MO2 Possibilities...12.31.12

Here are a few positively correlated pairs using the MO2 software to analyze potential trades.  I'm focusing on the SPYDER sector ETFs, previously discussed, to explore another route for detecting impending momentum both within the larger T2 default model and as a stand alone trading strategy.  I've also included a GE/QQQ pair that shows promise and long time readers know my special interest in GE as a trading instrument...I like it.

  Now a couple SPYDER pairs:

As you can see... we can mix and match the sector SPYDERS to both confirm current momentum and to see how that momentum is related to the other sectors.  This is a good edge to have when looking at potential trades and, here's a little bonus, we get quantified forecast of how long the current trade should last before risk overcomes reward. 
Now not all pairs look as attractive as this bunch.  That upsloping continuous equity curve (RSQ line) (orange line) is actually the most important metric to consider when taking these trades.  If current equity is below that line then something either technical or fundamental has gone awry and its best to just stand back from the trade until the RSQ and trade equity get back in line.
There's a lot more flesh to put on these pair bones to make it a whole system but these examples should give an indication of the possibilities.

90 minutes in today...16 hours until 2013 and the Congress  looks unable to reach a meaningful compromise on the pending fiscal mess. We're seeing some volume pops this morning and attempts at a rally but one of the NYSE floor traders on CNBC called it a "Fools Rally" that should be sold, not bought.  We shall see.