DVI is Da Bomb!
I upgraded my computer this weekend and as part of the upgrades, my new video card had a DVI output. I’ve had a 20″ Dell LCD for about 4 years, but had always been running it off VGA since none of my cards supported DVI. I just got a cable tonight and plugged it in, the difference is staggering. Everything is so much clearer (not that it was blurry before), no more messing w/ brightness and contrast (only brightness), no more auto-syncing, it’s wonderful.
Do yourself a favor, if your video card supports DVI (and you have an LCD monitor), get yourself a DVI cable, your eyes will thank you.
- John
Chrysler - You’re NOT welcome
These companies never cease to amaze me. First they don’t have enough money to make it through Jan. so the beg for it from the taxpayers, they get their money and then the spend it on advertising boasting about it. Amazing.
New look for the New Year
The blog was in dire need of some updating, so I updated the theme, updated wordpress and will be making a few more changes over the coming days. BTW, wordpress 2.7 is very impressive, the sidebar/widgets model makes configuration a breeze. I highly recommend it.
-John
The Best of The Trading Digest
Everyone else is doing best of lists, so I thought I’d comb through the archives and pick out some of my favorite posts.
Here’s a dandy from August of 2007 entitled “Why hedge funds fail“. An appropriate topic for this year.
- John
Interesting article by Alan Farley on recent volatility
Not sure what I think about it yet, but provides some food for thought…
What does a 5 year low mean historically?
Much was made in the press recently about the major indices closing at 5 year lows. I was curious as to know what has happened historically in the 12 months after a 5 year closing low. Since the S&P 500 and Nasdaq are relatively recent indices, I used the Dow for my testing.
In this scenario, if the Dow closed at a 5 year low (1250 trading days), then buy at market the next day and sell after 250 trading days (approx 1 year). Here are the results:
Notice there were only 6 total trades, 4 were profitable, the 2 unprofitable ones were 5/21/1931->5/18/1932 w/ a loss of 62% and the current trade which entered 10/8/2008 and is currently down 6.4%.
What I also did was try the reverse, what if you bought a 5 year closing high and held it for one year. Here are the results of that:
As you can see, this scenario has occurred far more frequently (38 trades) and is a slightly more profitable setup. The PF is larger that of the 5 year low and the largest drawdown is significantly less.
What conclusions can you draw from this? While obviously both scenarios are generally positive (due to the historical upward trending of stocks), it’s pretty clear that buying at 5 year lows is not any type of a “once in a lifetime bargain” and in fact doing the exact opposite (buying at 5 year highs) proves to have been a better strategy historically. Remember that when the market does eventually make new highs and the media is warning of stocks being “overvalued”…
- John
Just in case you forget how lucky we are
I’m normally not one for sentiments, but in these dark times, it’s easy to feel depressed with the constant stream of bad news, market down, GDP negative, bankruptcies, layoffs, etc. However, no matter how bad the news about our country, realize that we are about to elect a man to the most powerful office in the world who is the son of two regular people, one of whom was not even an American citizen. He was raised primarily by his single mother and grandmother in an extremely unpowerful and unwealthy family. As recently as 2000, his own party would not even give him a floor pass to their convention. I’m not aware of anywhere else in the world today or historically such freedom and opportunity has existed and for that, I feel very fortunate.
- John
The Investor’s Mind
Dave found this picture but he’s busy trading so I’ll post it.
I will get the T2108 Exits Posted Tomorrow
Family is visiting and I have had my hands full the last week. I will get all the T2108 exits exits posted for your review tomorrow. You can always gauge the Ultmate Oscillator at stockcharts.com with the default setting.
Dave Johnson
Why AAPL is gaining market share
Just got a new laptop at work, strange thing happens, I plug in the headphones but the speakers don’t mute. So while trying to listen to music at work through my headphones it’s also playing through my speakers.
No problem I think, I’ll do a quick search, find a setting/driver I missed and be on my way. This is what I found.
Unbeleivable.
- John
Inflation in action
My father-in-law owns an irrigation/landscaping company that primarily installs sprinklers systems. Last night he mentioned that in the past week, the wholesale price of PVC pipe (plastic pipes used in pretty much everything) has risen 25%. This means that all bids and prices are increasing by $150+ per install just to cover the extra raw material costs.
This is the type of trickle down that is just starting to work it’s way into the system from oil being $120+. These type of increases take months to make their way through the supply chain and be reflected in consumer prices.
