Ure is in a sour mood this morning. No, not your fault. Mine. Because I don’t administer an IQ test before letting people read this site.
It began with a piss-ant troll commenting that “You were wrong” in yesterdays pre-opening comment.
WTF kind of loser would write that? Sure, the Dow only went up about 20 points early, but the NASDAQ and the S&P (2,475.25 intraday) hit records. Record highs beget profit taking, but so what?? The run’s not over, as we see it.
Sadly, this person needs to GTFU and get some skin in the game. Obviously not a serious investor. By the close of the market Thursday, one of my trading accounts was down $71. I have spilled that much (back in the day).
And yes, markets will go down again this morning. So what?
I’m not going to brag about how well I’ve done since the market lows in November – when our model correctly called a long entry – but we have lots of Peoplenomics subscribers up 30-40 percent in the period.
So a pleasant “If you don’t like our take on economics, don’t let the door slap your ass on the way out…”
Anyone who doesn’t understand that on a trading account you will have big up days (like +$800) and you will have some down days (like -$71 Thursday) needs to a) read some books, b) learn something about trading, and so forth.
This commenter has been banished from further remarks because we don’t tolerate bullshit or fools – or, in this case – the worst of both.
Decoherence and Markets
What is “decoherence?”
In quantum physics it is (write this down) the “resolution of superposition.”
Which relates to markets how?
We went in to the week knowing that we would likely be UP for the week. But we didn’t know how much.
Why? This is options expiration, of course! Indexes expired last night and the underlying’s come off today. Any trading difference can land in the pockets of the pros.
Now, I can tell you our latest estimates of how high (and how soon) specific indices will go, but in a sour mood (because of the aforementioned dumb-shit) I’m keeping that for subscribers.
We use a proprietary technology to look at markets. Last Thursday our U.S. Aggregate reading closed at 20,055.013. As of the market close yesterday, we were at 20,273.881. That is an 1.09133% gain in a week.
Now, if you have a modest trading account, with say $25,000, your account value would likely be up $272 and change for the week. No counting allowance for income tax, exchange fees, commish and yada yada… But of course, no one will be exactly on the money.
That’s because of “trading noise.” Sure, some will have done better, others will have done worse. All depends on how you decided to play the trend. If you played the Dow ETFs, maybe a bit worse. Or in the Q’s? Maybe better.
Markets are all linked. But each specific market is subject to a “decoherence pop” where potential targets ‘lock’ due to noisy trading conditions.
For example: While Bitcoins last week were in the gutter, we’re pleased to report BIC’s are fetching $2,764 now. And, in my view, could set new highs in the coming month as the markets are due to roll up higher. How do you say Mood Swing?
You see: Everything runs (to some extent) in lockstep. When there is an ebullient social mood, all assets rise. When the mood shifts (as we expect it to this fall) we will expect to see ALL assets fall.
But they won’t fall in perfect lockstep – because of decoherence. If you want to understand how trading works in the real world, read this whole bit from Wikipedia and learn:
“Quantum decoherence is the loss of quantum coherence. In quantum mechanics, particles such as electrons behave like waves and are described by a wavefunction. These waves can interfere, leading to the peculiar behaviour of quantum particles. As long as there exists a definite phase relation between different states, the system is said to be coherent. This coherence is a fundamental property of quantum mechanics, and is necessary for the functioning of quantum computers. However, when a quantum system is not perfectly isolated, but in contact with its surroundings, the coherence decays with time, a process called quantum decoherence. As a result of this process, the quantum behaviour is lost. Decoherence was first introduced in 1970 by the German physicist H. Dieter Zeh and has been a subject of active research since the 1980s.
Decoherence can be viewed as the loss of information from a system into the environment (often modeled as a heat bath), since every system is loosely coupled with the energetic state of its surroundings. Viewed in isolation, the system’s dynamics are non-unitary (although the combined system plus environment evolves in a unitary fashion). Thus the dynamics of the system alone are irreversible. As with any coupling, entanglements are generated between the system and environment. These have the effect of sharing quantum information with—or transferring it to—the surroundings.
