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Greed and Fear

  1. I am using a proprietary indicator that I have developed over the last year. It takes a sentiment reading of my universe of roughly 1700 names.

    Using the SPY I will attempt to sell the greed and buy the fear.

    My goal is 50 trades in this journal then close it. I just want to stay honest and posting here should help with that.

    Overlayed with the Cash SPX is an oscillator of sorts. And extreme level of greed is .60 and fear is -.60. Currently anyway. I built the spreadsheet to adjust over a period to avg so an outlier today may not be one in a year.
     
  2. Here it is overlayed with the spx on a daily basis going back to the first of the year.

    [​IMG]
     
  3. And here with levels that will fluctuate. This is where I take trade signals from. Going long at a close below -.59 and short on a close above .65 currently.

    [​IMG]
     
  4. So thats it for now. I`ll post when I get a signal. Good trading to you all.
     
  5. looks like a derivative of the McClellan Oscillator. am i correct?
     
  6. if I bend stoc, cci, macd enough it could look like that
     
  7. Hello vhehn,

    The only thing it has in common with the McClellanOsc it is a breadth indicator. Thats where it stops. For the past year I have been applying the code to individual stocks with good success. So I decided to apply it to my universe and use it for market timing.
    I`m sure the code i`m using is not 100% original but i`m pretty sure its not a crowded trade. So results will speak. Either I make money or get smoked in front of everyone.
     
  8. ok. good luck. will be watching.
     
  9. I can assure you it is not using a combo of any indicators. Otherwise I would say so.
     
  10. Short SPY @ 129.85.
    Stop @ 133.75
    Tgt = open

    [​IMG]
     
  11. still short..moved stop to 131.65
     
  12. indicator closed at -0.350962
    Not ready to cover yet....waiting for a washout move to -.60382 or lower.

    Might get it tomorrow with the TXN move post mkt. I`m guessing the washout i`m looking for will bring me to about 126 ish.

    SPY still short from 129.85 +1.28% on the close
    Stop @ 131.65
    TGt open
     
  13. -0.670534

    Bot back SPY@ 127.84 + .0154% 2.01 points
    Went long @ 127.84
    Stop 126.08
    Tgt open
     
  14. [​IMG]
     
  15. interesting journal - i can see the potential for buying/selling oversold/overbought for individual stocks but i am not as convinced about applying this to the s&p - correct me if i am wrong, but from my research, during swing moves there is rotation in leadership/laggardship among the individual / component stocks, and therefore as swing momentum builds and the extreme points are approached, the breadth might start to stall or roll over but the index might still continue with the momentum - in addition, s&p's market cap basis makes it more "concentrated" which presumably will further weaken its correlation with a broader based breadth measure, especially if volatility increases - these are primarily my initial guesses, basically, given that last year marked the lowest volatility in a decade, i am wondering if you have back-/forward tested for more than one year? - all the best.
     
  16. Being 100% honest with you..I don't know anything about the sector rotations that occur during the swings. I`ve simply found that when most people are doing the wrong things at the same time the SPX is the best expression of those attitudes.

    Low volty is another concern all together. When it picks back up my calculations will become "wider" and i`ll have bigger stops and hopefully gains. Even if % gains and losses get bigger my $ risk is constant so thats not a big deal as long as it still works.

    I backtested only a year...and forward testing with money. I had to put all data in excel manually so it got really frustrating. Right now i`m working on another sheet that will take me back to 2000 and when i`m done i`ll use it. But for now since I have a working model I may as well try and make some coin. And anyways, I get bored easy so trading with real $ makes me pay attention to the nuances and action in it.

    One more thing. It was designed to take signals EOD and take SPY trades post mkt..usually 4:05pm or so while the SPY is still plenty liquid and close to the closing price. But i`m updating data here intraday for my own record keeping and testing. Basically to see of intraday extreme levels match up with EOD...and if I would be outguessing by taking the intraday one.
     
  17. ok best of luck with your trading.
     
  18. 2nd std dev at -0.71375 on the open and indicator @ -0.739464.

