Tuesday, December 16, 2014

Looking for Mr. Goodbar....12.16.14

It looked like a turnaround Tuesday, but then it turned around again. We're probably not done with the volatility disconnect.  This pattern is more like a spinning top than a trending market as SPY has fallen to the 200 support level and daily swings of 100-220 points are common.
Beware the Trap Door.
Following up on yesterday's post and my ongoing endeavor to find a reliable beta based trading model from now on the M3 daily update will include 2 signals . . one from the classic M3 volatility/price model with risk parameters embedded in the performance metrics (risk OFF), and one with only price components termed M 3 R (risk ON) with no money management stops and the momentum AUTO-STOP turned off.  Money management stops are provided with M3R but their application is NOT factored into the performance metrics.  
M3 users now have 2 fully defined systems to consider as trading models and each has its own pros and cons, which will reviewed in greater detail in future posts. The component technical panels have been reduced to 6 in each model to help simplify the presentation.
(SPY performance value vary between models as these screen shots were taken over an hour apart)