Intra-day Update: Read the instructions?!?!

UPDATE 11:50 EST: Okay folks, Berk here… Just did a sweep of the comments, and it appears that we are all hung-over this morning.  This is not a call to arms, as I completely understand the lethargy that has creeped its tendrils over the market and its participants.  However, when we are not running wide open, there are some important “lazy” things that we can get accomplished during days like this.

• Run through your favorite watchlist.  Nothing is moving RIGHT NOW, but perhaps a few things are setting up for after the new year that we should keep an eye on?  I know I see a lot of triangles forming in the AG stocks… 😉
• Read the tutorial of your favorite indicator…  There still seems to be some questions about how to take entries, and I encourage EVERYONE to re-read it just to make sure.  If you are not sure about how the indicator operates, make sure you leave the questions for someone who does.  I think Mole puts it best about the entries when he says that the “tip” of the Zero line is NOT USED for signaling, it is the previous candle that actually controls the signal.
• Exercise… This time of year, most of us are underexposed to the pleasure of the sun’s rays.  Getting outside and doing a little bit of exercise can really help refresh you mentally.  If you cannot venture more than a step away from your trading station, then you can always do some push-ups and sit-ups on the floor.
• Read (or re-read) a good trading book… When was the last time YOU read “Market Wizards,” “Reminiscences of a Stock Operator,” “Trend Trading,” or even the “Elliott Wave Principle?”

Of course, there is nothing wrong with hibernating away until after the new year.  Yesterday should have been the busiest trading day that we will see until after the New Year has come.  But it is what we do with our idle time that sepearates the amatuers from the pros…  We all know Mole is using this time coding and recoding the Zero to make it the epitome of evil, what are you doing??

Out of curiousity, how many of you folks read the instructions on a new appliance?  Do you REALLY read it the whole way through, or just look at the pictures and think you can do it?  What about you car?  Did you read the owner’s manual on your $75,000 Mercedes-Benz?  I would imagine that the majority of us do not read (especially not ALL the way through) the owners manual to many of the devices in our everyday life.  For me, it is a cost issue.  I may not read how to properly toast my bread in the morning, but I am damn sure going to read the instructions for my computer.  Now we all trade in the financial markets, so this indicator could be worth a mighty penny.  Therefore, I strongly reccomend familiarizing yourself with it’s actions (and opperating instructions) during this downtime…

UPDATE 12:20am EST: Mole here: Did you see how the VIX dropping by like 10% today?

If we keep dropping like that we might actually push below 40 before the end of the year. Now, if my evil plan works out and we hit 1040 on the SPX in January then we might even approach 35 in the VIX. That would be backing-up-truck time… perish the thought…. But even 44 is a bit of a X-Mas present for me – maybe the option market will actually become functional again – wouldn’t that be something?

UPDATE 2:00pm EST: Here is a quick preview of an alpha version of Zero-RL:

It took me three days to code this because thinkscript sucks so much, but I think this is a good start. When I took this screen grab the signal was about zero (smoothed) and the 898 long RL has a 29% probability. Based on my current algo this should hold unless we see a stronger negative signal. I have not released this into the ‘wild’ yet as the math is pretty complex and I want to collect more RL/Zero correlation data before I have sufficient confidence to let it loose on you guys.

The blue dots mean that the pivot should hold this candle. IF we get a trade alert on the bottom and it’s weaker than the RL to be breached it will be shown in blue as well. Which would mean – wait until the RL has been breached before taking on positions. Pretty simple system actually and it should keep us from adding or initiating positions ahead of RLs that are stronger than the current trend signal.

UPDATE 2:23pm EST: Excellent 🙂

There you have it – we got a 1.0 and it breached the pivot, just as predicted. Also note that I’m hiding all short RLs when the signal is negative plus I’m hiding the long RL one we breached since less lines on a chart is better.

UPDATE 3:06pm EST: We got a short VTA but the Zero-RL puts it in blue, indicating that the signal is not strong enough to overcome the RL below:

So, I would wait with taking positions here until the Zero-RL gives us the green – ahem – the red light 😉
No worries – I keep you guys posted in the comment box.

UPDATE 3:15pm EST: Seems we breached on a 1.25 – the one above was actually 0.65 – sorry. A 1.25% should be able to breach a 54% signal – this RL is a 46% – so far so good.

UPDATE 3:37pm EST: Okay, I caved and deployed my alpha version of Zero-RL 0.1. If you don’t care about the RLs just trade the signals as they come and ignore the RLs and the blue lines/dots. Have fun 🙂