|
|
Hello and Welcome,
Welcome to the new Trizen Systems newsletter. This will be the new format for discussing our algorithmic trading systems and other information. Weekly updates will include Actual Profits/Losses, Commitment of Traders, Articles and Actual Trading screen shots. Pass this along to anyone that you feel would like to understand more about the financial markets, derivatives, and how to trade them successfully. Year to Date (YTD) Performance vs. the S&P 500:
Return on Initial Capital: +19.72% We are currently above the S&P index by 24.22% |
| Market Action
Weekly Profit (P/L): +$800 | | The market bumped into the 200-day moving average and disappointing economic data coincided with a technical top. The market has been hedged since the 3% rally nearly two weeks ago though a "false positive" LONG only was fired middle of this week; however, there were simply too many negative items in the market to take the SHORT primary position off.
 Overall the two strategies, BladeTrader 3.3 Long Only and Short Only have been working on par with expectations. Versions 3.6 of the strategies (handling overnight) have filled in the gaps where 3.3 fail though we have not had these live in light of the volatility and will require more capital prior to deploying live. |
| Commitment of Traders
Bulls-n-Bears | | The COT, or Commitment of Traders, represents a government report that collects all the open positions for all traders in the futures market. It breaks it out into Hedgers, Professionals, and Small Traders. Hedgers maintain large portfolio positions and will hedge their positions using the S&P (so they can protect against falling markets). Professionals speculate and tend to be on the right side of the market opposite the hedgers. In most cases the Small trader (Green) is a contrarian indicator.
Analysis: Lets review last week's COT analysis:
Our analysis on the current environment would continue to see a short term rally into the 50-day moving average, possibly 200-day moving average and a "buy the rumor sell the fact" as professionals sell into the rally and/or move into companies that can survive a U.S. slowdown. Internationals should do well. As is normal from an historic perspective (per the stock trader's almanac) weak earnings typically will have a strong rally BEFORE actual earnings and a sell off after initial earnings. Selling into a rally in the 1080 area should bring benefit later in July.
The market went beyond the 1080 mark but the pull back on Friday has returned a profit. The stock trader's almanac has two Bear days this next week and one Bullish day. The COT agrees with the overall weekly sentiment in the electronic trades and a worrisome "short" covering by Hedgers while professionals go short gives us less incentive to be LONG in this market. The "pit" COT (not shown) is showing a very strong Bearish pattern with Hedgers protecting their portfolios against UPSIDE risk (meaning they are net short their portfolios). Our summary for this week will have a scenario of testing 1040 level with a down, up, down, flat, flat week ahead setting up for yet another short term rally with yet another lower high moving into August.
|
| Mad Money and Fast Money
Are these hosts any good? |  I have had absorbed an enormous amount of material on this year's stock market, from books, television, articles, blogs and of course Cramer and "Fast Money." As is typical of my assessment for any analysis my first question is always "do you trade your recommendations?" and secondly "what's your track record?" In general most can't pass the first one and hardly ever disclose their second or if they do, the record doesn't beat the S&P. So does Cramer meet the grade, or any of the CNBC hosts for that matter?
Since we don't invest in stocks, I barely hear a word when Cramer starts discussing anything related to stocks, but when he starts discussing market action (not Up or Down direction) I tend to listen up. Why would I listen to someone that trades instruments we don't even touch? Because he understands the inner workings of the market and that much is certain. What about the other shows like Fast Money and Kudlow & Co.? Fast money has several managers that also trade instruments we don't and I would never pick a stock based on what they recommend, always do your own homework to make decisions on stocks for a "day" but when they discuss the overall market, they have some inside knowledge. When looking at these talk shows, you must always take it with a grain of salt: Do they feel this way because they got caught short in a rally? Do they feel this way about a stock because they did their homework or did they fall in love with a dog? I only wish they would talk less about individual stocks and more about the inner workings of the day's action. My favorite show (currently), though it doesn't have much character is Kudlow & Co. because he doesn't talk about individual stocks, and as a constant Bull its good to get some insight on what the Bulls are thinking in a Down market. In a Bull market, you should listen to "perma" bears and get their insight on what the SHORTS think. Roubini would be good for this. In general, there is simply not enough of the good nuggets of information on these shows, but they are entertaining on a long flight from NYC to Chicago or Florida. But in general, make sure you read between the lines, because this last week the articles on Cramer were "The Rally is On" with an underlying "buy" connotation, but he was very clear for one second in the show "Wait for a 3% or more correction and buy a little" but if you missed it (and he only said it once) you might have been a buyer at last week's high. Information is always good, but good information is better. Know your source, do your homework, and realize these news reporters have human emotions too. If you catch yourself seeking confirmation about a trade that is losing money, you will find it and possibly lose more. You should stop and ask yourself "Am I listening to this because I want this person to agree with me?" or are you listening to this person to gain additional perspective. The difference is subtle and extremely important. |
|
|
Sincerely,
Edward Zaremba
Trizen Systems, Inc.
Commodity Trading Advisor
|
|
|
| | BladeTrader Version 3.6 | | Version 3.6 and 3.3 have been released. We will have four accounts for each side and version and seperate percentages. |
|
|
|
|
U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures, stocks or options on the same. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL, OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE DISCUSSED WITHIN THIS SITE, SUPPORT AND TEXTS. OUR COURSE(S), PRODUCTS AND SERVICES SHOULD BE USED AS LEARNING AIDS ONLY AND SHOULD NOT BE USED TO INVEST REAL MONEY. IF YOU DECIDE TO INVEST REAL MONEY, ALL TRADING DECISIONS SHOULD BE YOUR OWN. |
|
|
