Friday, February 23, 2018

Adapting Machine Learning for Medicine

One project I want to move into after we finally get Socrates up for all levels of service is to turn toward medicine. Google’s AI algorithm predicts heart disease by scanning your eyes. They have used machine learning to accomplish what a doctor would do by traditional methods including blood work.
Medicine suffers from the same problem as financial analysis. It is dominated by opinion and that depends entirely upon (1) your experience and (2) the current situation. For example, a small child of about two was running a high fever. She was taken to the doctor who was flooded with flu patients. She was checked for the flu, found to be negative, and sent home. Day three, the fever was still there. Again, the little girl was taken back to another doctor. The same thing took place. After day four, the fever persisted and once more she was taken back to a doctor and the same thing took place.
Finally, the mother noticed she was not urinating and the child simply responded that it hurt. A fourth trip ended up admitting her to a hospital with a urinary infection that had by now started to impact her kidneys.
Medicine, like analysis, is dominated by opinion. If the doctor does not think of anything else to test, nothing takes place.
Machine learning can be used with a full body scanner and much more accurate results can be obtained. We need a machine that will also do a full body ultrasound scan, a simple pinprick for a drop of blood, and the machine could come up with a lot more information at a far lower cost than what we see today.

Wednesday, February 21, 2018

They sell new debt to pay off maturing debt

India Enters the Sovereign Debt Crisis

I have warned continually that the Sovereign Debt Crisis will unfold not so much by people selling government debt, but by the lack of people buying new debt. The greatest peril is when there is NO BID for the new issues because all governments are operating a PONZI scheme. They sell new debt to pay off maturing debt. Currently, holders of Indian government debt have been dumping 4.7 billion rupees ($73 million) of government bonds on average every day this year, according to data from the Clearing Corp. of India. Last year, their net daily sales totaled 368 million rupees.
The Sovereign Debt Crisis emerges when the government is unable to raise enough cash to pay off the maturing debt. India has crossed that threshold so as we have warned, the Sovereign Debt Crisis will begin from outside the USA and spread to the core. This is how all Empires, nations, and city-states collapse

Monday, February 19, 2018

The Way of the Future

One of the more vital technological advancements has been developed locally in Philadelphia. They can grow all the necessary food without farmland from inside a warehouse that is completely free from genetic tinkering or chemical whatever. The owners of Metropolis Farms actually grow fresh produce all year long. Those interested in survival of the fittest, well here it is.
President Jack Griffin developed this technology and has been doing a bang-up job. It would probably not be a bad idea to set one up in a basement for the years ahead. As he explained, “The innovation here is density, as well as energy and water conservation.” Griffin continued, “We can grow more food in less space using less energy and water. The result is that I can replace 44,000 square feet with 36 square feet. When you hear those numbers, it kind of makes sense.”
This is the way of the future  — fresh food coming from your basement.

Volatility – What is It ?

QUESTION: Dear Martin,
In the private blog you mentioned a few times that the volatility will rise again in the week of the 12th. When you mention volatility, do you mean volatility as measured by the VIX index?

So far the VIX has lost around 1/3 this week so I suppose you mean something else?

ANSWER: The VIX is not a true indicator of volatility. We have three main volatility measurements and each is different.
(1) you have the traditional measurement of close to close. That is interesting, but it does not truly capture the concept of volatility.
(2) Then there is intraday volatility which we measure and simply the percentage movement between the high and low of that session. You can have a 1,000 point swing in the Dow intraday yet close nearly unchanged. The first volatility measurement would never even show a blip.
(3) The third measurement is overnight volatility. This is measured from the previous close to the open of the current day session. For example, Monday, February 5th the Dow opened at 25337.87 compared to Friday’s closing of 25520.96 gapping down.
Our indicators are intended for trading, unlike the VIX. In our Arrays, you will see Overnight Volatility, Intraday Volatility, and Panic Cycles, which are extreme moves in one direction or an outside reversal which exceeds the previous session high and penetrates the previous secession low.

