2010 Aug 21 - Sat
The Once Very Valuable ARMS indicator
In 1989, Richard W. ARms, Jr. wrote a book called The ARMS Index (TRIN).
In a nutshell, it makes use of various ratios of number of advancing and the number of
declining issues. In some cases, it can (or could) be used as a leading indicator of
equity market activity.
Oakshire Investment Research's Bourbon and Bayonets newsletter suggested that
this may now need to be take with a grain of salt:
It could well be that the 'Hindenberg Omen' is a helpful indicator for those who compute it on a regular basis, but for our part, there are problems associated with it that make it vulnerable to an excessive number of false positives.
It's the same issue, in fact, that plagues the once very valuable ARMS indicator, and some of the McLellan indicators, both of which are reliant on a daily reading of advancing and declining issues in the market.
The problem is this: these systems were designed to work by making a computation of all the market's common stocks, but today there are so many securities that are anything but common stocks that are dressed up and packaged as such . and they comprise an ever increasing number of the total issues trading on exchanges today. That includes bond and money market ETFs, Closed End Funds (CEFs), sector ETFs and preferred shares, not to mention all the reverse ETFs and other derivative products masquerading as common stock.
So to maintain some semblance of usefulness, the calculations will need to be refactored:
In short, both high/low numbers and advance/decline figures are not what they used to be. Certainly, for those who are able to strip out the superfluous aspects and compute the indicators on the basis of common stocks alone, there's something valuable to be had. Otherwise, we wouldn't trust the data as a stand alone indicator.
2010 Aug 18 - Wed
Cygwin, Eclipse and Subversion Installation Notes
I have written several articles about Eclipse (the code editing UI) and it's
integration with subversion. This is an update of a few things to watch out for
with Eclipse, the Helios release. I do development on Linux as well as on Windows. In
this case my primary machine is a Windows machine running VMWare with several
guest Linux systems.
For the Linux systems with a GUI, I've used Cygwin to provide a mechanism of running the
Linux interfaces on my Windows interface. I have tried the VMWare Unity mechanism, but
on my multi-monitor system, it appears clunky and buggy.
When installing Cygwin, the key library to install is the 'xinit' library. This loads
all other necessary X11 libraries. Also include mintty in the Shells category for an
improved console experience.
As a side note for regular terminal operations in Cygwin, the following can be used with
mintty. Start 'ssh-agent mintty'.
mintty is explained at
http://code.google.com/p/mintty/.
Then use ssh-add to add a private key. The public key can be added to the ~/.ssh/authorized_key
files on the destination machines.
Anyway, for getting the GUI experience, use startxwin to start an xwindow terminal window.
Connect to the destination computer with 'ssh -l username -Y ipaddress'. At that point,
I run eclipse with '/usr/sbin/eclip[se/eclipse &'. The '&' forks the process and allows further
operations in the terminal window.
I've got ahead of myself here. To get eclipse installed, I downloaded the binaries from
eclipse.org, expanded them to a directory called eclipse. I then moved the directory to
/usr/sbin. Eclipse can then be started with '/usr/sbin/eclipse/eclipse'.
For version control, the Polaris subversion client is listed as a standard item
in the Collaboration items in the Eclipse New Software. After trying that, I wasn't very
pleased with the experience. It is not well integrated.
Instead, I removed the Polaris Subversive client and installed the Tigris.org
Subclipose Client.
The integration into Eclipse is much better. I used the SVNKit (Pure Java) connector
so as to obtain the svn+ssh://... tunnelling capability with a private key based login.
2010 Jul 18 - Sun
Gold Manipulation, Deficits, Money Theory
Gold Manipulation
I've been accumulating a number of open browser windows, and need to get them closed.
The only way I can close them is to write about them. So here is a mish mash of things
I've collected.
The first collection looks at gold price manipulation. Many commentaters are saying
that gold is a safe investment for protection against today's faltering fiat money systems.
They are also saying that gold could reach highs of $1500, $2000, or even $7000.
Various conspiracy theories are indicating that JP MOrgan is acting on Government orders to
keep the price of Gold and Silver down. This could be one indication of why the price of
gold has been trading sideways for the last fews months in direct defiance of all the
money being thrown gold's way through direct investment, futures, and ETFs.
