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

  • Cell Phone Popcorn Popper

    Up till now, I've kept my cell phone in my front pants pocket.  After watching these videos I'm worried about fried eggs.  Pretty cool … or hot … depending on the perspective.

    Here is the direct link.

    Just in case one wasn't enough.

    Here is the direct link.

    So, what does Snopes say?

  • Cell Phone Popcorn Popper

    Up till now, I've kept my cell phone in my front pants pocket.  After watching these videos I'm worried about fried eggs.  Pretty cool … or hot … depending on the perspective.

    Here is the direct link.

    Just in case one wasn't enough.

    Here is the direct link.

    So, what does Snopes say?

  • “It’s About Time” — Or, Isn’t it?

    There is a difference between working on a problem and focusing on a solution.  Thus, trying to improve performance is different than focusing on limiting losses. 

    Einstein said: "We cannot solve our problems with the same thinking we used when we created them."

    It got me thinking. Most trading charts are time-based (meaning that price change is measured against time).  But maybe looking at price change in other ways would provide a different perspective.

     
    There are several interesting techniques gaining favor among technical traders.  These include measuring price change based on a certain volume traded or a constant range of directional movement.  Here is a link to a brief article about this in StockCharts.com.
     
    In some respects, these are "smoothing" techniques.  Nonetheless, they present a different picture of the market, and are something worth investigating.
     
    Here is how the S&P 500 Index looks like in one of these charts.
     
    080613 SPX Renko Chart

  • “It’s About Time” — Or, Isn’t it?

    There is a difference between working on a problem and focusing on a solution.  Thus, trying to improve performance is different than focusing on limiting losses. 

    Einstein said: "We cannot solve our problems with the same thinking we used when we created them."

    It got me thinking. Most trading charts are time-based (meaning that price change is measured against time).  But maybe looking at price change in other ways would provide a different perspective.

     
    There are several interesting techniques gaining favor among technical traders.  These include measuring price change based on a certain volume traded or a constant range of directional movement.  Here is a link to a brief article about this in StockCharts.com.
     
    In some respects, these are "smoothing" techniques.  Nonetheless, they present a different picture of the market, and are something worth investigating.
     
    Here is how the S&P 500 Index looks like in one of these charts.
     
    080613 SPX Renko Chart

  • Market Commentary from June 13th, 2008

    Wall Street is expecting another volatile week.  In addition to our regular complement of oil price spikes, Dollar worries, inflation fears and economic reports on home building and wholesales prices … this week, the biggest news might be the quarterly earnings reports from Morgan Stanley (MS), Goldman Sachs (GS), and Lehman Brothers (LEH).

    Currently, just 33% of stocks in the S&P 500 are above their 50-day moving averages.  Much of this weakness has come from the Financial sector.  Only 17% of Financials are above their 50-day moving averages.  To see how ugly that sector has been, take a look at the charts of the Financial Sector SPDR (XLF) and the Banking Index ($BKX).  Both are back at, or near, their lows. 

    But, next week also has Phi Day.  What?  Your friendly Fibonacci traders may note that June 18 is 6-18 (and everyone knows how important .618 is in trading).  If not, then you haven't spent time at Prechter's site.  Even if you don't believe it, enough traders watch the 61.8% retracement level, it is worth monitoring.  For example, check out the current chart on the Dow.

    080613 INDU Fib Level 600p
    Of course, not all US Equity Indices have fallen that far.  In contrast, note the relative strength of the S&P MidCap Index.

    080613 MID Relative Strength 600p

    Here are some of the things that caught my eye this week:

  • Market Commentary from June 13th, 2008

    Wall Street is expecting another volatile week.  In addition to our regular complement of oil price spikes, Dollar worries, inflation fears and economic reports on home building and wholesales prices … this week, the biggest news might be the quarterly earnings reports from Morgan Stanley (MS), Goldman Sachs (GS), and Lehman Brothers (LEH).