The VIX is a convoluted formula that does not reflect trading but more of a trend lending itself to manipulations. Hence, the VIX is not very reliable. The VIX is a measure of expected volatilitycalculated as 100 times the square root of the expected 30-day variance (var) of the S&P 500 rate of return. The variance is annualized and VIX expresses volatility in percentage points.
Volatility Index VIX Futures
where var = (365/30) x Expected 30-day variance.
The 30-day variance is the sum of squared standard deviations st (“volatilities”) of the S&P 500 rate of return at every point in time t during the 30 days:
Volatility Index VIX Futures

Friday, February 2, 2018

Electing all FOUR Monthly Reversals to change a trend from bullish to bearish or bearish to bullish is by no means an easy accomplishment.

The Third & Fourth Reversal

Many have asked for some clarification on the Reversal System and how we use it to ascertain changes in real trend. As stated previously, trend changes ONLY on the Monthly Level of time. The Daily and Weekly levels are the noise. This is where most people lose their money trading because a correction may appear to be a change in trend but it will suck them into a false move and the reverse again. Only at the Monthly level can we determine the true character of a market be it bearish or bullish.
We can see that there were periods in the Dow that provided brief corrections. The challenge was to determine if those corrections changed the trend. On our model, we can draw lines in the sand that if crossed provide the identification that the trend is actually changing. The trend is changed by electing all FOUR Monthly Bearish or Bullish Reversals. What is typical is the fact that we elect the first two and hold the third. This is a strong correction which typically moves the majority to assume the trend has changed when it has not. This is how the market traps the majority and cleans out their pockets making them pay their dues for learning.

All FOUR Monthly Bullish Reversals were elected in the Dow on the close of September 2012. There was one-month follow-through, a pull-back to retest the reversal, then it simply took off.

In the case of Gold, why have we been optimistic that gold will turn around and rally when the Monetary Crisis Cycle begins? When we look at the Monthly Reversals, gold has pushed through the first THREE reversals yet stopped before the FOURTH both on the upside and downside. From the major high, we elected the first THREE Monthly Bearish but not the FOURTH at $903. This is why a dip below $1,000 remains possible but unlikely to elect that reversal. Such a move would be enough to trap the majority and set the stage for a rally that is at last not believed as we have seen in the Dow. We have had the most hated bull market in history going on for 9 years now and the retail public is still not foaming at the mouth. Analysts are only now starting to consider it will continue and that is based only on Trump’s tax reform.
Then from the 2015 low, gold rallied and again moved through the first THREE Monthly Bullish Reversals stopping at the FOURTH. We have the perfect balance that is often the character of markets – equal opportunity for each side.
The major TREND is determined ONLY at the Monthly Level. Electing all FOUR Monthly Reversals to change a trend from bullish to bearish or bearish to bullish is by no means an easy accomplishment. Never get fooled by short-term moves on the Daily and Weekly level. So many people immediately call for a change in trend based upon just a few days price action. These are the people who are easily separated from the money rather quickly and will blame everyone else but themselves.

Tuesday, January 30, 2018

Elected the first Daily Bearish Reversal three more to go before we can say we are headed into a March low

The Dow Down & Dirty

COMMENT: OK Mr. Armstrong. Looks like the government was right. You come out and said the Dow reached a turning point and it crashes. You posted: “In the US Share Market, this is now a turning point we have reached. I have warned for months that exceeding the November high would lead to a January high.” You are too influential.
REPLY: Or perhaps our models are correct. This nonsense that people can move the market is absurd. Governments have spent trillions and failed. Why is it I am the only person who can move the world? Does a tree make a sound when it falls in a forest even when nobody is there to listen? They tried to silence me yet it still did not matter. Here is the internal 37.33 week. The target date 2007.86 was November 9th/10th. It was November 9th, 2007 that all four Daily Bearish Re4versals were elected from the major high.
So far, we have elected the first Daily Bearish Reversal. There are three more to go before we can say we are headed into a March low. Time will tell. It should be choppy for the next couple of weeks. When you gap lower like this, you normally will bounce and eventually fill that gap. So caution is always advisable.
The first high was the precise day that the Real Estate market peaked. They called that Armstrong’s Revenge on the trading floor that day. That was again precisely to the day and that same calculation produced the very day of the low during the 1987 Crash. Markets peak and bottom in sync with our models around the world even when I do not mention them. Sorry – there is just something beyond the surface that warrants our attention. These dates are not random. They cannot be fudged

