Stuck in Zeno's Paradox

Suppose that a monkey wants to cross to the far wall of a room that is 20-ft across. First, he crosses half of the distance to reach the 10-ft mark, Next he crosses halfway across the remaining 10 ft to arrive at the 5-ft mark. Dividing the distance in half again, he crosses to the 2.5-ft mark, and continues to cross the room in this way, dividing each distance in half and crossing to that point. Because each of the increasingly smaller distances must be divided in half, he must reach an infinite number of "midpoints" in a finite amount of time, and will never reach the wall. Welcome to Zeno's Paradox.

I tried this the other day going from here to that ant hill on the far side of the jungle. I didn't make it but I came real close... 10 feet, 5 feet, 2.5 feet, 1.25 feet, .625 feet, 7.5 toes, 3.25 toes, 1.62 toes, 0.8 toes, 0.4 toes. It doesn't seem to end! Zeno must have been a real joker in his day.

The only reason I brought this up is because of this "IF-THEN" list I created today while running through a bunch of different versions of this new market direction indicator, or as I like to say, "the Mother of all trading systems. Or is that the Monkey of all trading systems?

Anyway, the major hurdle is determining an upcoming trending market and an upcoming oscillating market and applying the correct "tools" for each scenario. Since I am currently using six 'tools' for each of the four different types of market volatility represented by the letters A, B, C, D, the plan of action looks like this:

IF "A", THEN 1,2,3
IF "B", THEN 1,3 (or maybe 1,5...I'm not sure yet)
IF "C", THEN 4,5
IF "D", THEN 4,5 (for trade x); 6 (for trade y)
The "x" and "y" represent QID and QLD respectively.

Turns out that simple oscillating and trending categories gave birth to a couple of major and minor volatility subtypes. ....Zeno's Paradox illustrated yet again.


Let the 200 day Moving Average Be Your Guide? Think Again.

Sometimes all this research sort of makes me want to trade using just a price chart and the 200 day moving average. Actually the results for trading the QLD and QID using only price above and below the 200 day average is much worse than I thought.

Glancing at the chart, it didn't look so bad, but the only hope for a lazy monkey's system like that would be for the market to behave in an orderly manner, and according to the results below...well, see for yourself.

2003 +48.8%... awesome
2004 -25.0%...no real surprise. The market was as flat as a pizza pie, and only
CVS was makin' any 'coin' that year.
2005 -22.8%...a continuation of the trendless 2004.
2006-2007...+6.6%...that's a long wait for a single digit gain.
2008 -3.8%...proof that a 200 day moving average cannot be used alone.
2009 +42.6...little in the way of direction changes or volatility for that matter.
2010 -28.2% currently...more dreaded volatility (200MA kryptonite) after fat finger Thursday.

These results are based on total trades opened for each year, and the results are listed for the year that they were opened regardless of a multi-year trend such as the 2006-2008 trade. Also, I added five days after the signal to help eliminate multiple false signals.

That was an exercise in proving the obvious even though I thought the results would be better. It was also an attempt to create a benchmark for the new Cheetum Market Indicator. I'll stick to something else like the results from Crystal Bull. I don't know what these guys do exactly, but the results are impressive...if they are real. That's not a criticism, but there's no transparency without whippin' out your Mastercard. Their indicator dashboard is really cool though.

New CMI...done yet?

At some point, sooner rather than later, I will eventually take the final step and call it close enough provided that the ten year back test looks and feels like I reached the "anthill". Zeno wins again. In the meantime, it looks like December might prove a little turbulent for the ever-morphing CMI. Buckle your seatbelt.