I think you are right in your analysis. But when does anyone cash out? Is S&P the new overnight repo? One thing for sure is I'm going to start scripting a download of the fed balance sheet. Not because it will make any difference to me but because it will help me understand the past. And I want to catch these basterds when they change something without announcing it.
Thank you Real Money, this is something I am going to need to learns more about and start paying attention to as well. I apologize for my lack of fully understanding, but I can see that the blue line represents the S&P and I'm guessing the white line represents actual bonds but I was a little uncertain on the red line. The red line the result of however you inputted the 72% bond allocation in your model right? So essentially you are paying attention to the red line more so than the white line? I will do some research on this myself, but if you wouldn't mind helping me understand reading it or understanding just a little bit better it would be much appreciated. So I see in your model that when the red line dropped in line with equities in mid September, equities started to sell off, however I don't see how it correlates in early November. And as of current it looks as if the red line is heading lower or the spread is getting larger between equities and bonds. Sorry man, I really appreciate your advice either way and if this is just something that I need to research more on my own I completely understand. There is just so much to learn in regards to analyzing charts and the correlation between different assets. Btw, what software do you use to do your charting and put your models together? I just signed up for a trading view pro account so I'm thinking I could probably use that to do something on the lines of what you do. Thanks again for what you have shared so far either way.
Great info! We just have to collectively figure out the best signals to watch for in order to maximize on the remaining bull market gains and also the best signals to watch for to really capitalize on the correction when it comes, as well as different ideas on the best ways to do so. I have some ideas, such as out of the money calls on leveraged inverse ETF's such as SPXU. This fund loses value slowly when the S&P goes up, but pumps up quickly during a correction (take a look at last December for example). Although overall I'm a novice compared to most of you guys so I'm sure there are better ways that I would love to learn about as well.
The chart formula is in the top left corner. It's ThinkorSwim. This formula 8000*/UB + 200*/ES gives you the cash value of 8 contracts Ultra Long T-Bond Futures AND 4 contracts ES futures. This is roughly 2.1 million dollars. So, it's a synthetic portfolio with about 1.5mm in bonds and 650k in S&P 500. I'm just using it as a reference to get a very general idea of what a book of stocks and bonds is doing. Funds allocate like this to reduce the portfolio volatility (the two assets are inversely correlated). If this allocation mix starts to turn up it means that a 'conservative' portfolio is starting to perform well. Fund managers will try to allocate to this kind of a mix. (I think it's because it's less risk and therefore less expensive to hedge.) This is all just back of the envelope stuff that I use to track what fund managers might be thinking.***** I have seen them trading off this chart though.... When it starts to turn down, they might sell both stock and bonds at the same time! So the white line is the value of the portfolio (roughly $2.1m) and the red line is just a 150 period rolling linear regression (inertia study) in ToS. (it's a 4 hour chart so one-hundred and fifty 4-hour bars are used in each calculation of the red line). *****I look at many things at the same time, VWAP charts, spreads, arbitrage markets, and all kinds of comparison charts. You can see them in my other posts. It's all there.
My end-of-year speech to myself (Well, first one over the years of this thread)...Follow along below... ----------------------------- The trade war is long over, yet I must not forget the reasons why I sacrificed so much, for the cause of profit. The cost of trading, can be high... But... Sometimes it's too high. You know, when I changed my trading plan, it was to save my account from extinction... But I never answered the question...Why? Why, am I, as a trader, worth saving? I still trade badly, over greed, revenge and anger... And I still visit my frustrations on the forum... I refused to accept the responsibility for a market gone wild. Like I did this year with the swings. I decided I knew better, and turned against it. But I comforted myself with the knowledge that it wasn't my fault, not really. I cannot establish a plan, and then walk away from the plan I have created. Sooner or later, the day comes, when I realize I cannot hide from my own creation.
Final 2019 update from last post detail. (It was light trading because of the holidays, but boy the opportunities were there.) My resolution tonight is to switch back to mini live, and not be a terrible trader. After all, this is terrible trading, right?
Update since last entry... Trying to wean myself back to minis...It's been a rough go. Still not trusting myself. The final NQ entry was one of those times when my feelings that the market looked "shaky" actually turned out to be true, got out with a tiny profit at peak of RTH.... And there's that haunting 70+% profitable number again. Beyond bizarre. I am now relegating it as just a fluke or something.
Those two might be "dotards", but what about the market? Are they so friggin' naive to believe everything those two say at face value? The answer is clearly no. But they push up the market anyway and, in my mind, knowingly pushing up the market on false information is MANIPULATION.
A sad week of no effort... This parabolic move north has my nuts so twisted up in confusion that as a bull I can no longer think straight. At this point any TA I know to use is suspect (I remember Feb 2018). The farther up NQ keeps heading with no pullback, the greater the pullback will be. Someone in another thread mentioned that if we can get a decent correction in the next month or so (and hopefully it is 20% rapidly), we should have a nice rise until mid-summer. I agree with that conclusion.