Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-31 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Code Update

The Man:

Hi all. Working on a few things... Version 8.3 of The Algorithm is slated for release this Monday! Looks like the code is stable now, and it provides a better overall predictive value and consistency. True to the new overall priorities of the project, it also includes a nifty stock scanner, and in the coming weeks I hope to provide more sample predictions other than the two that I have now. The data mining software is currently churning through the entire Nasdaq and will provide candidates for eventual inclusion in the watchlist. Backtest optimization is still needed for optimal results, but I hope to find a quicker way around this other than brute force.

Also working on another essay with The Dad. Hope to release it sometime soon.

Happy New Year! Go Fighting Illini!!!

More later.

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-28 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-27 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-26 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-25 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-24 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-21 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-20 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-19 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

New Essay on Wcoretech.com

The Man:
Hi all. I've finished another essay that you might be interested in. It details the priorities of the my algorithm. Version 8.3 is still in the works. Version 8.2 works great.. can't say 8.3 is improved yet. CY and SAY are doing quite well with The Algorithm!

The link to the esay can be found here.

Another stock that I've been trading recently popped up after The Algorithm told me to buy. After the second sell indicator I took my profits. It then fell to the original price, but The Algorithm did not tell me to buy again. It has since dropped some 25% in two days! PHEW! I dodged a bullet this time.

More later.

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-18 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-17 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-14 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

SAY what?

The Man:

So SAY was right in predicting a sell at ~$28.00. Version 8.3 is still in the works - there's a lot of optimization still left to be done, but it looks like it's a better predictor than 8.2. Will release it to the blog when it's ready.

A couple of articles in the works - hopefully we'll get that in before the new year. More later.

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-13 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-12 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

SAY Price: 28.255
Decision:SELL

Summary Version 8.2
Date: 2007-12-11 Time: 03:00
CY: WAIT
SAY: SELL
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

SAY Price: 28.03
Decision:SELL

Summary Version 8.2
Date: 2007-12-10 Time: 03:00
CY: WAIT
SAY: SELL
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-07 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

SAY Price: 27.02
Decision:SELL

Summary Version 8.2
Date: 2007-12-06 Time: 03:00
CY: WAIT
SAY: SELL
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-05 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

CY Price: 33.6775
Decision:BUY

Summary Version 8.2
Date: 2007-12-04 Time: 03:00
CY: BUY
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-12-03 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-11-30 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-11-29 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-11-28 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

SAY Price: 24.64
Decision:BUY

Summary Version 8.2
Date: 2007-11-27 Time: 03:00
CY: WAIT
SAY: BUY
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-11-26 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

1st Father and Son essay published!

The Man:

The first Father-Son essay entitled: "On Financial Markets" has been published! You can find the essay here. We hope that this collaborative work is helpful to you, and if you have any comments, please do leave them here! We'll be checking, and will take your comments into consideration over the course of the next few months. We hope to publish one essay like this a month.

As for The Algorithm, you can see that The Machine's predictions for CY are far from encouraging. Sorry for those who invested in this. Again, the code is always under maintenance, and I am planning to release the updated algorithm once it's ready. As from my previous post, it looks better, but it still seems to require optimizations that still have future information pollution. I'm not trading this month due to the time it takes to update and backtest the code. We'll shoot for a January release date for that.

In other news, running these back-calculations on my cluster at home has doubled my power usage!

More later.

Daily Report

The Machine:

CY Price: 29.53
Decision:BUY

Summary Version 8.2
Date: 2007-11-23 Time: 03:00
CY: BUY
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

CY Price: 29.53
Decision:BUY

Summary Version 8.2
Date: 2007-11-22 Time: 03:00
CY: BUY
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-11-21 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-11-20 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

CY Price: 32.445
Decision:BUY

Summary Version 8.2
Date: 2007-11-19 Time: 03:00
CY: BUY
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

CY Price: 32.6875
Decision:BUY

SAY Price: 26.04
Decision:BUY

Summary Version 8.2
Date: 2007-11-16 Time: 03:00
CY: BUY
SAY: BUY
This information does not constitute
financial advice of any kind.
Have a nice day!

The continual code update

The Man:

Code updating begets more code updating, which is the problem with updating code. I'm currently spinning up version 8.3, and it's looking good, though there's always some tweak here or there that needs to be done.

I've found that it is most helpful for me to write down my code on paper first. Strange as it may be, having it on paper gives me a chance to really think about the algorithm involved. Since Python is very intiutive, I end up formulating enough pseudocode on paper that it's a trivial matter to transfer the code to the computer. There's something about typing in ideas that makes it stilted... Less fluid. Without that pen and paper, I end up wasting more time at the keyboard and less time doing the real work of that human-machine symbiosis - Lead.

