SD's - Final Shot-2013-

[sd]

LOL-Rich and famous is definitely not my desire-!
I was trying to be- rhetorical-? Maybe just verbose.
And I totally agree with the sentiments about family and friends being far more important...

I'm narrowing my trading universe- since most things i own seem to stop out together in response to the market- Also limited time. You had made that suggestion some time back-It makes sense to monitor 3 positions vs 6 positions. Also on position size- risk more-but protect that downside with position sizing for the amount at risk.
I plan to have 3 larger positions-and some amount of free cash available to reenter a position or to add to it.
UPRO -since it tracks the S & P will be my trading candidate to
try to develop a more defined approach.
Thanks for the feedback!

[sd]

I"M taking a bit of a gamble with this entry in UPRO,
and have decided to employ RENKO charts and see how the trades work out.
RENKO charts appear to be consecutive, and therefore imply a smooth way to trade- The reality is they do not show price gaps which actually occur- RENKO charts also do not show when price exceeds the present box until it exceeds by a full box value- Therefore, if a Box has a value of $.50, and the present box is at $30.50 , a new box will not form until price exceeds $31.--... or whatever the box value is for the security.
In using the renko charts, i will be using a 1 or 2 hour chart.
This should reflect smaller price movements, and will also signal sooner than the daily chart-.
I'm interested in knowing what direction the trend is, so I will have some moving averages for reference- I also want to know what the predominant trend is, so a glance at the weekly chart tells me we're trending up in a fairly moderate channel.
Therefore, I feel more confident in taking long trades.
The goal is to capture a larger portion of uptrending moves, and to be out of the trade following declining moves, and to be ready to take a reentry.
Par Sar does a decent job of stops and reentry when price is trending but gives whipsaw signals in sideways consolidations.
I'm including a Stochastic/Rsi indicator, and the centerline .50 value for confirmation of Buy/sell- along with price action.
The Stoch/RSI will keep me out of some early entries based on price ROT attempts.
The weekly chart of the past 5 years show a great deal of volatility
in the 1st few years, and that we are now in a relatively benign uptrend/channel- This could change at any time-
Past chart:

[sd]

OK,
Using a renko chart on a 60 minute time frame should make for more timely entries and exits than viewing on a daily chart-
The Brick size is much smaller than the daily, so the % of losses should be narrower.
As with any trading system or method- If one has an early entry signal, one has a greater probability of getting whipsawed.
If one is taking trades against the predominant trend, that whipsaw factor likely increases.
If one is taking trades in the direction of the trend, there should be fewer whipsaws.
The best entry is the entry that reduces the Risk- Thus, a reversal of trend entry that comes after a new pullback low would seem to be the perfect entry- Risk is low and well defined, But where is the actual market momentum favoring? In this present market cycle- it appears it is favoring a continuation of what has been "working".
I jumped into the present UPRO trade following the price consolidation breakout & the Yellen affirmation that she will continue an accomodative Fed policy- LOOK at what the market has done with this type of FED policy in effect. That policy may be doomed in the future, but today's players are only listening to the music.
Chart attached - Since i cannot view trades intraday, I will make an assumption that 6 brick values would generate a sell signal on the P Sar as well as the Stoch/Rsi .
Therefore, i may initiate a trailing stop in the future. I will look to the psar value at present-

[sd]

UPRO has declined enough to generate a PSAR Sell- confirmation is just a $.10 drop away, and in all likelihood will stop out tomorrow .
PJP is holding the uptrend, and SDIV is rolling over and will stop out likely as well- also within $.10

[sd]

I am still long all 3 trades- with 2 losing ground and PSAR and S/RSI in agreement-after today's action- The market was upset by the Fed???
This means i bring up the stop belatedly- I should have calculated the # of bricks that would logically -based on past price history- generated that sell signal- Thinking along those same lines- because I am not at a computer intraday and cannot witness developments - If I am thinking I have a tradable systematic approach , I should be able to determine the brick size for each position and determine the number of sell bricks that would also generate a PSAR and S/RSI 'sell'.

My stops are in effect, but lagging the crossover- The advantage is that this is a 2 hr chart i am viewing, vs a daily chart- Should i be using a longer time frame- such as the daily, the same signals would not be in effect until tomorrow on the wider daily chart.

