I have executed 52 trades and have missed some pretty lucrative positions on qxb c sept 27.50 and gop c sept 380 to the tune of some 30,000 dollars. I could'nt believe my ignorance and stupidity. But, hey, i guess hard knocks wake you up to reality. And I am in this game for the long haul. your website has peaked my interest in perfecting the right model and to make more winning moves. Please give me your take. I would be delighted to hear from you. I also have a gmail account.

 

My Reply to Message #5:

Hi Dave. Unfortunately, I do not know what you are referring to when you mention gop, xba etc..  Nonetheless, I certainly know the feeling of losing. I have had losing streaks in the past. In fact, it is the reason I began to apply mathematics to the field of investing. Realistically, we know that even the ‘professionals’ have a tough time outdoing the S&P500 for instance. Thus, beating the market is not an easy task. To do it, one needs to have a significant edge. I consider my model as the edge. However, I have not proven this to be the case. The future will tells us if I do have a significant edge or if I am another one of those dreamers. Stay tuned.

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Message #6:

Header:    Leading the way to $1 million

Time:     November 3, 2006 7:04:43 PM

Text:

I've been enjoying your site for a few weeks and have a question.

I don't think you've given any specifics about the mechanics of the hybrid timing model, exactly what info you're using, ie volume, high low, close, etc.

I think that's because it's "your magic" and you'll use it in your book or just keep it as proprietary.

Like you, I've invested for many years, but haven't had that spectacular of a return.  Over the last couple years, I've refined some entry and exit strategies based on simple technicals and have had some success.

I've been comparing my "very simple" technique to your entry and exit points and, of course, yours are much more accurate.

So my question is - are you interested in selling or renting your model to other investors to use on stocks you're not currently following.  Fortunately you're investing in AAPL and I'm grateful for that.

Best of luck on your goal.  We all certainly hope you'll succeed.

 

My Reply to Message #6:

Many thanks for your note. I enjoyed reading it. If you read my previous answer you will see that I have yet to prove myself and my model. What I will do in the future will depend on the outcome of my journey. At this time I have no plans for the future except to show that the little guy can play the game with the best of them and he/she can win.

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FORECASTING

 

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.

 

 

 

 

 

Announcement:

 

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:

engprof6@hotmail.com

 

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’.