Thoughts about the markets, automated trading algorithms, artificial intelligence, and lots of other stuff

  • Weekly Commentary through September 5th, 2008

    The bailout of Freddie & Fannie should breathe some life into markets that needed a lift. 

    That means stock
    markets around the world are breathing a little easier after a tough
    last week. For example, Russia and Taiwan each lost over 10%.

    Sometimes a picture is worth a thousand words.  This chart shows how the NASDAQ fared last week.

    080904 NQ Drop

    The chart doesn't need fancy indicators or words to tell the market's story: it went down.

    Last week I said a move down, here, wouldn't surprise me.  We got more than I expected, because it was unrelenting.  After a big gap-up to start the trading week, it was straight down from there.

    Now for the S&P 500 Index. 

    080905 SPX Trend 500p

    This chart shows the monthly displaced moving average
    channel for the S&P 500 index. It typically acts as support or resistance to the markets longer trend.  Notice how the attempted rally in August moved the
    index closer to the channel; but the market wiped-out that
    effort in just a few days of trading. 

    What about the Dow Jones industrial average?  Which economic anxieties were the catalysts as the Dow plummeted 344.65 points on Thursday ?  Was it that initial unemployment claims were near a 5-year high, the weak retail sales report, or fear of a global slow-down?

    There is probably a little more work to be done on the downside, setting-up a decent bounce.  Again, historical patterns show a year-end rally typically starts in late September or early October. And the 4-year Presidential cycle pattern also favors a year-end rally.

    Here are a few of the posts I found interesting this week:

    • U.S. Near Deal To Save Freddie and Fannie (WSJ, Washington Post)
    • Another Bank Fails: 11th this year, as Regulators shut Silver State (WSJ, FDIC)
    • Swing-Trading the Sell-Off (TradingMarkets via Forbes)
    • Who's afraid of Sovereign Wealth Funds? (Minyanville)
    • James Surowiecki on "That Uncertain Feeling" affecting the herd of investors (New Yorker)
    • Unemployment hits 6.1% and a closer look doesn't make it prettier (Dash of Insight, Portfolio)
    • Bank of Canada Offers a Downbeat Outlook while holding rates steady (NYTimes)
    • Did governments work together to save the Dollar? (Clusterstock)
    • BMW sales up 2% last month, year-over-year (Bloomberg)
    • Doug Kass says this is what market bottoms look like (Street.com)
    • Trader Mike says we're not oversold yet (Trader Mike)
    • McCain speech seen by record number of viewers (Bloomberg)
    • Apple's iPhone making gains in business users (WSJ)
    • Yahoo Below $19: Microsoft's $31 Offer is Looking Pretty Good Right Now (Silicon Alley Investor)

    And, a little bit extra:

    • Technology That Out-thinks Us: A Partner or a Master? (NYTimes)
    • Numerati: How math models improve productivity and management (BusinessWeek)
    • Lines and Bubbles and Bars, Oh My! New Ways to Sift and Visualize Data  (NYTimes)
    • Microsoft has been granted a patent on 'Page Up' and 'Page Down' keystrokes (ZDNet)
    • Invisibility Cloak becoming a reality; the challenge is seeing out of it (New Scientist, More)
    • Facebook's hottest games (Forbes)
    • Hulu Getting NBC Shows Before TV Does (Silicon Alley Investor)
    • ESPN and Electronic Arts Innovating Play-By-Play Commentary (NYTimes)
    • Google developed its own web browser called Chrome (CNet, WSJ)
    • Andy Kessler's take on what Google is really doing with Chrome (Andy Kessler)
    • Is the first Jerry Seinfeld ad for Microsoft funny?  You decide (NextWeb)
    • Download Limits: Is "all-you-can-eat" Internet a thing of the past? (ABC)

  • Weekly Commentary through September 5th, 2008

    The bailout of Freddie & Fannie should breathe some life into markets that needed a lift. 

    That means stock
    markets around the world are breathing a little easier after a tough
    last week. For example, Russia and Taiwan each lost over 10%.

    Sometimes a picture is worth a thousand words.  This chart shows how the NASDAQ fared last week.

    080904 NQ Drop

    The chart doesn't need fancy indicators or words to tell the market's story: it went down.

    Last week I said a move down, here, wouldn't surprise me.  We got more than I expected, because it was unrelenting.  After a big gap-up to start the trading week, it was straight down from there.

    Now for the S&P 500 Index. 

    080905 SPX Trend 500p

    This chart shows the monthly displaced moving average
    channel for the S&P 500 index. It typically acts as support or resistance to the markets longer trend.  Notice how the attempted rally in August moved the
    index closer to the channel; but the market wiped-out that
    effort in just a few days of trading. 

