Disqus - Friends of blues

Re: Next Move?

John Mobius — Tue, 18 Dec 2007 12:08:29 -0000

let's see if this works...

Re: Better than Sex

John Mobius — Tue, 18 Dec 2007 15:08:11 -0000

TSSP, a penny solar stock got hammered during the recent downturn, now has started rising again... very suspicious... I think it is a bullish sign, this risky stuff don't get bought when there's more trouble ahead

Don't forget media are manipulated to tell people what to do and now also Cr(e)amer turn bearish... mmm, I smell burned here...

I remain of the idea of a rally starting on 21st december and lasting into the end of february, based on program trading patterns.

Program trading accounts for the 60% of the market of today and is done mostly by the pros, so I think there is not much chance that things are going to deviate a lot from what these people do.

Informers are saying big hedge funds are already taking position for the january rally.

I may be wrong, and they may be wrong, but I think also from a pure charting point of view the S&P500 still does not look in a Bear Market - until it breaks that MA400 support, there is no Bear Market case here, just big swings up and down.

In fact, I still think the chart looks consolidating, even though the idea of a imminent bull run is not realistic.

Big swings, this is what ails us, I think...

Re: Increasing $RUT Put Position

John Mobius — Wed, 19 Dec 2007 10:24:30 -0000

I told you 21st of december is coming....

Re: Increasing $RUT Put Position

John Mobius — Wed, 19 Dec 2007 12:13:19 -0000

the 21st is, according to program traders, the BUY DAY OF THE YEAR 2007.

program trading accounts 60% of the market today, mainly pro traders and big market makers like GSCO, UBS and CS.

It is not automated trading, it's trading based on statistical research of the odds you have in every day of the year and it also sets the Buy periods and the Sell periods.

Program traders had forecasted at the beginning of 2007 that the half of october would have been the start of a big downturn.

They also said, since long time ago, that the 21st of december the market will start a rally up into Washington's birthday.

If these people decide to buy that day, the market will follow, the rest of the market cannot fight them and will just board the train going up.

To confirm this view, a few days ago I had the news from my friends in Chicago that a big hedge fund has bought some zillion dollars of spoos @1600 for january 2008.

This is called 'strategic positioning'.

Now, I know everybody here is a bear at heart, but sometimes it is better to reflect on what is going on really out there rather than falling in love with our own dearest (short) ideas.

It's up to you guys to do what you want with your trades, I am just trying to contribute to this board with some infos I get from reliable insiders.

Then, as a final note, I want to say I'll be really happy to see the market fall down without parachute and everybody here get ultra-rich with their shorts and puts, but I don't think it is going to happen now.

Re: Increasing $RUT Put Position

John Mobius — Wed, 19 Dec 2007 12:14:40 -0000

sorry, I don't know why I posted up there - reposting here:

the 21st is, according to program traders, the BUY DAY OF THE YEAR 2007.

program trading accounts 60% of the market today, mainly pro traders and big market makers like GSCO, UBS and CS.

It is not automated trading, it's trading based on statistical research of the odds you have in every day of the year and it also sets the Buy periods and the Sell periods.

Program traders had forecasted at the beginning of 2007 that the half of october would have been the start of a big downturn.

They also said, since long time ago, that the 21st of december the market will start a rally up into Washington's birthday.

If these people decide to buy that day, the market will follow, the rest of the market cannot fight them and will just board the train going up.

To confirm this view, a few days ago I had the news from my friends in Chicago that a big hedge fund has bought some zillion dollars of spoos @1600 for january 2008.

This is called 'strategic positioning'.

Now, I know everybody here is a bear at heart, but sometimes it is better to reflect on what is going on really out there rather than falling in love with our own dearest (short) ideas.

It's up to you guys to do what you want with your trades, I am just trying to contribute to this board with some infos I get from reliable insiders.

Re: Increasing $RUT Put Position

John Mobius — Wed, 19 Dec 2007 13:41:06 -0000

Program trading goes a bit deeper than "November as the best month of the year for stocks".

They use computer to calculate what has happened on every trading day in the past, CPI days, unemployments week, specific days of the week, etc, plus they have a special code to color the days and every color has a meaning and can enhance or reduce the long/short trading odds of a certain day.

For example, I objected like you that November was usually bullish, but they said that the end of every year ending in 7, in the last hundred years have always been bearish or more bearish than bullish.

Basically the pattern for this year was bearish in the fall because it was a year 7, but again, then it's bullish after xmas for other statistical reason that at the moment I don't know.

What I think the interesting point here is, is the fact that these people (pro traders and big market makers) are trading according to 'patterns' that are very wide and consider a lot of things, they slam them into a big computer and than get a trading odd for every day of the year and then they trade rigorously that odd.

This has started in th 80s, at the time it was only 1% of the market doing program trading, today it's 60%.

They also follow the PREM$ indicator (not the one on CNBC, the streaming one) and that sets the market direction every day according to them (you need to have the right data feed for this, not all providers have it).

