Thursday, December 22, 2011


The stock trade I mentioned yesterday for COO was filled at the close, I got in at 70.59 today on a limit. I had mentioned yesterday if you missed the close to try and limit in today, and I was on the golf course yesterday at the close. I placed the order today pre-open at yesterday's close of 70.48 and was filled at 70.59 since the open was higher. Now that the trade is on we do nothing at all but check back in at the close. The rules for today would be if the close is at 68.77 or lower, exit MOC. This number will not be the same tomorrow, it changes day to day. I will check within the last few minutes and if the price is there I will get out. I will not nit pick this, if it is vacillating in the neighborhood, I will take the profit. This is a strategy based on fading short term overbought and oversold conditions, and taking the first reversion to the mean you get.

The above table is just based on trading 100 shares every time the condition presents itself in this stock. Many stocks have much better numbers than this one. Obviously to make any money trading you have to trade quite a bit more size than that, but it is just a good baseline for running the tests. What I like the most about it is the accuracy being decent along with the payout being greater than 2 to 1. This is a non optimized strategy. Overall, the stock market does seem to be making it's year end push higher, so we are really swimming against the tide here. This is really a good test of this theory. If I can make a profit on the short side while the market overall is this strong, that will be a good accomplishment. There is nothing else to do on this one but check back in at the end of the day, ONWARD!

Prepare yourself for my disclaimers here, the next chart is not what it seems. For those who have read here regularly, you know my drama with the company I formed with a friend earlier this year called PNJ Advisors. We entered the Robbins World Cup under that name and were in third place with about a 25% RETURN through the end of March. My partner then notified me that he was having some difficulties in some other businesses he was involved with and at that point I made the decision to disband our company and shut it down. I did not want to get involved in any ancillary things that might develop as a result of those other unrelated ( to me ) issues. Of course it was disappointing, but my friend was so forthright with me, that it was a great testament to his integrity. I have more respect for him now than I ever had before with how he handled this.

After we withdrew our funds I mentioned this story here in the blog in case anyone had been following us. I did not want people to think we had lost a bunch of money and that is why we disappeared from the leader board. I am sure there are some that think we did, but what are you going to do, I can certainly prove otherwise. I then debated what to do, and wound up re-entering the contest just on my own in June. Keep in mind this is a year long contest, so I was spotting everyone else 6 months. Of course I will never get the chance to have that as an asterisk in the standings, so it is what it is. The standings below are where I will finish, I am not going to make any more trades in this account this year. My father is in town, is 83 and requires a good bit of attention, so I am trading very lightly right now. I also have to chase around my "little" rug rat Vinny my Saint Bernard pup. He is 3 1/2 months old and is already 60 lbs, so I have my hands full. He seems to think he can take on the 175 pounders we also have, so I have to save his ass multiple times a day when the big guys swat him.

When I enter things like this I do not go hog wild like many do in these contests, throwing money management to the wind, and having huge swings in equity. I trade them the same as I do my other accounts with the one exception being that I pass on some trades where the stops are too big. This results in this account under performing some, but when you go out publicly with these things you have to be careful. First, it is a lot different when so many people are watching you than it is just trading in isolation where a few dumb trades are invisible to the public. Second, if you have huge returns and later manage money, people will sue you if the results are not as good. This has happened to Larry Williams and he actually lost the law suit incredibly in another fine testament to our judicial system. Just as a side note, the woman who sued him had a huge return on her money when he traded it, but it was a lower percentage than his astronomical contest returns so she sued for the difference. Un.....believable. I can only hope that she went on to be run over by a bus at some point.

So what you see here is the results of basically 5 months in this contest, I have not made any trades this month in this account. As a result, over 50% for 5 months is not bad. I cannot say that I am proud of this, it is not that great in all honesty. However, it is what it is, it is out there, so I thought I should discuss this in case any readers came across this. There are plungers out there, so who knows I could get passed by a few people who put max bets on one trade at the end hoping for a big payoff. The last time I entered this I was in second and was passed by someone who had never been on the leader board the whole year until the last week. He obviously bet everything on one trade and wound up passing me knocking me down to third. Just in the event that happened I wanted to have my results posted here.

There is only one reason I enter this contest, and it is different than you might think. It is to get an independently audited accounting of real trades made with real money. It shows indisputable proof that I am a profitable trader. Some of my personal accounts have better returns than this, some ( my stock accounts ) have smaller percentage gains. I just feel that is important in this world of BS that we live in, to have proof of that by an outside body. I put myself out there in this forum as someone who has a clue, so I feel I need to have some proof other than just "my word for it." If you add up the first quarter of 25% and this 51%, that totals 76% of actual gains accomplished in this contest during this year. Of course it was done in an interrupted fashion, and represents only 8 months of actual trades. I am not sure what I am doing in regards to this next year at this point, but that is enough on this subject.

I do not recall exactly what day I mentioned that Bonds were looking like they might be setting up a sell signal. In the above chart you can see that we now have several things working together that may be lining this putt up for us. First the POIV divergence is huge here, these are the types of looks in this that matter. Second, we know that Bonds have a pretty good tendency to decline in January. The seasonal shows that pretty clearly. We also have my COT Synthetic clearly saying sell. That indicator has been good at times here and not so good at others as I always mention with it. I plan on spending some time with this thing over the holidays to try and make it better. I also have some of my short term tools not shown, telling me if we were to bounce up a little here, a sell signal could be there with them.

Net net here, I am looking for sell signals in this market in the next week or two. There actually is a seasonal buy trade on a short term basis about right now. I am hoping that lifts us up for a few days here to set this up a bit better. My short term tools are showing a potential marginal sell signal for tomorrow in the ES if we close up today. I doubt that is a trade I will take.

That's all for today, Good Trading!

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