Crash Coming?

Discussion in 'Index Futures' started by ShugKnight, Mar 5, 2007.

  1. I found this post on a blog I found over the weekend and thought it was interesting.

    Any thoughts?

    "Crash Coming?
    March 3rd, 2007
    The market had its worst week in 4 years. I missed my weekend post for the first time and look what happens. We’re down 4% from the peak, a correction is 10%, and a crash is over 20%. A lot of people are looking for something serious - I’ve read comparisons to Black Monday 1987, but the model values are very different than they were then. Then, the long-term model was bearish, and the first day decline was met with deteriorating model values. This time the LT model is bullish, and internal indicators are improving as the market declines - historically, the results were that the market ended up above new highs within 30 days. I’ll bet that will come before April.

    The model will miss 50% of these bull-market pullbacks, so the fact that it held LONG throughout the week is normal. The model outperforms over time periods longer than a week, so it will be wrong. I think we have at most 3% more downside and 10% upside. I expect the model this week to start “scaling in” this week, which means adding contracts should the market continue to decline. Generally, the model will double leverage near bounces, which allows us to get back to profits with half the move.

  2. Generally, this is a really really really stupid way to trade!

    Should read:

    "...the model will double leverage near bounces,
    which allows us to lose your money twice as fast..."

    What is the URL of the blog in question?

  3. Hi Kevin,

    The blog is at They claim the model gave them a 25% return in 2006 and has always beaten the S&P 500 in backtesting.

    It seems to be a simple trading system, which I liked, but I don't have a lot of experience trading futures, so I wondered what others thought about it.

  4. capmac


    Helmets on folks......

  5. Is that the same helmet they put on the last 55 times?

    Need to keep it lubed.