Island of Allan

In the solemnity of our national anthem, this collection of mostly immigrants were unaware that in their future would be a resounding Game 5 victory against a tough, agile and speedy upstart opponent.

In a similar fashion, we embark upon our own challenges, daily.  In this spot, we are taking on the financial markets and in the spirt of Ed Koch, former mayor of NYC,  "How am I doing?"

From a subscriber to my email list:

For months you've been offering a short opinion , while your system was predominately long and right! I think you are at odds with the purpose of a trend following system. Just for the record, your system has been right and profitable, your short opinion has been unprofitable and wrong.

And another, because it meant so much to me:

You are making a difference in my life, outlook, and confidence with regard to trading.
The support you provide, the tutorials, the advice, the lessons, the comment.
I call it the island of Allan in a troubled sea.

Somewhere between the Wings victory last night and these two emails, there is inspiration and penance.   Despite occasional dalliances  with Armageddon scenarios, my work here has uncovered and exploited the absolute truth of the market.  It is not the future, nor the past that guides us, it is the now, a/k/a trend following.

If you're going to follow something, follow #13 above, Pavel Datsyuk, as inspirational as they come, a Russian hockey player for the Detroit Red Wings, but more then that, a boy who loves his job, his work, his passion.  It's in his smile, his way, his karma.  Fallen far from my own, last night I watched in awe as he mastered his game.  Time to step up, Allan.

If you are looking for perfection, you will not find it here, nor in the Red Wings, nor in my writings, my life, or my trend tables.  But as the subscribers above-referenced point out, there is value here, big value, but it comes with fallibility.  Most of Datsyuk's shots don't go in the net, but of the ones that do, they make a difference, a consequential, almost eloquent difference, not only for Pavel, but for his teammates; not only for Allan, but for his teammates. 

 
Thirteen is a Fibonacci number.  Can we use this to make money in the markets?  Yes, by discarding it in its entirety, it is just a number and tells us nothing about how to make money in stocks.  One less piece of information to deal with in our work.  Eliminate enough errant pucks and what we are left with is something that works; then we trade it.

From my stock trend tables sent out this weekend:

Daily Trends

TNA:    Long;  Bought 2/16/2010 @ 41.70; current 70.78
AAPL:  Long;  Bought 3/1/2010 @ 208.99; current 270.83
TZA:    Short;  Sold 2/12/2010 @ 10.13; current 5.41

Weekly Trends

SSO:    Long; Bought 3/1/2010 @ 39.91; current 45.43
FAZ:    Short; Sold 3/16/2009 @ 350.00; current 11.09
BIDU:  Long; Bought 3/9/2009 @ 172.66; current 645.76

These are some of the trend table's better trades, so don't for a minute think they are all that good.  In fact, the trend following service didn't even exist last year, so those trades from early 2009 are all pro-forma, hypothetical, but nonetheless are based on the strict application of a rule-based trading system and methodology. The same rule-based system that is in use today, in real time and real money. A few of the above trades reflect real time application of the methodology.

My point, if there has to be one, is that the opportunity and potential to garner impressive profits from application of systematic approach to trading is there, imperfect as it may be.  Throw enough pucks at the net and some are going to go in; just be sure that the ones that miss don't come back to burn you, don't go so far the other way as to score against yourself.  Built into this system is a fail-safe trailing stop discipline that provides a guard against the risk of ruin; a lesson in life in and of itself.

There is more then a pristine beach to this Island of Allan.  Call it a rugged outback, a insect invested swampland, an unbearable abyss of burden and failure.  Its all part of the same asylum.  You have to pick your spots, follow a trend and go with it.  Above all, keep skating, keep you feet moving and don't stop until you find something that works..........then trade it.

And always, always, beware of the dark side:

Finally, an excerpt from the Weekend Update sent out a few hours ago:

The question I pose up front in AllAllan is,

Why are you here?

If the answer is to make money, or to improve your market results, or to find something that works, you are at the right place.  Yes, I occasionally proffer market observations or opinions that stray from strict allegiance to the trend tables and the principles of trend following. But ask yourself this, how boring would this become if all I ever did was repeat the mantra, "Respect the Trends?"

My penance for such digressions (thanks again, "C" for your heads-up observations and email), is to devote an entire Weekend Update to illustrate the ease, elegance and efficiency of this trading system. 

Enough words and explanations.  Let's get on to the Trend Tables.  In the spirit of "C's" observations, I will let the symbols, tables and trends speak for themselves this week. Instead of trying to figure out where the markets are going in the future, let us focus completely on what direction they are going now.  That is clearly set out in the tables below, believe in what you see, it is the absolute, unbending, tough-love truth.

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Trading the SPX

Below is the SPX hourly trend model for the past two weeks.  The beauty of this model is that it has no directional bias, it is simply a trend following, rule based, purely mechanical, objective, algorithm-based trend line. 

SPX 60 minute trend model

I'm not advocating short-term trading here, just providing an illustrative model of trend following on a shorter-term time frame. 

