Wednesday, September 06, 2006

Paradigm - Update

On April 5, 2006 I wrote a review of Paradigm, a novel written by Robert Taylor which discloses a market timing model based on natural earth cycles. As I indicated in my review, Robert Taylor maintains a web site that tracks those cycles and issues market forecasts based on the theory he espoused in his book. It is an engaging theory (and novel) and I have been closely following the forecasts for the past four months.

What follows below is a track record of the forecasts as I have been interpreting them. Interpreting is a little misleading, as for the most part they are set out clearly and succinctly, in an easy to follow and tradable manner. But there is some leeway in exact entries and exits, so to be consistent, I based every one of these trades on buying/selling the Open on the day indicated in the forecasts as a likely change in trend. In other words, the trades below can be considered, "give or take one trading day," in about half the signals.

All signals are based on the DIA, the Dow Diamonds which is tradable in and of itself, although I prefer the near term at-the-money options for leverage.


BUY April 15 111.31.....+1.94
SELL April 24 113.25.....-0.41
BUY April 28 113.66.....+2.17
SELL May 9 115.83.....+2.13
BUY May 17 113.70.....-1.26
SELL May 26 112.44.....+1.19
BUY May 31 111.25.....-0.95
SELL June 18 110.30.....-0.29
BUY June 22 110.59.....+1.63
SELL June 30 112.22.....+0.88
BUY July 12 111.34.....+0.16
SELL August 1 111.50.....+0.44
BUY August 11 111.06.....+2.39
SELL August 18 113.45.....+0.25
BUY August 24 113.20.....+1.42
SELL Sept 5 114.62.....+0.48 (open)
BUY Sept 8/11

*Sixteen trades in 17 weeks.
*Twelve wins, four losses = 75% winners.
*Average DIA points per trade, 0.76.
*Average option pro forma, based on 0.76 DIA pts per trade, about 40%.

This represents some pretty good timing and you can find out more about it at the Taylor Trends web site. My understanding is that the forecasts are posted free to anyone who reads the book.

The above trades are based on the shortest term time model, one of three timing models that are based on the cycle methodology. The medium term model I already highlighted in my original blog, but those signals were all backtested. The above signals were real time. Finally, based on the forecasts of the other two models along with the one above, we are about one month away from one hell of a BUY SIGNAL.

One hell of a Buy Signal, kind of like the way that sounds.

A

24 comments:

Konrad said...

Allen - check out the movement in EDIG.OB. Its a stock you mentioned a while back.

Ronny said...

Allan,I wonder if this timing system can help us trade our I-Buys.Having the market direction in our favor can always help.
Thanks for posting,Ron

Allan said...

konrad - we highlighted EDIG at about 15 cents, it got cut in half and is now at 21 cents - is that good?

ronny - I wouldn't mix and match, trade each on its own merits, although timing can me used to guided the size of your bets.

another analysis of Paradigm here:

http://twocents.blogs.com/weblog/

A

Konrad said...

Its good if you got in it at half of .15 ;)

With those kind of stocks you got to be able to take the draw downs b/c you're looking for the 10x winner. Am I wrong here?

Anonymous said...

Can you purchase options in a IRA account? or Short a stock in an IRA?

Greg Reiman said...

Hi A and all:

OK, I admit, I am still a skeptic on Mr. Taylor's gravity theory.

Yet here is an article from someone who's advice has made me money, and I respect him a lot, that lends some credence to lunar cycles in technical analysis.

Greg
^^^^^^^^^^^^^^^^^^
Lessons from My Very First Gold Trade
by Jeff Clark

“Never trade gold during a full moon.”

It was October 1980. I was sitting on a public bus with my girlfriend, discussing what sort of engraving I should have on my high school class ring. I mentioned how unfortunate it was that gold prices were so high that I would have to work overtime at the shoe store to buy the ring.

A stranger in the seat in front of us turned around and uttered the sentence you see highlighted above.

There was a full moon that evening, but I ignored the stranger’s advice and bought the gold ring anyway.

That was my very first gold trade - and I bought at the peak of the market. Just after my purchase, gold began a twenty year bear market.

Since that day, whenever I see a full moon, I’m reminded of the unsolicited advice from that stranger on the bus, “Never trade gold during a full moon.”

It may seem absolutely crazy to you, but that advice has saved me from many a heartache… and that advice came in handy two days ago.

Subscribers of my newsletters know that I’ve been patiently waiting for specific action in the gold market before re-establishing the positions we sold in May. Two days ago, however, gold and gold stocks broke out of a bullish “ascending triangle” pattern. It looked like gold stocks were ready to run to the upside… without me on board.

As I drove home from my office last Tuesday night, I ran through the arguments in favor of buying gold stocks right now… and the arguments against it. The most compelling bullish argument is the technical breakout of the “ascending triangle” chart pattern, which you’ll see in a moment.

The most bearish argument is that everyone is talking about how bullish the gold stocks look.

You can probably sense how conflicted I was. As a trader, I pay close attention to technical analysis. However, I’m also a contrarian, so I’m naturally inclined to go against the herd.

Moments later, the conflict resolved itself. I turned the corner to drive up the hill toward my house and there, like a sign from above, was the biggest, brightest full moon I’ve seen in months.

Now… before you start thinking I’m totally nuts to consider trading on the basis of moon phases, you should know that many popular technical analysis theories are based on lunar cycles.

