Safe Trading Blog

                                    
Index               Posture     Date Elap  @Start     Close      P/L      P/L
——————- ——- ——– —- ——-   ——-  ——-  ——-
Stocks Medium-Term  Bearish 06/11/08   26  1335.49  1252.31   +83.18    +6.2%
Stocks Long-Term *  Bearish 01/08/08  181  1390.19  1252.31  +137.88    +9.9%
Gold (NY Spot) *    Bullish 07/01/08    6   938.00   925.70   -12.30    -1.3%
30-Yr Bond *        Neutral 04/21/08   77   117.07   116.30     ….     ….
——————- ——- ——– —-  ——-  ——-  ——-  ——-
Dollar Index        Bearish 06/30/08    7    72.53    72.73    -0.20    -0.3%
CRB Index           Bullish 09/14/07  297   320.92   459.04  +138.12   +43.0%
Crude Oil (USO)     Bullish 02/11/08  147    75.24   114.95   +39.71   +52.8%

Special offer @ www.thestockcode.com 

Complete overview of financial theory (500 pages) + high frequency data files for $47

A sample free DOCUMENT ==>

free_ebooks.pdf

Contact: thestockcode@gmail.com

For those interested in model building, I have selected 2 references. Among thousands of articles and books, I think those 2 are the one to be read… They give the essential concepts and mathematics. Of course, this post is focused on experts in financial model building.

Article1.pdf

Article2.pdf

If you are interested by ideas and a reformulation of all this without any mathematics, first read or free ebooks free_ebooks.pdf…

Contact: thestockcode@gmail.com

In the future, I will give some references that I find interesting on this blog… sometimes for pure model builders, most of the time for anyone interested on financial markets with no mathematical background. If you have any question, do not hesitate to contact me @ the email address above…

A few of my market lessons compacted in one DOCUMENT

free_ebooks.pdf

Contact: thestockcode@gmail.com

If you follow us, you must not be worried by the erratic behaviour of financial markets at the moment, whatever the weights we put on fundamentals of the economy and artefacts of technical analysis. That reason why is explained below.  When examining financial markets, they are all very different with non-deterministic behaviour… But, there is one common universal feature that can not be contested: financial markets are never following a quiet path. On the contrary, for all of them, they are either super-exponentially accelerating or crashing. In our education series, we have illustrated this FACT with many graphs… For all of them, we can observe the succession of accelerations followed by crashes. This basic feature stands at the heart for financial markets. This is a central point, and most probably THE central point of the modern aspects of financial markets…  Just to give the bottom line of the complete explanations that you can find in our documentation, available on this web site, we can say that financial markets are fed on volatility. In fact, with no volatility, the free markets would not exist: both are intrinsically related. In order to generate some volatility, there is a need for bubbles and anti-bubbles (or crashes) with a periodic wave. Financial markets need to generate such extremes… Remember the famous history of the tulip bubble 400 years ago! In a certain way, this general behaviour is largely independent of a precise trigger or catalyst that gives the turning point of the extreme towards another direction.  Then, the game is very simple: one needs to catch the train and to jump off before it explodes! We know this game! And we can play it by limiting the risks at the lowest levels…

Check the complete recommendations & follow up cycle on www.thestockcode.com…

Check our recent analysis & recommendations on:

www.thestockcode.com

As a free memeber, you will get lots of document about market mechanics, how to fold information etc.

Just as a reminder, we reproduce the PDFs of the last recommendations done on 21 & 22/04 below =>

market_views_1.pdf

market_views_2.pdf

Check the today morning 25/04 follow up => follow-up1.pdf  in order to measure the great efficiency of our method!

addendum:

follow up on the CAC: 4872 => >5000 pts (early afternoon)… (we are ++ on CAC40 for this week)

1. We find out a key level on the major US index:

Posted on March 27, 2008
Filed Under Stock Code Trading, US Market | Leave a Comment

The short term rebound develops chaotic waves: SPX have moved back below the 1350 pts target… as well as financials have been stopped at resistance level (JPM is a good example). My odds are still positive & I expect a break of these resistances, but we need confirmation today. If yes, the rebound would find a new strength. Very important: check the 1350 pts level on SPX, this is the key technical number for the following…

2. Sentiment indicators (measured by our own calculations) turn on the positive side

Posted on March 27, 2008
Filed Under Stock Code Trading, US Market | Leave a Comment

Looking at short interests on SP500 is always of great interest: the total short interest of all stocks (on SP500) is about 10% (in per cent of the total float of those stocks)… ok, it was 7% at the beginning of the month!