 The monthly chart isn't all that different:

SPX monthly trend  model

This weekend I hope to provide a fresh overview of these models in my Weekend Update to the email list.  

Repetition is the father of learning - Lil' Wayne

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A few good shorts

X - Short Trade of the Week, April 12

FAS - Still floating above 100

GS - a break of 155, then 145, then.......

 BAC - too big too rude too arrogant to survive

C - some cheap puts if Sell pans out

YHOO - fresh signal

Absurdism

 Absurdism is a philosophy stating that the efforts of humanity to find inherent meaning in the universe will ultimately fail (and hence are absurd), because no such meaning exists, at least in relation to the individual. - wikipedia

This is my version of a DJIA monthly chart that appeared last week in the Elliott Wave Theorist.  Using the definitions of a Head & Shoulders Top, by Edwards and Magee, this analysis targets an ultimate price objective, "below zero." 

Seems like we can miss the first 1,000 points and still do pretty well, although I suspect the Daily and Weekly Trend Models will both flip Short much sooner then that.  More interesting would be what fundamental phenomena could by any stretch of the imagination generate this kind of catastrophe?

Katla Volcano: Threat Of New, Larger Icelandic Eruption Looms

For all the worldwide chaos that Iceland's volcano has already created, it may just be the opening act.

Scientists fear tremors at the Eyjafjallajokull (ay-yah-FYAH-lah-yer-kuhl) volcano could trigger an even more dangerous eruption at the nearby Katla volcano – creating a worst-case scenario for the airline industry and travelers around the globe.

A Katla eruption would be 10 times stronger and shoot higher and larger plumes of ash into the air than its smaller neighbor, which has already brought European air travel to a standstill for five days and promises severe travel delays for days more.

The two volcanos are side by side in southern Iceland, about 12 miles (20 kilometers) apart and thought to be connected by a network of magma channels.

Katla, however, is buried under ice 550 yards (500 meters) thick – the massive Myrdalsjokull glacier, one of Iceland's largest. That means it has more than twice the amount of ice that the current eruption has burned through – threatening a new and possibly longer aviation standstill across Europe.

Katla showed no signs of activity Tuesday, according to scientists who monitor it with seismic sensors, but they were still wary.

Pall Einarsson, professor of geophysics at the Institute of Earth Sciences at the University of Iceland, said one volcanic eruption sometimes causes a nearby volcano to explode, and Katla and Eyjafjallajokull have been active in tandem in the past.

In fact, the last three times that Eyjafjallajokull erupted, Katla did as well.

Katla also typically awakens every 80 years or so, and having last exploded in 1918 is now slightly overdue.

"Supervolcanoes:" A Potential Global Catastrophe

As if the world's increasingly violent weather weren't enough (See previous article), the BBC is set to air a two part documentary on the potential threat of mass destruction posed by "Supervolcanoes."

The program, which will be aired in the U.K. March 13 and 14, describes the phenomenon as the accumulation of massive amounts of magma beneath the earth's crust. Unlike garden-variety volcanoes, such as Mt. St. Helens, Supervolcanoes "begin life when magma rises from the mantle to create a boiling reservoir in the Earth's crust. This chamber increases to an enormous size, building up colossal pressure until it finally erupts."

The program focuses on a region that Americans know well - Yellowstone National Park. Under all those geysers and hot springs lies a pool of molten rock, which could become a supervolcano. Even though, as the BBC points out, "Only a handful exist in the world, when one erupts it will be unlike any volcano we have ever witnessed. The explosion will be heard around the world. The sky will darken, black rain will fall, and the Earth will be plunged into the equivalent of a nuclear winter." The potential death and destruction caused by such an eruption is virtually incalculable.

NNVC - Analysis

At the bottom of this TA analysis there is an email from NNVC CEO, Dr. Eugene Seymour, posted yesterday at the iHub NNVC forum.  The email contains a lot of information, literally as well as by implication, reading between the lines.

Speaking of implications, this piece of fundamental analysis goes well with the underlying implications of the following three charts:

NNVC Daily

NNVC 240 min

NNVC 120 min

TA Discussion:

It looks like a corrective wave has taken over which has me looking for a reliable pattern that will suggest its time for the rally to resume.  For this I am using the False Bar Stochastic shown on all of the above three charts, in conjunction with the ATR Trend Models.  Those models suggest that 2.46, 2.28 and 2.26 are all thresholds that will signify a resumption of the uptrend.  Based on the patterns shown in the stochastic for all three time frames, hitting those prices will surely generate Buy signals.

---------------------------------------------------------

Posted on iHub NNVC forum, Tuesday afternoon:

Re: SHELF stock price.
Tuesday, April 20, 2010 12:16 PM
From:
"Eugene Seymour, MD, MPH"
View contact details
To:

There is something very important to remember about a shelf registration

It's effective for a number of years and merely allows us to register treasury shares so they can be used as currency. For example, to buy equipment, pay for laboratory improvements or, to raise money, (sold as an offering). This offering can take different forms and is considered to be a "secondary offering".

However, we are under no obligation to do anything with those registered shares. They can simply sit there until we decide to use them (if ever).