More later.

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-11-15 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

CY Price: 32.5275
Decision:BUY

Summary Version 8.2
Date: 2007-11-14 Time: 03:00
CY: BUY
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Gamble over the weekend

The Man:

So I took a gamble this weekend, and decided to rewrite part of my code. This part was particularly nagging to me because the original code (8.2 and earlier) has two parameters that are used to optimize the back testing. This is a logical connundrum, because it uses prior knowledge of the future as part of the algorithm to fit the answer to a supposedly "future blind" algo. This logical fallacy will lead to optimizations that don't fare well in the "real" future. In other words, my back testing was not pure, and if we relied on it for extended periods of time past a prior optimization run, the parameters may have drifted enough to give bad answers. This is not good, especially if money is involved!

So I rewrote the "energy field" function that determines what days are "buy," "sell," or "wait." Only this time, I didn't just start out at the keyboard. I took the time to write "the algorithm" in my notebook so that I would have a concise path forwards. That helped out tremendously! The code was written in only a few hours, and I found that I could stop at any time. That's because I had already written down what would happen next, and it was easier to put the programming down when I knew what would be written next! This was perhaps to most important lesson that I've learned!

The net effect is that the gamble paid off... I think. The algorithm is now more robust in that it requires minimal optimization. In versions prior, in order to get 30% over buy and hold, I needed to heavily optimize the parameters using an iterated DOE. I didn't have enough computing power to use another ubergenetic optimization algo on top of the 24 hour day-long-with-5-CPU-cluster back test. It would take at least 100 days before my optimization would be complete, and by then, the parameters would have already drifted!

Now I hope that my changes will work, but we'll see if I'll need to add an additional couple lines of daily optimization... I'll need to test it on a few stocks that I know have different optimal values, and each ticker takes one day to complete. If all goes well, we'll roll out version 8.3 to the masses by next weekend!

More later.

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-11-13 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-11-12 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-11-09 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

The stock market strikes back

The Man:

It's no surprise that the stock market is sliding south. The recent market drops to me signal the extreme pessimism of the market. This is due to the low interest rates leading to a record rise in gold prices and the drop in value for the U.S. Dollar. A "crash" seems to be looming, however I doubt anything like that will occur in just one day. The markets are rigged in such a way that after a certain amount of points above or below the previous day's close, computer trading is halted, and trades are run by humans only. This is a stop gap measure that keeps stocks from declining more than 3% per day. This is because my guess is that with human market makers as the go between, only a fraction of volume can be traded, and just rates of trade, you can only let so much money out of the market.. By cutting electronic trading, the markets effectively slow down, and keep the absolute point loss to a minimum. This is pretty smart, because although liquidity is effectively thickened to cold maple syrup, the markets themselves do not officially close. This keeps panic from occuring. This only works though, if you are looking to limit the sellers near to the number of buyers. If prices go down 300+ points a day for 5 days in a row, then the real crash will occur.

I'm currently working on another essay detailing the philosophy behind the design of my algorithm. I hope to publish it soon!

More later.

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-11-08 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-11-07 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.2
Date: 2007-11-06 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

SAY Price: 30.165
Decision:SELL

Summary Version 8.2
Date: 2007-11-05 Time: 03:00
CY: WAIT
SAY: SELL
This information does not constitute
financial advice of any kind.
Have a nice day!

Version 8.2 rollout!

The Man:
I am currently backtesting the code for The Machine's upgrade to version 8.2. Unfortunately the update is much more computationally intensive, and it's taking much longer than I've expected. Hopefully the algorithm will converge sooner rather than later.

I've also added an essay to the brick and mortar website:

http://www.wcoretech.com/

Any comments are encouraged... The essay portions are meant as a dialogue between myself and you, the community!

Weekly Market Commentary

The Man:

This past week marked an interesting turnaround in the interest rate situation. The Market, though up, rose on light trading on the day of the Fed's rate cut, and the momentum was not carried through to the end of the week. Given that the dollar vs the world dropped sharply and comoditities rose (most notably oil and gold), it is an abvious signal to you and me that the US treasury is tapped out.

There's no longer any true "slack" in the system to be exploited. I believe that the U.S. has very little options at the moment in order to improve the economy. The world markets will simply not tolerate another dilutionary action by the Fed. If they do, then they are essentially giving away capital to the U.S. Treasury. They will eventually have to devalue their own currencies in order to make sure they don't get their U.S. Bond payments in the form of inflated, diluted pennies.

The ultracapitalist society that we've been subjected to since the 90's is coming home to roost in the pockets of us Americans. No savings, no house, no small business... We've been reduced to innovationless couch potatos eagerly anticipating the next DVD release of the summer's blockbuster hits! (By the way, I can't WAIT until Shrek III comes out on DVD.)

