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ES and the Great POMO Rally
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ES and the Great POMO Rally

  #61 (permalink)
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MXASJ View Post
Interesting. Core-Satellite is pretty popular among the private bankers I know. Out of curiousity what is the average hold in your Core? And is your Core an asset class-based, mean-variance optimized portfolio or is it more a discretionary macro Core?

Thanks for sharing.

Hi MXASJ,

Nice to meet you. I have specific entry criteria for swing trades that are derived from a daily chart interval. The asset class of preference for a core position is large cap stocks. I'll utilize the ES as my core position typically although I have used SPY in the past. I've drifted away from stocks entirely because of the associated costs (expense ratios, commissions, etc.) and the tax implications. My core position is a trend following strategy which can last months just depending on how long the trend lasts. I do not utilize price targets but have a trailing stop that will take me out of the position. Keep in mind that this is not for the faint of heart. Swing trading involves big account equity swings.

As far as MVO or MPT, I don't include that in my short(er) term investment strategy. That would be best used for a long(er) term investment strategy where you are utilizing third party investment managers, etc. I am handling/trading my own portfolio. I do have long term, more passive investments but those are an entirely different approach which I do incorporate MPT to a degree.

My strategy is discretionary macro for sure. I don't trust an automated system to select which satellite asset class/investment I should pursue throughout the day. As I mentioned, I'm looking to simply enhance or hedge the core position which also provides income while the big picture plays out. This means that if only CL is the best option for the day, I'll trade that.

Hope this helps.

Cheers,
PB

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  #62 (permalink)
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Thank-you

I would like to thank all of you for the high quality of the posts!

I had "sworn-off" forums due to several factors:
  • Forum trolls
  • negative people
  • sound bite - no thought responses.
I am impressed with well thought out contributions here.
(You guys make it tough for me to keep my resolution of no forums! LOL )

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  #63 (permalink)
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aquarian1 View Post
I would like to thank all of you for the high quality of the posts!

I had "sworn-off" forums due to several factors:
  • Forum trolls
  • negative people
  • sound bite - no thought responses.
I am impressed with well thought out contributions here.
(You guys make it tough for me to keep my resolution of no forums! LOL )

Thank you! Always feel free to contribute here.

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  #64 (permalink)
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tigertrader View Post
( MUNIS and MBS)...WOW!!!

I'm beginning to scale into some shorts between 1238.50 - 1240.75 basis ES 03-11.

Top Ten Reasons I'm Getting Short

10) VIX on lows
9) Spain/ eurozone
8) rising interest rates
7) rising energy costs
6) 25% equity rally since July 1
5) bullish sentiment at its highest level since the Nasdaq bubble / put-call ratio indicates longs are un- hedged
4) low volume on upticks
3) NYSE TRIN at its lowest since before the 1987 crash
2) Relentlessly negative NYSE TICK action / one of the lowest Cumulative TICK closes of the year
1) economy still sucks


It's Rally Redux as Mr. Market jumps ahead during his nocturnal jaunts, only to rest, rotate, and revert, during the light of day. Having taken my shot at shorting this market, I can't help but feeling a little like Bobby Fuller, but it just goes to show ya, you can't fight the trend, you cant fight the man in the red suit and white beard (seasonality), and most importantly, you can't fight the Fed.

" It's time for the Fed "one trillion" hats- as of 2:00 pm Eastern, the Fed's Treasury holdings have surpassed $1 trillion. Add to this the well over $1 trillion in MBS and agency debt held by the Fed, and there is your perfectly quantified reason why the S&P has just hit a two year high, and why the Nasdaq bubble is alive, back, and will soon retest its 2000 highs. Basically, with the Fed the de facto purchaser of all securities with a yield of under 4%, the entire definition of a risk-free rate per the MPT has to be scrubbed. " from Zero hedge.

However, a cautionary note should be sounded for the New Year, as the banks have been taking the Fed’s POMO money and depositing the funds back with the Fed itself. With the the PDs At Rest, it could be Bull Remembered, as early as next year.


Last edited by tigertrader; December 21st, 2010 at 10:45 PM. Reason: typo
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  #65 (permalink)
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tigertrader View Post
It's Rally Redux as Mr. Market jumps ahead during his nocturnal jaunts, only to rest, rotate, and revert, during the light of day. Having taken my shot at shorting this market, I can't help but feeling a little like Bobby Fuller, but it just goes to show ya, you can't fight the trend, you cant fight the man in the red suit and white beard (seasonality), and most importantly, you can't fight the Fed.

