Monthly Archives: April 2009

Links for April 18th from 07:21 to 07:43

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These are my links for April 18th from 07:21 to 07:43:

  • Susan Boyle, an Unlikely Singer, Is a YouTube Sensation – NYTimes.com – But she has become a heroine not only to people dreaming of being catapulted from obscurity to fame but also to those who cheer her triumph over looks-ism and ageism in a world that so values youth and beauty. – AH BUT WE ARE ALL BEAUTIFUL REGARDLESS
  • Personal Journeys – In Laos and Vietnam, Tracing the Path of a Colonial Ancestor – NYTimes.com – This past January, I spent a week following in the footsteps of Antoine Fayard, my maternal great-grandfather who built and designed roads, dams and canals across colonial Indochina — traveling along the sandy banks of the Mekong, across the Bolovens Plateau, rich with coffee plantations and stunning waterfalls, then across the border through the well-peopled villages and towns of central Vietnam. Two journeys, a century apart.
  • Well – Stomach Bug, C. Difficile, Crystallizes Antibiotic Threat – NYTimes.com – C. difficile is not a new illness, but it appears to be spreading at an alarming rate. The rate of C. difficile infection among hospital patients doubled from 2001 to 2005, according to an April 2008 report from the C.D.C. The rise in C. difficile cases around the world is linked with the growing use of all antibiotics, particularly a class of drugs called fluoroquinolones, which came into widespread use around 2001. The use of acid-suppressing drugs, including proton pump inhibitors like Prilosec, also may be a risk factor, although studies have been contradictory.
  • Obama Calls for Thaw in U.S. Relations With Cuba – NYTimes.com – Other leaders here said that in watching Mr. Obama extend his hand to Cuba, they felt they were witnessing a historic shift. And in another twist, Cuba’s strongest ally at the summit, President Hugo Chávez of Venezuela, no fan of the United States, was photographed at the meeting giving Mr. Obama a hearty handclasp and a broad smile. – ALTHOUGH I DIDN'T VOTE FOR BARRY, HE'S GOT THE RIGHT IDEA FOR FOREIGN POLICY. FRIENDS WITH ALL

Links for April 17th from 05:48 to 05:59

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These are my links for April 17th from 05:48 to 05:59:

  • Fairness, idealism and other atrocities – Los Angeles Times – We were the moron generation. We were the generation that believed we could stop the Vietnam War by growing our hair long and dressing like circus clowns. We believed drugs would change everything — which they did, for John Belushi. We believed in free love. Yes, the love was free, but we paid a high price for the sex.
  • Stiglitz Says White House Ties to Wall Street Doom Bank Rescue – Bloomberg.com – The return to taxpayers from the TARP is as low as 25 cents on the dollar, he said. “The bank restructuring has been an absolute mess.” – MAYBE THAT'S WHY MY MODELS ARE POINTING TO A MASSIVE MOVE COMING (UP OR DOWN I DON'T KNOW)

Black or Golden Swan Coming?

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My models are indicating that another big market event is looming on the horizon.  It’s too early to tell if it will be a Black (down) or Golden (up) swan type of event but we should be ready to go long or short the bejezus out the market.

Could this be a bull market breakout or just a resumption of the bear market trend lower?  Only time will tell I guess.

On a completely different note, here’s a chart og the S&P500 closing price vs the 10 day lagged volatility.  Notice the big spikes back in 2003?  Notice the bigger spikes recently?

sp500-vs-10-day-market-vol-lag-041609

Back To Forex!

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I’m so looking forward to start trading my favorite market of all time again, FOREX!  I have my many neural net models to update for sure but this time I’m going to test out some automated systems, aka robots, as well.

I’ll probably go back to trading the London market open using a breakout strategy if its still viable.  I like that strategy alot because I’m usually asleep when the trade is entered! LOL!

Real Estate Still Sucking

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As I wrote in my Feb 2009 post,  “Where’s the Market Bottom,” I believe the real estate and equity markets have more downside coming.  Now someone’s IYR model , is setting up for a possible test of its March lows. Hehehe.