    What about the Dow Jones industrial average?  Which economic anxieties were the catalysts as the Dow plummeted 344.65 points on Thursday ?  Was it that initial unemployment claims were near a 5-year high, the weak retail sales report, or fear of a global slow-down?

    There is probably a little more work to be done on the downside, setting-up a decent bounce.  Again, historical patterns show a year-end rally typically starts in late September or early October. And the 4-year Presidential cycle pattern also favors a year-end rally.

    Here are a few of the posts I found interesting this week:

    • U.S. Near Deal To Save Freddie and Fannie (WSJ, Washington Post)
    • Another Bank Fails: 11th this year, as Regulators shut Silver State (WSJ, FDIC)
    • Swing-Trading the Sell-Off (TradingMarkets via Forbes)
    • Who's afraid of Sovereign Wealth Funds? (Minyanville)
    • James Surowiecki on "That Uncertain Feeling" affecting the herd of investors (New Yorker)
    • Unemployment hits 6.1% and a closer look doesn't make it prettier (Dash of Insight, Portfolio)
    • Bank of Canada Offers a Downbeat Outlook while holding rates steady (NYTimes)
    • Did governments work together to save the Dollar? (Clusterstock)
    • BMW sales up 2% last month, year-over-year (Bloomberg)
    • Doug Kass says this is what market bottoms look like (Street.com)
    • Trader Mike says we're not oversold yet (Trader Mike)
    • McCain speech seen by record number of viewers (Bloomberg)
    • Apple's iPhone making gains in business users (WSJ)
    • Yahoo Below $19: Microsoft's $31 Offer is Looking Pretty Good Right Now (Silicon Alley Investor)

    And, a little bit extra:

    • Technology That Out-thinks Us: A Partner or a Master? (NYTimes)
    • Numerati: How math models improve productivity and management (BusinessWeek)
    • Lines and Bubbles and Bars, Oh My! New Ways to Sift and Visualize Data  (NYTimes)
    • Microsoft has been granted a patent on 'Page Up' and 'Page Down' keystrokes (ZDNet)
    • Invisibility Cloak becoming a reality; the challenge is seeing out of it (New Scientist, More)
    • Facebook's hottest games (Forbes)
    • Hulu Getting NBC Shows Before TV Does (Silicon Alley Investor)
    • ESPN and Electronic Arts Innovating Play-By-Play Commentary (NYTimes)
    • Google developed its own web browser called Chrome (CNet, WSJ)
    • Andy Kessler's take on what Google is really doing with Chrome (Andy Kessler)
    • Is the first Jerry Seinfeld ad for Microsoft funny?  You decide (NextWeb)
    • Download Limits: Is "all-you-can-eat" Internet a thing of the past? (ABC)

  • Weekly Commentary Charts through August 29, 2008

    Another week of big swings in thinly-traded markets.  There is a trading range in the S&P 500 where the bears defend the top (1295) and the bulls defend the bottom (1260). So far, no one is winning. Let's see which way things break; though a short-term move down here wouldn't surprise me.

    Historical patterns show a year-end rally typically starts in late September or early October. The 4-year Presidential cycle pattern also favors a year-end rally.

    Here are a few of the posts I found interesting this week:

    • Lehman in urgent talks to secure a capital injection before earnings call (UK Telegraph)
    • Worker Confidence sinks to levels of last recession (WSJ)
    • Nightmare on Wall Street: Why the Credit Crisis has lasted so long? (Economist)
    • Candidates on the Credit Crisis (Dash of Insight)
    • Does history favor Democrats' economic plan? (NYTimes)
    • Victor Niederhoffer on why the Markets continue to surprise him (Daily Speculations)
    • A positive sign for markets: 64% of stocks above their 50-day averages (Bespoke)
    • Is the "Bearish Crescendo" a contrarian sign of a market Bottom? (Shaeffers)
    • Ten factors that contribute to Market Mood Swings (Seeking Alpha)
    • To make a stock "pop" – Innovate (NYTimes)

    And, a little bit extra:

    • Great Photos from Beijing Olympics (Boston Globe, LA Times, Time, FT,The Star, S.I.)
    • The Business of College Football is probably Bigger than you think (Forbes)
    • Does it Matter that Internet Traffic is beginning to bypass the US? (NYTimes)
    • Interesting comparison of housing market price declines in various cities (Bespoke)
    • Obama's acceptance speech for Democratic Presidential Nomination (Politico, Many Eyes)
    • Air-Ball: Game Ball Delivered by Parachute; Skydivers land in Wrong Stadium (Inquirer)
    • Microsoft releases beta of a major new version of Internet Explorer (WSJ, Microsoft)

  • Weekly Commentary Charts through August 29, 2008

    Another week of big swings in thinly-traded markets.  There is a trading range in the S&P 500 where the bears defend the top (1295) and the bulls defend the bottom (1260). So far, no one is winning. Let's see which way things break; though a short-term move down here wouldn't surprise me.