    Still long from yesterdays stop and reverse...holding

    long @ 127.84
    Stop 126.08
    Tgt open

    My studies have shown me that when it gets to such an extreme level that there will be a few days of slight pain to contend with before the snap occurs. Pain is ok...thats why there are stops. Anything more than a 1.37% move against me and i`m out and waiting for a fresh signal.
     
  19. move like a jelly fish,
    rhythm don't mean nothing,
    go with the flow,
    you don't stop.

    Jack Johnson



    The market ebbs and flows like the tide. My goal is to ride it in and out and to not get beached. Relaxing my body and thinking straight are paramount to survival. When the tide comes in I will swim. When it goes out I will wade.

    A flurry of action builds to a crescendo of human psychology that can almost be smelled and tasted. My natural inclination towards trading has always been trying to pick turns. When I fight this inclination I lose money. "They" always say "the trend is your friend". What if you have bucked the trends your entire life? All of a sudden you are supposed to become a peg in the gears and integrate seamlessly. Bullshit.

    I have read that "you must trade your own style to be successful". It only took 5 years to figure out what "they" meant. For me trend following doesn't work. Psychologically that is...and thats all there is...

    Not that my hit rate is that much better with ego trades. It is just an easier approach for ME.
     
  20. my style tends to be the same way.
     
  21. I`m sure you have run the gamut then. And are a superior trader for it.
     
  22. Ok, so far one day of slight pain was felt with a -.50 out of the money or so. No big deal as past trades have shown similar moves. Currently at a neutral point(no signals)-.009231 with 1st std dev @ .612304 and 2nd std dev @ -.72036

    open pos +.57 .0045% current SPY @ 128.41
     
  23. great thread..

    i trade the exact same way ... since 1998 this style has made me a living ..

    are these indicators your own ?? i would be happy to discuss my signals ..

    --mb
     
  24. Great thread? Time will tell! :)

    Glad to hear you pull it out of the mkt. Hopefully i`ll be there one day. For now its part time trading/full time obsession.

    Yes, the indicator is my own monster. Did you create yours?
     
  25. If you get stopped out of your position it seems your indicator will show even a more extreme level of greed or fear. WOuldn't you then want to enter the same position again? Or do you wait until it moves into the "neutral range" and then gives another signal?

    Thanks
     
  26. No, I would wait for a fresh signal to go the other way. Neutral is just neutral..no actions to be taken.

    good trading to you
     
  27. Still long SPY @ 127.84 from the 7th
    Stop 126.08
    Tgt open



    For me the hardest part of trading is the waiting. Sitting on my hands and trying not to trade when the market does not warrant a decision. Overtrading is my demon. Taking losses for me has always been easy. In fact taking them too fast has been an issue. I went back over my last years trades and found that had my stops been wider and I risked the same $ amount per trade my returns would have been roughly double. That hurts.


    Ever evolving and expanding. Resting on your trading laurels is tantamount to rolling over dead. Sometimes you hear people talk about trading success as if it were crossing the finish line at a marathon. That makes me smile.

    I dont know anything except I know nothing.
     
  28. Still long SPY @ 127.84 from the 7th
    Stop 126.08
    Tgt open

    Indicator as of 3/14 close = .5743707
    1st std dev = .614879

    Close but no reverse signal. Although the action was great for longs yesterday it certainly wasn't translating into euphoria or GREED. Nice and steady stair steps. Calculated buying. This is good and bad for me. Good because without that flush of buying that would put me into SELL mode I get to hang out a little while LONGer and see if we creep higher. Bad because I have to sit on my hands for at least a few more hours. :)

    Normally I update my program every 30-45 minutes throughout the trading day looking for emerging patterns in the numbers.
    And from about midday on the 10th I was getting the confirmation that a nice trend was developing. That doesn't mean anything for the indicator I post here. But for a few quick daytrades it means i`ll most likely be on the right side. A pleasant side effect indeed. I may start throwing some more of those around when it is called for.

