Dangerous play- not for amateurs and DON'T try this in your Mom's kitchen! This is a high-risk high-reward play on CAK using SC/ST. Learn more about Synthetics at orangequant.com



EUR/USD Short-Term 3/30/14

Synthetic Circle forecast for EUR/USD near term chart is here. But I'll try to put it below also. Learn more about Synthetic Circles at  orangequant.com.



FATE Rampage Continues?

The Synthetic Circle FATE chart says it all at this image link (new window). But I'm going to try to put it below. Learn more about Synth Circles at orangequant.com .



SPY Update for Weeks of April 19th and April 26th

If you've followed my youtube video forecasts, you know that on April 1, 2010 i forecasted inflections for last week (wk of April 12th) and for this week (wk of April 19th).  This means that last week ended an uptrend and this week should exhibit a lower high and lower low than last week.
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Since this week is also a forecasted inflection, it means that we have a profitable whipsaw on tap, so next week (wk of April 26th) should show a higher high and higher low than this current week of April 19th. In other words, assuming the forecast is accurate, you can enter long virtually anyplace this week and exit profitably sometime next week- but try and pick the lowest spot this week to maximize gains.
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This simple forecasting method comes from the FLIR2 eBook, available at orangequant.com . The video forecast made April 1 is at youtube.com/orangequant .

First Judgement $2.6 mil in Drywall Case

The first part of the video below details this bad China drywall judgement; the latter part is a BAC forecast (Bank of America). Watch Treasuries, guys, watch Treasuries. Opportunity calls.

Something Wicked This Way Comes

Hear that sound? As the old song says:
"Stop, hey, what's that sound? Everybody look what's goin' down!"
                                                             -The Buffalo Springfield

Yesterday, Wednesday April 7, 2010, i heard that sound, the same sound i'd heard three years ago with the China Market Meltdown in late March 2007. Like the sound in a suspense movie just before the bad guy jumps out of the shadows and knifes somebody. Yea, that sound. In the video below i talk about that sound and what it was for me this time around. You may have heard it too-- or not-- or maybe soon you'll hear a different sound that means the same thing. But what sound am i talking about? Let me set the stage...
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The FOMC (Federal Open Markets Committee) has 12 members. Nearly all of them recently voted to keep interest rates the same, right? And the market loved that, right? So why the dickens did the market get all rattled yesterday (Dow dropped 100+ pts in two hours) when just one lone member said the Fed needs to raise the rate to 1%, and that's just an "accomodation" (i.e., we really need to raise it even higher)? Why? I mean, considering that this guy is 'way in the minority in that opinion, why did it spook the market so badly? Does the speaker, Kansas City Federal Reserve chief Dr. Thomas Hoenig, have some hidden superpowers that scare big traders and market movers? Probably not-- but he scared them just the same. And of course, he's absolutely right. But, unfortunately for him and a lot of ordinary people, he's being treated like a market Cassandra, ala Mr. Roger W. Babson of 1929 fame. What a shame.
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So the actual sound i heard was the Dow clattering its way down 100+ pts on news of very little practical significance. Just like the non-China markets shook and trembled for months after that China meltdown, on even the tiniest bit of bad news, even though their market fully recovered within 48 hours of the event. It was the sound of BIG people on edge. And we all know what started happening a few months later. And that's what yesterday's sound was- BIG people on edge about something.
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So as you watch this short video, remember that verse: "Stop, hey, what's that sound? Everybody look what's goin' down!"
And keep listening- there will be other sounds.

Chinese Drywall Stink Fouls Markets

I'm really going to try to blog here more often-- been mostly doing SPY forecasts at youtube. But this Chinese drywall issue needs to be better understood by all of us retail traders, myself included. The current story has got little traction with mainstream media-- yahoo finance is where i saw it last Friday, then it sunk slowly down the list of stories and just faded away... the main drywall story is old news-- but last Friday's development should be HOT news, and i mean HOT HOT HOT....
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In brief, the U.S. Consumer Product Safety Commission (CPSC) issued a report last Friday saying that ALL the bad drywall must come out, as it poses a safety hazard (they only rule on safety, not health issues- that's maybe the EPA?). This means that between 100,000-200,000 homes must be gutted, the drywall replaced, the wiring gutted and replaced, gas lines gutted and replaced, plumbing fixtures replaced, smoke alarms replaced, and A/C possibly replaced..... cost is estimated at about $100,000 per home. Getting the picture? This is HUGE. Who is going to pay? And that $100k per house doesn't even cover potential liability for injury to health, inconvenience, other losses, or punitive damages, or damages to appliances and electronics (devastating to computers).
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So i began looking for short targets. And doing some reasoning. About 30 seconds into the embedded video below (made friday night) i forecasted that China would start dumping Treasuries in order to pay off the drywall overhang-- whether they did or not on Monday is an open question, but something sure spooked the T-bond market into a hard gapdown Monday (see TLT or IEF charts, or watch my video at this link: China Dumps T-Bills on Drywall Overhang?). So i'm on track to comprehending the implications, i guess.
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(More of this post below the video)

