Stock Systems: Re-Iterate Long Trading Signals 12/4/12

We have not needed to update our stock trading signals because the signals have mainly remained the same. Our last signal update was on October 11, when the S&P stood at 1438.   The S&P closed yesterday at 1410.  Our stock market signals remain:

• Long-term models remain bullish.
• Intermediate-term (Overbought / oversold) models remain moderately bullish.
• Short-term trends continue to dictate our stock positions.  

Since October, the stock market has been fairly volatile, dropping from the 1460 level down to 1350, before  rebounding to the 1410 level.  

• Long-term investors should look to add to positions on stock declines.  
• (E-mini) S&P traders should look to be long, based on our long-term (bullish) and intermediate-term (moderately bullish) signals.  

Stock Market Systems: Full Steam Ahead (7/12/12)

Our stock market indicators just switched to:  all bullish.  This is a change from our last update of almost a month ago, on June 16th, when our overbought / oversold indicators flashed a "pause" signal when the S&P stood at around 1343.

Since the last update on June 16th, the stock market has been churning and has been fairly volatile (in a range of about 1313-1370), but is relatively unchanged over the entire time period -- and currently stands at 1336.8.  Here is a look at our stock indicators:

• Our long-term model remains strongly bullish.
• Our intermediate overbought / oversold indicators are strongly bullish as well. 
• Our short-term models reflect short-term movements, so we do not typically list the current signal.  

Traders -- including stock index futures traders -- may want to be long in the stock indices.  Long-term investors with an over-allocation to cash may want to put some of that cash to work.  

A Look-Ahead at Stock Signals 2/1/11

Our stock market indicators last changed signals on January 14th.  In that blog post, our intermediate stock indicators went flat (at S&P 1293) from a moderately-long position.  Since that time, the stock market had grudgingly moved higher, until Friday's steep decline.  With the market's bounceback yesterday -- and rise early in today's trading (S&P currently at 1301.5), our intermediate indicators have changed to very slightly bearish (not a huge signal change, but notable).

Interestingly, a look-ahead at the model's signals points to a bullish call in a few days, but that is dependent on stock market action.  Keep an eye on our blog for updated information.  Our long-term model remains strongly bullish.  In addition, short-term market direction will help dictate our overall stock index futures position.

The stock market has been relatively quiet -- especially to the upside -- in recent weeks.  The market has generally moved steadily higher, although it has hit some resistance at the 1300 level on the S&P 500.  Our z-Trader Short-Term System, tracked at Collective2, applies the results of these stock market models to the S&P and/or E-Mini contracts.  Because the market has had this "grudging" rise with resistance near 1300, the system has also been flattish.

The Short-Term System trades larger, more volatile, markets such as the S&P, energy, metals, and financials.

Intermediate Stock Indicators Turn Slightly Bullish; A Bit on Time-Frames

Our intermediate-term stock indicators flipped from slightly bearish to slightly bullish at the close of trading for 2010. Our long-term indicators remain strongly bullish, as they have been for a while. As a result, our stock trading will be biased to the bullish side, with short-term trends -- and stock index movements, completing the picture.

Our trading strategies are diversified in terms of time-frame as well as technical trend-following approaches. Our typical approach focuses on the intermediate and long-term, with short-term approaches used for diversification.

Our Short-Term Program also uses the various time-frames, with a stronger emphasis on short-term research. Because of the focus on shorter-term systems -- this program targets liquid markets that show volatility -- such as financials and energy (with a focus on the S&P 500).

Adamah Capital uses Collective2 as a third-party tracker of trading strategies developed by Carlton Chin and George Parr.

From our Twitter: 17 Nov 11am ET: Intermediate-term (oversold) stock indicators turn bullish.

17 Nov 11am ET: Intermediate-term (oversold) stock indicators turn bullish. Long-term models remain strongly bullish. More on blog later today.

Long-Term Stock Models Go Long 10/7/10 350pm

Near the close today, our long-term stock market model has gone fully long, from it's medium-long position.

In addition, our intermediate-term models are just very slightly short, from a moderately short position. Net-net, we now have a moderate to medium-long stock market position and outlook. You can't fight the tape...

Long-Term Stock Indicators turn Neutral 9/17/10 730am ET

With the sustained rally, our long-term stock indicators went from a "moderately bearish" stance to a neutral position, at the close on Thursday, September 16th.

Our intermediate-term indicators remain cautious and slightly bearish. No indicator will be correct all of the time, and the long-term indicator certainly "took it on the chin" this time. However, like all good investment strategies, the system will will "cut its losses" at some point -- in order to preserve capital -- and look for another opportunity in the future.
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With gold's continuing rally to all-time highs, there has been increased interest in commodities. Stay tuned for some research on the commodities markets and the diversification opportunities they offer to traditional portfolios that hold equities.

Stock Market Indicators

As of our last stock market update on July 20, 2010, both our long-term and intermediate-term models were moderately bullish:

http://z-trader.blogspot.com/2010/07/stock-market-outlook.html

As the market rallied from around the 1080 level to recent highs at 1125 on the S&P 500, the models maintained this bullish stance. Now, however, the intermediate-term overbought indicators are turning moderately bearish. Interestingly, the long-term model remains just moderately bullish, even with the relatively strong rally.

