May

31

There are many speculators who have an inclination to trade during night hours. Such behavior exposes one to the possibility of premature death, according to a study of Penev et al "chronic circadian desynchronization…". In order to survive until that time, one might try to learn from the adaptations of night animals such as the raccoon, leopard, and mice. It's darker and colder and quieter at night and fewer prey are about. Particularly interesting to me were all the adaptations of fish for night survival.The article "where fish go to sleep" by Balzarova is highly recommended. Large pupils, asymmetrical ears, sleeping bags, taking advantage of a source of illumination, as the lion fish does, are helpful. The markets take these considerations into account, and make it hard to make a profit the same way taking into account the normal human need for sleep.

In talking about reversals of fortune, one should always take into account violent moves from highs to lows in markets. The recent move from a six month high to two month low in the stock indexes in three days is particularly noteworthy. Such moves occur about once a year in many markets, and it is interesting to consider the regularities that follow after they happen.Moves in the minutes before and after bond auctions have become particularly pronounced lately now that the financial institutions are strapped for funds, as all the fuzzy assets on their often 100 to 1 levered balance sheets are coming under closer scrutiny. The data from auctions on the long bonds should be adjusted and perhaps extrapolated from such studies.

I would like to see an extension of studies of the exact integers that mark the highs and lows in such active markets as bunds and 10 year US bonds, to see if there is any congestion, as has been shown for individual stocks, and areas from which there are non-random expectations. I hypothesize that prices slightly above and below round numbers are non-random within and at the end of day.

Larry Williams responds:

I am writing about this in my next market letter; that trading hours have upset the circadian rythms of millions of people and we need to learn the side effects of sleep deprivation and how to deal with it.

More on the subject as my research is completed.

Alston Mabry adds:

Makes me think of hiking in the desert and how a change of the same magnitude, occurring in different situations, can have very different consequences. If you go for a hike thinking it will be 75° F, and instead it gets up to 85°, that's not a big deal - you can tell the difference, but there are no serious consequences. But if you go out on a day when it's supposed to hit 105°, and instead it hits 115°, then your life can be in the balance.


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6 Comments so far

  1. Dwayne on May 31, 2008 5:18 pm

    Regarding the dynamics of markets, oil, and policy:

    Has anyone in this forum made reference lately to the late William E. Simon’s book, A Time For Truth?

    I would be very interested in any comments on the former energy czar’s dated, yet relevant analyses.

  2. Lon Evans on June 4, 2008 5:37 am

    Dear Victor,

    Why must one worry about sleep in playing the late game? Anytime I take a position in the wee hours, I justify potential loss against supposed gain, place a stop, and hit the hay.

    As I write it is 4:43 A.M Heartland time, and I’m short the SnP at 1377.5. Currently were looking at 1373. I’m only awake as I’ve been cleaning up some overdue correspondence. I’m now off to sleep with a limit at 1370 and a stop at 1375.

    I’ll take two handles minimum with a possibility of seven-one half. Either way I’m O.K. with the outcome. Experience tells me that such opportunities come along only, oh, seven or eight times a week.

    If not today, then tomorrow. Is it rude to suggest that the DS boys take it all too seriously. As an aging athlete, I’ve come to understand that much of my youthful endeavor and angst was not only unproductive, but even damaging and detrimental.

    For the athletically inclined, take a look at the original texts from Joseph Pilates (’CONTROLOGY’ was the first). Give his suggestions a whirl and amaze yourself with what careful focus and measured application will realize.

    lon

  3. vic niederhoffer on June 4, 2008 10:05 pm

    Mr. Evans is back on a much more civil basis with his shorting ideas. And ultimately, he will learn that this is guaranteed to lead him into oblivioun because of the drift, and the institutional assymmetres. The recent respite that the shorts have had, a eight year one, indeed, is merely to create more pockets of frictional contribution during the next decade. vic

  4. Lon Evans on June 5, 2008 2:21 am

    […] Here's how it will play out wanna-be-vic. The monolines are soon to collapse. Given that, the financials, desperate souls for the last few months, collapse as well. Now the question becomes, who or what is to support the Ponzi fantasy which is American investment?

    Dubai, Arab Emirates, the Saudis, etc.? An accumulated population that figures less than our most sparsely populated state is to be our salvation? Wow? Dude, count me in on your grand bullishness.

    Yeah, right. [That is] the coming reality, […] .

    Money is money!

    That's all.

    lon

  5. Jeff Watson on June 9, 2008 5:28 pm

    So much for civility.

    Jeff

  6. Lon Evans on June 14, 2008 3:55 am

    Dear Mr. Watson, I cannot agree with you more. "My" comment was edited by the moderator, an editing demanding the offensive mutation you've noted. This has been a practice, which has on occasion introduced my opinions in less than a favorable light. I'm not attempting to say that I've not, on occasion, been unfortunately rude. But I will hazard that the negative opinions possibly held regarding my person are much influenced by the practices of at least one moderator (I assume there to be more than one).I objected to the practice and since have had my comments offered verbatim. Yes, what was printed is rude, but, please, accept that the content realizes neither my words, nor their intent. In truth, I was surprised to find Victor acknowledging my existence, and so at first doubted that the reply was from him, therefore the mention of a wanna-be-Vic (it was only later that his full name was added). Thank you for your restraint in chastising what you believed to be my words. You could have been, rightfully, far less kind. lon

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