ZeroHedge has a
lateral reference to market manipulation via an article on the current Coco futures market sqeeze.
To profit from the market's manipulation of the gold market, some people have put together intraday average price
charts which show some interesting entry and exit times.
In any case, it could be said that the bullion banks are
manipulating the market technicals
in order to obtain a market correction for getting rid of their disportionate
shorts in the futures markets. The Market
Oracle thinks
that gold is going down, lots due to
a broken wedge formation.
If gold is indeed going down, bullion bank's shorts could be cleared, and this could represent a buying opportunity
for gold. It is unclear how far the correction could go. But in any case, most places I read indicate that getting
into gold is a good thing. And to keep it for a while. Possibly a long while, as described by
Dylan Grice Discusses When To Take Profits On Gold: Hint - Not For A Long While.
Even while gold is undergoing some weakness, the
Wall St. Cheat Sheet
figures that it has considerable upwards strength. Once the manipulation is taken away, the price of gold could quickly get out of hand.
Market Leading Indicator
ETF Daily News offers a possible leading indicator:
Watch The 20+ Yr Treasury Bond ETF For Clues To Likely Stock Reversals? (TLT, SPY, IEF).
Hauser's Law
The government, any government, has an insatiable hunger for more and more money. On the US side of things,
there is talk of instituting a value added tax (VAT). Will it do any good?
According to an article written by David Ranson called
The Revenue Limits of Tax and Spend,
there appears to be a limit to how much tax a government can collect through it's various mechanisms.
Hauser's Law indicates that Federal tax receipts will always fall short of 20% of GDP. So...
if the government ever became efficient, they would use the opportunity to close out other departments where
taxes collected decrease.
The Canadian Government instituted their GST, which is a form of production pipeline tax. Both the
GST and VAT could be seen as a form of consumption tax. If you don't consume anything, you don't pay taxes. I
suppose that could be seen as the best of a bad situation.
Spending
As governments spend and spend like there is no tomorrow, they create larger and larger deficits. Deficits
can be covered by printing more and more money. Because there is no physical basis on which money resides,
it is called a fiat money. That is, governments can simply pay for things with money
it prints electronically out of thing air. Because gold
is a physical quantity, and can be traded, it's value should rise with the inflation of fiat money. But the
markets are appearing to be manipulated. Big Money is holding things back. By inflating away the value of fiat
money, governments have a slim chance of making good on the money they've spent. But with today's economy
as slow as it is, some are warning we could go into a deflationary phase. Governments don't like that, as
it makes it hard to cover their debts.
On the US side of things, it is said that
The American Dream Is Quickly Becoming The American Nightmare. It is hard to cut back
when so many expect so much for so little.
Keynesians would like to spend more and more to get out of the economic malaize currently existing. But that
just doesn't make sense anymore. The tipping point has probably been reached. It would appear that
even if there were to be a recovery, the recovery wouldn't be substantial enough to pay back even a small
percentage of what is owed.
The blog Credit Writedowns has an article which provides some insight into
Misunderstanding Modern Monetary Theory.
For a background on hyperinflation, Dylan Grice writes on
Popular Delusions, Some useful things I've learned about Germany's hyperinflation.
2010 Jun 27 - Sun
The Reformed Broker
Joshua Brown, writes as the
The Reformed Broker. He has a number
of interesting entries:
- The Periodic Table of Finance Bloggers, which is a list
of blogs defined by categories such as Rocket Science, Rogues Gallery,
The Establishment, Stock Operators, Peanut Gallery, and Baby Buffets.
Econ Gangs of New York: "The factions that are shaping the economic dialog these days are becoming every bit as colorful and distinct as the proto-gangs that once ruled New York's notorious Five Points area. Their leaders, every bit as bellicose and recognizable."
2010 Jun 12 - Sat
Real Time Black Holing (RTBH)
Here are some notes to self regarding real time blackholing configurations for dropping / analyzing
packets that 'do not belong'.