A "look-ahead" at probable intermediate-term signals shows that (depending on market action), the intermediate overbought-oversold indicators will be bearish for about a week or so. Long-term stock investors may not want to take action on a short-term change in model indicators but shorter-term traders may want to take profits.

Please visit our blog for stock market model updates.

Stock Systems Wary

Our long-term stock market indicators are moderately bearish. The market has bounced, but not very strongly. The indicator will hold on to it's bearish stance for a few more days, based on market action.

Interestingly, our intermediate indicators are also moderately bearish right now. The intermediate and long-term indicators have been countering each other a bit recently, but both are now moderately bearish due to the market bounce. They are calling it a dead-cat bounce -- at least for a few more days.

We'll keep you posted with any changed in the stock market indicators.

Stock System Update

During the recent stock market volatility, our long-term stock systems have remained long. Our intermediate overbought/oversold have been slightly "long" through the turbulence -- and they are now moving to a medium to strong long position.

Volatility and scary drops have returned for now -- but the computer systems are giving a green light. We moved back down to the area of the "Flash Crash" and there looks like there is solid support in the 1050-1060 area on the S&P.

Using Z-Trader Blog: Difference between Traders & Investors

Several readers and friends have asked about our trading systems and how to best read our Blog -- and use the trading signals. Last week's crazy free-fall was a prime example.

There is a difference between traders and investors. Investors typically look for positive results over a longer-term time horizon. Traders, on the other hand, attempt to add excess returns by trading in and out of positions over the short to intermediate-term.

During last week's sharp declines, traders had to reduce positions and manage risk. On the other hand, long-term investors were looking to add to positions. I act as both an investor and a trader for various portions of my portfolio.

Note that we always blog or Twitter whenever we have a change in our long-term or intermediate-term (overbought/oversold) stock indicators. We also periodically discuss the futures markets.

Preview of Friday's Mkt Action & How We Trade Mkts

In AH (after-hours) on Thursday evening, MSFT missed their quarterly earnings and revenue estimates. The market is currently calling down a little more than -1%. What does that mean for our trading in Asia overnight -- and as we enter Friday? As computerized and systematic traders, we'll follow our systems -- which are currently positioned fairly neutral in the equities -- and are poised to take their cue from overnight and early market action on Friday.

Recently, the "futures" portion (namely, currencies and commodities) of our portfolio has been the leader, helping our diversified portfolio to near recent highs. We'll talk more about the futures sectors in another blog post.

Trading Approaches

In our posts and Twitter, we talk about various time-frames -- such as Long-term (LT), Intermediate-term (IT), and Short-Term (ST). We trade many liquid markets around the globe using multiple time-frames and various approaches. These systems are all profitable and robust as stand-alone systems -- and are meshed together to produce excess returns with an eye on risk and robustness. We will often refer to our models' views across various time frames. Our Members have access to our positions -- as well as database (if they want to research their own trading systems).

Markets

We trade everything from equities, futures, options, fixed income, currencies, and commodities. Our focus is on the futures markets where we trade all major sectors including global stock index futures, interest rates, currencies, and commodities (metals, energy, agriculture, meat, softs).

Other Diversifying Methods

In addition to this core of trading systems across diversified markets, we are able to capture positive returns that are great diversifiers for the rest of our portfolio -- and are particularly useful for more traditional stock (and bond) portfolios. We'll discuss this investment approach in a different post when we get a chance to publish some actual performance that we -- and our Members have earned.

Outlook for the Stock Market

The market is very interesting right now. We are truly at a crossroads... After the scary declines last fall (in Nov 08, the S&P hit 750) -- and then again this spring (March 09, we hit 670), the market has rallied strongly (to around 950 on the S&P).

Many gurus are calling for steep declines ("bear market rally"). Currently:

- Our Long-term models are bearish, and

- Our Intermediate-term models are bearish.

However, interestingly, if we rally much more, our Long-term models will lighten their stranglehold on the strong short position they have held for about 1.5 years. In this volatile market, you definitely have to let the "tape" tell you the story!

Futures Sectors

We invest -- and trade -- in the major liquid futures markets, focusing on the US markets. Note that we have also traded international commodities such as London metals and Japanese Commodities (Tocom Rubber, Azuki Red Beans). Recently, we mentioned that many of these sectors have become correlated with the stock market during this recent sustained equity rally. Traders in these markets are probably aware of this -- but should make special note of this to avoid having undue concentrated risk in their portfolios.

Here is a look at the major futures market sectors in which we invest. We like to use the word "invest" because we believe that we extract risk premiums that are left in the marketplace by hedgers and other market participants.

• Stock Index Futures
• Interest Rates
• Currencies
• Metals (precious metals and industrials)
• Energy
• Grains
• Meats
• Soft Commodities (coffee, cotton, sugar, OJ, cocoa)