CFTC Has Made Spoofing a Crime

The Commodity Futures Trading Commission announced that it has brought a case in conjunction with the Department of Justice and Federal Bureau of Investigation’s Criminal Investigative Division, charging criminal and civil enforcement actions against three banks and six individuals involved in commodities fraud and spoofing schemes, which they define as bidding or offering with the intent to cancel before execution. The problem with now claiming to spoof is a crime, they are dangerously destroying how markets have traded from the beginning and this is only reducing the liquidity. That means in the years ahead, during a crisis, there will be fewer and fewer big players left in the markets and that will become dangerous. The government tries to spoof itself during a panic and always comes out and says the market is fundamentally sound to try to stop a panic. They simply write a rule and it becomes a crime that is contrary to a Democratic form of government. Any crime should ONLYbe authored by Congress – not agencies.
We use to call that “flash” bids or offers. It was simply a way of trading that was often mandatory. Of course, there was the risk that you could be tagged. I was short one time in gold about 5,000 lots and it was a turning point so I wanted to cover and flip to a long position. There was a large local trader in the pit. His style was to do these flash offers or bids to try to push the market to the next level. I instructed my guy on the floor to just wait for him and as soon as he would flash offer a thousand lots, buy them. He flashed 1,000 and I said done. He then flashed 1,000 again and I said done. He tried a third time 1,000 and I said done. Gold then rallied. It is one thing to bid or offer and you are not willing to take that position. I seriously doubt that anyone in their right mind would do that. If you are going to flash bids or offers, you can also be tagged and you have to be good for the trade.
The CFTC is totally destroying the market and liquidity. They filed charges and settled charges against Deutsche Bank AG (DB AG) and Deutsche Bank Securities Inc. (DBSI) (collectively, DB), requiring DB to pay a $30 million civil monetary penalty and to undertake remedial relief. The traders were between February 2008 and continuing through at least September 2014, in precious metals. They call this a scheme to manipulate the price of precious metals futures contracts by utilizing a variety of manual spoofing techniques with respect to precious metals futures contracts traded on COMEX, and by trading in a manner to trigger customer stop-loss orders. This is how the markets have traded since inception.
The CFTC also charged and settled against UBS AG(UBS), requiring UBS to pay a $15 million civil monetary penalty and to undertake remedial relief.  Again, this was concerning precious metals futures contracts traded on COMEX.
The third charge was an Order filing and settling charges against HSBC Securities (USA) Inc. (HSBC) for engaging in numerous acts of spoofing with respect to certain futures products in gold and other precious metals traded on COMEX. HSBC was ordered to pay a civil monetary penalty of $1.6 million.
The CFTC Division of Enforcement Director James McDonald said:
“Spoofing is a particularly pernicious example of bad actors seeking to manipulate the market through the abuse of technology.  The technological developments that enabled electronic and algorithmic trading have created new opportunities in our markets.  At the CFTC, we are committed to facilitating these market-enhancing developments.  But at the same time, we recognize that these new developments also present new opportunities for bad actors.  We are equally committed to identifying and punishing these bad actors.  The CFTC’s enforcement program is built around the twin goals of holding wrongdoers accountable and deterring future misconduct.  We believe these goals are best achieved when we hold accountable not just companies, but also the individuals involved.  As these cases show, we will work hard to identify and prosecute the individual traders who engage in spoofing, but we will also seek to find and hold accountable those who teach others how to spoof, who build the tools designed to spoof, or who otherwise aid and abet the wrongdoing.  These cases should send a strong signal that we at the CFTC are committed to identifying individuals responsible for unlawful activity and holding them accountable.”