From the c-nsp list, RTBH commonly used next hops are RFC based Test Networks:
- IPv4 RFC3330 192.0.2.0/24
- IPv6 RFC5156 2001:db8::/32
2010 May 27 - Thu
Oil Farming
It is only on rare occasions where one can obtain an elegant solution having positive ramifications for
two differing economic sectors simultaneously.
These two guys are offering up an eco-friendly solution for
squeezing oil out of water.
Naked Market Orders and the Market Meltdown
At Security Industry News, Tom Steinert-Threlkeld
suggests that naked market orders helped escalate the 'flash crash' and subsequent recovery on May 6. I gather the
market-makers, who provide liquidity through limit orders couldn't handle the deluge. And I think that we still don't know
what the hair trigger was that set off the deluge of sell orders.
I learned a new lesson today. The best way of submitting market orders, in order to get the trade, is to use limit orders to create
'collars' around the price of a stock to reduce risks in trades. To go along with this, use algorithms that expressly include risk controls.
Speculation is that the naked market orders were used by the less experienced: some smaller high-frequency traders and some semi-
professional traders.
2010 May 26 - Wed
Germany / Russia Working Together
I wanted to record this little snippet for something to check back on during some point in the
future.
One writer is indicating that Germany is the real economic power in the European Union. Should the
European Union break apart or evolve/devolve into something else, Germany can't go it alone. I have to
take that assertion with a certain grain of salt, but perhaps the next idea fits in.
It is said that Germany's strength is it's manufacturing and export ability. Germany also has a
decreasing population. A logical partner might be France, but they are typically highly competitive
with each other, rather than cooperative with each other.
On the other hand, Russia has a large population with nothing much to do. Rather than being an
exporter of raw materials, Germany could partner with Russia for manufacturing. Rather than
increasing immigration towards Germany, which is something Germany does not want, they would
send manufacturing to Russia.
In summary, it would be of interest to see how the European Union reorganizes around a
possible Germany - Russion alliance.
Value Investing
When it comes time start living off dividends, it will be good to have some good value equities in the
portfolio. These equities generate good dividends year and year out.
Good candidates for these types of equities are companies which are what one writer calls
'World Dominators'. These are companies which dominate their industries globally, each is
Number One in its industry. They earn consistent high returns on their capital, and generate
excellent cash flows year after year, through thick and thin. It is said there is one company which
has raised its dividend every year for 54 years, another every year for 36 years.
With the market reaching a low, it might be good to pick up some of these companies. Some
are indicated to be trading at less than 10 times free cash flow.
I think I'll generate a query through my DTN IQ live feed and look at the dividend fields and income fields
to see what I can see.
As one example, one writer is suggesting NLY as a buy. It's chart may be reaching a bottom. I don't know if
it satisfy the other criteria mentioned above, but I'm recording for posterity. It's close today is $16.40.
2010 May 25 - Tue
C++ Curiously Recurring Template Pattern
Through the years of maturing in software development, I have migrated through a
series of technologies to solve various programming problems.
During the initial stages of my C++ usage, I used the tried and true run-time dynamic
polymorphism, mostly known as virtual methods through class inheritance. To answer the question of
when to use virtual destructors, Herb Sutter has an excellent article called
Virtuality.
For more virtual destructor information, Item 33 in Scott Meyer's More Effective C++ is helpful.
Inheritance - virtual Functions FAQ has more useful information.
Class inheritance and virtual functions closely couple classes. I wanted start some
decoupling, and do some event based coupling through C#-like events/delegates.
C++ doesn't have a similar concept built-in, but there are various libraries available
while supply a similar concept: Boost's slot/signal system, or the one I ended up using:
FastDelegates.
FastDelegates are supposed to be fast. And they do work well.
As I do some work on the Windows platform, I had been using the MFC classes for some GUI work.
As I got more into multi-threaded designs, MFC started to show it's significant short-comings
related to modular and mult-threaded designs. I came across the Windows Template Library (WTL)
as a nice, fast, light-weight windowing library.
The WTL introduced to me the concept of the Curiously Recurring Template Pattern (CRTP). WTL and
ATL make significant use of the CRTP pattern. A good introduction can be found at Wikipedia's entry for
Curiously Recurring Template Pattern.