Anyway, now I don't want to look like the program trading ambassador ;-)

I'm just saying that if 60% of the market thinks after xmas is bullish time, we are not going to see a a good time for bears....

Statistics is a great approach to trading, I am developing a system on this, if it works in the future I'll post here some trading signals with high chances to win.

Re: Increasing $RUT Put Position

John Mobius — Wed, 19 Dec 2007 14:22:47 -0000

That's very interesting.

I actually have read some statistics saying reverses are happening mostly on Wednesdays...

Do you mean the 20th was usually the most profitable day for reversals from a previous trend?

Re: Increasing $RUT Put Position

John Mobius — Wed, 19 Dec 2007 15:27:01 -0000

4sight2020,
they have 2 time frames:
intraday (mainly for commodities like the ES contracts in Chicago)
daily (14 days max holding time) for stocks (longs and shorts)

I don't know about VWAP, but scaling is definitely an option in certain cases.

Kate,
60% of the daily trading volume, on average, is coming from program traders.

I'm pretty sure you can find articles about this on the net, anyway I've been told so as well by program traders.
I think they know it .... ;-)

Re: Increasing $RUT Put Position

John Mobius — Wed, 19 Dec 2007 15:48:56 -0000

Hi Jen,

I like your pic...

21st would be a market low, yes, according to program traders and these guys have a lot of computers they use to calculate all the possibilities for the year, basing on statistics of the previous years and everything that has happened on every year of history of trading.

This year was a year ending in 7 and they said all these years '7' end quite bad in history...

They usually nail the long term forecasts, let's see if they nail this one as well...

Re: Increasing $RUT Put Position

John Mobius — Wed, 19 Dec 2007 15:55:18 -0000

thedocument you're right, that's exactly what I expect: sell-off down into 21st, then resurrection...

but maybe they just potter around before xmas around where they are now, you never know...

anyway, a break below MA400 on the S&P500 will change all the story... but we are far from that...

Re: Increasing $RUT Put Position

John Mobius — Wed, 19 Dec 2007 16:35:01 -0000

I agree the calendar thing it's not very exciting... but traders are boring ...... they are just looking for some statistics to trade...
(except for our beloved Tim who is a chart genius)

Here is an idea about FXI and FXP: in theory, if one goes up, the other one goes down, so if you've got a position like FXI and you're worried that you may be 'wrong' , you can cover it with an equal amount of FXP (like 1000$ on FXI can be be covered by 1000$ on FXP - check the leverage because I am not sure if FXI has double leverage like FXP, maybe 500$ on FXP are enough to cover 1000$ on FXI if FXP moves the double).

This way you don't need to sell FXI when you're wrong, just cover it.

You can do this forever, holding always the position you think is 'right' for the long term (this way you get all the move in your favor in the long term)
and using the other one (the 'cover') as a protection in the wrong moments, so you are always earning - you just need to be good enough to jump in and out with the cover at market turns, because if you hold the cover when the market turns agian you are going to lose on that one...

Re: Increasing $RUT Put Position

John Mobius — Wed, 19 Dec 2007 16:50:16 -0000

dancing is great... much better than trading...
bye, have fun!

Re: Increasing $RUT Put Position

John Mobius — Wed, 19 Dec 2007 18:22:24 -0000

20th, 21st, it can even be right after xmas, the point is that the downturn is over and the bulls will take back control of the market till january-feb 2008 according to program traders

let's see what happens, we can never be 100% sure of anything, I watch the market day by day even though I keep an eye on the longer term picture...

Oh, I love Australia btw, it's a fabulous country...

Re: Sputter to a Stop

John Mobius — Wed, 19 Dec 2007 18:26:13 -0000

yes... I did see that as well

Re: How Bad is the Break?

John Mobius — Thu, 20 Dec 2007 15:15:20 -0000

It's not 2sweeties thinking, it's program traders saying...

the theory is that the market will rally since the 21st (or since the first trading day after xmas) up into the end of january 2008

in any case, we may see swings up and down during these periods, but the bottom line according to program trading forecasts is that the market has reached more or less a bottom and it's pointing upwards from here

I'll be trading this theory, so if it is wrong rest assured that I will be massacrated and lose my money

Re: Does the VIX Trend?

John Mobius — Fri, 21 Dec 2007 10:34:27 -0000

I bow to your chart wisdom, Tim King, this is a good point...

Re: Does the VIX Trend?

John Mobius — Fri, 21 Dec 2007 11:50:45 -0000

let me refine the forecast made by program traders: up into january 2008, but with a chance to touch a new low after 1 jan 2008 (allow a 4 days shift on every date I mention)

then rally up into 8 jun 2008 (again 4 days shift possible)

Re: Does the VIX Trend?

