2009 TAO 3 Graphs available Now:
11/3/08 Announcement:
SOMC is transferring the trading portion of this site to individual/company contract basis. SOMC will continue to publish the Portfolio (spy, efa, gld) trades through 12/31/08. At that time the decision will be made on future transactions.
Real-time updates will be email or telephone, or both. On this site now, there is a minimum of a 2hr delay between contract trades and public posting.
This time delay will increase with time.
The standard trading model will be the MT3MM1 that is similar to the LT2MM1 on this site, with several enhancements. It will generally hold trades for a few days into weeks, unless in high volatility or gap mode.
MT3MM1 uses the TAO 3, and other TAO models to bias the use of leverage. Over 30 major ETF's, across a broad spectrum of sectors, with the inclusion of trading signals for 21 futures contracts.
Contact: richardschulz12@yahoo.com
847-680-8206
SOMC
6300 Eagle Ridge Dr.
Gurnee, IL 60031
NOTES: older notes moved to somc history page
12/31 0700: The TAO 3 supported stock rally is likely to extend gains in the next two+ weeks. Gold, as usual, will fluctuate. For now, the buy is working, and needs some consolidation time. For country pickers, Ghana rallied 60% this year.
Best of wishes for the New Year.
Richard
12/29 1040: EFA is Alice in Wonderland...amidst a confusion and turmoil, a perspective...
0700: Looking for the cyclical stock rally to evolve. Gold is favorable overnight and into the projected future. US oil dependency comes to the fore once again, and gives a nudge to reflation.
12/24 0700: There still is hope for a bull run into the Inauguration, just not yet. It is likely that stocks and gold (commodities) will rise simultaneously, with a fall in bond prices. This would be a temporary victory of reflation over deflation. somc asserts that the absolute lows of the stock market have Not been seen yet--next year, and then again much later. This dression (a depression-like recession) has been and will continue to be a long one...
12/23 0700: For yearly cycles, this is the most Bullish period of the year--into the 1st Quarter. Most of the markets came down to lasting support yesterday and held. It is no the remnants of tax loss selling versus cyclic buying. TAO 3 favors the buying, as do momentum, vix, ma's, ema's and other technical factors. Futures for stocks and gold have been neutral overnight.
12/19 1100: From today forward, the main MT3MM1 models will be used, without
hourly data adjuncts, and only sparing use of the G/V rules.
This will have two effects:
1) About 1/10 the frequency of trades
2) About 1/4 the current profit returns.
Why do this? Writing and research are moving to the forefront of my
priorities--trading on this site will be secondary. I will publish the
basic trading rules so that you can do it yourself, and use shorter
time frames if you wish.
12/18: 0700: The delay in the GM and Chrysler settlement probably indicates that they will share the fate of the investment banks; they will survive with severe modifications. Ford may or may not be forced to do the same.
12/17 1100: somc offers an unusual observation given the TAO 3. TBT is a long term buy.
10% risk; 50+% reward. 5:1 generally works...the trek back to 55.00
may occur sooner rather than later. There has been a breakaway gap, an
extension gap, and, now, an exhaustion gap...
The official buy: at 37.00. Stop: 33.30.
Stop close only.
This is also somc's general overview of the debt market...fear is exhausted...normalization ahead...
0700: The Global protectionist momentum toward universal zero interest rates continues. Germany, Canada and Australia (among a few others) will stop soon, and maintain some fiscal integrity.
TLT will not be used--keeping it simple.
12/16 0600: Longer term, 2009 will probably yield a net positive return on both stocks and gold. There are likely to be four major cycles within the year--up, down, up and down, sequentially.
The FED speaks today; at least Bernacke has had the ethical and logical sense to oppose the bailout of GM and Chrysler. Maybe the car czar will be given the guillotine and execute a mercy killing...
We're into the ninth+ day of stock chop, and soon to end...as the commercials say, stay tuned...
