Watch List Notes for 26JUN07

I’m writing this one directly into the blog, and with any hope it will go up before market open today. Let’s what we have on dee plate. AMGN Notes from late last week: “Stoch sell. MACD still strong. I think this guy is recharging.” I’ve since changed my theory from “recharging” to “dropping”. It’s looking (more…)

AI and Trading

I was reading a blog entry on CPPTrader that was referencing an article from Bloomberg. I am a newbie with respect to trading, but with respect to AI I have been a few times around the block. It was something that I studied in University and have had an attraction to for a long time. I guess I am lazy and would love to write a program that “thinks” for me. As a sidenote I am using AI in my algorithmic trading software, but in a different context.

Avoiding Getting Burnt

Colin brought up the following point:

Christian, it is extremely interesting to read your thoughts on neural nets. I’ve been looking at Neural Nets in a piece of software called Merchant of Venice – . Beyond that, what’s interesting is that as humans, we can look at current day situations and have an innate sense that history is repeating itself, yet there are these outlying situations that break those rules – like Amazon’s recent performance.

How to put that “sense” into code and avoid getting burned by the outliers is the real rub

Stochastics and Multiple Realities

Tom gave a reply that I think deserves more attention. Tom made the following comment to one of my blog entries.

One more thing, if the market is random per the stochastic process and you can’t find patterns in a market where patterns don’t exist, then why do we have trends? A trend is a pattern in my opinion.

If you look at the definition of stochastic process at wikipedia it does not say random as in completely random walk. What the definition is saying is that at each and every point multiple realities can occur.

Is the Model Important?

Tom wrote the following comment:

Christian, great article! I was building an ATS myself but had to put it on the back burner. Do you dabble in neural nets and AI modeling as well? I predominately use YALE, an open source data mining, machine learning software to build currency, futures, and stock models.

This helps me identify emerging market trends and trade (discretionary) accordingly.

Ever Wonder Why the 2.0% Inflation Target is Important?

You will often read in the news comments like the following.

Carl Tannenbaum said, “I think chances are evenly split between a cut and a hike right now it looks like inflation is coming down – but core inflation is still stubbornly above the Fed’s 2% target.

Why 2%, why not 3%, why not 1.12345%? After all 2% is some number somebody thought would be a good number. Well, the 2% number is based on a central bank strategy.

My Head Says One Thing, But My Gut Says Another Thing!

One of the things that I do to rationalize positions is take the opposite side and create my own debate. I often do this when my head says one thing, but my gut feeling is saying something else. So for this blog entry I am going to spill my guts and hope somebody wants to add their own two cents.

Ok, here is my problem that my gut keeps telling me, and its from from a comment Greenspan made.

Alan Greenspan said the housing downturn is more of a problem than credit quality and said the lending worries would be fixed if house prices rose 10 per cent.

Greenspan has been saying quite a few things lately with some things being that we may have a recession in the fall. I was reading in Business Week Greenspan is behaving the way he is because Bernake can’t tell the truth.

What are the Managers of Ford Thinking?

Ford is dire straits and we knew that. So what do they do? Sell Aston Martin! Idiots!!!! I am being harsh because I have not seen that much lunacy in a while. Aston Martin is profitable for Ford, and they sell what is profitable. What does Ford keep? Whatever is loosing money.

The Premier Auto Group, bogged down primarily by Jaguar, handed in a pretax loss of $344 million. Mulally, Ford’s top executive since September, has said Jaguar is not currently for sale.

Annual production dipped as low as just 46 cars in 1992. But the brand [Aston Martin] has enjoyed a resurgence this decade — a record 7,000 Aston Martins were sold worldwide last year and a similar number are expected to be purchased in 2007.

Oh yes let’s keep the stuff that is bleeding Ford and sell what is profitable for Ford! Yes that is smart, NOT!

Take Notice: Chrysler and Magna

For those that follow the car industry the linked news is definitely interesting. When I was studying to become a mechanical engineer I spent many a workterm working at Magna. My father was a higher-level manager at Magna and I used to have quite a few friends at Magna. For those that don’t know about Magna, think of it as the Microsoft of the car industry.

Magna was started by Frank Stronach an Austrian tool and die maker in the early 70’s. Frank found a niche in supplying car parts for the car industry. Supplying parts these days is a very lucrative business. What made Magna different from the rest is that they built an innovative company that appreciated its workers through things like profit-sharing.