Monday, February 9, 2015

Churn and Burn...02.09.15

Frustrating see-saw markets continue to be the dominate theme.  I've posted about the lack of trend and momentum conviction previously and last night's post by Rob Hanna over at Quantifiable Edges (subscription service) illustrated that many quants share my perspective on the current difficult trading milieu.

Let me reinforce Rob's comments and repeat my previous strategy for trading this environment.... trade small or stay in cash.
Yes, we do have some new improvements to the M3 models but keep in keep in mind that P6 remains below the RSQ line in both models M3+ and LM and it has always been my contention that these are indicators that the trading paradigm is unstable and unreliable.
Eventually the technicals will kick back into line and a tradable trend will develop either up or down...until then caution and patience are is executing money management stops, either the defaults or discretionary, in order to minimize drawdowns.