12/15 0600: Globally German/Europe confidence and Industrial Production nearing or below 10-30yr lows, Japan Tankan surveys at or below 30yr lows, and futures are mixed. Once the housing crisis is resolved (3-5+yrs), there comes the Demographic bubble somc has referred to. The global markets will be mainly for traders for an extended period.
The US FED meets today with its decision on FED Funds rate tomorrow. Usually it's important. As with the last meeting, the immediate impact is likely to be minimal in the context of other more commanding decisions being made.
12/12 0830: TAO 3, bullish bias, standard lower gap buy...the futures were key...has happened before, and will happen
again. With reference to this morning's comments, there are also too
many hedge funds, banks, auto companies, leverage, US Dollars, among
others to numerous to mention...
The irony is that in his final failed days, Bush is becoming a bona
fide Democrat, handing out taxpayer's money to support his
laissez-faire largesse losers...easy when it's someone else's money...
0600: Sometimes, in economics, there is just too much "stuff"...too many Starbucks, too many houses (why open/build any new ones?), too many investment banks (they're gone now), etc., too many Madoff's and Blagojevich's, and too few dinosaurs. The dinosaurs-to-be are emerging almost on a daily basis.
That is the beauty and regenerative power of a major recession. The playing field is leveled and the Darwinian healthy can provide their products. As was written earlier, in a deep recession, these are the products that people Need, not want.
SOMC's graphs created "sell islands" over the last two days with the probabilities strongly shifting to the sell side. This current decline will likely clear the way for a healthy rally.
12/11 1200: Trades still possible. GM aside, there may be a government need
for a mega-billion capital infusion for Starbucks and the housing
industry, so that builders can supply even more houses while fully
caffeinated...it is all part of the "enjoy now, pay later" plan, and it
is time to pay. In
perspective, there is the ongoing $300+ trillion Libor-based debt
tsunami. Especially in California, surfing rises to new heights...
0825: Trades are likely today.
0730: somc will write more on the technical picture of the USD and Gold. The short version is that there is a six week triple island top in the USD. This parallels what happened in commodities last summer. Unemployment, of course, continues to rise. Budget deficit grows, Europe is contracting and so is Japan. Russia devalues. OPEC is almost desparate...and the flowers bloom in the Spring.
No matter what the markets do, everyone can earn money by being with the trend in ETFs. Just with the LT2MM1 model posted, 2008 has been the best year yet. It might seem complex, but it simply follows the 192 dma, with two minor qualifications, and leverages with the TAO trend. And no matter what, the LT2MM1 Preserves capital.
It takes a 100% gain to recoup a 50% loss. That's the numbers. Step by step positive results can not only be achieved, but also maintained...
12/10 0730: The gold trade continues to profit. As somc has written several times, the US debt will overwhelm the value of the USD, and gold, being valued in USD, will appreciate over time. Just as the first bailouts were the demise of investment banks, the auto bailout is destined to prolong the agony for the US auto makers...
As for stocks, somc has a mixed technical picture and is waiting for support levels to be tested and held. Work on publishing here an intermediate term (based on daily data) MT2MM1 model continues...combining simplicity with effectiveness.
12/9
1000:
A few days ago Bernacke let loose with one of the best Freudian slips I've heard in awhile: referring to the various excuted and tentative bailout plans, Ben Bernacke said:
"The options taken were worse than the alternatives,"...and somc tends to agree...
0630: The initial G/V trades have now converted into standard MT3MM1 positions, with duration potential. They are ok, with the futures favorable overnight. TAO 3 is adding increasing optimism for awhile.
Congressional, Treasury, and FED actions over the last few weeks are almost fitting to be part of a Shakespearean tragedy. What of significance isn't now nationalized in the US? How is the newly accumulated debt to be repaid? Who, now, is going to be the car czar? It is tempting to ask for the cereal industry to be regulated, so that the hot air can be taken out of each box, and I can see the amount of grain that is actually in there...emphasis on "hot air"...
