THE YIELD CURVE - IS ONE BETTER THAN THE OTHER?

Above are charts of the 10 Year and 30 Year debt instruments of the US Government. Since the launch of the Bond System last August many people have asked if the system works in the 10 Year Notes. I have responded that it does not. However, I have been studying this and I stand partially corrected.

On the two charts above we have the identical system applied with one exception, the stop is $800 on the Notes since they tend to move about half as much as the Bonds do on an average day. One thing to note, the trades trigger at different times and also in different directions occasionally as well. You can see in the recent period where we had a couple of bad Bond buys the Notes did not have those signals and as a result did better last week. What we are going to do shortly is publish the signals for both each day at no extra charge, and we will then monitor the trades in the Notes outside of sample ( test period without real trades ).

What we hope to accomplish by doing this is to make a concrete assessment in real time of which is better. What I suspect is going to be true is the Notes are going to be a tad more accurate and the Bonds are going to make more money. We will see if that is true. The reason I suspect that is that the volume has dramatically shifted towards the shorter end into the 10 Year Notes and away from the 30 Year Bond. It is not inconceivable that at some point there will be no 30 Year Instrument, so we always have to be prepared. We are going to start sending both starting next week. Keep in mind you have a smaller stop but the market also moves less. What we may wind up doing if the 10 Year winds up consistently out performing the 30 Year, is that we will just trade 2 for every 1 of the Bonds. For now we will track the results on a one contract basis.

I am sure some of you are wondering why the results are not the same. This is pretty simple, if you look at the charts closely, the patterns in the price movement are a little different. Generally one leads the other and it changes. Many of our trades are based on intricacies and it is these little differences that trigger the trades. When little differences are there, it will make one trigger when the other does not. What you cannot do and this is what I have told those of you who asked, is take a buy or sell signal in the 30 Year, and trade it in the 10 Year.

THIS DOES NOT WORK

This chart above has the 10 Year in Green on top of the price bars of the 30 Year Bonds. I have labeled three prominent divergences so you can see that they don't always trade the same. In each of these cases you can see the 10 Year has been relatively stronger than the 30 Year, in some cases there has been a huge difference. Look at the high point on the left, the 10 Year made a significantly higher high when the 30 Year made one that was quite a bit lower. That should be enough to convince you that you can't take signals from one and apply then to another. In time we may convert completely to the 10 Year or we may run them together which will give people with smaller accounts a chance to trade this system. You will be able to do it with half the size that is required on the 30 Year. Next week begins the roll out.

PAY PAL

If anyone has either cancelled something and is still getting the emails, or has paid and is not getting them, please email me at cj@wearefuturestraders.com.

We have had some glitches with Pay Pal. There have just been a few here and there and I apologize for this. Overall the integration with Aweber works pretty well but there does seem to be a gremlin loose causing an occasional problem.

WEBSITE UPDATE

I guess I should have bet on the over and not the under on the time line with this. It was 6 weeks and we are in week 12 at this point. I have finally figured out how to get videos made correctly for the Instructional Videos section. I think it is always helpful to hear someone explain something as opposed to reading it in print in a venue like this. Now the trick is to get past me having to listen to my annoying voice over and over as I record these darn things to make them sound good. I hate listening to myself talk for minutes at a time, then find one clumsy sequence and have to start all over again.

For those interested in doing videos let me tell you what I have learned in case it might help. The free programs are a pain in the ass and often don't create them in a format that is up loadable to You Tube. You can try and get free conversion programs and they are triple pains in the ass. They often take 30 minutes to convert a file and then once done the quality is too grainy and has to be tweaked. I have found that the Camtasia program from Tech Smith is by far the best of any of them I have tried. It is kind of expensive, but I think it is worth it just from a time saving and quality stand point. I love the concept of free open forum development of software, but time matters to me. I remember a chat I had with a Genesis technician, my favorite one of their group, Ross. He is a great guy and very on his game with their program. I was having printing problems and he gave me a work around that did actually produce a far better quality chart than the standard procedure which would not work.

The problem was it took so darn long to do it for each chart, 2 minutes or more, that if I printed out 50 charts it was going to take an hour and a half! This was not exactly practical and neither are the free video creation programs. Man up and pay, you will be glad you did.

A PROBLEM AND REALITY

One of the things that has bothered me the most about the PFG situation is the way victims are so quickly forgotten about. It is the case in all types of financial scandals as well as personal tragedies. I don't know what the solution is, but as a society we have to find a way to be more compassionate for those who befall bad fortune. On one had you can't sit around crying in your corn flakes, that does nobody any good. However, for us to always just move on with our lives and forget those who need help is a harsh reality that I don't like. I guess this is why people who form these foundations to help people should really be commended. They are trying to do something to help and I tip my cap to anyone who is involved in anything along these lines.

I was talking to a close friend of mine Friday who knows the chunk I had wiped out, and he made a comment that struck me as so pertinent to this topic. We were discussing some of the things I have had to do to survive this and his attitude was like enough already you have been saying that for months. I finally asked him how he would be if he had $....... stolen from him, just 8 months later? He was silent on the other end of the phone. Things are slowly improving for me but the recovery is going to take some time. The point is it takes people time to recover from things. If you have a friend who has lost a family member or had identity theft, or some other type of difficulty, find a way to help them even if it is just being a good friend. I was just shocked that this guy just assumed everything in my life would be as it nothing happened when 70% of the money is still missing. He had just moved on and I could not blame him but it made me realize I have done this too and will not do it again with friends or family that need me.

We took a hit last week so hang in there, I took it too and probably bigger than any of you. 

Good Trading