----- Original Message -----
From: Greg Simmons
To: '*G SIMMONS'
Sent: Thursday, August 25, 2005 10:09 PM
Subject: Market Update" Aug 25 2005 + past info on Fannie Mae from Jan '05
August 25 2005
The SPX closed up 2.78 @ 1212.37
The VIX closed down .44 @ 13.73
Not exactly a big bounce today, but the selling stopped in face of >$68 crude + lots of other worrisome events…
The HGX or the housing sector in general has been taking a little hit (RBC is issuing bonds that instead of paying interest, take advantage of the % down move in price in the housing sector or the HGX index + there has been talk of issuing a "futures contract" re: housing also) and Wallstreet will create many new products (usually total impossible to understand derivatives) for the public to gamble on the direction or supposedly hedge their positions in real estate.
I (in my previously bearish "non-system" trading mode of the past - - keep in mind it was only the beginning of this calendar year) wrote the below regards my concerns regards Fannie mae + other market worries from Greenspan's irresponsibility in printing fake money, fake earnings, interest rates, the dollar etc. and my "call" (granted right on Fannie mae stock down around $18 points close to 30% so far), was pretty wrong on it's effect to housing and the markets - - we are almost exactly unchanged for the whole year ... SPX started at 1211 and is at 1212 !!!
* if the re-read from January '05 bores you more than necessary please scroll to bottom because I have some other information after:
I maintain NOW that over many years (close to 20) of watching and trading the markets (good times and bad, being very right and very wrong) that nothing but price matters … price is all that matters period!!!
The system which I am using which is PURE math based and has better performance (see attached numbers again) has zero to do anything but "price action" (the computer doesn't use in the model what's happening with the weather down south or outsourcing jobs to other countries or whether the people running the country are starting wars or if Fannie Mae could be the biggest corporate failure in history with 80 times leverage etc.) is still suggesting that higher prices are still more likely at the moment (keep in mind we are not dropping on any of this horrible news!!!) than lower, so I will follow the math till the odds shift to the downside providing a higher probability of price action in that direction.
This summer's extra choppy/trend less action, as you can see from the performance chart, doesn't make for too easy trading, but the beauty of "system trading" is the end result of a "robust" system.
One other thing I will mention regards the system is it's job is to ,get in the way of REAL moves ,of which there hasn’t been much of during the last two years and the performance is still great!
Give us a market like the 80s or 90s and it will be almost too easy + it is not the systems job to buy low and sell high - - it's job is to buy high and sell higher and sell low and buy back lower = there is no system that can pick exact top or bottoms over any meaning period yet alone back test over even longer timeframes (be "robust") as this one does.