12/8 0700: Thank the forlorn US auto industry for giving another large, and probably successful, push toward the world's reflation efforts. Technically there is an excellent compression of key moving averages, plus positive momentum (MACD's), help from the somc LL/LH (local low/local high) indicator, and other critically important support.
The technical squeeze of last week is over. It behaved ideally--with the first breakout (lower) being the false one, followed quickly by this Real Rally. Friday gave somc a relatively low risk buying opportunity. TAO 3 is very positive in this time-frame. Technicals are positive. The SOMC buy leverage is in place, and the markets globally are headed for a longer 20-50% rally, depending upon the Beta (volatility) of the ETF.
Enjoy. This rally has longer and stronger legs.
12/5 1100: TAO 3 is Bullish; today's action is typical of a TAO 3 buy on negative news (unemployment).
TAO 3 is bottoming now.
0700: The squeeze met its upside objective, and the MACD's issued a sell. Today's report matters most to those losing their livelihood. Given the accelerating nature of this recession, the unemployment report today is a lagging indicator.
12/4 0700: The squeeze between Friday's high and Monday's low continues...yet to be resolved. The futures overnight are lower and mid-range. So somc remains flat. During the squeeze it is easier to lose than to gain. The resolution is likely to produce two trades in quick succession.
12/3 1100: It amazes me that any Hedge Fund
can lose money, much less halt withdrawals, especially in current
market conditions. The Hedge have all the trading advantages, and
don't have to disclose anything. High volatility allows for enhanced
profit potentials, as in the old adage "Make hay while the Sun
shines." Yet, the Hedge lose money...
0700: The march toward zero interest rates continues, as the financial top of the world becomes more unstable. The current attempt at reflation will likely succeed, only to be followed by a more merciless collapse. Instability reigns, and the overwhelming levels of debt will be the master.
Strategic trades are the way to profit. somc avoids analysis in favor of utilizing price as the guide. There is no need "to know"--let "them" do it. somc goes with the flow of price. Strategic trading is the most effective and safe investment vehicle. Caveat: discipline over time is essential. Futures overnight are reemphasizing deflation and contraction=lower.
12/2 0600: The risk in the current trades is high, corresponding with their profit potential. G/V rules have strict and short-term parameters.
12/1 1200: With the decline in the overnight
futures, the sell on the open was certain. In this dression ( (a new
word for a depression-like recession), we are now approaching the
wrenching financial and emotional phase--when evaporating idealism
transforms into depressing realism. On another front, China
voluntarily went down the slippery slope of an export driven economy,
and not to return intact.
0600: Technically, somc has a mixed picture with both some buy and sell signals. More will be known after the open. The futures are all negative except bonds. The global recession is extending. For somc, progressing...
11/28 0700: somc wrote in Feb 2007 that the imminent recession would end in housing and other losses somewhere between the worst recession and the Great Depression. That seems to be playing out. Today, for most companies, the recession will make this Friday somewhere between bleak and black--inventory liquidation at the expense of price and profit.
The somc Portfolio position has evolved into the MT3MM1 rules. One or two or a few consolidation days would be normal here=flat to mildly lower.
11/26 0500: In time somc will expand upon the essence of this note. Global Nationalization of finances and industry is expanding. There is also a major new development--Protectionism. It too is now global, however, in a dramatically new form. Countries are now racing to infuse capital into their own economic system faster than the others. This is just delaying the inevitable--the collapse of those countries that cannot provide for the Needs of their people (same applies to states, cities, and corporations). The current interventions only buy some time, and slows the declines into severe recessionary conditions, globally. Only those that provide for Needs will fare well. The deleveraging of the international capital systems is maybe half way through, and will persist into 2010-11, as the debt consequences of the current infusions are felt.
11/25 0600: The TAO 3 diverges from TAO 2 at this point. The Obamanomics stimulation plan is at least approaching an order of magnitude that might have noticeable effect. The current rally is most likely to extend. The tenuous projection is for a total of 30%, already being more than 10% into it. SOMC uses several simple yet dynamic trading tools, that are effective when uniquely combined in gaining and maintaining profits from its trades.
