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Daily Stocks: Algorithm & Formula Enhancements

Over the passed several weeks we have made significant changes in our algorithms and formulas for both Daily Stocks. The result is a lean and mean technical analysis engine that has increased accuracy while finding more stocks for a more powerful list of potential trades. The change in design is non-existent, but there will be significant changes in the results presented.

The following is a sample of the enhanced features and changes made in our algorithms and formulas for Daily Stocks:

- Updates to the app now happen at 5:00 pm ET getting you the scans you need, sooner.

- Improvements to the Japanese Candlestick formulas providing increased accuracy of the scans, which in turn finds more stocks.

- Enhancements to the Overextended stocks algorithm, providing a better list.

You can download Daily Stocks from the App Store or by clicking here.

 

A Note from CB3

An important note from CB3 Financial:

07:32, Monday, February 4th, 2013 – Lake Geneva, WI

Stocks in the world’s developed nations posted the best start to a year in two decades, a sign the global economy is poised to accelerate after contractions in Japan, the U.S. and Europe. This, of course, is only if history is a guide. The MSCI World Index of stocks in 24 markets rose 5 percent in January, the most since 1994, as individual investors pumped record deposits into mutual funds, U.S. profits increased for an 11th quarter, central banks kept interest rates at record lows and growth from Europe to China improved. The last two times stocks gained this much in January, world gross domestic product expanded at least three times the 2.4 percent that economists forecast for 2013, according to data compiled by Bloomberg.

While market strategists say that equities have already recorded most of this year’s gains, bears who predicted declines at this point in 2012 only to see the Standard & Poor’s 500 Index close up 13 percent, are being overlooked. Bulls say the rally is just getting started after U.S. investor sentiment rose to a two-year high. Billionaire Warren Buffett offered to buy the parent of the New York Stock Exchange. It was an interesting month in January, for sure.

Our World Centric program is off to a terrific start, with Equity Income and Ultra Income doing well, respectively, versus their more conservative benchmarks. Like 2012, Spec Opp is off to a difficult start, since it is primarily short-side biased. As you know if you are invested in this program, Spec Opp began 2012 down 15% versus the major averages, and then ended up beating them by more than 500 basis points. Spec Opp investors, please watch for some news later this month as the scope of our speculative programs will change in this first quarter. We are moving toward an absolute Return model for this program, although the details are not yet fully developed. We are also considering a day-trading model to supplement the absolute return program.

My next contact to you in this space will be from the Bakken area of North Dakota and Montana, as I pursue investigating investment opportunities for our clients in that area of the U.S. Please see my recent Fireside Chat videos for more information about my travels. Have a great week.

Towards your prosperity,
CB3

You can see the post and more like on CB3′s facebook page.

Arbitrage Trader Note: Managing Stop-Losses

The stop-loss concept is one of the most necessary, but unfortunately, also one of the most overstated terms in the investment world. These conflicting drivers make stop-loss a vital yet also tricky checklist item in trading.

Determining a stop-loss level that is too large is dangerous and potentially makes the trader lose a lot on a bad call. However, even worse happens when the trader accurately positions his/her trade in the right direction with a very tight stop-loss and gets stopped before the instrument makes the expected move to the right direction. Especially in instruments that demonstrate high volatility by their nature (e.g., high beta stocks, commodities, and f/x instruments) placing a small stop would almost certainly end-up in a loss. The market is full of fake rallies, false breaks, and timeless surprises that can confuse a disciplined stop-loss approach easily.

Investors and traders use different stop-loss methodologies when entering trades and managing their portfolios. These include technical levels (e.g., major support levels, double-bottoms etc.), % or absolute loss levels, and others. Unless you are a professional trader with substantial trading experience, we would not recommend very tight stop-losses that in series can significantly harm your portfolio balances. This is especially important when the markets start trading sideways. In those cases doing nothing and waiting for confirmations in the market become the wisest move.

Our Stock Arbitrage Trader app uses an unconventional stop-loss algorithm that is based on a trailing statistical analysis. Based on this complicated mathematical analysis, the app uses a stop-loss determined and dynamically changed (trailing) for every stock’s standard deviation and variance characteristics. If the price reaches that particular stop level, the signal changes to hold or reverses from buy to sell (or vice versa). However, in our app – as can be seen from P/L levels – these stop-loss levels are not extremely small. Our clients should also note that in very volatile tickers (e.g., FSLR) the actual signal reversal mostly occurs before a stop-loss is reached. In other words, our clients will be seeing stop-losses very rarely in our app. On the other hand, the model would be accurately reversing trades before these sharp moves take place in the price.

How do you manage your stop-loss level? Let us know in the comments section below.

You can download Stock Arbitrage Trader for your iPhone and iPad via the iTunes App Store.

If you liked this post you might also be interested in the following posts:

8 Principles to Follow for Successful Trading

How to Analyze a Stock

Psychological Factors Affecting Short Term Stock Trading Part 1 and Part 2

 

Coming Soon: Stocks Pro for the iPhone

This message is just an FYI to all of our customers and followers. We’re currently working very hard on an update for our incredibly powerful stock market app, Stocks Pro, that will make the app available on the iPhone as well. This would bring real-time charts, streaming stock quotes, automatic fibonacci retracement line recognition technology, stock-specific news, a watchlist that syncs with other missingSTEP apps, and market news & momentum information all to your iPhone®. To learn more about Stocks Pro read our introduction post and watch our iPad app walkthrough.

Download Stocks Pro now via the iTunes App Store.

Stocks Pro for the iPhone Home Screen showing Fibonacci Line Indicators for popular stocks such as AAPL and AMZN

Stocks within 0.5% of a Fibonacci Line

Stocks Pro is a powerful tool for your mobile device that automatically recognizes fibonacci retracement lines in real-time. The gallery below contains 5 stocks (APC, ABC, ADBE, ADI, AMAT) that are within 0.5% of a fibonacci line.

You can download Stocks Pro for the iTunes App Store.

Click a thumbnail for full-size charts:

 

Arbitrage Trader Note: Reiterate Buy S&P500 08/01/2012

RIDE LIKE THE WIND: REITERATING BUY FOR S&P500

As our clients have followed, on July 22nd, we signaled “buy” for the generic market when S&P500 index was trading at 1,339s. On July 25th, we also wrote that the upward trend may continue until August 2nd for which date our market model algorithm had indicated a sell-off. Parallel to our expectations, the market moved to 1,380, briefly hitting the key resistance level at 1,390. Now, however, our arbitrage model signals a continued upward trend for at least the coming 2-week period:

  • Statistical arbitrage continues to recommend “buy”. Our market model algorithm continues to indicate upwards move in the market direction for the coming at least 10 trading days. According to our models, there is about 77% probability of further upside movement.
  • Technically, we now see a potential re-test of the 2012-high, which was 1,422 for S&P500. This time we may actually see the break of this key level. For aggressive traders, our stop-loss level continues to be at 1,330.
  • FED & ECB? While the markets do not expect much surprise from the FED today, we think that we may see developments that were not priced in yet. Furthermore, the ECB’s move (especially after Mario Draghi’s speech last week) tomorrow will also play critical role in the overall market direction.

In short, we reiterate our bullish view on the generic market for the coming 2-weeks.

For instant access to the Arbitrage Model Short-Term Forecast check the MarketPulse screen of our apps or download one of our popular iPad/iPhone apps directly from the iTunes AppStore: Stock Arbitrage Trader, Daily Stocks, and Stock Signals.

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