I built a fast IYR model myself using Stock Neuromaster to see if I can match his “box” model.  My model show a short signal generated on 4/1/09 for 4/2′s open, which remains short this morning.

iyr-041509

Overall I’m hoping that we see a test of the equity market bottom and maybe even a break of it, I want to go balls to wall long with the remaining 401k monies have I have. Only time will tell what happens.

Testing Out EWS Model

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I’ve been working on updating my various stock and forex models, both in Rapidminer and other platforms, and just built a test model for EWS using Stock Neuromaster. It seemed that it had some false signals at the most recent bottom but managed to catch a small leg up. I wonder if it’ll go long again or stay out of the market as shown!ews-041409

Remember, the signals tell you to enter or exit at the next day’s open from where they are generated.

Hikaru No Go – Boom in Japan

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I want to teach my kids how to play Go when they get old enough because I think its a good to get them to think about strategy, patience, and game psychology early on. I found it interesting that a comic book started Go’s resurgence in Japan. I wonder what it would take to do so here?

Keep an eye for the kid playing the really old man. I found it interesting that this game matches your ability, not your age.

More Investors Say Bye-Bye to Buy-and-Hold

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After I read this WSJ article I realized that we are in the buying opportunity of a lifetime.  That is if you are a contrarian, emphasis mine. =)

The ups and downs of the market are prompting more retail investors to abandon buy-and-hold strategies in favor of opportunistic trading. Some want more control over their money, so they are fleeing funds and advisers — not to mention the feelings of helplessness raised by recent months’ losses. Some are attempting to recoup their losses, while others are stepping back into the markets after a recent string of stock gains and better-than-expected economic news.

and,

But others say things are different this time. “The problem I have with the buy-and-hold strategy is that it’s a bull-market strategy,” say Matthew Tuttle, a financial adviser in Stamford, Conn. “In the bust, you give all of your profits back.” Mr. Tuttle has recently taken a more active approach to trading. While short-term investors are likely to face higher tax bills — since short-term gains are taxed at higher rates than long-term gains — he notes that some people who incurred big losses last year will be able to carry those losses forward to offset taxes in future years. [By JANE J. KIM]

Things are different this time? I can think of two times when “things were different” and then collapsed.  Dot-coms and Real Estate.

Humans No Match for Go Bot Overlords?

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Since my time away from blogging , I’ve found a new distraction addiction to keep my overactive mind busy.  It’s called Go (well two if you count 18 yr single malt scotch), an ancient strategy game that’s really big in the Asian world but catching on here.  Its a fun game and I routinely get beat online by 6 year old children from all over the world.

So, what does Go have in common with neural nets and AI?  Quite a lot actually because programmers are working frantically to build a Go program that can beat humans.  So far they haven’t had success because school children routinely beat these programs but that could be changing, all through the use of the Monte Carlo method:

Called the Monte Carlo method, it has driven computer programs to defeat ranking human players six times in the last year. That’s a far cry from chess, the previous benchmark of human cognitive prowess, in which Deep Blue played Garry Kasparov to a panicked defeat in 1997, and Deep Fritz trounced Vladimir Kramnik in 2006. To continue the golf analogy, computer Go programs beat the equivalents of Chris Couch rather than Tiger Woods, and had a multi-stroke handicap. But even six victories was inconceivable not too long ago, and programmers say it won’t be long before computer domination is complete.

But the programmers admit that they’re merely throwing brute computational force behind this algorithm and they’re missing the nuances of intelligence that allow humans to continue to beat these programs.

“People hoped that if we had a strong Go program, it would teach us how our minds work. But that’s not the case,” said Bob Hearn, a Dartmouth College artificial intelligence programmer. “We just threw brute force at a program we thought required intellect.” [By Brandon Keim]

Well I think they’re still a way off before that can happen but in the meantime I highly recommend this game to anyone.  Especially those with artificial and human intelligence. =)