As you can tell from our previous SEC filings, we have enough money to last for one year at our current burn rate so we are not in a panic to get more capital. We will do a financing, if and when we think it is in the best interest of both the Company and its shareholders to do so. In the meantime, I am actively exploring other forms of capital acquisition that will have no effect on the number of shares outstanding.

When the S3 was filed, many different investment banks contacted me. I have interviewed all of them, most in person, in an effort to chose the institution or institutions that will be important to us as we move forward into the FDA process and beyond.

I feel that we're at an important juncture in the life of NanoViricides. We now have a number of "lead drug candidates" for an FDA filing(s) and will decide in the next 2-3 months what the submission order will be. The priority voucher program is an important consideration, especially since there are a number of tropical medicine diseases that don't require human trials except for Phase I safety when the drug is given to healthy volunteers. And, there's an immediate financial payoff once approval is obtained. Only a few non human primates are needed for the other Phases which makes the trials go rather quickly.

There is now widespread understanding in the scientific community about the usefulness of nanomedicine and particularly of our nanoparticles, called nanomicelles. You only have to go to http://nano.cancer.gov to see that they're doing the same thing in oncology, targeting and destroying individual cancer cells, as we're doing with viruses.

It's important to look into the future but at the same time make the correct decisions that will help us achieve our long-term goals

I'm most interested in seeing this S3 shelf registration go effective so we can leave this quiet period and update everyone on our most recent studies.

I hope this has been helpful


EUGENE SEYMOUR, MD, MPH
Chief Executive Officer
NANOVIRICIDES, INC
Nanotechnology-based targeted anti-viral therapeutics
http://www.nanoviricides.com
eugene@nanoviricides.com
310-486-5677

AAPL Trend Models

AAPL Weekly Trend Model

AAPL Daily Trend Model

Silver and Stocks

Below are two daily trend charts of Silver (SLV) and Stocks (SPY).  My interpretation is that these two markets are highly correlated, with SPY turning in a much smoother trend profile. 

SLV Daily

SPY Daily

That said, a longer term application of the low-volatility algorithm to Hecla (HL) shows stellar results:

HL Weekly 4.0 Trend Model

Socionomics In One Lesson

Could the 11,000-Point Dow Make Us All Miserable?

If a group of predictive theorists are to be believed, the market's about to nosedive — and Americans will get very, very angry... about everything. So is it B.S., or might a national malaise take down Obama?

By John H. Richardson (Esquire, April 14, 2010, link below)

For decades, stock investors have known that hemlines track stocks — that short skirts mean good times. That's always been my philosophy, for sure. But there's definitely a dark side to ponder: Did you know that bear markets tend to trigger wars? That the size of a war almost always correlates with the size of the bear market that preceded it? That the use of words like "we" and "they" appear to increase as economic trouble approaches? That the popularity of horror movies increase as economic trouble approaches? (Seriously: Check out this report and see how Night of the Living Dead, released at a market peak in 1968, was followed by steady erosion in stocks accompanied by the mood music, as it were, of The Texas Chainsaw Massacre, Halloween, and finally, in 1980, at the grim bottom of the '70s recession, by Friday the 13th).

These statistics come courtesy of the Elliott Wave theorists, a cult of chart obsessives who try to predict the stock market by following trends in social mood — most recently, in an article in The Socionomist (the Elliott Wave newsletter) that follows the current growth of secessionist sentiment — the militias, the tenthers, the birthers, the federal-reserve haters, the fad for nullification of federal laws. A recent Rasmussen poll found the gap between the government and the people as big as the one that preceded the Revolution — just 21 percent of voters now believe that our government rests on the consent of governed, which is a founding principle of our country. To help track all this, the Socionomist article includes the first-ever index of secessionism as it corresponds to dips in the stock market — which is, it turns out, pretty damn close.

The bad news is that the theorists think civil war is a "distinct possibility."

Complete article here

More Socionomics

Sea change

Sea change or seachange is an idiom for broad transformation drawn from a phrase in the song "Full fathom five" in Shakespeare's The Tempest, and connotes a transformation: see Sea change (transformation) - wikipedia

The past trading sessions have seen a shift in my daily charts from all-bullish-all-the-time to  a mixed bag of longer term Buys and now new Sells that are spreading across a wide spectrum of ETF's and individual stocks.  Is it time to become all out bearish, again? 

It's time to stick to our trend models and follow their lead.  As I have published, the Daily SPX Model has flipped Short.  Since this is my main market gauge, this Sell carries a lot of weight.  But as we have seen with charts like SDS, the shift in trend has not extended across the board.  Note that the strongest market index this past year, Value Line (chart below), has flirted with Daily Sells for the past two days, but remains entrenched in its mid-February Buy signal.   For the time being, that too has to be taken seriously. 

Whether or not markets are exhibiting a sea change to the downside, has yet to be determined.  I remain mostly in cash, awaiting a higher confidence resolution, one way or the other.

Respect the trends.

 Value Line Daily Trend Model

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Scariest chart in the world

DJ Shanghai Index, Weekly Trend Model