Buyers In Control - December 2, 2011

[Pierre Brodeur]

This morning we have the following

These are the settings for managing the stop loss of an existing position in related ETFs.
These settings are calculated from the IWM settings. Note that we do not keep track of the original position entry level. :
RWM: Trailing stop loss for a trade that started on 12/1/2011: 32.01
UWM: Trailing stop loss for a trade that started on 12/1/2011: 30.25
TWM: Trailing stop loss for a trade that started on 12/1/2011: 44.99
TNA: Trailing stop loss for a trade that started on 12/1/2011: 36.32
TZA: Trailing stop loss for a trade that started on 12/1/2011: 33.74

As suggested by Billy (if I understood correctly, I took a BASE position in IWM and added a 2/3 position in TNA.
-1- Under what condition(s) are we to enter the last 1/3 position in TNA, if your care to comment Billy?
-2- I am somewhat surprised that the system would suggest stop losses for SHORT positions which are the opposite of what the robot has suggested. It adds to confusion IMHO and I think only the long positions should be showed.
This is a positive constructive suggestion

[Pascal]

This morning we have the following

These are the settings for managing the stop loss of an existing position in related ETFs.
These settings are calculated from the IWM settings. Note that we do not keep track of the original position entry level. :
RWM: Trailing stop loss for a trade that started on 12/1/2011: 32.01
UWM: Trailing stop loss for a trade that started on 12/1/2011: 30.25
TWM: Trailing stop loss for a trade that started on 12/1/2011: 44.99
TNA: Trailing stop loss for a trade that started on 12/1/2011: 36.32
TZA: Trailing stop loss for a trade that started on 12/1/2011: 33.74

As suggested by Billy (if I understood correctly, I took a BASE position in IWM and added a 2/3 position in TNA.
-1- Under what condition(s) are we to enter the last 1/3 position in TNA, if your care to comment Billy?
-2- I am somewhat surprised that the system would suggest stop losses for SHORT positions which are the opposite of what the robot has suggested. It adds to confusion IMHO and I think only the long positions should be showed.
This is a positive constructive suggestion

Pierre,


I use the "short" positions limit a lot myself when the Long signal is issued: I would simply short TZA or TWM.
Therefore, these stop loss on the TWM/TZA shorts are important for my own trading.

Do not forget that when a BUY signal is issued, going SHORT TZA should be more profitable than going LONG TNA. However, shares availability might be limited.


Pascal

[Pierre Brodeur]

Pierre,
Do not forget that when a BUY signal is issued, going SHORT TZA should be more profitable than going LONG TNA. However, shares availability might be limited.
Pascal

Thank you. Now I understand

[nickola.pazderic]

The most bullish statement I've ever seen this year:

As Macbeth said, It is a tale told by an idiot, full of sound and fury signifying nothing. Fading the "Grand Plan" rally worked very well. There was a couple days of pain and then generally the market followed a nice path lower. Last week the market had felt oversold and was looking for a reason to rally. I thought that Monday was overdone, and that Wednesday was extremely overdone, but I started cutting shorts yesterday, and am now getting long. Everyone seems to understand that the "globally coordinated rate cut" plan was not a big deal in of itself, yet the market didn't give up any of the gains. Even some of the perma bulls downplayed the move. I think the move was meant to be more pre-emptive than a strong show of future support, but Ben is not dumb, and he has seen the outsized impact such a simple move had. Cracks will appear in this rally, and we will ultimately figure out the problem with the current attempts to fix Europe, but right now it is too vague to fight, positioning has been too extreme, and Bernanke and Draghi have to see the opportunity to push things forward while the market is behaving positively.

Well, now. Incidently, /ZB (30 year treasury futures) fell below 140.

Do I yet want to take off that TNA position?

Good morning, all!

[taw55]

The Sector page of the PascalA_List spreadsheet, and the Sector List, are great tools, but in a strong trend, almost all sectors tend to go into buy or sell mode. I wondered if you or Pascal had any thoughts on the best way to approach creating a ranking of sector forecasts (i.e., how they are likely to perform over the next few days or weeks) for those of us who might want to rotate into the best sectors, or hedge by going long the best (forecast) sectors and short the weakest ones. Thanks!

[Billy]

The Sector page of the PascalA_List spreadsheet, and the Sector List, are great tools, but in a strong trend, almost all sectors tend to go into buy or sell mode. I wondered if you or Pascal had any thoughts on the best way to approach creating a ranking of sector forecasts (i.e., how they are likely to perform over the next few days or weeks) for those of us who might want to rotate into the best sectors, or hedge by going long the best (forecast) sectors and short the weakest ones. Thanks!