- John
Google (GOOG) earnings call summarized
The number of paid clicks on the Web sites operated by Google and its partners during the second quarter fell 1 percent from the first quarter, the first sequential downturn that the company has ever reported in the category. The 19 percent year-over-year increase in Google’s paid clicks also was the company’s lowest ever.
- John
IYF Hits Profit Target (Again)
IYF hit the 3% Profit Target this morning.
Here is a post with the present holdings.
Many of these will probably start to exit based on a cross of the Ultimate Oscillator crossing the 50 line. We’ll know at the close.
Once we get back to cash I will do a full review.
Dave Johnson
Stoning Inanimate Objects
This Bloomberg headline caught my eye:
The history of dumbasses is a well littered trail, yet the ones that got together at the Karachi Exchange decided to :
In Karachi investors today broke windows, threw plant holders in the parking lot of the building, burned shareholder statements and at least one protester was injured, prompting intervention by police and the paramilitary. Investors were also protesting outside the Lahore and Islamabad stock exchanges, Geo Television reported.
and
Police surrounded the exchange after hundreds of investors stoned the building and shouted anti-government slogans. They directed their ire at the government and Securities and Exchange Commission of Pakistan, which this week removed a 1 percent daily limit on price declines. The measure was aimed at halting a slide that wiped out $30 billion of Pakistan’s market value in three months, threatening to undo a 14-fold rally since 2001.
That is right folks. A 14 fold rally since 2001. Yet prices slide 25% in a short period and this requires stoning the building. Here is the recent chart. Were there any obvious warning signs in the past 3 months? Of course.
Dave Johnson
That’s How I Roll….
Source:
http://bigeyedeer.wordpress.com/2008/07/15/this-cartoon-wrote-a-sweary-word-on-your-toilet-wall/
Dave Johnson
Rule #1 of investing, Never trust management
From Sept. of 2006 (via The Big Picture)
Next week should be fun
One one hand, we have news that Bush has given an “amber-light” to the Israelis to bomb Iran.
On the other we have a largest bank failure in decades, which is will cost the FDIC billions.
And of course we have the beginning of earnings season where we learn how realistic those 3rd quarter EPS projections really are…
No summer doldrums this year :).
- John
How we got into this mess
Whenever you read a story about declining consumer savings rates or increasing consumer debt load followed by some media explanation of why it’s not the consumers fault and it’s due to economic “headwinds”, remember this picture.
Consumers are lining up for hours for the opportunity to spend $199 to buy a new iPhone. Has there ever been any activity that makes less economic sense than waiting for hours/days in line to buy a product that will be mass produced to the point of saturation? It boggles my mind.
- John
Quick T2108 ETF Trade Update
Below you will find entry prices followed by price targets for exits. Yesterdays rally brought some a bit closer.
IYF 67.66 - 69.69
IWP 102.22 - 105.29
EWA 25.69 - 26.46
IWB 70.79 - 72.91
EWY 51.43 - 52.97
EWT 14.21 - 14.64
EWU 20.81 - 21.43
EPP 132.89 - 136.88
The other exit criteria is the Ultimate Oscillator crossing above the 50 level.
In this foray below 20 on the T2108 indicator we have had 9 entries. IYF was entered twice with the first entry exiting at its 3% profit target. We presently have a full position now with 8 holdings.
Dave Johnson
Last 2 Entries for T2108 ETF System
Tomorrow the system will be buying:
IYF- We were in and out of that profitably last week
IWP
Here is a look at those ugly charts.
These are at tomorrows opening price.
This brings the system to 8 full positions and the system will no longer add any more positions unless we get some exits.
Dave Johnson
Only one entry for ETF system tomorrow
Only one signal for tomorrow and that is:
EWA
Australia
Alright Australia it is. With the the one exit today this kind of evens things back out again at 6 holdings. Maybe tomorrow we can get a really really big down day to fill out the portfolio. We’ll see 
Dave Johnson
IYF hits 3% profit target
IYF hit the profit target at 69.45 this morning. Figures it is the financial one that hits first
The 3% targets for the other 5 entries are as follows:
IWB 72.91
EWY 52.97
EWT 14.64
EWU 21.43
EPP 136.88
Remember the other potential exit is the Ultimate Oscillator crossing 50 if the profit target is not reached.