John Mobius — Fri, 21 Dec 2007 12:57:56 -0000

the point is that if 60% of the market (aka program traders) believe that is the trend they are going to act (trade) in that direction

the rest of the market will follow

program traders are the trading desks of GSCO, UBS, CS - this people ARE the market makers

Merrill Lynch is not program traders and they are just following (in late) what the leaders do

somehow it is a self-fulfilling prophecy

I don't pretend to be a prophet or say that the above info is damn right, I am just saying: watch out, there is a 60% of the market (big boys, not retail crap like us) that do bow to the program trading rules and forecasts and I am giving you the forecasts

then if tomorrow an atomic bomb drops on Wall Street maybe things can go another way, but besides the extraordinary events (curveballs), pretty much what is going to happen is market up into june 2008

Re: Does the VIX Trend?

John Mobius — Fri, 21 Dec 2007 13:06:44 -0000

I am sorry, I want to point out something: program traders are not planning anything, it is not a conspiracy theory, or a secret masonic sect.

they are just using STATISTICS to calculate the most probable scenarios for the market trends short term and medium term (an also daily and intraday)

then they trade according to the statistical odds they've found

now this is a bit of a simplification, things never go so smooth and linear in life, but these people follow a sort of roadmap made out of statistics

in the end of the day Tim Knight does the same: for example he believe that statistically the Fib lines act as entry/exit points for the IWM, or that H&S patterns are very reliable shorting point.

The difference is that program traders use computers to calculate events of the past that are mainly related to dates, financial reports like CPI, unemployment, etc.

Tim Knight uses his eyes to make decisions based on charts, UBS, GSCO and others they use a piece of paper with numbers on, but it is the same approach.

Everybody, as a trader, is just trying to frame the chaotic and unpredictable market phenomenon, into something predictable and rational.

I hope I made myself more clear.

Re: Does the VIX Trend?

John Mobius — Sat, 22 Dec 2007 03:32:17 -0000

Hey, Merry Xmas to you as well, I'm happy you've been profitable on this widely announced trade.

But keep the guard up, and always make your own final decisions, as you said in another post.

Sometimes my calls are wrong. I am just trying to keep them 80% right - LOL

Re: Does the VIX Trend?

John Mobius — Sat, 22 Dec 2007 03:35:09 -0000

Well, the number of posts has been so high lately and the market has in fact bottomed and turned up.

I think the next down leg will be when this blog will be almost deserted....

A Merry Christmas to everybody, see you after the holidays.

Re: My Most Valuable Lesson from 2007

John Mobius — Fri, 28 Dec 2007 02:47:29 -0000

I agree on taking profit while you are winning, somebody calls this 'scaling out'.

I have seen some Excel tables where you can see clearly that the final profits, on average, are higher, if you start to take money off the table while you are still profitable.

Basically, when the market turns against you, your position has become so little that the damage is minimum.

At that point you can just sell your left position with no regrets.

Of course you have to know 'where to get out'.

I am developing a scaling system based on Fibonacci Levels, I'll post it here for all the readers, after the testing, if it works ;-)

Re: Nice Clean Open

John Mobius — Fri, 28 Dec 2007 13:23:02 -0000

Jake,
what has happened to your previous 'face'/avatar?

I like the Yoda too, anyway...

Re: To the Penny (Again)

John Mobius — Sun, 30 Dec 2007 05:32:16 -0000

If you go here:
http://www.timingcharts.com...

and plot a chart of the COT and the S&P500 back to 2001 (Select: History: 7 years)

you can see that the Commercials of the COT wen NET SHORT -42.144 on the 26th June 2003, from a +18.446 on 19 June 2003.

That's a big change to NET SHORT in a week.

What has happened in the market after that?

Well, the market consolidated a bit until 14 August 2003, then shot up 17% till March 2004 (7 months, 2.4% a month).

In the meanwhile the Commercials of the COT were NET SHORT down to -67.251 on 11 September 2003
and then finally becoming NET LONG again on 22 January 2004.

From January to March 2004 not so much happened, a bit of consolidation, but then the S&P500 went down into August 2004.

Would somebody here insist in calling the COT Report a good market timing system?

There are plenty of examples like this analyzing the COT Report from the Commercials net position angle, the most recent was when they were long in June, promising a big rally and we have seen what has happened since then.

If you analyze the charts at the link provided above you can see by yourself, checking the facts, that the COT may work for some commodities and currencies, but not for the S&P500 and related.

Plus, I will add that being now the Commercials net short, they may be actually announcing a rally, reinforcing the idea of a 2008 rally, that I have proposed here basing on my program trading insider info.

You have to know that institutional investors they usually sell when the market goes up - check this:

http://www.stocktiming.com/...

This is what the Commercials may be doing, they are short, ergo they are 'selling' while the market goes up, and this way they achieve 2 things: hedging themselves in case of corrections (coming when the market goes up) and selling their positions at the top.

I wish a very profitable 2008 to everybody.

Re: Angels in the Architecture

John Mobius — Thu, 03 Jan 2008 04:21:00 -0000

"I was dead wrong on the $XAU"

and you were dead right on a lot of other stuff...

so, thank you for your daily insights