    Trade so small is doesn't matter.
    Keep risk constant no matter the time frame.
    Be aware of what the body is telling you because it knows before the mind.
    Poor trading is usually exciting.
     
  29. sold SPY @ 130.64 +2.8 0.022%
    Short SPY @ 130.64
    Stop @ 132.43
    Tgt open

    Indicator @ .6283186
    1std dev @ .623921

    2 trades
    2 winners
    4.81 points gained
    +.0374%
     
  30. great journal... thanks


    How are you determining your stop? price based or your proprietary indicator?
     

  31. Glad you are enjoying.

    Very simple. Took the avg gain over a series of trades and took half that for my loss level. Rolling, so if if things stop working I wont chew all(if any) gains up.
     
  32. As of 10am EST the trend persists.

    1 std dev @ .638309
    indicator @ .7317073

    My indicator is sticking up straight like the tail of a scared cat.
    Regardless, my backtesting shows that a few days of pain may be in order. Thats why there are stops.

    Let em trade where they may...
     
  33. Happy Saint Patricks Day! Especially to my better half who is 100%.

    My 8th Grade teacher Mr Cooper (Irish :) ) gave us a class on the stock market. Real basic overview and how to read quotes. Then broke up the class into several groups and we had a stock picking contest. Our group picked a company name that sounded cool! I forget the name or actual results but I remember that we came in last. At that point I forgot about the markets but in retrospect it stayed with me. All those numbers we would check everyday. Changing for no apparent reason. I knew I wanted to be involved but didn't KNOW WHY. Fast forward to 1994 and an honorable discharge from the armed forces. I went to college for 1.5 years and took economic and psychology classes. The two seemed to go hand in hand. But I DID NOT KNOW WHY. I took 4 classes seriously 2 eco and 2 psych. Then dropped out. Classroom settings are not for me. On the job training is the only way I stay focused. Around this time we know what was happening in the US markets. So as I searched the help wanted ads I noticed the entire financial section would be filled week after week with stockbrokers positions looking to be filled. "Make 6 figures" they boasted. Done! I can do that...or so I thought. I hated being a salesman but stuck with it for 4 years because I was learning about the markets and getting professional licenses. I never made much money because I always did the right thing...sad huh? Yet I hung around brokerage. I couldn't FIGURE OUT WHY I still wanted to be in this field. Then in 2000 I said to myself if my stock ideas are so great that I am trying to sell them why not just trade the ideas myself. In 2001 I FIGURED OUT WHY I stuck with it.

    Trading is the only career in the world that ever existed for me. I had a few false starts during the learning curve..we all do. But this time it is sticking. Its my passion and cant envision myself doing anything else.
     
  34. In addition to trading the SPY with my indicator I have two directional strategies. One long/short momentum strategy and one long only flat base breakout strategy. The FBB strategy scans my universe for dormant junk thats begun to move. Running daily scans usually produces 0-4 names. But for the last two months or so I have been getting lots of candidates. Its been more like 0-10+. My point being that when the junk flys it usually indicates a mature Bull Market. General sentiment about this is that since most of the "quality" issues have been lifted beyond attractive levels. The only things left to put cash into are the most speculative of names...JUNK.

    But i`m currently biased

    :D
     

  35. My avg hold per trade is 10 days and I am on day 6. Starting to feel like an eternity. And my minds reaction to those 6 days is telling me a move is underway. How do I know that a move is underway? Because i`m aching to trade and make a premature decision to do something. That is the absolute wrong decision so I know the right thing to do is stay short. Which i`ll say was hard after the move yesterday...

    It amazes me that my body gives clues about the proper action to be taken. Its like being able to read my own tells. :D Often when I feel the need to trade my face will get flush and cheeks burn. So I have learned that when my body has this reaction to NOT DO ANYTHING. Yesterday afternoon I was burning up...on fire. Body screaming "cover now and save some profits". But the mind was saying "play the %`s ..if you get stopped you get stopped...its only one trade in thousands at 1/2 your avg gain".

    Ultimately the mind won out. Never let the body win.
     
