Stock Signal Update (4/24/12)

The recent stock market decline let some of the air out of the stock market's steady rise over the past several months.  Our stock market indicators switched to positive with the stock market currently trading at about 1371.

• Our long-term model are now bullish.
• Our oversold/overbought models are also bullish, after the recent downdraft.  

Our last update was in December, when the S&P stood at 1254.  Since that time, our models unfortunately had us underweighted in the stock market.  Systematic trading strategies are not always correct, but following disciplined methodologies helps in terms of repeatability, managing risk, and managing emotions.  

Flat Stock Market signals 9/27/11 (7am)

Just a quick blog post; as our readers know, we were short the stock market going into the weekend after last week's emotional drop.  Our stock market models are currently as follows (S&P currently at 1145; calling higher in electronic trading):

• Long-term -- moderately bearish
• Intermediate-term -- oversold indicators neutral
• Short-term -- went long after Monday's rise.

As a result, we are currently flat.  

Oversold Indicators turn Bullish 4/13/11 7am ET

Our oversold stock market indicators have turned moderately bullish from their slightly bearish signals of March 25th (when the S&P was at 1318).  The market is calling slightly higher in overnight trading, with the S&P trading electronically at the equivalent of 1319 (on the cash S&P).

Our long-term models remain strongly bullish, and our short-term models are slightly bullish, awaiting confirmation during the day.  Long-term investors should have their stock positions in place, and traders can be looking to enter the equity markets.

Overbought Stock Indicators turn Slightly Bearish - 3/25/11, 1pm ET

A quick blog post:  our intermediate term overbought stock indicators have turned slightly bearish.  This indicator last changed a week ago, when the S&P stood at 1275.

The S&P is currently at 1318.  Our long-term stock indicators remain strongly bullish.

Our equity outlook is based on a combination of our long-term, intermediate (overbought/oversold) and short-term stock market models.    

Stock Indicators Update 2/14/11

Our stock market indicators remain the same as our last blog post.  Our long-term model remains strongly bullish (as it has been for a while).

With the stock market's continued rise, our intermediate models have remained mostly neutral.  They have had slight shifts from slightly bearish to neutral -- but with no notable or material change.  A few weeks ago, we said that our intermediate models looked like they would turn bullish -- but the market's slow rise has kept that in check.  We'll keep our readers posted on material changes to our long-term or intermediate-term indicators.

Our short-term models, along with the long-term models, have kept us on the right side of the stock market's rise, so that our Short-Term System has had a good run in February.   

Intermediate Stock Indicators - Moderately Long

As the market nears the close, our intermediate-term stock market indicators are moving to an increasingly bullish position -- going from a slightly-long reading to a moderately-long position. Our long-term indicators remain strongly bullish.

We do not post indications from our short-term indicators, but our overall S&P positions are dictated by the combination of all time frames. Our S&P models are part of a z-Trader Short-Term System monitored at Collective2.

We also use Collective2 to track our Diversified Futures program, zFutures.

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.

Long-Term Systems Flip to Moderately Bullish

With today's rally, our long-term stock models are flipping to moderately bullish at the close today (from their moderately bearish stance). Our overbought (intermediate) stock market indicators remain moderately bearish.

The short-term trend upwards today kept us flat to slightly long overall. Remember to keep all three time-frames in mind if you are a trader.

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.

Intermediate Stock Signals Remain Neutral but...

look like they will turn positive in a few days depending on market action. This information includes today's (Friday's) move lower as of 3:25 pm on April 16th. Note that we always update our blog with new stock signals.

Long-term indicators remain bullish.

Intermediate Stock Signals Turning

Our intermediate stock signals are turning neutral and will be slightly bearish by tomorrow. The long-term trend remains bullish.

Thus, long-term investors should remain bullish, but "traders" may want to take some gains off of the table (net-net neutral positions for traders, perhaps following short-term trends).

Overbought / Oversold Stock Indicator Shifting to Moderately Short

At current stock market levels, our overbought / oversold stock market indicators are shifting to slightly short. However, with both the long-term models and short-term models long, we will maintain a long stock market bias -- with a "yellow caution flag."

Our overbought/oversold indicators have been in sync with the market quite well lately.

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.

Trading Systems and Methods

Our math and science backgrounds led us to a quantitative and research-oriented approach to trading the financial markets. We enjoy our work immensely and love the challenge that these"competitive markets" bring. We like it better when the markets "cooperate" -- but we feel like we are improving constantly. As "quants," we have developed systematic trading algorithms that are robust across numerous markets and market sectors.

Our approaches cover various time-frames and methods. We monitor risk and factor risk levels into every decision we make. Some of our approaches are non-linear in nature -- and some border on genetic algorithms. All are systematic and disciplined.

We have purposely developed our trading approaches so they are relatively simple and robust -- and consult with institutions and select clients on portfolio management and/or implementation.