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Thursday, May 8, 2014

50 Days Box


I've been sick for over two weeks, just managing positions, reducing, avoiding whipsaw.
We have been in this S&P500 Box for over 50 days, seemingly trying to break the top, but unable to. May-be any minute now, maybe later... Bradley low is now, to be followed by up to 7/16/2014. Small caps are in a world of hurt, in their own bear market or just a correction. Treasuries are a place to be, I bought and added once in System1 account back in    .

chart SPX
chart IWM

BCM and LB accounts are fluctuating in 1% range. I don't know where we going. Internet is dead, bloggers don't post much, commenter are all gone. Not that I am reading too much - mostly skimming pages ones in a while.  Cobra had 50 people today in a room - he used to had hundreds! What is this dead summer market? Did everybody already blow up? My accounts are light - LB over 30% cash; BCM off the margin. I don't see a lot to buy. Either too late, or too beat up , or may be i am in a wrong stocks... I wasn't in a condition to do too much anyway.

Being sick in a Box gave me some time to think about System1, that had been frozen since 2013 with only   Wellesly Fund on. I promised myself to never sell it, just add or reduce. In fact, I bought it in 2008, added once in 2009, then took some off, and never touched it since. I look at it ones in a while, just to see if I can add a half position or so, but its always too late... One of my best performers ever!

The complete sell off of System1 during Spring and Summer 2013 was based on very vague exit concept, that effectively ruined my performance last year. System1 served me well, it always managed to step aside in bear market and participate in bull market, it never had a loosing year. Exuberant risk avoidance inevitably leads to excessive protection of gains, and is a major drawback  to my long term performance. This old and true system was developed even before I new about systems, or their management or mostly everything I know now. Simplicity of System1 needs to be preserved, but for everything else I need something better. I need a new System 14, to stay invested in long weekly-monthly trends, rotating thru major asset classes in Vanguard account via mutual funds only. It has to be rule based, with simple set of risk controls and filters, diversified and ranked (somehow)

of TopStep reflecting on organized destruction of financial industry, a recurring theme of mine.
...I have pointed out how there were over 500 clearing firms between the CME and the CBOT and that today there are only 40 clearing firms of which only 10 can do a small account... It really doesn’t matter if the markets go up or down, with the volumes as low as they are many of the big banks and brokerage firms that made up our industry are either closed due to new regulations or just not trading...
I don't think it doesn't matter. I don't think that volume is liquidity. I don't think its a good...