[sd]

In this instance, instead of belatedly stopping out for a wider loss, my raised stop was not hit as i anticipated on UPRO, and SDIV. UPRO opened higher and gained 2.5% above yesterday.
SDIV moved up weakly.

[sd]

Just a thought tonight-After the market has indeed rallied higher...new all-time highs across the board.
Do you remember the theme of the Terminator movies?
Arnold returned from the future to protect the young man that would eventually become the leader of the future resistance against the machines that had become self aware through evolving computer programs and revolted against serving humanity.
Stock trading is in a similar evolution- with machine trading a significant counter-party to any trade that you and i may take.
Is the counter-party to your trade actually a computer actuated algorythmn? Consider that as part of the new "normal" .
Consider this thought- IF TA is based essentially on repeated human behavior, would not computer programs find ways to jump ahead of the human herd?
It's an interesting concept that technology has brought us-
With the easy computer- almost instantaneous - transmission of real time data, Computer programs are evolving that can respond faster and take advantage of data or price manipulation- With no bias- Simply responding to price action requirements-
Supposedly this will add to market liquidity to achieve the best price exchange between Buyers and Sellers-
That sounds fine- until I use an example of the 1 minute flash crash in trading in WMT_ Was that not generated by a push of machine orders testing how to manipulate the market?
Not to get too paranoid here, but one has to wonder- we have both the machine trading and the Fed News manipulating what would be a totally different market should either not exist.
Perhaps we need to think more mechanically and methodically in our trades...... Just a thought ....

[bankedout]

This reminds me of Bugs Bunny 'If you can't beat 'em, join 'em.'

What we need to remember also is that behind every computer program that is trading, is the computer programmer. I'm sure there is also a human monitoring the operation. The human may be tempted to go in to 'manual override' if he/she feels the computer is not doing what that person desires or thinks might work.

I'm sure it is a different market than the days when the ticker printed on a tape.

I wonder what the percentage of the market that is trading by human actions versus non-human actions is right now? That would be an interesting tidbit of information.

Thanks for the food for thought.

[blygh]

This market is a jerk around extra-ordinaire - There is expectation of a Santa Claus rally - employment numbers are improving - rising middle class in China / India/ Russia - energy prices down. On the other hand, when the small investor is getting in - the smart money is getting out - I think that domestic large caps and foreign growth are my themes for the next month

[sd]

"This reminds me of Bugs Bunny 'If you can't beat 'em, join 'em.'"
I agree- Just have to trade WITH the trend de Jour- until it fails.
The statistic i heard- I think on Fast money- Is that over 2/3 of the market's trading is now done by programmed trading. I do not know that that is accurate- but I expect it is close-
I expect that is likely focused on the major indexes and perhaps -more so- the leveraged etfs- Likely the nemesis of the day trader pitting his skills and bank account against an algorythmn backed with the funding of a JPM or GS.
I wonder if these programs are mostly all intraday, and how many are in place to swing trade.
When you consider that the large institutions have millions of dollars at their disposal to hire the very elite of programmers,
Why would that not be the case? Every once in a while, you hear of a huge trade that went SOUTH- because a human trader botched the trade- Recently in London-He likely went well outside the normal parameters that a programmed trade would allow-using his intuition to believe his trade would turn in his favor.
What is perhaps worth thinking about - is - If we had the skills- How would we write the program for the way we each trade-
How much flexibility would we want to have-?
How rigorous would our rules be/ How would we incorporate
the various "What IF " this is True, THEN.....this action is allowed.....Or Not.....
How many variations of a basic BUY_SELL program can exist-?
What are the parameters? What does the professional institutional programmer consider, that we human beings may not consider in our trade decisions.? Interesting concept to try to consider what the programmer on the other side of one's trade has included in their decision to Buy or Sell on your position .
It might be a good exercise to ask "What would the programmer do?"

