Actionable Risk Opportunities, Tactical Musings and Timing Indicators for Investors
Tuesday, September 30, 2014
Looking for Mr. Goodbar....9.30.14
Looked like there was bullish hope at the start but momentum got derailed and indices finished mixed. We re-entered VXX based on our new re-entry level and picked up a few cents but we're ready to bail out again if the bull rears his head.
Monday, September 29, 2014
Instability Evident...9.29.14
Last trading day of the month tomorrow so odds for a pop and into Wednesday. Nothing guaranteed but that's the most bullish driver right now. If all the talking heads would stop talking about the coming crash that would probably help too.
SPY-X is currently stopped out of the #1 ranked position VXX and did leave a couple bucks on the table today in opportunity costs but.....keep in mind...this is NOT a daytrading platform so we expect some lag along the path to Alpha, especially when we remember one of our prime directives
....preservation of capital.
Given today's developments it would be helpful to establish a re-entry level for stopped positions and that will be coming in a couple days. In the meantime we'll assume a tactic of re-entering stopped positions (for tomorrow) if the closing price of the #1 ranked slot is at least 1% greater than the the calculated stop on the worksheet. Huh? Yeah, it's confusing I know so I'll add another metrics line to the stops to clarify ...soon.
SPY-X is currently stopped out of the #1 ranked position VXX and did leave a couple bucks on the table today in opportunity costs but.....keep in mind...this is NOT a daytrading platform so we expect some lag along the path to Alpha, especially when we remember one of our prime directives
....preservation of capital.
Given today's developments it would be helpful to establish a re-entry level for stopped positions and that will be coming in a couple days. In the meantime we'll assume a tactic of re-entering stopped positions (for tomorrow) if the closing price of the #1 ranked slot is at least 1% greater than the the calculated stop on the worksheet. Huh? Yeah, it's confusing I know so I'll add another metrics line to the stops to clarify ...soon.
Saturday, September 27, 2014
Yo-Yo Markets....9.27.14
A lot of volatility recently...there's an understatement....kind of reminds me of the good old days of late 08-09 when the Dow could move 200-400 points a day up and down for weeks on end.
In times like this I generally prefer to stand aside and avoid the whipsaws but the new SPY-X model has helped to clarify the odds and eke at least a few points out of this see-saw and AS LONG AS WE PAY ATTENTION TO OUR STOPS the risk is fairly contained. In Friday's action the VXX stop fired at 30.02 (see below) and we closed the position for only a .3% loss...much better than hanging with it until the end of the day (MM stands for "Money Management"). There's always the potential that the markets will open way up or way down and blow through our stops but those are typically driven by big news days and the markets have recently shown little tendency for big opens or big downs that reverse ....a radical change in open to close behavior from the 09-2012 period when fading opening gaps, either up or down, was a high probability strategy.
In times like this I generally prefer to stand aside and avoid the whipsaws but the new SPY-X model has helped to clarify the odds and eke at least a few points out of this see-saw and AS LONG AS WE PAY ATTENTION TO OUR STOPS the risk is fairly contained. In Friday's action the VXX stop fired at 30.02 (see below) and we closed the position for only a .3% loss...much better than hanging with it until the end of the day (MM stands for "Money Management"). There's always the potential that the markets will open way up or way down and blow through our stops but those are typically driven by big news days and the markets have recently shown little tendency for big opens or big downs that reverse ....a radical change in open to close behavior from the 09-2012 period when fading opening gaps, either up or down, was a high probability strategy.
Thursday, September 25, 2014
Trap Door Opens...9.25.14
Yesterday's potential Key Reversal turned into a Trap Door setup right at the open and got progressively worse as the day wore on.
The SPY/SH Vixen chart below looks like a JAWS caricature...it was just as scary if you had long positions. The SPY TrendX chart on the right suggests there's likely more bad action to come.
Our suspicions about M3's failure to go long after yesterday's surge turned out in M3's .favor and we avoided a substantial drawdown by sticking with a cash position going into today.
The work on the SPY Pulse model continues...here's the latest below...now termed SPY-X. Refinements continue before deploying actual $ but the preliminary results are more than encouraging.