Taw 55,
The best indicator I know for sector rotation is relative strength.
The best book I know on the topic for multi-month investment timeframes is by Michael J Corr:
http://www.amazon.com/Smarter-Invest...2853400&sr=1-1
But the paradox for short term trading is that you must buy the worst short term RS sectors on a 20 DMF buy signal when confirmed by Pascal’s sector lists.
Billy

[nickola.pazderic]

Billy,

I'm playing along at home here, and I'm also currently at 1/3 my original position. So far so good. I know this is not a universal prescription, but I certainly appreciate your candor in the service of education.

My question may have been addressed implicitly or explicitly previously. If so, my apologies.

It is this: At this point I set my speculation in the robot trade at approximately 125% account, calculated according to net exposure. Acting in this manner I've secured fantastic gains at times with a risk of only 40%of my capital in the account.

In your calculations, do you wager your entire account at 100% in 3X instruments and then adjust your holdings according to the risk management tactics you adopt? Or, do you like me, wager only an amount that would equal an exposure to a given percentage of the net liquidating value in your account?

For example:

An account of 73,140.00 USD would have allowed me to enter a 100% position of IWM at yesterday's robot price of 1000 shares-- a 1000 share or 100% exposure. However, with the same amount of cash I could purchase 1671 shares of TNA, which would increase my total exposure (as I calculate it) to 5013 shares of IWM, which seems to me to be an exposure of over 500%.

Any thoughts?

Many thanks,

[Billy]

Billy,

I'm playing along at home here, and I'm also currently at 1/3 my original position. So far so good. I know this is not a universal prescription, but I certainly appreciate your candor in the service of education.

My question may have been addressed implicitly or explicitly previously. If so, my apologies.

It is this: At this point I set my speculation in the robot trade at approximately 125% account, calculated according to net exposure. Acting in this manner I've secured fantastic gains at times with a risk of only 40%of my capital in the account.

In your calculations, do you wager your entire account at 100% in 3X instruments and then adjust your holdings according to the risk management tactics you adopt? Or, do you like me, wager only an amount that would equal an exposure to a given percentage of the net liquidating value in your account?

For example:

An account of 73,140.00 USD would have allowed me to enter a 100% position of IWM at yesterday's robot price of 1000 shares-- a 1000 share or 100% exposure. However, with the same amount of cash I could purchase 1671 shares of TNA, which would increase my total exposure (as I calculate it) to 5013 shares of IWM, which seems to me to be an exposure of over 500%.

Any thoughts?

Many thanks,

Nickola, I have a visitor now and will reply this weekend.
Billy

[taw55]

Taw 55,
The best indicator I know for sector rotation is relative strength.
The best book I know on the topic for multi-month investment timeframes is by Michael J Corr:
http://www.amazon.com/Smarter-Invest...2853400&sr=1-1
But the paradox for short term trading is that you must buy the worst short term RS sectors on a 20 DMF buy signal when confirmed by Pascal’s sector lists.
Billy

Billy,
Thank you very much for the book reference and great tip - I will definitely try that out! I also remembered that the SIGR file available on the site has a kind of sector ranking, and so am looking at that as well.

Thanks Again,
Terry

[Billy]

This morning we have the following

As suggested by Billy (if I understood correctly, I took a BASE position in IWM and added a 2/3 position in TNA.
-1- Under what condition(s) are we to enter the last 1/3 position in TNA, if your care to comment Billy?

Pierre,
There are no position-sizing rules from the robot. All position-sizing and leverage decisions are your own responsibility.
I previously gave an example of my own discretionary guidelines in the current conditions.
First, I always enter a full TNA position at the initial limit, say 1,000 shares at 43.77 yesterday. I place my initial stop for 666 shares just under the first support cluster and for 334 shares at the robot’s stop.
Once I see a higher low from my entry followed by higher highs, I exit 333 shares at a 39% retracement and 333 shares at a 51% retracement. The remaining 334 shares are managed exactly like a robot position.
The proceeds of the 666 shares should only be reinvested at a robot’s entry limit if there are buy settings and the same stops and retracements guidelines apply from there.
Today, 1/3 of my TNA (entered at 43.77) was stopped out at 45.29 and 1/3 at 44.99. I am still long 1/3 position but wont scale back-in my 2/3 position before a new active buy limit price.



The first retracement line is at 23.6% retracement and puts me on alert for potential stops triggering.

Again, these are not backtested rules but just an example of my current handling of leverage in the context of the robot because I was asked and tried to help.
Billy