Monday, April 26, 2010

SMH and the Dollar

You probably thought I was going to make some astounding correlation between SMH and the dollar. Not his time around amigos. I simply wanted to point out that despite the weakness on the majors today, SMH managed to close in the green. Hey! . . maybe there's something to this rotation thing. Of course, over the short term things don't look quite so optimistic for the semis . . with an apparent consolidation pattern well underway. The SH, although in last slot, did make a nice little pop today and we'll be keeping a close eye on that for possible further evidence that a pullback may be imminent.
The currency front has some interesting developments going on and the metrics are actually a little bit deceptive until you step back and look at the broader picture. To help in that regard I've posted the PDQ Dashboard for the UUP. While I haven't posted on the PDQ for a while, it's still alive and well, kicking out those signals every day and I've actually found that using the VXX and the dollar (UUP) as PDQ targets provides a good probability edge. In reality, all you had to do was be Long over the past year and your total return on the majors would be very impressive, but I'm one of those traders who keep thinking mean reversion will kick in one of these days and actually reverse the upslope markets. Meanwhile, I'm net Long with one foot out the door and I continue my digging for nuggets.

1 comment:

Robert said...

Hi Bob,
I've read your many posts that discuss the PDQ Dashboard and have a few questions that perhaps you can answer:

1. What does PDQ stand for?
2. What period of time is covered by the info in the dashboard ... 6 mo?
3. What is its general purpose? It seems that it's used to compare a set of pairs where one side of the pair is constant ... correct?
4. Is the data that's displayed pretty much a summary of the ETF-Rewind pairs data?
5. Re the P&L status column
5.1 Why aren't the above statuses (AP) identical/symmetrical to the below statuses (BF, BR, BD)? It somewhat seems that they should be. After all why couldn't the P&L be Above and Flat?
5.2 It seems like the P&L Status should always be Flat when not currently in a trade ... correct?
5.3 It seems that the P&L status 'could' be flat if in a trade where the pair has had the same value over a number of days (though unlikely) ... correct?
6. What's the difference between Trade Position and Final Signal?

I ask as I'm trying to learn about effectively analyzing pairs and the PDQ Dashboard seems like a good source of info. Thanks.