It’s true. The formulas behind both the Elliot Wave Theory and the Bradley Cycle Theory are derived from lunar cycles. In fact, much of modern day mathematics can trace its roots to the early astronomy of Galileo.

Of course, that doesn’t mean you should look to your horoscope for financial advice.

But let’s face it… Strange things happen during a full moon. And, one of the strangest things I’ve learned in over twenty years of trading is that you can’t trust the moves that happen in gold and gold stocks during a full moon.

Bullish moves often reverse and turn bearish. And bearish moves often lead to bullish turnarounds.

So when the gold stocks broke out on Tuesday, as the full moon shined brightly overhead, I wondered whether the move would hold. Based on Thursday’s big drop… it didn’t.



I’m sticking with the plan that I told my subscribers about a few months ago. There are lots of trading opportunities in the gold market. But before you go chasing after one, maybe take a look up in the sky first.

Best Regards & Good Trading,

Jeff Clark

Anonymous said...

great post, greg, thanks.

Ali

Anonymous said...

Guess what yesterday was a full moon.... hummm..

Anonymous said...

does anyone know which is the company that is working on the manitoba compound BCT that is mentioned in S&A article?

Gov't review of
Manitoba Compound "BCT" creates 7-week window for investors...

The Fed’s final decision could
make you 194%... overnight

Dear S&A Reader,

A few years ago, researchers at the University of Manitoba created a compound known as BCT.

It turned out to be one of the most potent cancer-fighting drugs ever made.

Administered under the supervision of the Canadian Government, BCT increased the survival rate of breast-cancer patients by an unheard-of 51% – more than double the rate of any other drug on the market.

Days after the news was published in the Journal of Clinical Oncology, the U.S. Government offered a special deal to the tiny biotech company developing the drug:

Bring the Manitoba Compound to the States. Run a single trial under FDA supervision.

If the results are even close to that good, we’ll make BCT available for sale in the U.S.

The company accepted. The test began in March 2004. And today, as I write this, the data is being reviewed.

Anonymous said...

I have a market timing system based on the Novel "jaws."

This year:

22 Trades
22 Winners.
Gain 368 SPX points.

Davenport

curt504 said...

Will the Jaws traders please share your trading signals, or are your claims toothless?

For the Moon traders (Taylor'like) an elite trader thread seen on Tom Drake's blog.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=76224&

or http://tinyurl.com/ql6as

They get into the details as I hope we do here on Jaws, Taylor, Darts-method...

curt

Greg Reiman said...

Univ of manitoba compount BCT?

I think the company is YMI

Greg Reiman

Allan said...

We did see the market move down from the highs of September the 1st and the spike up on September the 5th, down to the lows of September the 8th as previously forecasted. The Xyber9 programs are now suggesting we will see the market move up to September the 15th. We may still see another gap down on Monday the 11th but the highs of September the 15th should be higher than the lows of September the 8th or the lows of September the 11th

Pretty damn good market timing.

A

Ronny said...

Allan,can your day trading system ever be used in longer time periods?
Thanks,Ron

Allan said...

Allan,can your day trading system ever be used in longer time periods?

Generally, no, except for i-Buys that can be held for weeks under some circumstances. But the good news is that my absence from actively blogging for the past month is atributed to some serious new R&D on a new methodlology that is geared to multi-day holds and is applicable over a braod spectrum oh higher capitalization stocks. This was the missing component to my work, as it opens lots of doors as far as trading goes. The work continues, I am in the real time, real money stage. Hopefully, I'll be back to blogging more frequently in the coming weeks.

A

Ronny said...

Allan,do you use software (like Trade Station) for your research?
Ron

Allan said...

ronny - no.


A

joe said...

Hi Allan,
Miss your posts at Oracle, understand your working on a multiday system. Last name I traded from you was MED and did vey well in less than 30 minutes. Thanks for that. I'm wondering if you have any experince setting up a mechanical trading system based on a specific measurement of the amount of divergence on a 1 or 5 minute MACD chart and filtered by another market such as oil or t bills? You usually answer this type of question with a yes or no, but I'm looking for some direction based on your work. Thanks, Joe

Allan said...

any experince setting up a mechanical trading system based on a specific measurement of the amount of divergence on a 1 or 5 minute MACD chart and filtered by another market such as oil or t bills?

Joe - can't be on much help on this as I have zero experience specific to your question.

A

Anonymous said...

thanks greg

curt504 said...

Hi Allan,

Somme Q's and trading tips:

I'm interested in thoughts on the duration of the strong dollar. This street author gives good TA on why the $$ may make a turn down.
http://www.thestreet.com/_htmlbtb/pom/pomrmy/10308549.html

I've made good $$ trading short term calls on the trains: BNI, CSX, NSC I have insights and strongly believe these three will move up in some fashion from here. A strong Taylor effect, they'll move up strongly.

Contrairian play, also a Buffet play, USG, short term calls from here running with the Taylor effect and TOL/PHM. I'm not long home owners, just a contrarian play on over sold builders and a special play on USG.

Thoughts welcome, good luck, curt

Ronny said...

Allan,how has your new multi-day trading system worked so far?
Thanks,Ron

Allan said...

ron - it's 4:30 am out here, give me a friggen break, it's still night time, what am i doing already "at work?"

a

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