    Historical patterns show a year-end rally typically starts in late September or early October. The 4-year Presidential cycle pattern also favors a year-end rally.

    Here are a few of the posts I found interesting this week:

    • Lehman in urgent talks to secure a capital injection before earnings call (UK Telegraph)
    • Worker Confidence sinks to levels of last recession (WSJ)
    • Nightmare on Wall Street: Why the Credit Crisis has lasted so long? (Economist)
    • Candidates on the Credit Crisis (Dash of Insight)
    • Does history favor Democrats' economic plan? (NYTimes)
    • Victor Niederhoffer on why the Markets continue to surprise him (Daily Speculations)
    • A positive sign for markets: 64% of stocks above their 50-day averages (Bespoke)
    • Is the "Bearish Crescendo" a contrarian sign of a market Bottom? (Shaeffers)
    • Ten factors that contribute to Market Mood Swings (Seeking Alpha)
    • To make a stock "pop" – Innovate (NYTimes)

    And, a little bit extra:

    • Great Photos from Beijing Olympics (Boston Globe, LA Times, Time, FT,The Star, S.I.)
    • The Business of College Football is probably Bigger than you think (Forbes)
    • Does it Matter that Internet Traffic is beginning to bypass the US? (NYTimes)
    • Interesting comparison of housing market price declines in various cities (Bespoke)
    • Obama's acceptance speech for Democratic Presidential Nomination (Politico, Many Eyes)
    • Air-Ball: Game Ball Delivered by Parachute; Skydivers land in Wrong Stadium (Inquirer)
    • Microsoft releases beta of a major new version of Internet Explorer (WSJ, Microsoft)

  • Doing What Works – Insight Happens in an Instant

    080829 kung fu panda poster 200p
    Colin Powell said that "There are no secrets to success. It is the result of preparation, hard work, and learning from failure." 

    On the other hand, I've found that insight often happens in an instant. 

    In Kung Fu Panda,
    an overweight,  seemingly uncoordinated panda transforms into the
    unlikely hero of the story who battles evil and saves his village.  The
    turning point?  His teacher recognized that during a quest for a snack,
    nothing could keep our hero from his food.  By integrating that in the
    training routine, a star was born.

    OK, that was a Disney movie.  Maybe you want a real-life example?

    My
    youngest son, Zach, is learning to drive.  Currently, I am working on
    improving his mental map of where he is, where he is going, and how to
    get there.

    My early assessment was that he did not have much of
    a sense of direction.  This was making our time in the car together
    either existentially funny – or stressful – depending on my mood.

    "What
    comes next?" was often followed by a blank look or a head shake. The
    answer to "Which way do we turn?" was a seemingly random "north,"
    "south," "east," "west," "right," or "left" — or sometimes several of
    them.

    Apparently, I was asking the wrong questions.  He has an
    encyclopedic knowledge of where restaurants are, and an uncanny ability
    to get there.  We just have to plot his course with the right
    milestones (fast-food, pizza and ice cream).

    He explained to me, "hey, I just do what works."  And that makes a lot of sense; I'm just glad he found something that works.

  • Doing What Works – Insight Happens in an Instant

    080829 kung fu panda poster 200p
    Colin Powell said that "There are no secrets to success. It is the result of preparation, hard work, and learning from failure." 

    On the other hand, I've found that insight often happens in an instant. 

    In Kung Fu Panda,
    an overweight,  seemingly uncoordinated panda transforms into the
    unlikely hero of the story who battles evil and saves his village.  The
    turning point?  His teacher recognized that during a quest for a snack,
    nothing could keep our hero from his food.  By integrating that in the
    training routine, a star was born.

    OK, that was a Disney movie.  Maybe you want a real-life example?

    My
    youngest son, Zach, is learning to drive.  Currently, I am working on
    improving his mental map of where he is, where he is going, and how to
    get there.

    My early assessment was that he did not have much of
    a sense of direction.  This was making our time in the car together
    either existentially funny – or stressful – depending on my mood.

