Category Archives: Cyclical

Flat Market Leading to Angst —  For the past two weeks in a row, the broad indexes have ended trading at the end of the week at a break even, leaving traders with no real market direction. With news on Friday midnight that the government has dodged a shutdown, it will be interesting to see the market reaction on Monday. Investors, both concerned and unconcerned about the government shutdown, sought to use the 1995 Clinton-era shutdown as a precedent. The unconcerned argued that the market did not react too drastically in the past and should be no different now. I would like to contend however that we were financially stable in 1995 relative to today. With the S&P 500 lingering around the 500 levels, the market barely winced at the 3-week shutdown a decade and a half ago. In addition, we have since than initiated many government programs and as a nation have become over “leveraged” as evidence of our debt.

The market remains very mixed. On a technical level, I believe the market index may see a short-term correction in the ensuing weeks before continuing higher. Support levels suggest the Dow Jones will find recovery at the 12250 level and the large 12000 level. MACD and stochastics show the index is weighted heavily and is currently in overbought territory. Inference from the NASDAQ is noticeably different – mainly caused by the surge of good earnings reports coming from tech stocks. This gives me a small reason to believe the Dow Jones and S&P 500 will follow the NASDAQ up and possibly breakout to higher highs in the next month. I conclude that I am slightly bullish to market neutral.

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Not Taleb’s, Natalie’s Black Swan

I saw Black Swan this weekend.  While I thoroughly enjoyed the movie, I know that many people won’t feel the same.  The movie is dark, and left me feeling uncomfortable most of the time.  This is due to the tremendous acting skill of Natalie Portman, who emanates tension throughout the movie.  For all of us who recognized her talent in ‘The Professional’, we feel pride at all of her performances.  She is ‘ours’ (creepy huh?)

And here I come to the real point.  The director of the film is Darren Aronofsky.  He  also wrote and directed ‘Pi’.  A movie about a man, Max, who believes **(1) Mathematics is the language of nature; (2) Everything around us can be represented and understood from numbers; (3) If you graph the numbers in any systems, patterns emerge. Based on these principles, Max is trying to figure out a system to predict the behavior of the stock market.

Well, I know a man like Max.  We’ll call him Jack, because thats his name.  I’ve known him for nearly the last 8 years, and traded with him for 2 of them.  Jack understands chronometrics and cycles.  Like clockwork, when the computational numerical simulations and stellar dynamics  collide to form a black hole, Jack gives me a call.  He has sent me some of his recent work, which includes forecasting and technical analysis.  It has been good enough to make me take notice.  I have invited him to come to the office on Wednesday.  While I hope he can help generate positive P&L, there is one thing I know for sure.  Once the wormhole has been opened, there is no telling what is going to happen, and there is no going back.  But I guarantee it will be extremely entertaining.

Todays Aprox P&L:          $1,500

December  Aprox P&L:  $187,000

Portfolio:  2.7mm Long Value,  2.2mm Short Value


**taken from IMDB