" It's time for the Fed "one trillion" hats- as of 2:00 pm Eastern, the Fed's Treasury holdings have surpassed $1 trillion. Add to this the well over $1 trillion in MBS and agency debt held by the Fed, and there is your perfectly quantified reason why the S&P has just hit a two year high, and why the Nasdaq bubble is alive, back, and will soon retest its 2000 highs. Basically, with the Fed the de facto purchaser of all securities with a yield of under 4%, the entire definition of a risk-free rate per the MPT has to be scrubbed. " from Zero hedge.

However, a cautionary note should be sounded for the New Year, as the banks have been taking the Fed’s POMO money and depositing the funds back with the Fed itself. With the the PDs At Rest, it could be Bull Remembered, as early as next year.

You're right on with that. This low volume + two POMO's per day is allowing the PD's to pump this thing higher and higher. It feels like the Holiday break of 1999! It's amazing to think that this entire run up was primarily fueled by the Fed via POMO. The Fed's balance sheet now looks like a hot air balloon. It will be interesting to see if Dennis Kucinich's Bill will receive any support. If passed, it would be a game changer for the Federal Reserve. I won't hold my breath though.

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  #66 (permalink)
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break before New Years?

Hi Everyone,

I'm planning to sell a gold coin (for cashflow) before month end, perhaps Wed 29th at the latest.
It's looking sleepy in the ES as we close in on Xmas with Thursday probably more cabbage - narrow range choppy trendless.

So I'm wondering if someone with wonderful foresight has an idea if we will get a Eurocrisis spike in gold before month end pushing it to 1425 area ? (1386 level at the currently)

Thanks in advance to all the sooth-sayers for their crystal ball inspired guesses!

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  #67 (permalink)
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tigertrader View Post
It's Rally Redux as Mr. Market jumps ahead during his nocturnal jaunts, only to rest, rotate, and revert, during the light of day. Having taken my shot at shorting this market, I can't help but feeling a little like Bobby Fuller, but it just goes to show ya, you can't fight the trend, you cant fight the man in the red suit and white beard (seasonality), and most importantly, you can't fight the Fed.
..
With the the PDs At Rest, it could be Bull Remembered, as early as next year.

After watching the cartoon video "Buy the dip" - thanks to whoever posted it, so funny so true - and connecting this with what you said;
don't fight the fed
don't fight the fat man
the reality, and unreality, of the situation is just so strong.

At another forum, there was a teenager who has made 4 pts every day on the ES for months! (hyperbole included gratis). I congratulated him, setting off a firestorm of 'watch out sonny there could be a big crash'. He responded that the Dow would have to fall to 7,800 to wipe out his profits. (THEN the firestorm really took hold). It calmed down when he explained (re-explained) that he spread bet (in the UK) and has his leverage set at 10 pounds per point - so 8 pts = 80 pounds. But the curmudgeons didn't like it - the nerve of this youngster out trading them.

He would just buy the dip. Then he placed his sell (about 10 points higher) and left it - no stop that I know of. Overnight, one day, two days -0 whatever it took to get filled. If it went down again before being filled, he'd buy another. No worries no stress off to his job at the pub to come home and find 8 crisp new 10 pound notes deposited in his account.

He's accumulated $48,000 (?) in profits. "Good old ES - gotta love it"

So the line from the cartoon, by the girl, "I've lost so much money shorting this market, I'm afraid to go long and have the market crash and wipe out what little I have left."

I have been totally convinced "this is the top" from 1147 (?). 100 points later and unbashed printing of money (oops Big Ben said not to call it that -stay away black helicopters!) I still enter the day with "This could be it - the big chance" - even though I tell myself logically I am unbiased - to once again suffer though another slow, demoralizing, relentless grind higher.

So as it inches to 1253 (about 10:15CT) I venture forth with hope once again for a medium to wide range day, knowing in my heart of hearts they'll out do themselves with another day narrower than yesterday.

Quoting 
Just for fun:
Est High= 1256.00
Est Low= 1248.50



Last edited by aquarian1; December 22nd, 2010 at 12:25 PM. Reason: typo
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  #68 (permalink)
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aquarian1 View Post
Hi Everyone,

I'm planning to sell a gold coin (for cashflow) before month end, perhaps Wed 29th at the latest.
It's looking sleepy in the ES as we close in on Xmas with Thursday probably more cabbage - narrow range choppy trendless.

So I'm wondering if someone with wonderful foresight has an idea if we will get a Eurocrisis spike in gold before month end pushing it to 1425 area ? (1386 level at the currently)

Thanks in advance to all the sooth-sayers for their crystal ball inspired guesses!

