Odds Czar: Simple Biases in the Futures Markets 2006

Art's futures biases for January 11.

A "1" means bullish bias. A "-1" means bearish bias. The total is the sum of biases. A positive sum will be long bias. A negative sum will be a short bias. A sum of zero will be a neutral bias.

 

some of you have voiced confusion as far as integrating the biases i'm posting. i don't have a set methodology for integrating them at this time. you can follow just the first box and act off that. my most recent analysis has convinced me that a bigger absolute value doesn't have more weight than a smaller one. the direction of the total signals, plus or minus, is all that matters.
the second box has more targeted specific biases--those that don't happen all that often. you could just follow them. or, you add them to the first box and go with a net result. that is closer to what i did last year for all 8 signals.
i applaud anyone who is trying to get completely away from judgement and be 100 mechanical. i don't claim to have an absolute grail along those lines, but everything i do use is the culmination of seeing trends and patterns persist over time. again, you can satisfy yourself that each individual component i'm presenting has been holding it's own weight over the last few years by hitting the various links i've put up. from there, you should be able to do some combining and cross checking on your own to see what you'd be comfortable with. i think there are a variety of mechanical methodologies that can be taken from the postings--i'm just not ready to wave an absolute seal of approval wand over any yet. i've been very sidetracked lately writing my book--i'll be more freed up starting march and i will keep refining. you might want to keep monitoring me.
the third box is the most dissimilar. it targets only the indexes. it suggests longer term trading rather than daily. it's again more of a background thing though--this time of the month, the indexes are bullish--you might want to weigh that into your existing long/short positions. etc.
when you view the postings for jan 13, coming a little later, you might note that all three boxes for the nasdaq and s&p are flashing bear signals. again, biases are never humongous and you probably want to come up with a total mechanical plan to follow every and all signals rather than just getting excited over one standout isolated one. but again, for what it's worth, this is the kind of setup that would cause me to take short signals more seriously on jan 13.
hope i've clarified some of the issues that have been raised.
art

 

Art's futures biases for January 13.

A "1" means bullish bias. A "-1" means bearish bias. The total is the sum of biases. A positive sum will be long bias. A negative sum will be a short bias. A sum of zero will be a neutral bias.

 

Art's futures biases for January 17.

A "1" means bullish bias. A "-1" means bearish bias. The total is the sum of biases. A positive sum will be long bias. A negative sum will be a short bias. A sum of zero will be a neutral bias.

 

Art's futures biases for January 18.

A "1" means bullish bias. A "-1" means bearish bias. The total is the sum of biases. A positive sum will be long bias. A negative sum will be a short bias. A sum of zero will be a neutral bias.

 

Art's futures biases for January 19.

A "1" means bullish bias. A "-1" means bearish bias. The total is the sum of biases. A positive sum will be long bias. A negative sum will be a short bias. A sum of zero will be a neutral bias.

 

Art's futures biases for January 20.

A "1" means bullish bias. A "-1" means bearish bias. The total is the sum of biases. A positive sum will be long bias. A negative sum will be a short bias. A sum of zero will be a neutral bias.

 

Art's notes:

Friday saw the biggest market decline since 2003. This may be one of those scenarios that are violent, but short lived. The monthly indicators will officially flip to the long side on Tuesday.

Still, that doesn't mean you can't possibly ride the short side a little further. Perhaps Monday will be a selling climax. As you can see, the indicators in all three categories net out bearish, but again, I wouldn't be surprised if they (and the market) do rapid about faces. This may be a little odd coming from someone strictly mechanical. If you get a sizeable intraday profit on the short side and the indexes do a rapid retreat off the lows, that may actually represent a change in direction rather than the renewed selling opportunities so many daytraders are expecting.

Art's futures biases for January 23.

A "1" means bullish bias. A "-1" means bearish bias. The total is the sum of biases. A positive sum will be long bias. A negative sum will be a short bias. A sum of zero will be a neutral bias.

 

Art's notes:

If history is any indication, the index scenario should play out roughly like this:

Lots of noise and excitement was created by Friday’s steep downdraft — among traders anyway. The news media hardly ever emphasizes stock breaks much these days unless we’re talking like a 10-20 percent Dow decline.

But again, trader sentiment tends to be another story. Huge downdrafts like Friday tend to make traders position themselves for immediate downside follow-through. That tends to be the wrong answer — one of those backward adages along the lines of “buy soybeans in the summer to capitalize on the big upcoming drought.” (Do the research—you never want to be long as of July 1. The drought almost never materializes, and even when there is some pressure like last summer, beans tend to be, as one trader put it, “a weed growing in a rain forest.”)

But back to the stock market. We expect an upside bounce on Tuesday. Research along those lines isn’t extensive — how many 200-point down days can we be talking overall—but the few existing trials do suggest quick recovery bounces. This is partially dovetailing with what the CzarCharts are saying. We have just flipped to the long side on the monthly dates. Other signals in the Nasdaq and S&Ps are mixed, but it’s a pretty straightforward call in the Russell. All three components in that market urge buying.

Art's futures biases for January 24.

A "1" means bullish bias. A "-1" means bearish bias. The total is the sum of biases. A positive sum will be long bias. A negative sum will be a short bias. A sum of zero will be a neutral bias.

 

Art, good call and good job. I tend to agree but have to admit to expecting follow through after moves initiated on 4/13/05, 6/23/05, and of course the 10/4/05 move. Granted Friday's move was larger and so there is more of a tendency to bounce back.