  36. Excellent thread, indahook.

    I also trade systematically now and I could not agree more with the difficulty to stay disciplined and do what the system wants you to do. Actually, my weakness is still with me taking my profits a little too early, by fear of losing them all. I track , in parralel, the "pure" result of the system and mine, and more often than not, the pure system has better results.
    As you said, trading your personality is critical in this business. What I do, to satisfy my urges, is to keep a small account to "mess around". It does not harm me, financially, and it enables me to optimize the performance of my two systems, basically by leaving them alone !
     
  37. Thank you.

    I feel your pain. My head is real thick, I mean so thick you can hit me on it with a stick and the stick will break. So it took me a long time to figure out that you cant beat the numbers with emotion.

    Good trading to you.
     
  38. NON TRADING RELATED POST

    I have been a surfer since the age of 17. Seriously since 21(late starter). Actually thats how I picked my screename. Was reading Longboard Magazine one month a long time ago and read a Hawaiian surfers account of tube riding. He referred to tude riding as being "in da hook" of the wave. At 34 now i`ll be visiting the birthplace of Surfing in late April. For my honeymoon, 5 days on Maui and 5 on Kauai and I AM STOKED!!!!!!

    [​IMG]
     
  39. I started surfing when I went to Hawaii for a job in 1960. When I got back to the mainland and saw the waves they surf on here it was kind of funny.
     
  40. Day 8 of an average 10 day cycle. And i`m just sitting on my hands. Updating every hour or so intraday and watching and feeling the action unfold before me in number form.

    Boring is good.
     
  41. Been short for 10 days. And i`ll tell you this, that early rally before the dump yesterday had me a little concerned. I could have fried an egg on my face. Even after years at this game I still get emotional. But the difference is I dont react to the individual emotions anymore. They get recognized, acknowledged and filed away for review.

    SPY closed @ 129.22
    Indicator closed @ -0.040179

    Slightly negative sentiment. But no where near a proper FEAR cover/go long signal.
     
  42. Around 3:30 yesterday I got a major SELL. GnF Indicator was sticking up like a scared cats tail @ .71 and 1st std dev was @ .63..while the SPY was trading @ 130.40.

    I`m thinking this market is like a zombie in a George Romero flick. :)
     
  43. imho sentiment indicators dont work well on the upside. maybe they let it sell off after eoq markups.
     
  44. Maybe. It would have been a great counter trend punt from 130.40 to the close @ 130.03. I may start taking some of the more extreme signals intraday. Will update journal accordingly. Thanks for your opinion
     
  45. Gonna give this one shot to test her out intraday.

    Short Q`s @ 42.17..GNF indicator is @ .778 std dev @ .64

    42.27 stop
    41.97 tgt
     
  46. stopped
     

  47. Still short and holding at day 12. The two previous posts are why I personally dont day trade. I`m horrible at it and only lose money. Even though my indicator topped ticked the market for the day I still lost a .10. Funny thing is the HOD in the Q`s was .30 and my stop was .27. :D

    The longer I trade the more I look forward to weekends. Not because i`m tired of the markets though. I dont know about you guys/gals but by then my eyes are so tired of looking at screens its a welcome relief.

    Happy Friday to you and good trading.
     
  48. Day 13 short. Seems to me a line in the sand has been drawn at 1310/131.00. My system has me short so I shall stand pat until signaled otherwise. We will see...

    Fun facts = My journal officially started on the day I posted the first trade here. 2/27/06 the SPY closed @ 129.46. Last nights close was 129.73. So a "buy and hold" of the SPY would have yielded a +.0021% gain. So far i`m up +.0374%. A .0353% beat.

    Of course that can all change in a NY minute!

    Good trading to you!
     
  49. Position stands as above.

    A very interesting day for me. Even with the Naz and SPX going for new highs my indicator is not very Bullish. Its strong but not overwhelmingly. Yet anyway, the day is young.

