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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: +18.22% We are currently above the S&P index by 19.17% |
| Market Action
Weekly Profit (P/L): -($725) | | A difficult week for shorts but a strong week for the Bulls as the market advanced on a nearly 7% range. When thinking logically about it we only lost just over 1%while the market advanced in the complete opposite direction by nearly 7% (which implies we should have lost 7%) so, this gives me more faith that we can protect assets when we're wrong. The system is trading a less aggressive strategy until we get a full year under out belt, but the theory is holding very steady.
Though losing money is never good, it is the cost of doing business even in the face of such bullish news. And was the news actually bullish? Its only bullish if the market advances, but expectations are so low now almost everything can be considered bullish. You can't fight the tape and we don't, but we stick to our plan and this week we lost, but we are hedged out for the rest of the week. An aggressive strategy would be LONG only but we are acting conservatively until we cover at least 12 months of data to review.
Overall, its been a frustrating summer for a conservative strategy, but we are still up over 18% heading into a shortened weekend and we have just over a quarter to go. Things are going quite well.
As for the market, the ISM number came in and the market rallied an easy 3% then the market took in a less than bad jobless claims and climbed some more, then it took in a Non-Farm payrolls that was less than bad and the market continued to nearly 7% move from the lows.
Europe will likely take the news positively and push the markets higher and we should probably tread water for the rest of the week. We don't expect September to bust 1030, especially in the last two weeks, but expectations and the market aren't necessarily in synch as of late.
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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:
This week we are showing a combined COT of electronic and PIT traded contracts which show the Professional traders are loading up on short positions in anticipation of a weaker 3rd and 4th quarter while the hedgers are about the same expecting poor performance as well. The contrarian small trader is LONG. We feel this week will test 1070 possibly 1080 then sell-off hard as the truth is digested and then slowly rally back.
We expect to see a lower market overall in the next couple months with snap-back rallies spread around.
Well, the sell off actually occurred early in the week and the test of 1080 came and went as the market closed near its difficult to break 1105. The COT being a very early indicator shows a tremendous short position being taken by professionals as Hedgers (RED) continue to be long. In general, portfolio managers are NOT expected a good earnings season, however, if expectations are extremely low, then the market may rally regardless.
We are coming up on expiration, and as open interest climbs above its current level, we should see a coinciding sell off expiration through the end of September to earnings season.
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| Frustrated?
Difficult Summer is finally over |  I am hoping that the rest of the year is better than this past summer. It was a difficult to trade the market for all types of strategies. Snap back rallies, oh how I loathe these when the system has just become SHORT ONLY and we have had 3 this summer alone that took our profits for the weeks leading up to them. Aggressive strategies performed quite well, but we have chosen to be less aggressive and as such we have not pushed through 20% for more than a week at a time.
As for the stock market, things have gotten less bad and expectations have become so low that its hard not to beat the estimates. I feel strongly that the COT is correct, but bullish markets tend to ignore bad news when the expectation is "really bad" and as such bull markets can tend to advance beyond reasonable as what occurred from February to April. As for the newsletter, interest has fallen below 30% (click rate as provided by constant contact) and as such I will likely move this to a bi-weekly or even monthly newsletter until we find a balance above 50% so we don't overload with information. |
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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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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. |
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