Hi Aquarian1,

First and foremost, I respectfully wouldn't want to recommend anything that would affect you in making a financial transaction. I don't know your financial situation. Additionally, it would be impossible to predict any news releases that may come out. But I will tell you what I'm seeing on the charts with the hope that you will be able to determine what to do on your own.

From looking at the daily chart on GC, it's really at an interesting point here. There were several bearish divergences that occurred which resulted in pull back's to the 50 day MA where it found support and the PPO is still hovering above the zero line. It's really tough to say which way it will go but I would remain bullish for now. Also, the second chart shows that the bollinger band has crossed within the keltner channel creating a squeeze. This is could and often does result in a burst in one direction and they've been to the upside lately but certainly not an indication that it would happen again.

Hope this helps,
PB

Attached Thumbnails
ES and the Great POMO Rally-gold.jpg   ES and the Great POMO Rally-gc2.jpg  
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  #69 (permalink)
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aquarian1 View Post
After watching the cartoon video "Buy the dip" - thanks to whoever posted it, so funny so true - and connecting this with what you said;
don't fight the fed
don't fight the fat man
the reality, and unreality, of the situation is just so strong.

At another forum, there was a teenager who has made 4 pts every day on the ES for months! (hyperbole included gratis). I congratulated him, setting off a firestorm of 'watch out sonny there could be a big crash'. He responded that the Dow would have to fall to 7,800 to wipe out his profits. (THEN the firestorm really took hold). It calmed down when he explained (re-explained) that he spread bet (in the UK) and has his leverage set at 10 pounds per point - so 8 pts = 80 pounds. But the curmudgeons didn't like it - the nerve of this youngster out trading them.

He would just buy the dip. Then he placed his sell (about 10 points higher) and left it - no stop that I know of. Overnight, one day, two days -0 whatever it took to get filled. If it went down again before being filled, he'd buy another. No worries no stress off to his job at the pub to come home and find 8 crisp new 10 pound notes deposited in his account.

He's accumulated $48,000 (?) in profits. "Good old ES - gotta love it"

So the line from the cartoon, by the girl, "I've lost so much money shorting this market, I'm afraid to go long and have the market crash and wipe out what little I have left."

I have been totally convinced "this is the top" from 1147 (?). 100 points later and unbashed printing of money (oops Big Ben said not to call it that -stay away black helicopters!) I still enter the day with "This could be it - the big chance" - even though I tell myself logically I am unbiased - to once again suffer though another slow, demoralizing, relentless grind higher.

So as it inches to 1253 (about 10:15CT) I venture forth with hope once again for a medium to wide range day, knowing in my heart of hearts they'll out do themselves with another day narrower than yesterday.

Based on past experiences, whenever you hear of amateurs making hand over fist effortlessly like this, you know the game will be over soon. I've witnessed this so many times. Most recently it being Real Estate which has since taken a beating and IMO, hasn't finished the down trend. Stocks are right there in the mix of froth and ironically the entire move was caused by a false sense of demand just as real estate did with the help of the FRBNY providing daily liquidity to the PD's via POMO and allowing them to goose high Beta stocks giving the impression of a rally.

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  #70 (permalink)
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Private Banker View Post
Based on past experiences, whenever you hear of amateurs making hand over fist effortlessly like this, you know the game will be over soon. I've witnessed this so many times. Most recently it being Real Estate which has since taken a beating and IMO, hasn't finished the down trend. Stocks are right there in the mix of froth and ironically the entire move was caused by a false sense of demand just as real estate did with the help of the FRBNY providing daily liquidity to the PD's via POMO and allowing them to goose high Beta stocks giving the impression of a rally.

For sure.

However, I was more trying to highlight that no one wanted to give the kid a "well done!" It costs nothing to support and encourage others.

He is making more than 4pts on average per day and has done it for three months. I would wager that few experienced seasoned traders could make 4 pts consistently every day one one contract, for 3 months even if they traded on their sim account. He always posts his entry and target exit well in advance.

Seasoned investors always know are the mantras:
"The trend is your friend"
"Those who try to pick the top get picked off."
"Never fight the Fed."
Yet in a bear market rally like this we ignore them and try to pick a top.

Yet how many of us have sat on the sidelines "thinking this thing is going to roll over any day now" for months?
Is it our egos that are talking, an attachment to being right?

One day it will top and roll over. And he will be stay long. Maybe he will be wrong for a week, maybe two.
But with 3 months of profits - he'll have to be wrong a long time to eat up his profits. I think for a teenager to stick with just one contract when he's been winning shows good discipline for one so young.

(BTW I'm a bear too!).

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