The SPY/SH Vixen chart below looks like a JAWS caricature...it was just as scary if you had long positions. The SPY TrendX chart on the right suggests there's likely more bad action to come.
Our suspicions about M3's failure to go long after yesterday's surge turned out in M3's .favor and we avoided a substantial drawdown by sticking with a cash position going into today.
The work on the SPY Pulse model continues...here's the latest below...now termed SPY-X. Refinements continue before deploying actual $ but the preliminary results are more than encouraging.
Wednesday, September 24, 2014
Key Reversal Day?...9.24.14
The day started out a bit iffy but turned solidly positive midday with virtually all sectors joining in by end of day. We've still got some work to get back to the old highs and we need to see a continuous day tomorrow for reversal confirmation.
I've modified the SPY style box a little and turned on the auto-stop feature. There are 6 active inputs described in the "Beta" line. The fact that the Box only displays 3 results indicates the other 3 inputs do not meet the minimum momentum requirements to fire. The Box is really an old M6 model that's been speeded up considerably and tweaked a bit to cull the momentum laggards.
Eventually I intend to make it a fully functional long-short model but for none its just a forward looking SPY signal.
I've modified the SPY style box a little and turned on the auto-stop feature. There are 6 active inputs described in the "Beta" line. The fact that the Box only displays 3 results indicates the other 3 inputs do not meet the minimum momentum requirements to fire. The Box is really an old M6 model that's been speeded up considerably and tweaked a bit to cull the momentum laggards.
Eventually I intend to make it a fully functional long-short model but for none its just a forward looking SPY signal.
Tuesday, September 23, 2014
New Feature...SPY StyleBox.....9.23.14
Markets had another red day with little news to drive momentum. QQQ was actually green at the M3 pre-close update at 12:45 but ultimately closed in the red. Worse than yesterday 28 of the Dow30 finished in the red. The 2 green stocks finished up 2 and 4 cents....not exactly inspiring.
The few intraday upswings were met with concerted selling and M3 is still happily in cash.
I've added a new feature (below)
in anticipation of a rocky 4th quarter. It still only trades long but thanks to the growing opularity of SPY inverse related ETFs and ETNs we can now effectively play the short side of the markets by being long an inverse issue. The 6 SPY related issues are reaally a beta spectrum from wild exuberance with the SPY to abject rejection. I'll be posting a few nuances of the StyleBox over the next couple weeks and intend to make it a permanent part of the M3 site.
The few intraday upswings were met with concerted selling and M3 is still happily in cash.
I've added a new feature (below)
Monday, September 22, 2014
Green Turns Red....9.22.14
It was an ugly day from the get go and didn't get much better as the session wore on.
M3 issued a special alert Update at 7:10 AM PST this morning showing the abrupt reversal in momentum from Friday'c close. XIV was stopped out at 43.82 based on Friday's posted stop.
The market swoon was supposedly based on China's announcement of slower growth than expected and no intention to apply a stimulus package.
XLE (oil), XRT (retail) and EEM (emerging markets) were particularly hard hit.
BABA, the new 800 lb gorilla in the room dropped a few points, perhaps based on reports that YHOO and BABA insiders had devested themselves of a few billion $ in shares greater than had been previously reported.
YHOO also dropped almost 5% at one pointed although recovered somewhat at the close.
A divergence in the SPY price TrendX and the SPY pivot TrendX was noted in the pre-close update of M3 so it will be interesting to see if we get a little reaction bounce tomorrow.
M3 issued a special alert Update at 7:10 AM PST this morning showing the abrupt reversal in momentum from Friday'c close. XIV was stopped out at 43.82 based on Friday's posted stop.
The market swoon was supposedly based on China's announcement of slower growth than expected and no intention to apply a stimulus package.
XLE (oil), XRT (retail) and EEM (emerging markets) were particularly hard hit.
BABA, the new 800 lb gorilla in the room dropped a few points, perhaps based on reports that YHOO and BABA insiders had devested themselves of a few billion $ in shares greater than had been previously reported.
YHOO also dropped almost 5% at one pointed although recovered somewhat at the close.
A divergence in the SPY price TrendX and the SPY pivot TrendX was noted in the pre-close update of M3 so it will be interesting to see if we get a little reaction bounce tomorrow.
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