    Currently, just 33% of stocks in the S&P 500 are above their 50-day moving averages.  Much of this weakness has come from the Financial sector.  Only 17% of Financials are above their 50-day moving averages.  To see how ugly that sector has been, take a look at the charts of the Financial Sector SPDR (XLF) and the Banking Index ($BKX).  Both are back at, or near, their lows. 

    But, next week also has Phi Day.  What?  Your friendly Fibonacci traders may note that June 18 is 6-18 (and everyone knows how important .618 is in trading).  If not, then you haven't spent time at Prechter's site.  Even if you don't believe it, enough traders watch the 61.8% retracement level, it is worth monitoring.  For example, check out the current chart on the Dow.

    080613 INDU Fib Level 600p
    Of course, not all US Equity Indices have fallen that far.  In contrast, note the relative strength of the S&P MidCap Index.

    080613 MID Relative Strength 600p

    Here are some of the things that caught my eye this week:

  • A New Chart Pattern

    I loved Nassim Nicholas Taleb's book "Fooled by Randomness".  And everyone is talking about his recent book "The Black Swan".

    With tongue-in-cheek, the next chart shows a very rare Black Swan formation – note both feet and neck are
    complete and the rare vampire tooth variation is in place.  This is very
    bad. Very, very bad.

    Blackswanchart joke

    from Elite Trader.

  • Virgin America(n)

    Fuel costs have certainly affected the average American.  It is possible that these added costs might have an even bigger effect on another American (as in, the airline).  Industry-wide losses for airlines are blamed on fuel cost too. And AA is no exception.

    While I was on a American Airlines flight, recently, I overheard two flight attendants talking.  The topic was that they were worried that AA was going to get bought by Virgin.  Of course, US airlines can't be purchased by foreign concerns.  However, they meant Virgin America.  At first, I didn't think much about it.

    They noted that some very senior AA alumns had high positions there.  And that rumors were that the first condition of the purported deal was that Virgin didn't want American Eagle (which is now being shopped).

    While I certainly have no inside information, or positions in any of these companies, I thought it was worth mentioning.

    AMR, American's parent company, recently said they are not in danger of bankruptcy.  However, the airline industry is certainly hurting. 

    For some additional context, here is an article that describes the current state of affairs and where Virgin's chief sees more industry failures coming.  Also, here is a recent BusinessWeek interview with AA's ex-head Robert Crandall.

    Something to keep an eye on …

  • Virgin America(n)

    Fuel costs have certainly affected the average American.  It is possible that these added costs might have an even bigger effect on another American (as in, the airline).  Industry-wide losses for airlines are blamed on fuel cost too. And AA is no exception.

    While I was on a American Airlines flight, recently, I overheard two flight attendants talking.  The topic was that they were worried that AA was going to get bought by Virgin.  Of course, US airlines can't be purchased by foreign concerns.  However, they meant Virgin America.  At first, I didn't think much about it.

    They noted that some very senior AA alumns had high positions there.  And that rumors were that the first condition of the purported deal was that Virgin didn't want American Eagle (which is now being shopped).

    While I certainly have no inside information, or positions in any of these companies, I thought it was worth mentioning.

    AMR, American's parent company, recently said they are not in danger of bankruptcy.  However, the airline industry is certainly hurting. 

    For some additional context, here is an article that describes the current state of affairs and where Virgin's chief sees more industry failures coming.  Also, here is a recent BusinessWeek interview with AA's ex-head Robert Crandall.

    Something to keep an eye on …

  • Where Does All the Spam Come From?

    Yesterday I got over 400 spam e-mail messages.  Either I spend way too much time in questionable chat-rooms, or the technologies they use for spam, viruses, worms, etc., are getting better and more efficient.

    As for me, I use an anti-spam product called Cloudmark.  It is the best I've seen; so the spam wasn't a problem … just a growing trend.

    On a positive note, new technology is often exploited first in fringe areas (malware, porn, etc.).  I expect that many of the things we curse about the power and sophistication of these techniques are soon harnessed to solve many problems and issues that we haven't yet thought possible.

    So, on a related note, it reminded me that I just saw a nice piece on where spam comes from.  Here is the graphic.

    Spam_chart_x600
    Source: MIT Technology Review.