"WOW – That's It"

Lately, the day’s low in the S&P 500 has been frequently put in at …sceeto’s blue line price magnet.

For more recent examples see here and here.

If you would like a free copy of our S&P 500 Price Magnets you can pick up a copy for NinjaTrader here and TradeStation here.

No registration is required.

Hope this helps.

Back in 2009 I wrote this screed, “So someone stole Goldaman Sach’s algos – Much ado about nothing“.

The post discussed the arrest of Sergey Aleynikov for heisting algos and source code from Goldman Sachs.  At the time there was a lot of media hullabaloo about a quote from someone at Goldman Sachs saying something like, “This code in the wrong hands could blow up the world”.

This put some folks on edge.   What was Goldman doing writing code that they could use to blow up the world some wondered?

The gist of my blog post was that the code was useless without Goldman’s infrastructure, their proprietary data feeds, and all of the ancillary databases that the are the Goldman Grid, a grid which, I suppose would need to be humming along quite nicely in order for the jacked code to ‘blow up the world’.

Yesterday, Finextra reported that, “Former Goldman Sachs programmer Sergey Aleynikov has had his conviction for stealing the bank’s propriety high-frequency trading code overturned by a federal appeals court.”

Further on they report that, “The reversal – which came hours after a three-judge panel heard oral arguments on the appeal – will be explained in an opinion “in due course“.

What new information could have surfaced 2 1/2 years later that is so pertinent and so accurately insightful that he can walk out the the hoosegow?

This craziness is now worthy of documentary status.

Does hacking my Twitter account, and then using it to spew out stuff that is even junkier than my own, make the hacker any money?

I guess so.

The account has been recaptured.  The process that Twitter has in place to manage hacked accounts is pretty straightforward, but it did take two attempts before it worked…go figure.

I think that algos run the market.   I have thought this for awhile.

A lot of other people now think this.

I think that the algos are self-reinforcing, and have lemming like behavior.

I think that one algo can fire off another algo.   The buy programs excite other buy programs.

Some smart, well resourced people, build algos just to take advantage of these phenomenon.

Maybe this recent attraction of the day’s low with the blue line has something to do with this.

Perhaps a bunch of algos have pin-pointed this price zone and are firing trades here…creating a more self-reinforcing environment.   This is my best guess.

Here’s today’s action…

Prior day is are here and for more here.

Feel free to help yourself to a free copy of our S&P 500 Price Magnets for NinjaTrader or for TradeStation.

Hope this helps.

T-Shirts, Socks, Gloves.   When it comes to One Size Fits All it simply doesn’t work.

Same goes for trading systems.

Some folks are excited clickers, some folks have day jobs, some folks are comfortable when the market goes up, some folks prefer the short side.

A trader’s system has to fit their personality

And its not just the users of the systems that have different personalities, any given market has multiple personalities.

Thus, a trader’s system also has to be congruent with the market’s personality.

Sometimes the market is sleepy, sometimes it drank too much coffee and jumps around a lot, sometimes it decides to go for a nice long steady jog.

If you’re trying to trade a caffeinated, jumpy market, like it is a long steady jog market, you will be stopped out continually.

Thus, you either need to only trade your system when the market will play nice with your system, or you need a bunch of systems, each of which are appropriate for a particular market personality.

Part of our job here at …sceeto, is to help you determine what each day’s market personality is going to be so that you can more readily go along for the ride.

For instance, if market internals, as foraged by …sceeto’s WOW Index, WIND or MacDaddy, indicate that the market is likely to go up, then its important for a trader to know this basic fact so that they can begin to tailor the fit of their trading approach to the market that is front of them.

If a trader who is more comfortable going short than going long, wants to trade to the short side 5 days a week, he will likely experience a lot of pain during a bull market (and even during a bear market).

But if this ‘short only’ trader was tapped on the shoulder in the morning and given the message, “Hey, the market is likely to go up today”, he can opt to do something else that day with his time and capital.

There is very little risk to a trader who is parked on the sidelines holding only cash.

It is super to monitor the …sceeto algos during the pre-market and into the open at 9:30 EST, as they will frequently give you early readings on what the initial price moves for the day are.   This is a critical distinction as you can now have an insightful preview to the day’s action.

The following are screenshots of yesterday’s action of smart automated trading in the S&P 500 e-Mini contract.

You can see that some folks knew when to get short, when to add to their profitable shorts, when to take profits, and when to turn around and take the elevator back up to the penthouse.

One thing to note is how our algo, MacDaddy, indicated that the Buy Programs were on in full force.  The screaming takeaway from MacDaddy’s readings was to not short this puppy….or you will face the wrath of the machines.

If you are interested in a free beta version of …sceeto for TradeStation, which is the software that surfaced the above algorithmic insights, please drop us a note here.

Hope this helps.

Carl