11/24 0700: Citigroup infusion plan is workable. The futures favor spy, efa, gld and related ETFs.
11/21 1500: somc wrote positively about Tim Geithner (and Volcker) over the
last few weeks, and now he is soon to be the Treasury
Secretary--excellent...
not a panacea, of course, but at least hope...
1030: Not that long ago, Standard and Poor-me had a buy/hold on Citigroup when it was 50.00+
The ratings agencies are a travesty.
As Jim Grant said, "This is a scandal..." of the greatest
proportions...why aren't the heads of Moody's, Standard & Poors,
Fitch, etc., on trial?...maybe because they give money to those who
would try them...earnings?...what earnings?...fair value?...based on
what...positive GDP for countries?...not any time soon as far as somc
can tell. By simple methodologies it is possible for everyone to earn
money in this and every economic environment.
1000: A trade possible...amidst an imminent global depression, the
djia on its way to fulfilling its dinosaur role, the US autos becoming
nationalized, drug companies overdosing, the Hedge losing its edge,...a
trade...possible...
11/21 0700: No change. Wal-Mart CEO resigns, and Hillary will now sit down with leaders she said she would not talk with...The futures indicate a 2+% rebound in stocks, and continued rally in GLD. A trade is unlikely today...always possible, just unlikely...
11/20 0600: So far ok on the Portfolio trades.
2009 TAO 2 graphs will be available for purchase by Sunday evening. Email or snail mail, as you choose. Various time frames to be offered.
11/19 0700: The equity downtrend continues, with
Gold holding its own. Some ETF's are currently at new lows, with most others likely to follow soon. The Bear has more grizzly left. Henry (not Paulson)
would be proud...Ford likely to survive...
The countries with the least internal debt and with the greatest exportable hard commodities will also fare best. 2009 will feature increasingly bankrupt companies, cities, states, countries.
Since many IRA's can only buy, it is helpful to know what ETF's to buy that profit from market declines. When the IT2MM1 model is functional, that section will itemize the most liquid ETF's for both Bullish and Bearish trends...keeping it simple...for everyone to use and benefit from...
11/18 0600: Long Bear markets require discipline to navigate successfully. In long Bull markets almost anyone can randomly select stocks, sectors, funds, etc., and be profitable. In this Bear market patience is and will be a virtue. Preservation of capital is paramount. As far as somc can tell, there is no quick nor intermediate global economic fix. We are amidst global financial restructuring. SOMC will offer the TAO 2 for 2009 for sale soon.
11/17 0700: The Hedge funds still control most of intraday trading, and the volatility continues. The intermediate stock models are short, with gold still long. The G 20 produced nothing of substance, with their greatest fear being protectionism. The P word is already happening. Countries desperate to
maintain fiscal stability will protect themselves.
SOMC's current goal is to have an Intermediate Term mechanical model posted on this site, to complement the LT2MM1. The IT2MM1 will hold most positions for days/weeks, and can be used by everyone.
11/14 0600: The re-addition of EFA continues the theme of Sectors 1, 2, 3, and with only 3 ETFs covers the globe with a breadth of international stocks and Gold. Gold, both directly and indirectly, relates to silver, bonds, fxe (euro), uud (USDollar), oil, nat. gas, and other hard commodities. One month ago somc expanded its Gold coverage and will continue to do so.
11/13 0700: The 20-30% rally in ETF's occurred quickly and vanished in a six day flash, ending 11/4. The SP 500 never made it 1050, and that is not positive technical news. While there will be more extended Bear Market rallies between now and 2011, and very playable and profitable rallies, they will be the exception rather than the rule. It was not encouraging yesterday that Paulson is flying by the seat of his well-burnt pants... As was written several times on somc, buy and hold as a successful investment strategy is extinct history.