Now comes the monkeywrench. In the above video, i say watch banks, homebuilders, and insurance companies, because they're all potentially liable for the $100k per house pricetag. So monday they all pretty much went up, leaving me wondering what kind of fakeout crap this might be. Bottom line, i began to run some FLIR2 synthetic trendlines and h2o5 on BZH and it does look like it could run up some thru April, but then may face a massive downside. On researching various insurers, i came up with Allstate (ALL:nyse) as the only major insurer with significant exposure (might be others) and sure enough, today it began to slip after yesterday's fakeout. But, in truth, with all the cross-bets and CDSs (credit default swaps) of these clowns, i expect them all to take a major hit as the spring and summer wear on, including the banks and homebuilders.
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In the whole mess, i think the homebuilders may fare the best, i.e., lose the least, because they'll be paid to fix all that crap. USG (United States Gypsum) actually looks pretty good on synthetics, so (ironically) they may be expecting to recover most of their damages outlay from China, even though their monday fakeout was exposed today by a sharp downturn.. And China has no choice but to pay for the rehabs-- because if they don't, then the USA has an excuse to default on at least part of its debt to China. See what i mean?- this whole thing is monkeywrenches tied up in knots with wet bubblegum.
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So, it seems to me, it all boils down to this---- ALL is cooked; Treasuries are french-fried; homebuilders are roasted after April; and USG should be scalded but gets away with only first-degree burns. Why do i say USG "should" get scalded? because they (apparently) relabeled Chinese drywall as their own, as apparently did National Gypsum (NGCO:AB, Saudi Arabia Exchange). I think the most reliable plays will be shorts/puts on t-bill ETFs-- a bit tricky because China won't dump all at once but in stages of dumps with small bounces to suck in retailers. So i'd place puts some distance out (in time) 'til dumping's over.  I'm also about to run FLIR2 on some charts for Home Depot, Lowes, Builders Square, etc.--- these may have some legal exposure but might also actually profit in the long run from this fiasco.

p.s.-- no matter where you live in USA, you may have bad drywall. see a lawyer. SYMPTOMS: rotten-egg smell, or ammonia smell (or like cat urine), or sweetish smell-- these odors may "disappear" due to olfactory fatigue after a few minutes; may not even be noticeable in low-humidity regions, but try to notice after showering or after cooking/boiling something; black deposits on wiring or inside smoke alarms or on A/C coils; respiratory or sinus symptoms may indicate bad drywall- in some dry states, this is the only symptom. HOME TEST: crumble some drywall into a large jar, sprinkle a few drops of water to create humidity (not to soak it), drop in a shiny copper penny, cap jar and set in sunlight for two weeks. If penny corrodes or turns black, you got bad stuff. If still shiny, it's good stuff. NOTE: your builder or remodeler may have used drywall from more than one supplier, so a "good" test is not necessarily definitive.

Forecasting with h2o5

FLIR2 contains about four relatively simple methods for forecasting future inflections (synthetic trendlines, tau/iota valuation, h2o5, and FLIR1), as well as assorted trading strategies, and methods for determining support/resistance and trends. It's 118 pages plus a large appendix, more than 25,000 simple words, 70 charts and illustrations, is fully printable, includes as appendices one simple tutorial on using spreadsheets and one on using msPaint. It also contains TOS code (thinkorswim) for implementing h2o5 and its histograph. Literally, a 10-year-old could use this stuff.  orangequant.com