Decoherence has been used to understand the collapse of the wavefunction in quantum mechanics. Decoherence does not generate actual wave function collapse. It only provides an explanation for the observation of wave function collapse, as the quantum nature of the system “leaks” into the environment. That is, components of the wavefunction are decoupled from a coherent system, and acquire phases from their immediate surroundings. A total superposition of the global or universal wavefunction still exists (and remains coherent at the global level), but its ultimate fate remains an interpretational issue. Specifically, decoherence does not attempt to explain the measurement problem. Rather, decoherence provides an explanation for the transition of the system to a mixture of states that seem to correspond to those states observers perceive. Moreover, our observation tells us that this mixture looks like a proper quantum ensemble in a measurement situation, as we observe that measurements lead to the “realization” of precisely one state in the “ensemble”.
Decoherence represents a challenge for the practical realization of quantum computers, since such machines are expected to rely heavily on the undisturbed evolution of quantum coherences. Simply put, they require that coherent states be preserved and that decoherence is managed, in order to actually perform quantum computation.”
To reiterate: When markets are in a period where a sudden decoherence will happen to many stocks and indices around the same time, you will see deviations from “normal” trading trend channels. The way markets “pop” out of superposition is determined by things like solar influences (our Peoplenomics focus tomorrow) but even things like the weather, believe it or not.
On this last, if your trading education hasn’t taken you there yet, go read the David Hirshleifer and Tyler Shumway paper “Good Day Sunshine: Stock Returns and the Weather…” from 2001.
If you’re still skeptical, look into the work of Markku Kaustia (Aalto University School of Business) and Elias Henrikki Rantapuska (Aalto University) as they asked more broadly (in 2011) “Does Mood Affect Trading Behavior?” From their abstract:
“The assumption that mood affects investors’ behavior in the field is gaining acceptance due to experimental studies and papers linking stock returns with environmental variables, such as weather and length of day. To identify mood effects this paper utilizes account level stock trading data from all investors in Finland, a country with significant variation in weather and length of day. While some weather-related mood variables and calendar effects are individually significant, little of the day-to-day variation in trading is collectively explained by all such factors. In contrast, we find strong seasonal lower frequency patterns that seem connected to vacations. “
Now, toss in space weather (specifically our Solar Cycle work out tomorrow in PN) and figure out the weather in the Northeast, a handshake or arbitrage and expiration dates and yeah, you can do OK.
Or, you can sit on your butt losing money and bitch because people who work harder than you make a lot more money. You ever wonder WHY?
Mueller Goes Fishing
With nothing solid, but a lot of democrat/Obama sycophants on staff, we are not surprised to see that the ‘special persecutor’ is going down “We will find a problem, or make one” boulevard.
We ask – slightly tongue in cheek: Does Mueller have worms?
Meantime, still no sign that Mueller will go after Hillary on server data or on her setting up the Russia uranium deal for a
payoff “contribution” to the Clinton Foundation which seems to us to be much easier proven potentially felonious behavior.
Will Mueller have the cajones to ask Untouchable Loretta about that PHX onboard will Slick Willy?
‘Course not. The Swamp is in charge…and maybe Trump erred by not cleaning house at Justice, first.
It’s all theater, though, although we won’t name who we think it crooked. There’s enough switchbacks it should be obvious, unless Ure blind.
Bash and Trash Dept.
BLOWN COVER CIA boss rips NY Times for exposing operative – but will anyone do well-deserved prison time for traitorous actions? Likely not…such is double-standards America. Left journos get a pass? Maybe on swamp missions…
And TRUMP’S SANCTUARY SETBACK SF judge refuses to reinstate executive order to block federal $$$. But we expected nothing less than a regional court judge ruling from the bench for the whole country; he was, after all, appointed by Barack whozit of the Shadow Government/ liberals-in-exile.
All in favor of heaping the same levels of scrutiny, obstruction, general bullshit, divisiveness and malevolence on the next democrat president, raise your hands?
Ayes seems to have it…
Reverse Racism Dept.
I Told Your: Friday Holds Little Meaningful “news”
And “Will Smith Says Seeing Star Wars for the First Time Was Better Than Sex.” Might we recommend a good doctor for that?
Dow should drop 50 after the open…but the week is likely to still end up in the plus column overall… We’ll go over the Fed Money Supply numbers tomorrow on the Peoplenomics side and all will become clear and decoherred.