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Dick
First, I'd better explain myself a little better. Our systems are in a
continual state of evolution. Stuff that used to work great in the 60s for
example, don't work well now. If we ever tank, I should be in great shape
because I can dig out our old technical systems that worked like a dream
back then.
Currently, all of our systems are based on some proprietary indicators that
we developed over many years. Being very honest, without spending a lot of
time, they would be meaningless to anyone not familiar with our methodology.
I can give you some indication as to how we work and our general philosophy.
1. We are strictly technical traders and have almost never (want to leave
myself an opening here) paid any attention to fundamentals.
2. We are contrarian traders. For us to execute a trade, we have to have
two things present. They are, first a buy or sell signal and second, a
'contrary' which is another proprietary indicator that gives us some idea of
what happened that day, price wise. There are times when we wait because
experience has taught us that without this 'contrary' our probabilities drop
to 50% or less.
3. We've gravitated to trading strictly S&P futures because the
profitability has been better, and more consistent.
4. All of our indicators are based upon our philosophy that the 'price
action' in the futures market already includes all fundamentals as well, so
that by basing our system on these 'price actions' we can develop some
thoughts as to the probability of success in making a trade.
5. We feel quite strongly that you should develop your own indicators as
opposed to using the ones packaged with MetaStock or other software. Our
signals are quite good at picking tops and bottoms, FWIW. If you develop
your own, then you won't have the problem of trying to trade the same day
and time that everybody else is trying to trade. Just our thoughts and
opinions. We're not knocking anybody's approach, but this is ours. Works
for us. We're constantly working on developing new indicators, all the
time. My dad, who's 89 BTW, spend about 8 hours a day working on new
indicators. He's sent me 3 programs this week alone to evaluate, one of
which doesn't use a contrary indicator, which is unique for us. For
example, the William's %R indicator that's floating around, is very similar
to an indicator of ours that we developed over 25 years ago. Again, this is
easy for me to say, but we have my dad working on it full time, my brother
part time and me, most of the time. It's hard with an 8 year old on Summer
vacation, but I do spend as much time as I can. Sometimes up to 10 hours a
day.
We first automated our systems in 1962 when I left IBM and joined a
manufacturing company in Detroit. That gave me access to a mainframe
computer. From there, I converted it to Basic and use GE timesharing. Then
converted it to COBOL and stuck with that for several years. In the early
70s, we built NorthStar Horizon computers running under CP/M and COBOL
(MicroFocus). We've been in micros ever since. My current box is a Pentium
400 with 64Mb RAM, 14Gb disk, a DVD II drive, a 17" monitor, etc. We've
come a long way baby, in terms of processing power. That first NorthStar
had 4k of memory and 2 floppies.
Hope this is of some help.
-----Original Message-----
From: owner-metastock@xxxxxxxxxxxxx [mailto:owner-metastock@xxxxxxxxxxxxx]
On Behalf Of Dick
Sent: Sunday, June 21, 1998 11:25 PM
To: metastock@xxxxxxxxxxxxx
Subject: Re: Times are a changing? Bonds & Equities
Hi Guy,
I've been reading your comments with great interest, and I
haven't seen you describe your S&P futures trading system...
What's interesting to me is that after all these years, you've
managed to not only survive, but prosper using it. (Most I
know haven't accomplished either of these seemingly elusive
trading goals in futures trading)
Could you describe your system ? (I hope I'm not being
nosey, but I'm curious about the nature of a mechanical
system robust enough to survive all these years of use.)
Thanks,
Dick
Dick@xxxxxxxxxxxxx
P.S. I lived in So. Cal. for about 25 years, and right now, hawaiian
property is cheaper than many parts of California (because of the
Japanese credit collapse, and the subsequent sale of assetts to the
tune of ~.25 on the dollar) Go figure, eh ?
-----Original Message-----
From: Guy Tann <grtann@xxxxxxxxxxx>
To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Date: Saturday, June 20, 1998 11:55 PM
Subject: RE: Times are a changing? Bonds & Equities
>Otto
>
>I agree with your comments, however right now, it appears that we have
>decoupled without the recession indicators flying, at least here in the US.
>With regards to Asia, I see a flight to US Bonds to increase the meager
>interest earnings available to the Asian saver and as protection from the
>collapsing markets over there. For it to happen now, after the market
>collapse in Japan, the problems in Korea, Hong Kong reunification, etc.
Why
>now? Why not earlier, while the Japanese market was beginning its way
down?
>
>Commodity prices have been on a downward slide for some time now as well.
>Through all this, Bonds remained coupled to equities here (at least in our
>system). I guess what I was posing was has anyone else seen this or was I
>imagining it and did anyone have thoughts to share whether concerning the
>fundamentals or what they noticed through their Technical Analysis.
>
>BTW, other areas to consider in addition to utilities are food vendors like
>the big grocery chains. People still have to eat, as the story goes.
>
>
>
>-----Original Message-----
>From: owner-metastock@xxxxxxxxxxxxx [mailto:owner-metastock@xxxxxxxxxxxxx]
>On Behalf Of Otto
>Sent: Friday, June 19, 1998 7:00 PM
>To: metastock@xxxxxxxxxxxxx
>Subject: RE: Times are a changing? Bonds & Equities
>
>I apologize if I am stating the obvious or something totally out of whack.
>But it has been my understanding that equities and bonds decouple every
>once in a while whenever investors are beginning to focus on a possible
>recession ahead. With a possible recession ahead, the utilities rise
>markedly and the bonds follow, because investors are anticipating an
>economic slow-down which will reduce money demand, reduce interest rates,
>and thus increase bond prices.
>
>If investors go back to focusing on economic overheating (and fear of the
>fed), then the bonds and equities will re-couple, as investors see any
>evidence of overheating of the economy as bearish for both equities and
>bonds, and they will see any evidence of moderate cooling of the economy as
>relief from their fear of the fed, and thus bullish for equities as well as
>bonds.
>
>If the bonds make an extreme move (currently perhaps yields increasing
>beyond 6.2%) then the bonds might re-couple because this would strangle
>profits enough to be bearish for equities who would then join the bonds on
>the way down. If the bonds make an extreme move up, pulling the yield down
>to 5.4% and lower, this does not necessarily mean that equities will rejoin
>the bonds and rise, because the drastic drop in bond yields can happen in
>times of deflation (recession, depression, disaster, catastrophy, end of
>the world, etc.) and this is not good for corporate earnings, therefore
>remains bearish for equities.
>
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