My resolution for this year is not to be in a position to not buy cheap assets again. I feel these times are a opportunity of the lifetime for someone who was diligent and saved some cash. That is it.

        

I have been so busy lately but I have not stopped paying attention to the markets and their insanity.

1. The backtesting process is finished and I am almost ready to trading the system.
2. Barring any disaster I think the market bottom is in. Support for the DOW is around 8000 and it has held for eight weeks now.
3. The bond market collapse is imminent. If you are long bonds consider taking your principal and a little profit off the table. Put a trailing stop for the rest of your position.
4. We thank God for cheaper gas. Enjoy it while it last as our friendly OPEC fiends are cutting oil production. Yes, the Saudis are our BFFs.
5. The banks are a bunch of thieves. For example, Bank of America took 7.5 billion dollars (yes with a capital and instead of lending it to the people they went ahead a purchased a huge stake in Bank of China. How cute are these maggots? Remember that Bank of America took 15 billion dollars as their cut from the 700 billion bailout fund.
6. Some rich people are pissed these days. That scum ponzi schemer Martoff took a lot of them to the cleaners with his scam. I guess we don't need Nigerians to do scams and ponzi schemes. Americans always can do it better...
7. Illinois governor = scum
8. Somalian pirates = dufuses aaaaargh!
9. The car manufacturers with all of their gloom and doom will get their bail out. There is not corporate responsibility anymore. Companies that are burning through 44 billion dollars cannot be saved. Get it Ms. Pelosi and Mr. Barama?
10. Kudos of the day for the Iraqi reporter that magnificently threw his shoe to Bush Jr. So much for the war on terror eh?

There you go... A lot of ranting in under 15 minutes.

        

I have been revamping my original trading method for three weeks now. It has been filled with mistakes and a lot of number crunching. I backtested the wrong parameters twice and obviously I was not happy. I since have corrected the coding and added a ADX/DMI+ filter to wed out a lot of the bad trades. My system is a trending system that enters the trade on a correction in the direction of the major trend. The system is coming nicely and will kick some ass I promise.

I am not going to divulge the software package I use (they don't pay me). There are a lot of software packages that can do backtesting of stock picking strategies. Metastock, Tradestation, Blocks have some backtesting capabilities. You can also back test by hand and paper.

My methodology is as follows:

1. Take a list of stocks and indexes and use data for at least 5 years so as the system sees good and bad times. I went back to 2002.
2. Develop the code and conditions for going long or short.
3. Test those conditions against the data and optimize the parameters.
4. Select the parameters that repeat the most and also select an average of the parameters.
5. Run the parameters that repeat the most and the average parameters against the same list of stocks.
6. Select the best parameters after this final run.

That is it. Easy right?

I traded a similar system back in 2003 and it performed very well. This system is even better and more robust. It trades less but the signals are really good. The King Diamond method is the best system I have ever traded and now it will be much accurate.

        

Thanks for your support.

        

Thinking that you can get a bargain at the local Wal-Mart during Black Friday? how much do you value life and limb? Read the following article and reflect on it. Click Here.

        

I read an interesting article on Seeking Alpha about how if you bought the Dow in 1999 you would be in a losing position today. Should you have a buy and hold strategy? Only if you buy the correct stocks.  Click here. I am not going to tell you how to invest, however, the market has broken the backs of many mutual fund managers in the past year (the market topped in 2007). Again I must ask you to use stops and have a detailed entry and exit strategy for every trade you take.

        

Dear friends: My worst fears became reality today. I was actually kind of excited that the market had gained some ground at noon. The worst indicator of a problem is late afternoon reversals down. Next stop are the lows of 2002-2003 bear market. I fear for people that are close to retirement and are fully invested. Please, use stops when you trade. Hedge yourself with a Covered Call or a collar. That is the best advice I can give from this point forward.

This one is gonna end badly, however, with some cash we can buy the vicious bounce back. I encourage you to study the bear markets of 1929, 1973, and 2000. The opportunities will be there. We need to be patient and hone our craft.

We are living a historical four standard deviation event. It is the equivalent of seeing an unicorn.

Technical analysis mantra says that market cannot break forcefully on low volume, yet this is happening. At least Warren Buffett is in competition with yours truly to see who is the worst stock picker. Have you seen the returns of Fidelity Magellan recently? Down 60% for the year! I guess the fund manager did not read this memorandum. Excuse me while I go puke.

        

My dear fans, I have been busy upgrading my original trending system. I have been backtesting it since Sunday. Backtesting refers to testing a trading system using historical data. I use at least 5 years of data that includes a semi bull and the ugly 2007-2008 bear market data. That way I can be confident that the system can be used under any circumstances. The system uses the following:

An average true range stop
MACD and stochastics (for entry timing)
ADX (trend strength)

I won't waste my time acknowledging those pesky hecklers.

If you need good reliable and free end of day stock data I use Stock Quotes Express. The data can be used in Metastock, Tradestation 2000i, Advanced Get, EASC trend, Omnitrader and other popular software. The program retrieves its data from Yahoo Finance, MSN Money and others.

        

How cute, a day after I close a trade the markets decide to reverse. I am not going to even look at a Ford quote or buy a Ford car for that matter. I curse you Ford, may Kia kick ur ass!

A successful test of the lows of October 10th where the indexes undercut those lows and reversed. Is that a good sign? Summoning the spirit of our awesomest governor Ms. Palin I give you my response: You Betcha!

Tomorrow I will conquer the world and deploy the last third of my 401k. I will be fully invested.

By the way, I am still waiting for my bailout Mr. Paulie.

        

I closed the Ford trade today at about a 7% loss. I was happy that ford was gapped up on the open on speculation that the dumberment will give them a piece of the 700 billion dollar bacon-ator. The pigs led by the magnanimous evil genius Paulson are at it again. Paulson has the audacity to say today that the bailout is not working. Duh! Dee dee dee!

I told you guys again and again that this bailout was a scam. Congress never added a condition that the banks would have to lend for them to receive the money. In addition, the government did not even collaterized the loans they were making. They should hire me and I will show those banks some very tough love. Let Harvard or whatever Ivy League school he graduated from burn Paulson's diploma.

Back to Ford, on yesterday's post I discussed that Ford is done. Those thoughts were confirmed today. Ford volume yesterday on the downside was about 73 million shares. Today on an up day the volume was a putrid 50 million shares. The math does not add up. In addition, the stock could not hold the highs set in the morning and was sold off in the afternoon. I suspect that even with the potential bailout Ford won't survive the competitive advantage and lower labor costs of Toyota. Toyota manufacturers cars at about 30 dollars an hour cheaper than GM and Ford. Gotta love those unions and the retirees. but oh course every one is begging for some handout an the stupid Congress will believe whatever those lobbyists will tell them. I can't take it anymore.


photo courtesy of makethingsinteresting.wordpress.com/


At least this beggar is creative. I would love to say the same thing about our government. And do not start me on the change we can believe in crap! Help us saint Barama.