    "What
    comes next?" was often followed by a blank look or a head shake. The
    answer to "Which way do we turn?" was a seemingly random "north,"
    "south," "east," "west," "right," or "left" — or sometimes several of
    them.

    Apparently, I was asking the wrong questions.  He has an
    encyclopedic knowledge of where restaurants are, and an uncanny ability
    to get there.  We just have to plot his course with the right
    milestones (fast-food, pizza and ice cream).

    He explained to me, "hey, I just do what works."  And that makes a lot of sense; I'm just glad he found something that works.

  • Before He Trades Video

    This tongue-in-cheek music video, called "Before He Trades," re-makes a popular Carrie Underwood song as a trading reminder.


    Here is the direct link.  From John Carter.

  • New Imaging Tools Will Change How You Access Information

    Photosynth is a new technology from Microsoft. 
    It is software that could transform the way we look at digital images.
    Using still photos (and more), Photosynth builds a breathtaking new
    form of composite image, and lets us navigate them.  This service turns multiple photos of a scene or site — say, an art gallery or a building — into a 3-D scene you can virtually "walk" through on the Web.

    080829 Photosynth of Venice Canals 600p

    Ten-years ago I saw something like this; it was the interface to a game called Myst.  It was ground-breaking at the time.

    In the early phase of adoption for Photosynth, I expect to see things like the 3-D rendering of the Canals in Venice.  It is an easily accessible way to explore the concept.  Soon, however, this could evolve into a new way to hyper-link a wide range of data, meta-data, and business information.

    To get a better idea of what this can do, watch this video from the Ted Conference introducing Photosynth.

    Think about how much the web has already changed how you do research?  Also, because it is so easy to do now, think how much more research you do.  For example, I'm amazed at how often I search Google or Wikipedia. Similarly, I use sites like Digg, Technorati, Regator, and various blogs to find relevant information – even if I didn't know I was looking for it.

    Photosynth is different, and in some ways a step beyond, those research tools.  It is graphics-centric instead of text-centric.  And I can imagine a new type of front-end (a new framework) for accessing information stored virtually anywhere.  Consequently, I expect to see a lot more of this, and things like it.

    Click here to explore some interesting Synths.  You can make your own, too.  For example, here is a link to a Photosynth of, my son, Ben's dorm room at Duke.  It took him about a half-hour to make it.

    Note: you can use arrows on the screen to navigate a Photosynth image; and the "Space Bar" is helpful, too, because it jumps to the next cluster of 3-D images.

  • New Imaging Tools Will Change How You Access Information

    Photosynth is a new technology from Microsoft. 
    It is software that could transform the way we look at digital images.
    Using still photos (and more), Photosynth builds a breathtaking new
    form of composite image, and lets us navigate them.  This service turns multiple photos of a scene or site — say, an art gallery or a building — into a 3-D scene you can virtually "walk" through on the Web.

    080829 Photosynth of Venice Canals 600p

    Ten-years ago I saw something like this; it was the interface to a game called Myst.  It was ground-breaking at the time.

    In the early phase of adoption for Photosynth, I expect to see things like the 3-D rendering of the Canals in Venice.  It is an easily accessible way to explore the concept.  Soon, however, this could evolve into a new way to hyper-link a wide range of data, meta-data, and business information.

    To get a better idea of what this can do, watch this video from the Ted Conference introducing Photosynth.

    Think about how much the web has already changed how you do research?  Also, because it is so easy to do now, think how much more research you do.  For example, I'm amazed at how often I search Google or Wikipedia. Similarly, I use sites like Digg, Technorati, Regator, and various blogs to find relevant information – even if I didn't know I was looking for it.

    Photosynth is different, and in some ways a step beyond, those research tools.  It is graphics-centric instead of text-centric.  And I can imagine a new type of front-end (a new framework) for accessing information stored virtually anywhere.  Consequently, I expect to see a lot more of this, and things like it.

    Click here to explore some interesting Synths.  You can make your own, too.  For example, here is a link to a Photosynth of, my son, Ben's dorm room at Duke.  It took him about a half-hour to make it.

    Note: you can use arrows on the screen to navigate a Photosynth image; and the "Space Bar" is helpful, too, because it jumps to the next cluster of 3-D images.

  • An Early Sign of Economic Recovery?

    080822 Cowboys Stadium 200p
    I got to visit the Cowboys' new $1.1 Billion Dollar stadium, which opens next year.

    It is a lot bigger than the model in this picture.

    There is a lot of development happening here in Texas.  Part of it is because of Oil & Gas money.  I suspect that part also is an early sign of economic recovery.

    P.S., My corporate lawyer tells me deal-flow is great here too.