VOLATILITY REVERSAL

A BULLISH VARIATION

IYR UPDATES

I THINK FIBONACCI HAS SOMETHING TO SAY

MOOD SHIFT

 

Just a note to myself, I have been in a particularly GRUMPY mood the last 15 hours. It is one of those bad moods for no reason.

As a personal insight I often get these moods when there is a big reversal about to take place in the markets. It doesn’t always mean that it is a reversal in my favour

But often times the market is about to track a new course.

 

MOOD SHIFT

Just a note to myself, I have been in a particularly GRUMPY mood the last 15 hours. It is one of those bad moods for no reason.

As a personal insight I often get these moods when there is a big reversal about to take place in the markets. It doesn’t always mean that it is a reversal in my favour

But often times the market is about to track a new course.

 

DUBAI FORECLOSURE

Something that caught my eye today is a report about the poor state of the housing market in Dubai, values are down more than 50% since last year. People have just been walking away from their mortgage obligations, and until a landmark case recently won by Barclays nobody was showing any foreclosures on their books. Well things are changing now.

 

 

THE NATIVES ARE GETTING RESTLESS

It may just be my bias’ speaking but I pickup in the media that there is growing hostility towards government, big shot bankers, and heaps of other people in seemingly powerful positions.

I sense there is a shift in mood transferring and the canary in the coal mine is the build up of hostility.

AGENT BASED MODELLING & CIRCUITIST THEORY

This is a note to myself.

 

I have gone to great lengths to prove to myself and others that the ability to forecast the market is impossible, at least to any high degree of probability yet I spend inordinate amounts of time seeking a model that puts things nicely into place.

There is no doubt it is the need within me that is seeking an answer to something I know only too well is unknowable, so I decided to be a little indulgent, perhaps it will serve me better to understand the enemy camp a little better.

 

Today was a left brain focused day, where I spent most of it researching Agent Based Modelling & Circuitist Theory.

 

The concept of Agent Based Modelling is appealing to me for a number of reasons. In essence a couple of days ago whilst studying the subject I came across a simulator model that is able to simulate an artificial stock market. The appeal to me is that if one has a really good simulator then one can firstly test some of the models we have been working on, the second appeal is that perhaps then I can forecast the markets (hmmmn what is with me on this subject). To end this section off, I have sifted through heaps of programmes and come across one that I will spend some time working with, it has built in evolutionary and social dynamic models, such like modelling how birds flock, or how rumours are spread, and 100’s more. I guess in a nutshell alot of the behind the scenes thinking in these models is game theory or genetic algorithm based.

 

Circuitist Theory is based on a closed circuit monetary economic model. Such that you break down an economy into a skeleton of variables, and then observe the behaviour of the circuit based on the actions of the agents within the model. As we know the market is not made of supremely rational agents however they do equilibriate to a point. Steve Keen an Aussie Economic Professor is one of the leaders in this field and who writings led me down this path. I find this extremely interesting and I do believe quite logical. It by no means predicts the markets behaviour but can certainly provide a probable string of events based on certain conditions.

 

SO CLOSE

It feels like we are so close to some real interesting market action.

It sure feels like the market wants to punish itself, as no matter how bleak certain macro factors present themselves, Mr Market wishes to choose a positive spin and hence up it climbs.

This cannot go on for much longer as the market internals just do not have enough momentum to drive things up more.

 

I sense the many hours of worry and lack of sleep are about to be rewarded.