[sd]

"This market is a jerk around extra-ordinaire - There is expectation of a Santa Claus rally - employment numbers are improving - rising middle class in China / India/ Russia - energy prices down. On the other hand, when the small investor is getting in - the smart money is getting out - I think that domestic large caps and foreign growth are my themes for the next month"

I think you cited the very fundamental reasons why this rally will indeed continue- You could have also included the Hedge Funds that are below the market return, and need to play catch up in the last weeks. At least for a few weeks more....
As far as the smart money getting out as the average investor is getting in- Suggesting a Top is close by.....
This seems to be true- Bonds tanked, and the average retirement based investor with considerable assets is not seeing any kind of return on their bond assets, and are being forced to BUY into this market- because they have to have some kind of return on their assets in order to survive- They are being "Forced" by the Fed to go into the market, pushing all Riskier assets higher - However, stocks are not essentially overpriced....
When you think of all the adage's- "The market climbs a wall of worry" ; "The market looks ahead 6 months" ; The look ahead suggests that things are improving on many fronts.
Your theme seems to be valid- Small Caps (IWM) are also rejoining the parade higher- China is likely not a disaster- as once thought- Look at FXI for the past 2 weeks....
RSX looks like it's basing- definitely not busting out higher yet though- may be a good entry close to support here- But if commodity prices continue to fall, what drives RSX?
It would seem that we should have had many opportunities to see a grand sell-off, sharp and decisive- but that has not occurred-The belief is still intact that we trade as long as the music plays; That the Fed can unwind this experiment successfully- So, the market continues higher- Despite major political indecisions/ budget conflicts etc. Fluctuations in price due to these concerns have been buying opportunities-
The take-a-way- Trade With the Fed.

[bankedout]

Well, if you ever want to try your hand at it:

www.interactivebrokers.com/en/index.php?f=5041

I wonder where the computers are trading? The deepest most liquid market is foreign currencies. Other commodities have large deep markets as well. The big fish might be swimming in other waters a lot of the time. Bonds, foreign markets, who knows.

I have no inclination to write a program at this time.

[bankedout]

Nov 23, 2013 20:12:48 GMT -5 sd said:

The take-a-way- Trade With the Fed.

However if the market indeed looks 6 months ahead, will it see the Fed reversing course before the Fed reverses course?

Remember when the Fed was blowing bubbles in the stock market in the 1990's? Did the US Equity Markets top prior to the Fed changing it's strategy? I wasn't paying much attention to those things back then.

I think the better saying is: "The trend is your friend, until the end, when it bends"

The S&P 500 for the past 5 years:



Some day, the trend will bend......

[sd]

Thanks for the link- I will check it out - but I don't think I have the aptitude or skills for such-
Yes, the market reportedly looks ahead, - It would appear that even the past several years of budget impasse and default potentials were just minor blips- Temporary 'Noise' and a pause in the trend higher- Will we see a substantial drop - 1987- 2008, When?
With unemployment seemingly improving, and price multiples not extended, and companies using the present financially low rates to their advantage,, and improve,ments in many parts of the world-
The many items that were feared to derail this market have all become past news items. Some indeed believe that this fiscal manipulation will eventually end badly, others believe that this experiment will be successfully "unwound'
As you say- "Until it bends" and does not bounce back on track-

[bankedout]

Instead of trying to have a bullish or bearish bias about the future, maybe the bias should be that we simply do not know what future prices will be. A permanent neutral bias.

Accepting that the future in unknowable, you can just let it unfold in front of you.

When price stops trending higher, it is time to liquidate your long position(s).

When there is no clear trend in price, it is time to sit on the sidelines.

When price is trending lower, it is time to be short.

For what reason do people feel compelled to know WHY prices have changed? How does knowing the reason(s) 'why' help you as a trader?

Can any of us accurately predict the future?

I think that is why we need to keep our eyes focused on transactions. Transactions are the sum of everyone's knowledge. If a person or corporation has any knowledge that is 'valuable' that person or corporation is certainly going to act on that knowledge. Those 'knowledge' transaction(s) will show up on the chart. The more valuable the knowledge, the larger the effect on price.

Whether the Fed is (or will be) successful nobody knows for sure. It is our job in the markets to attempt to make money no matter what the Fed or anyone else does. Whatever the reason price went up or down doesn't matter in the end. What matters is that you either bought lower and sold higher, or vice versa.

You either have more electronic pieces of paper than you did in the past, or you don't. How, or why you have the paper doesn't matter too much when you go to trade your paper for food or shelter.