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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: +22.28% We are currently above the S&P index by 23.49% |
| Market Action
Weekly Profit (P/L): +$613 | | The market ended almost exactly where it started this last week. The 200-day moving average and a lower than expected GDP (2.4) kept the market in check. However, movement off of critical levels has been extreme to say the least. Trading this week for day traders was probably very difficult depending on your strategy.
The market in July was extremely bullish and to be clear, on a personal note, I have never done well prior to earnings season, I will be glad when its over (its very difficult to model and manage this period). A 7% move in July is reason for the bulls to pile on the contracts but the shorts and the profit taking couldn't get past the 1115 area.
The Stock Trader's almanac proved to be pretty close to accurate (in general feeling) heading into August with all eyes focused on Friday's Non-Farm Payroll and Unemployment numbers. This report is released on the first Friday of the month by the government and this month will determine if the July rally was in fact forward looking or rear-window looking (reviewing those elements that happened from March to July).
Action in the market had a very bullish bias as pullbacks on poor numbers were gobbled up. Are money managers throwing in the towel and just trying to stay with the market from here on out? Are professional hedgers loading up on long positions when volume is at the highest (downward)? Are economists and their "estimates" even close? Are analysts even close?
In our opinion, only price matters and managing the risk when you're wrong. For the economy we hope the numbers on Friday will be good, but regionally it seems there are a lot of workers simply giving up while other areas are seeing some gains.
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| 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:
We expect to test 1120 this week heading into August. With subsequent retracement and test of 1080 as we move into Non-Farm payrolls in August and weakness after corporate earnings are digested.
Pretty much on target for this last week. Buyers were rewarded with the move off of 1080 and sellers rewarded at 1118. Very much range bound. The market will likely be flat with position taking as the week moves closer to the Friday "Jobs" number. No guesswork here, if the number comes in below expectations look for a test of 1080 and additional downside. If the number comes in above expectations, look for 1120 to be tested. The COT is showing little conviction by all participants, but both the Professional (BLUE) and Hedger (RED) are slightly short, typically not a good combination. Look for weakness and further downside if the jobs number is poor.
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| JOBS
Getting back to work |  True unemployment is pretty high right now, though the government only reports "U-3" which doesn't count many workers and part time workers who have stopped looking for full-time employment. This is currently around 9.5, while U-6 looks more like 16% or more. Interestingly, PIMCO (bond funds and management) considers this the "new normal" and I tend to agree. These are the same kinds of periods in which Americans and the world needed to make changes to their tool box of skills (Industrial Revolution, Technology Revolution, Communications Revolution, etc). "Gone" seems to be the keyword when it comes to manufacturing jobs and America needs to get back on track with something "new" rather than trying resurrect the "old" way of doing things. Many are now realizing that they are competing directly against global workers rather than regional workers and this will require most to gain new tools in order to compete and require a significant change at our educational system (which needs its own revolution). Being around smart individuals from all over the world that aspire to have the American dream is something to consider. In order for America to provide jobs, the Americans who want them must be willing to change stride with the "new normal" that is taking place. Americans must become smarter and more effective and be able to access capital that allows them to do what America does best: Entrepreneurship! Businesses have found that they can maintain productivity with less workers, increase revenue with less infrastructure, but this is also temporary and business will be looking for advantages above and beyond efficiency efforts, they will be looking for businesses they can "social network" with and acquire the Entrepreneurial spirit from (we need to make sure these are American companies if we want unemployment to decline). This will include hiring the brightest and more importantly the "hungriest" workers they can find. I believe America will get "hungry" again, but when we turn around, there are billions of Asians and Indians just waiting to grab the American dream as well and are starting to realize that what makes America great is something their governments are coming to terms with as well by providing Small Businesses with advantages to compete and grow them from within to Big Businesses globally. I don't see Unemployment turning around at all until we have more destructive creation (a term I am borrowing) that moves our American workforce into the future rather than trying to retain the past while creating an environment of great passion for creating the next "new" revolution. |
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Sincerely,
Edward Zaremba
Trizen Systems, Inc.
Commodity Trading Advisor
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| | 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. |
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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. |
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