Thursday, May 06, 2010

Trades of the Week

Trades of the Week
Issued Saturday, May 1

BUY - GLD
Monday Open 115.91  Current  118.48  = +2.2%
ATM Calls up about 100%

BUY - TYP
Monday Open 7.24  Current 8.33 = +15%
ATM Calls up about 150%

BUY - NNVC
Monday Open 2.40  Current 2.19  -8.75%


This was in response to the following comment from the prior thread:
The only trend here is the theory that computers and charts can predict anything, so put blind faith in them.
The whole point of this trend following exercise is not to predict anything, but instead to identify and exploit current trends.  In the case of last Saturday, those trends were UP on GLD, UP in TYP (inverse 3X technology ETF, i.e. tech stocks in down trend) and UP in NNVC (still in uptrend on Daily and Weekly charts). 

From an email that I received today from a subscriber, in the heat of the turmoil:
Allan,
I just finished Ch. 4 of Michael Covel’s Trend Following book.  I know you have read this book, but I wanted to share something since it is fresh on my mind.  One of the takeaways I had from that chapter is that trend followers aren’t surprised by market anomalies or strong down/up turns because they are generally already on that side of the market before it happens.  He supported that claim with multiple examples of market downturns and showed how the trend follower would already be positioned on that side of the market due to other indications of an impending trend.




A




8 comments:

Anonymous said...

That is a great quote from one of my fellow subscribers, all of which I'm sure had a profitable day and week due to your efforts. Many thanks!

Anonymous said...

Call a coin heads. Your friend calls it tails.

One of you will be right twice after three flips.

This is not skill. This is dumb luck.

PENN STATE Eric said...

A coin flip? Wow, really? That's the best explanation you have for people successfully making money following some simple rule based and non-discretionary trades?

"Dumb luck" defines your quarter flip, pure discretion..."I like heads so I'll say heads." There are no rules with a coin toss except heads or tails.

Rule based trading is just that, trades based on rules. I don't give a shit is I like or dislike a stock or ETF, if it's about to turn into money I take it.

Your argument has provided me the best laugh I will have all day as you sit there broken down and not making any money, just criticizing.

Good luck with that. Go make some money tossing the only quarter you have.

Anonymous said...

I welcome anon's comment about the coin flip. I hope no one believes Allan's work (sorry Allan, I know that won't help with the subscription service). Let them ridicule and scorn. The more that doubt the higher the probability the trend model works.

Allan said...

If a Comment appears here its because I let it through. The only Comments I reject are ones that contain falsehoods, or are in really poor taste. Skepticism is good.....after all, it makes a market.

San Jose said...

Allan,
I gave you a hard time about the market not falling like you had predicted. I think in all fairness you should at the same time be complimented on a good pick, NNVC. It has risen quite a bit since you told everyone to buy it. I am seriously thinking of buying it now. Is it too late or do you think NNVC has a long way to go? What is your time and price target on it. What makes you think this thing is going to the moon?

Allan said...

I stand by my forecast of triple digits by 2014. That leaves a lot of price appreciation between here and there.

Anonymous said...

I still don't understand the whole "triple digits for NNVC" prediction. A $13 billion market cap seems a bit high for a company with no revenues or products.

Any reason for the big hit taken by TYP today?