    On a personal note. Anybody hiring? I`m about ready to quit my day job. ugh.... :(
     
  50. Day 16 which is an eternity for me. Funny thing is I have never once questioned my position. And the fact that i`ve taken little pain tells me i`m most likely on the right side with this one. But as always i`ll remain flexible and take signals/stops as they come to me.

    Once in a position all I can really do is let it happen. Thats my style anyway. In the past when I over think an existing pos is when I do something stupid like exit early because I talk myself out of it. In fact my most profitable trades are when I set a stop and tgt and walk away. Thats it....let the PnL talk.

    Good trading to you
     
  51. Follow the numbers and the rest will fall into place.

    Indicator negative for the first time since March 22.

    My motto for the day = "Bush speaks, market leaks"

    Happy Friday!
     
  52. Indicator @ -0.724665....2nd std dev @ -.64666

    Covered SPY @ 128.59 +2.05 points ...+.0157%
    Long SPY @ 128.59 Stop @ 126.82..tgt open

    New stats

    3 trades
    3 winners
    6.86 points
    0.0531% gain
     
  53. way to hang in there with that short. my sentiment indicators are also at an extreme that has produced a bounce point in the past.
     
  54. thanks
     
  55. Indicator heading north currently. Although I dont put much merit in any moves today. Might as well be watching price action on the day before Christmas Holiday.

    Happy Holidays!
     
  56. Just hanging around long. I could blabber about things like earnings or oil and gold. But none of that matters to me(and i`m not that smart) because the tape tells me the news everyday. If i`m long and the last print is higher than my purchase...the news is good.

    Good trading to you all
     
  57. Just got a fresh Sell/Short signal

    sold long @ 129.87 for 1.28 or .01%
    Short @ 129.87 stop @ 131.64...tgt open

    New stats

    4 trades
    4 winners
    8.14 points
    .0631% gain


    Let the numbers tell you when.
     
  58. if we are @ 131.65 or > by 3:55 will close out. other than that it will be my last post for two weeks. going on vacation to a faraway warm place and will not be bothered to trade at all. time for some sun and fun minus streaming numbers.


    good trading
     
  59. tough call. i suspect that next week after options ex and earnings are mostly reported we could see a pb but you never know. the market has one of the most persistent bids under it i have seen in years. every small dip has been a buy opportunity.
     
  60. Well, I went away with no stops in place because I was under the impression I would have net access. And I did not have any for the last 5 days. I would have stopped out at 131.64 on May 1st. But since I got a fresh Sell/Short signal from Fridays close i`m gonna ride this existing short out and stop at 133.16 (1.37% gain from Fridays close). I`m a little pissed because if i`m stopped it will be a .025% loss instead of a .0137% loss but its the only thing I can do right now because I would have taken Fridays signal anyway....oh well.

    Let them fall where they may.
     
  61. Short @ 129.87 stop @ 133.16(adjusted)...tgt open



    4 trades
    4 winners
    8.14 points
    .0631% gain

    One open position



    Indicator pointing south since 5/9. No cover/buy signal yet.


    Staying short and sitting on hands. Open pos OTM -0.013% currently...but feeling OK.
     
  62. Got a cover/go long signal on the close..did so @ 130.87..stop @ 129.08..tgt open

    New stats as of the close May 11th 06

    5 trades
    4 winners
    1 loser
    7.14 points gained
    .0554%gain
     
  63. May get stopped today...waiting for closing price to confirm.
     
  64. Cant take it anymore..clearly on the wrong side...sold at 127.97

    New stats

    6 trades
    4 winners
    2 losers
    4.24 points gained
    0.0417%gain

    At this rate i`ll bleed my gains in two or three more trades...we will see. May need to read adjust stop %`s to make RR more acceptable. Another thing I am considering is incorporating a second reversal method as confirm.


    Hope you all are trading well.
     
  65. my oversold indicators are at a level of negitivity that indicated a bounce area in the past right now.
     
  66. Mine also. Never have seen mine so negative. Will look to reenter long tommorrow if the close confirms.
     
  67. Bot SPY premkt at 127.48....stop @ 126.77...tgt open