CRTP has brought me back tight-coupling of classes, but as a consequence, it offers up the ability to
integrate a number of concepts together: slot/signals aka delegates, maintenance of strong typing,
simulated dynamic binding aka static polymorphism, and fast execution.
The close-at-hand references don't mention one other refinement (I wish I could find the
original source of this trick), and that is one of conditional static polymorphism. There is a way
to conditionally make the polymorphism call: if the derived class doesn't over-ride a method,
the calling code doesn't get compiled, it gets optimized away.
For example:
template <typename T>
class base {
void implementation( void ) {};
void interface( void ) {
if ( &base<T>::implementation != &T::implementation ) {
static_cast<T*>( this )->implementation();
}
}
};
class derived1: public base<derived> {
};
class derived2: public base<derived> {
void implementation( void ) {};
};
In this example of the CRTP, the base class has a default implementation of the interface.
In class derived1, as there is no implementation defined, no implementation gets called. In
class derived2, where there is an implementation defined, it is called.
2010 Apr 23 - Fri
Common Representation of IPv6 Address Text Representation
Most everyone knows how to write an IPv4 ip address, and is easy and simple to understand.
As the world migrates to a new internet addressing system, which is known as IPv6, writing
out the address becomes difficult. The difficulty is that there are multiple ways of
writing an IPv6 address. As a consequence, when people need to perform text searches,
no matches may result because the way in which it was searched doesn't match the way in
which it was written.
A new document has been authored entitled
A Recommendation for IPv6 Address Text Representation which helps to standardize the process of writing
an IPv6 address.
In a nutshell, the recommendation is:
- Leading zeros MUST be suppressed. For example 2001:0db8::0001 is not
acceptable and must be represented as 2001:db8::1. A single 16 bit
0000 field MUST be represented as 0.
- The use of symbol "::" MUST be used to its maximum capability. For
example, 2001:db8::0:1 is not acceptable, because the symbol "::"
could have been used to produce a shorter representation 2001:db8::1.
- The symbol "::" MUST NOT be used to shorten just one 16 bit 0 field.
For example, the representation 2001:db8:0:1:1:1:1:1 is correct, but
2001:db8::1:1:1:1:1 is not correct.
- When there is an alternative choice in the placement of a "::", the
longest run of consecutive 16 bit 0 fields MUST be shortened (i.e.
the sequence with three consecutive zero fields is shortened in 2001:
0:0:1:0:0:0:1). When the length of the consecutive 16 bit 0 fields
are equal (i.e. 2001:db8:0:0:1:0:0:1), the first sequence of zero
bits MUST be shortened. For example 2001:db8::1:0:0:1 is correct
representation.
- The characters "a", "b", "c", "d", "e", "f" in an IPv6 address MUST
be represented in lower case.
- When writing port numbers with an IPv6 address, the [] style as expressed in [RFC3986] SHOULD be employed, and is the
default unless otherwise specified -- [2001:db8::1]:80
Borrowing Money to make Money, Taxpayer Pays the Interest
Eric Fry, in teh Daily Reckoning, provides an interesting insight into the profitability of today's banking sector:
When it converted into a bank holding company back in 2008, Goldman became eligible to borrow
cheap money from the Fed's discount window. Morgan Stanley did the same thing. As a result, Goldman,
Morgan Stanley et al. may borrow billions of dollars from the Federal Reserve and use the
proceeds to purchase higher-yielding government securities of longer duration.
In other words, Goldman may borrow from the government at 0.75%, then loan the money back to the
government at 3% or 4%. All in a day's "trading." Not surprisingly, all the major financial
firms have been reporting blockbuster profits. Yesterday, for example, Morgan Stanley
wowed the Street by nearly doubling its expected earnings result. Bond trading provided most of t
he juice, as Morgan's fixed-income revenue more than doubled from the prior year's first quarter.
Prior to Morgan Stanley's results, Bank of America, JP Morgan Chase and, yes, Goldman Sachs, h
ad all reported record quarterly revenue from fixed-income trading. On the surface,
these monster profits would seem like good news. But this silver cloud contains a very dark
lining: without the Fed's low-cost financing, fixed-income profits will be much harder to come by.
|