Using ClassifierXL to Find the Right Stock to Buy

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I recently downloaded the new version of TraderXL and was surprised to see a major update to the ClassifierXL module (as part of the NeuroXL suite). I’ve used this module before to classify like groups of stocks and identify (per my requirements) the right stock to buy out of a group of many. Major updates to the module include a better GUI interface and the inclusion of five neural net functions, namely the Threshold, Hyperbolic Tangent, Zero-based Log-sigmoid, Log-sigmoid and Bipolar Sigmoid functions. classifierxl-1 To see what it can do, I’m attaching a recently classified ADR stock scan spreadsheet from www.aaii.com.I downloaded this scan from AAII, used the zero-based log-sigmoid scan, and classified the stocks into 5 similar groupings.After it crunched the data it created two charts and a color coded spreadsheet from your data.If you flip to the charts in the spreadsheet, you’ll notice that cluster 1 and 5 have large groupings of similar stocks.These clusters represent the most interesting of the stock groups and should clue in the data modeler to some possible opportunities in the data. Let’s say you are interested in investing in a China based company and you have lots of data from a stock scan to go through. How can you identify a good candidate for more due diligence? First open the spreadsheet and then using the pull down data sorting menus to select China as your country of choice. classifierxl-2 The data in the spreadsheet will sort and show 7 China based stocks, with 5 being in Cluster 1 and 2 being in Cluster 5. Now this is interesting data revelation to me because not all of these 7 China based stocks are being classified as the same. If you further drill down the data by selecting the Top 10 EPS Growth Estimate, then you are left with 4 China based stocks in Cluster 1: LFC, JOBS, BIDU, and MR. These 4 companies should give you a good smaller list of stocks for further review. classifierxl-3 Granted, this example was a fast way of doing a complex data analysis but the ClassifierXL module helped simplify the process. The neat thing about this module is that it does all the heavy lifting for you and organizes the data in an easy to use spreadsheet!

Product Review: EasyNN Plus

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I’ve used EasyNN plus in the past and I still use it today. I think it’s a great product for a lot of general neural net applications and the occasional stock fundamental analysis model. I use EasyNN plus primarily for Yahoo Stock Fundamental Data analysis and building data models that help me select the “right stock poised for growth”. I know I can do that in Rapidminer but I find it quicker to use EasyNN plus because of the screen outputs that let me identify stock sensitivity in a blink of an eye (more on this later).easynn-1

If you’re scared of Rapidminer, want to do more with all kinds of data, and don’t want to spend a fortune, EasyNN plus is the product for you!

What I like about it:

EasyNN plus is a lot easier to use than Rapidminer but a little bit harder to use than Stock Neuromaster. While Stock Neuromaster is primarily geared toward stocks, EasyNN Plus can be applied just about anything. Overall its best features are its output screens. My favorites have to be the Sensitivity, Relative Importance, and Training Error screens. From those screens I can figure out what variables in my input data are very sensitive to change (Sensitivity), which variables are driving the outputs (Relative Importance), and which rows of data might contain bad information (Training Error).

easynn-3

The product lets you load in CSV and Excel files, checks your data for any errors, allows you build macros and scripts, allows you to forecast, and lets you do a lot more tweaking with your data than other programs.

What I don’t like about it:

As I mentioned above, it’s harder to use than other programs so you’ll have to have a basic understanding about neural networks and how they work. You’ll have to know the basics such as validation, momentum, lag, and how to set up your data into input and output variables. Loading in the data is easy but prepping it for your model takes more time than I originally expected, and there is a slight learning curve.

easynn-4

Bottomline:

Despite these minor shortcomings, I use EasyNN plus in my routine stock data modeling and will continue to do so.  It’s a great little contained neural net building system for a fraction of the price of other products. Granted it’s not free but they have a 30 day trail with plenty of samples for you to check out and make that determination yourself.  I highly recommend this product overall and its perfect for the user who has a basic understanding of neural nets but wants to dabble more in the addicting world of financial modeling.

You can download the 30 day trial executable file here: EasyNN Plus

S&P500 Weekly Timing Model

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sp500-weekly-timing-model-indicator-040609My weekly S&p500 timing model is still showing elevated volatility levels but a major easing off the insane levels from last year.  While this is a major improvement, we are still not out of the woods.  The real bottom isn’t here yet and I expect a little more pain before everyone throws up their hands and capitulates.

Overall the model remains in BUY mode from 11/14/08 and I’ve been adding more money to my 401k and IRA’s as a result.  I have one last slug of $$$ left to drop into the markets when this last “pain event” occurs.  I also added some shares of GE, JNJ, and TX to my long term holdings.  I will looking to add more stocks (domestic and foreign) across the board this year and I’m busy using my AAII stock scans to find those canditates!