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Friday, December 16, 2011


WHAT "SHOULD" HAPPEN



My father is in town for an extended stay for the holidays, and we got to talking about Sports like we always do. He began mentioning some of the NBA trades, and what the experts were saying about them. This took me down a bad road, because one of my pet peeves is experts opinions including my own. If you took a bunch of monkeys and asked them questions I would bet the accuracy of the answers would be as good statistically as a panel of experts. It seems to be everywhere you turn there is someone else telling you what you should be doing. I wish people would mind their own business, tend to their own gardens etc.. My favorite "expert" opinion is these cute kids who come on the sports talk shows with the super high energy, and the "play of the season" for the football game that night. They all are knocking it dead and having tremendous years etc.. 

Here is what people don't realize about most of these betting handicappers. If you call their hot lines they split the calls you get between the teams. Half of the callers get the one, half get the other. This way they are guaranteed to be right with half of the people, who will then come back for the next game. Obviously this is why they have to market because eventually the half from the first go around gets halved again and so forth until the original group gets whittled down to a group to small to make money from. As a result they have to constantly get more people coming in the front door for this to work. This is one of the ultimate scams, but it is just an example of expert opinions not being worth anything.

One of my favorite sports guys is Boomer on ESPN, Chris Berman. I love his nick names and his commentaries on highlights. He makes me laugh every single time he comes on. However, his prognosticating, which he has a full segment on, is not even 50% accurate. Who in the world needs some expert opinion that is right less than a coin flip?

With all of that as a back drop, I went to the software to get an "expert" opinion of what to expect for the rest of the year. What is concerning me here is the lack of strength considering the very bullish time period and price cycle we should be in. If you look at the projection of the times during December when we have had this type of look, you can see we have on average just drifted sideways to down for the next couple of weeks. I have posted all the charts of the matches the program brought back so you can look at them. To me there are two that are not really matches, where it shows the price rallying strongly in the blue area. This software is not perfect, but it does do a good job of bringing back similar things to examine. If we eliminate the two that show price rising, the forecast gets more bearish.

In summary, it does appear that historically, when we have not been rallying come mid December, that has not boded well for the year end rally for the balance of the year. At this point the only long exposure I have is one retirement account that I went to 100% SP 500 when we were falling out of bed a couple of weeks ago. I plan on holding that through about mid January, then to the chagrin of the administrator, I will move it back to cash. That is up a few percentage points only coming into today. I don't expect that to bring in much more than possibly a few percent more. I do not have any short term longs in the indexes or the SPY's at this point.

You can peruse these charts and see if you see something that I don't, but it does appear that when we dip the first couple of weeks of December instead of stay strong, it has historically meant we aren't going too far here.







I talked the other day about a short term GOLD rally due to how oversold we were, and we are getting that, up about $20 today so far. This is lagging the stock market right now, so I don't think it will go far, but an oversold bounce was a high probability.

I just don't see much in my world in the way of trading opportunities here for today. On a short term basis we may get a selling opp in the indexes in a day or two. I still am expecting the seasonal to keep the market from falling out of bed, which it pretty much has this week. Keep your powder dry. Hopefully the lack of words today is made up for by the pictures, aren't they worth a thousand words each according to the experts?

Have a great weekend


3 comments:

The Sound Center said...

Yes, indeed. Worth a thousand words.

Thank you, Chris. I appreciate it.

Not conditional bias.

Anonymous said...

Chris. first of all, GREAT blog. i like the honesty. you are like the Howard Stern of trading blogs (that's a compliment).

can you post an updated chart of stocks compared to that weird index that you said has nothing to do with stock, but has been a remarkably accurate for no explanable reason? are stocks still tracking reasonably close to it?

thx

Anonymous said...

Hi Chris, can you email me at info@proptrades.com I wanted to ask you a question about one of your trading methodologies? Thanks.