12/06/2011 Trading Signals


The bottom line, everything went exactly as planned (Evil laugh here again, hai-hai-hai-hai), but please remember officially now the trend is still up, so don’t front run unless you know what you’re doing. If you’re not experienced enough, a simple way of reading my daily report is to try your best not to trade against the Cobra Impulse System which is now in buy mode, or at least take a look at the daily Portfolio Update to see whether the system is long or short Russell 2000. These 2 systems, although cannot give you the best entry, however as your direction guide, they’d keep you on the right direction the most time.

Bearish biased toward tomorrow, because VIX and SPX both up for 2 days in a row, short at close today and cover at close tomorrow, you’d have 80% chances since the last 2,000 trading days.


11 Comments on "12/06/2011 Trading Signals"
  1. Comment left on:
    December 6, 2011 at 5:28 pm
    Anonymous says:


    Thanks again for the signals!

    I have a question not directly related to the trading signals, but related to how to set stop loss in the short term model. Do you use ATR on the 15m or 60m or daily chart to compute the stop loss or there is something else?

    • Comment left on:
      December 6, 2011 at 7:02 pm
      Cobra says:

      Short-term model use daily ATR(10)*2 as stop loss but can be adjusted depends on the current swing highs/lows.

  2. Comment left on:
    December 6, 2011 at 5:59 pm
    Anonymous says:

    Uempel made a very informative post regarding mechanical systems in yesterday’s Trading Signals section.  I responded with a question for him and for Cobra.  I fear that my question may have gotten lost in the pre-market excitement, so I’m reproducting it here:

    Uempel, your friend’s observations about mechanical systems are interesting.  However, I wonder if it depends on what kinds of systems your friend was studying.  Most systems that fail are based on indicators (moving averages, stochastic readings, etc.).  But mechanical systems can be based on other criteria, and I believe that the Impulse system is among these.Cobra’s Impulse system has been backtested over many market cycles (over twenty years, if I remember).  Surely, in twenty years, most kinds of patterns have emerged.  There are, of course, “asteroids,” but, by definition, they would be short lived aberrations that would, in addition to nullifying mechanical systems, also wreak havoc with technical analysis in general.  And, if asteroids knock the cycles into different patterns, I imagine that over a twenty year period that would have happened multiple times and the Impulse System would have stopped working. And yet, it hasn’t.I’m well aware that systems that have been optimized for a short period of time will invariably fail.  But if a system has been backtested for over two decades, through an array of market cycles, shouldn’t it be more robust than that?I’d love to know what you think abou this, uempel. And, of course, I’d appreciate Cobra’s take on it as well.Edit

    • Comment left on:
      December 6, 2011 at 9:51 pm
      Cobra says:

      My system is not based on indicator and not optimized a lot to achieve a good back test results, so I’m confident it’d work for a long time. That said, I’m still watching the model and continue to find way to improve it. So what Uempel said are not totally wrong. A good mechanical system like a good car, although runs fine the most of the time but you need maintain it properly.

      • Comment left on:
        December 6, 2011 at 10:20 pm
        Anonymous says:

        Thanks, Cobra.

    • Comment left on:
      December 7, 2011 at 1:55 am
      uempel says:

      Algyros, every process is evolutionary, means that every mechanical system is bound to fail if it remains unaltered. No exception. These facts are mathematical/physical and they cover much more than price development of bonds/stocks/indices. 

      A different approach would be Charles Darwin. His thinking applies to market patterns too. And should you mull over Darwin for a long time you’ll find yourself back in math…If you watch market movements very closely you’ll see that patterns/games change from hour to hour, day to day. Why? Traders/algos notice a pattern and try to exploit it until it loses it’s rhythm. Happens all the time, in every time frame.

      Take the 2008 pattern. Until very recently FTSE 100 followed the 2008 pattern like a shadow, nearly tick by tick! First signs of slight discrepancy were visible a few weeks ago, and now it has detached completely. Too many guys were making money, it had to change.

      And you might have read “Way of the Turtle” by Curtis M. Faith. Those plays worked just fine 30 years ago, today they are back to 50/50.

      Pension plans in the US and Europe: they are all based on mechanical systems which are failing. Why? – because systems are based on last 100 years of western economical development and failed to factor in that this trend might come to an end. Worst mechanical system ever – or at least since the construction of the Pyramids of Giza (picture shows top of Chephren and close up of Cheops)

      Last but not least: note that I’m not writing about Cobra’s systems here, because he is constantly upgrading them. And if he ceases to upgrade them…

    • Comment left on:
      December 7, 2011 at 7:58 am
      Anonymous says:

      Thanks for your answer too, Uempel.  

      What you say is compelling.  The only thing that bothers me is that “upgrading” can also mean “curve-fitting.”  Do you think that there’s a way to do one without actually doing the other.

  3. Comment left on:
    December 6, 2011 at 6:06 pm
    Anonymous says:

    thx, ding

  4. Comment left on:
    December 6, 2011 at 7:39 pm
    Anonymous says:


    CPCE seems to have maintained it’s upward trajectory and has remained above the trend line it broke yesterday.


    If I haven’t said it enough, thanks for all the nightly work you do for us.

    • Comment left on:
      December 6, 2011 at 9:48 pm
      Cobra says:

      Yes, it’s possible what we have is just a consolidation before breakout and this is why I said no front run because to guess a top on an uptrend isn’t easy.

  5. .
    December 6, 2011 at 8:49 pm

    […] today, except that both VIX and SPX up on the same day for 2 days in a row mentioned in today’s Trading Signals, the ISEE Indices & ETFs Only >= 100 certainly isn’t a good sign for bulls as […]

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