Dave Johnson
Quick correction
On my ETF list of holdings in yesterdays post I wrote one of them twice.
EWU should be in place of that second EWY. I posted it that morning, I just screwed up the list.
EWU entry was @ 20.81
Dave Johnson
We have 6 holdings..
Ok, we have 6 holding in our portfolio that can hold 8 total positions. With today’s mini-reversal we have no new entries for tomorrow because no ETF’s crossed below the level of 30 on the Ultimate Oscillator.
Remember our exit is either a 3% profit target or the Ultimate Oscillator crosses above the 50 level.
Here are the 6 holdings and their entry prices.
IWB @ 70.79
EWY @ 51.43
EWT @ 14.21
EWY @ 51.43
IYF @ 67.43
EPP @ 132.89
Remember the only reason I am trying to highlight this system is because it has a couple key elements I have found in backtesting.
1) High win/loss percentage
2) Favorable profit factor when comparing cumulative profits versus loses over the long term
3) Although risk is open ended it can be mitigated by using a small percentage of the overall portfolio
If, again If, this catches a major swing point you just might be able to let a small portion of these positions run with a major swing low as a point defense. If the overall trade begins to hit profit targets make sure those runners are small enough that if they hit those swing lows you are still ensured a profitable trade. Keep the overall trade small and if those runners represent 1% of your overall portfolio you just might have the basis of a some exposure to extreme oversold conditions.
Dave Johnson
T2108 ETF Entries Are….
Todays entries are:
IYF and EPP
Big gap down which helps a bit
Dave Johnson
Next 2 T2108 ETF Entries
The next 2 entries for the T2108 ETF system are:
EWT
EWU
Taiwan and United Kingdom.
This brings us to 4 holdings and we have 4 more slots available as long as we remain under 20 on the indicator. Market is very very very fear wrought at the moment. It has the feel of a really big down move coming. But I suppose that is why bounces in this type of environment can be quite powerful as people look to quickly gain long exposure and shorts cover their positions. Either way we’ll know soon enough.
I see John did a post. I have reasons for not keeping up with the blog that are a bit different. I am quite lazy and get kind of bored trying to post same the same crap over and over. Maybe the blog muse will visit me sometime soon.
Dave Johnson
Less is More
As some of you may have noticed, I haven’t been posting much recently due to multiple factors. The first being my “real” job has been taking up significantly more of my time, primarily due to business travel. Amazing how spending hours stranded at random airports cuts into your stock blogging time.
The second is that I’ve been trying a slightly different approach to my trading. Where I used to be a voracious reader of everything market related (news, blogs, books, forums, etc), this past quarter I’ve done little more than update telechart to look at charts, read my favorite blog (alchemy of trading) and of course IM/talk with Dave.
In spending less time, I’ve noticed my trading has become less taxing. I’m no longer worried if I miss an open, or if I haven’t read any news. When on business trips, days go by without me even having a chance to look at my IB account.
The result of all this has been positive, my account has been doing well and trading no longer feels as much like a 2nd job. I’m not worried about missing a few days action one way or the other. Trading is such a strange thing, unlike almost every other profession, the results are often not at all commiserate with the amount of effort expended. For those of you that have full time jobs, remember that making 10% spending 10 hrs per week, is a much greater return on your time than making 15% spending 50 hrs per week.
- John
Time to turn on T2108 System
Some of you may remember the system that triggers when we get very oversold on the T2108 indicator that I have highlighted in the past.
Today that system is buying:
IWB and MDY
If we get another big down day you can expect it to buy another pair of ETF’s tomorrow. Remember based upon historical drawdowns keep this system a small portion of your total portfolio. 10% is about right. Have to do something with my high cash position since equity trend stuff went to cash over last few weeks.
Have a Great Day!
Dave Johnson
What would you propose?
Richard Fisher head of the Dallas Federal Reserve gave a speech entitled “Storms on the Horizon” yesterday. Below is a link to the text.
What would be your solution to the problem? or if you even perceive it as a problem.
Raise taxes? Massively cut discretionary spending? Do you think the next administration will address this problem?
Dave Johnson
Interesting thread on Wealth-Lab forum
These forums are much less interesting since Fidelity bought them, but every now and then there’s a good one. I’ve found this one interesting.
- John
This chart look similar to the current S&P 500?
Any guesses on when it’s from? (hint, it’s a daily)