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today, i want to talk about one issue using h2o5. no, i'm not going to show how h2o5 is derived- that info is in the FLIR2 eBook. this post mainly helps those who already have the book. but it also shows others how easy it is to use h2o5 (Hudson 2nd-order Oscillator).
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the issue i want to address is accuracy. the longer your trendlines on h2o5, the stronger the inflection might be. the shorter your trendlines on h2o5, the more accurate your forecast. this is a purely mechanical issue- not a data issue or system failure. later, i plan to blog a trig function method to reduce such error and an AUTOMATIC calculator so you won't have to know anything about trigonometry to use it. alright, here's the problem: when drawing a line from Point A to Point B, your mechanical skills are much less important to accuracy if Line AB is very short than if Line AB is very long. in other words, a couple degrees of error on a pair of short intersecting lines hardly makes any difference; but the longer the lines are, the more that error gets magnified. this can result in forecasting the wrong date or time of inflection. here's an example:
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As you can see above, the slight difference in alignment of the dark blue trendline gives you an inflection that will be off by at least one period compared to the other intersect. So you could be off a day, an hour, a week, or a month, depending on your chart's timeframe.  the best remedy for this, since you know the exact values of A,B,C,D, is algebra or trigonometry.  but that's 'way too much for most people.  so, as i said, i'll soon be doing a blog on how to use an automatic calculator to find the exact intersects.  meanwhile, the best solution is consistency in your drawing habits, i.e., always draw right through ABCD or always just above.  then backtest your method--- it should show consistent accuracy, or it should show consistent delay or advance and you would factor that in. 

SPY (S&P 500) Forecasting

Been a long time since last post, huh? Time passes faster than we know.
I plan to start doing some occasional "extra comments" here on my forecasting videos. I've been doing regular SPY forecast videos for some time now, achieving about 85% overall accuracy. I focus on calling INFLECTIONS, rather than price values, though my new FLIR2 system also allows price forecasting (Forward Looking Information Radar). Links are as follows:
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the FLIR2 eBook orangequant.com (very simple methods for forecasting inflections for any stock or forex or commodity, etc.), also has current forecast videos.
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forecasts at youtube (current and past): youtube.com/orangequant (so you can verify by timestamp).
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a recent forecast:

The above is a forecast for SPY for the week of Feb. 8, 2010. A lot of people made a lot of money on this one forecast. FLIR2 is used to forecast inflections days, weeks, months, or just minutes away (yes, i've used it for daytrading too on intraday inflections). I do this SPY forecasting partly as a public service but mainly as a way to promote the FLIR2 eBook. As of this writing, I still offer it at just $18.95, though i'm seriously considering raising it a lot. I might as well blog that issue here and now, just to get it off my chest...

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Back in the day, before the internet came along, you had relatively limited choices when trying to buy the best book in your subject area. You could read reviews in newspapers to help you make up your mind. And, book prices were set by publishers who had a reasonable idea of the value of the book's information. But now, EVERYBODY and their GRANDMOTHER is a publisher, prices often get set according to whim, and you can't possibly read all the reviews that are out there (besides which, the publisher of the review might not be trustworthy). So you often find yourself kind of stuck as to what to buy for your needs.

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Internet eBook publishers are aware of these factors and one other: they know that the higher priced an item is, the greater its "perceived" value. A higher perceived value might translate into more sales, providing that extra something to tip the scales. But there's a limit. A potential customer may say, "Yeah, that eBook's probably worth every penny of that $195.00 pricetag, but I'm not taking a chance to find out." On the other hand, if price is too low, people think the item's not all that good to begin with.

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So, like other publishers, i struggle with these issues too. I call it "finding the middle ground between affordable risk and true value". But i have an edge which other trading eBook publishers either can't or won't use: i do actual forecasts with FLIR2, and that SHOWS true value. just google around for "stock forecast" and you'll see that real forecasting is rare as cabbages on the moon. with FLIR2, i call INFLECTIONS well in advance. nobody else does that. instead, forecasting systems you see out there talk about their success rate, give a lot of testimonials, but somehow none of it is ever actually checkable (that's why i use youtube, as a way for you to see timestamps, or you can just subscribe to the channel and know that way).

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Anyway, i'm at the point where i've proven the value of the FLIR2 eBook and it's time to raise the price because, for one thing, it's driving me nuts and, for another, it's causing people to underestimate its true value. the methods in there are easy to set up- really, a 10-year-old could do this. so now i'm thinking $39.95 or thereabouts.

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okay, that ends my little intro to this new phase of my blog. now you know why i'm here, what i'm doing, and what you can do about it. NEXT BLOG: "Forecasting with h2o5".