Kudos to MMs

Quote from kinggyppo:

when you say edge, does that mean a discount based on your fair value estimate? I see this word thrown around alot thanks.:)
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Right.

It is real simple. Take the value of SPX. Subtract it from the value of "FV". If the number is negative, we have long edge, if the number is positive, we have short edge.

So for example. SPX is about 794. "FV" for now [it rarely changes intraday] is 825. 794 - 825 = -31. That means we have edge to go long. The more negative it is, the more edge we have to go long. You have to decide what your preferences are in regards to how far away from "FV" we are to pull the trigger, or add to a position, and then when we snap back, where to take profits. Finally, you have to decide on what portion of your account you are willing to allocate to the initial trades and adds. That would then constitute a complete system.
 
Quote from nitro:

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I think they are wrong, but these guys put a shit load of money where their mouth is, and all I am doing is analyzing. You decide who is likely right.
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The paper that bought these puts is up millions of dollars in three days. GM getting clobbered again.

I was wrong.
 
"FV" ~825. SIFs selling off pre-market. As stated above, we want to keep an eye on 781 SPX support. If that goes, 750 is a primary target, then 741.

Once again, oil futures rocking pre-market. Like clockwork.
 
Quote from nitro:

It is real simple.
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As a summary, it can not be used for trading, because the market can stay out of sync of the FV longer than you can stay solvent. A good example is Febr-March of this journal when the market had been -50 or more for days/weeks and anyone going long got his ass handled to him....

Correct me if I am wrong....

Quote from nitro on 2/20:

I estimate ES is trading 65 handles below "FV".
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Quote from Pekelo:

As a summary, it can not be used for trading, because the market can stay out of sync of the FV longer than you can stay solvent. A good example is Febr-March of this journal when the market had been -50 or more for weeks and anyone going long got his ass handled to him....

Correct me if I am wrong....
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You are not incorrect, but you are being far too harsh. That time frame would have proved very difficult. We got -170 !!! below "FV".

You should note that along the "FV" numbers, I also sprinkle S/R levels here and there. The way I trade this system isn't' blindly to go into a position just because "FV" vs SPX is this or that number. I use S/R and simple common sense to know when taking a signal is likely to result in strong momentum against me. For example, in a previous page, I said that "FV" was way out of whack, but in addition I pointed out that you don't buy new bear market lows, no matter what "FV" says.

I am a big believer in confluence of signals.
 
"FV" ~840. SPX resistance as stated in recent page 838 - 842, straddling "FV". Then minimal resistance at 850.

Oil futures rocking once again pre-market.
 
As of this witting, everything is identical to the way it was when the market closed yesterday. "FV" ~840, therefore zero edge to either side, mathematically at least. After the employment figures come out, things could change drastically though.

Heh, oil futures tame this morning.
 
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