This measure is certainly more complicated to track but also more relevant than the standard Call/Put ratio or VIX (or VXN) sentiment indicators…

As usual, we must focus on the trend: investors are booking short position on the “long” run. OK the stock market is gloomy, but for short term targets, the extremes are more interesting: we have found a decisive increase of the short term interests in only 3 weeks! This is a good contrarian sign that the rebound can take over… see also the previous post today.

3.  We follow our analysis && enter into the market

Posted on March 27, 2008
Filed Under French Market, Stock Code Trading, US Market | 1 Comment

See previous posts today: We have a positive bias concerning a continuation of the rebound… Worth playing the upside in case of validation of the break out of the 1350 pts level on the SPX!

We follow this plan with the idea also that consumer staples & health care are outperforming within uncertain periods: Ready to buy SAN & CA & FTE… & watching DG & financial sector for some other picks?! done on SAN & CA (@ the lows of the day)

We get ready for the US opening also => list: WMT, IBM, HP & OMI…

4. Another way to look @ the market confirms our view

Posted on March 27, 2008
Filed Under Stock Code Trading, US Market | Leave a Comment

SPX and 10Y yield for the last 6 months: The correlation is perfect. It is quite natural but not always with such a high correlation degree.

You can check the 2 last rebounds of about 1M each… On this picture, the odds are again in favour of a continuation of the upside as long as TNX has not reach a level of about 3.8%… (3.5% today)

It will be chaotic and it is plausible that we stand @ about half the present rebound duration?! Let’s observe the forces in the next days…

5. Trade follow up

Posted on March 28, 2008
Filed Under French Market, Stock Code Trading | 1 Comment

our 2 buys of yesterday:

SAN: already +2% this morning vs our buy level

& CA: at our buy level…

6. The (stock) market mood gives again some positive signs

Posted on March 28, 2008
Filed Under Debrief, Stock Code Trading, US Market | Leave a Comment

As developed in the previous posts, our confidence is improving on the market for the short term, even if it needs to be confirmed.

A key element is the situation on the mortgage business: the credit risk default has decreased the 2 last weeks by 25%. It means that things are evolving in the good direction: the confidence is increasing and then the credit default estimator is decreasing…

If we look at the SPX, we can track its situation with 2 simple numbers:

P/E ratio: 20  & the % of stocks above their 50 days moving average: 44%…

7. We book profits: the end of a safe && fast trade =>

Posted on April 1, 2008
Filed Under French Market, Stock Code Trading | Leave a Comment

[…] SAN: +4% && CA: +2%. We book profits today (+3%)… The rebound has already been quite interesting. We need to observe the further developments as outsiders… Status (after +3% on this trade): we have no position neither on the US market nor in French markets. More later…

A picture is always better than 1000 words: below, the chart of the yield curve (10Y yield divided by 2Y yield) versus the S&P500 == SPX (first plot)… Plain & simple: FED easing, short term interest rates drop faster than long term ones => gloomy economy => weak stock market and fly to bonds: second plot, yield curve versus 10Y bond index (UST)!

For us, as analysts & investors, we can make a powerful use of these basic observations: check the change in trend on the UST10Y/UST2Y… We will follow this macro-view on this blog!

We give a brief reminder of our plan following for the last trade (action) launched on a basket of Stocks on US & French market since last week:

1. We find an indication of a temporary bottom:

Posted on March 17, 2008
Filed Under Stock Code Trading, US Market | Leave a Comment

Yesterday, we have booked profits on our US positions & this morning, we book profits on our French positions : +4% in average per stock baskets (*) & (**)!

(*) http://www.safetradingblog.com/stock-code-trading/good-plan.html

(**) Reminder on our postions closed yesterday afternoon & this morning => 

Posted on March 19, 2008
Filed Under Debrief, French Market, Stock Code Trading, US Market |

…We play it through consumer staples, health care and financial sectors (equally weighted portfolio)… More later. There is some open space on the upside now, even if we may expect some kind of chaotic moves. Do not hesitate to buy stocks when the flows, macro economic news and earning estimate revisions, run in the optimistic direction for stocks… even during a bear market, bounces can be violent and can happen with large amplitudes!

WMT, OMI & JPM on the US market / CA, SAN, & CS on the French market… We overweight WMT in the US basket and SAN in the French basket (*3 with respect to other positions)