Where are the innovators that once drove the U.S. economy? Has prosperity truly been our greatest enemy? Will there ever be another DARPA Grand Challenge?

More later...

Daily Report

The Machine:

SAY Price: 30.0275
Decision:SELL

Summary Version 8.2
Date: 2007-11-02 Time: 07:48
CY: WAIT
SAY: <font color="#ff0000">SELL</font>
This information does not constitute
financial advice of any kind.
Have a nice day!

Markets reloaded

The Man:
I've noticed that The Machine's code isn't saving the buy and sell data for SAY and CY. It's a bug that I haven't gotten around to. I plan to release a code update, version 8.2 sometime this weekend, so be aware that the backtested results (which is what you see whenever the system posts a chart) may change after this weekend for SAY and CY.

The version update includes some error checking to account for the random run to run variability encountered when using genetic optimization techniques.

More later:

Daily Report

The Machine:

SAY Price: 29.22
Decision:SELL

Summary Version 8.1
Date: 2007-11-01 Time: 03:00
CY: WAIT
SAY: SELL
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.1
Date: 2007-10-31 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.1
Date: 2007-10-30 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.1
Date: 2007-10-29 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.1
Date: 2007-10-26 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

SAY Price: 29.4
Decision:SELL

Summary Version 8.1
Date: 2007-10-25 Time: 03:00
CY: WAIT
SAY: SELL
This information does not constitute
financial advice of any kind.
Have a nice day!

The Machine was right!

The Man:

Well, based on the fact that the machine correctly guessed SAY's initial buy reading, and has posted a sell today means that the wise trader who listened to The Machine would have made roughy $5 in profits per share... This is ~20%. SAY is a particularly good stock for these technical indicators.

Disclosure: I do not own any stock in SAY, and don't invest in any companies that The Machine posts. I have The Machine running a personal set of stocks that I'm trading myself. Let me know if there's a particular stok you want me to run through the model.

More later...

P.S. The share price is not the closing or the opening price of the stock. It is the average.

Daily Report

The Machine:

SAY Price: 29.205
Decision:SELL

Summary Version 8.1
Date: 2007-10-24 Time: 03:00
CY: WAIT
SAY: SELL
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.1
Date: 2007-10-23 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.1
Date: 2007-10-22 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Quote of the week:

Honey, when was the last time you defragged the house?

Daily Report

The Machine:

CY Price: 31.55
Decision:SELL

Summary Version 8.1
Date: 2007-10-19 Time: 03:00
CY: SELL
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

The Machine was right!

The Man:

So it looks like the Machine was right a couple of days ago! Yes, it does seem to pick SAY's sells quite correctly, but it's buy indicators are hit or miss. I believe I can further optimize this, but it will take some time to rewrite the code,

Someone asked the other day why I am picking individual stocks and not trying The Algorithm on the DJIA or SPY. Well, the truth of the matter is that I have, and it does not work. I have to surmise that the DJIA and SPY do not have any significant technical indicators with which to trade on. This makes some sense considering that these stocks are composite indices, and though the individual stocks have technical components to the stock, the sum of these becomes truly random.

More later...

Daily Report

The Machine:

Summary Version 8.1
Date: 2007-10-18 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

SAY Price: 25.69
Decision:BUY

Summary Version 8.1
Date: 2007-10-17 Time: 03:00
CY: WAIT
SAY: BUY
This information does not constitute
financial advice of any kind.
Have a nice day!

Achieving Ze

The Man:

So I haven't achieved Zen.. But I'm sooooo close. I've "Ze," which is the best possible situation. The last "N" will take me 10 times longer.

The Machine's script had a problem on Monday, but The Machine is now fully operational! We'll see who gives the better postings...

Daily Report

The Machine:

Summary Version 8.1
Date: 2007-10-16 Time: 03:00
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Daily Report

The Machine:

Summary Version 8.1
Date: 2007-10-15 Time: 06:35
CY: WAIT
SAY: WAIT
This information does not constitute
financial advice of any kind.
Have a nice day!

Zen Computing

The Man:

Well, I have written the interface for The Machine's daily postings. Unfortunately no one tells you that to achive "Zen" ness for computing, there's a whole lot of work involved in the back end. One day, however, I do hope to have that IKEA-looking computing environment up soon. The problem is that Windows is so un-zen, and Linux is just a pain!

Anyway, The Machine will start its postings on the Market come Monday. This should be just in time for the 20th anniversary of Black Monday, which will be on Oct 22nd.

Genesis

The Man:

Hi all. This blog is meant to detail the day to day exploits of The Man, The Machine, and The Algorithm that resulted from this collaboration of flesh and 'net. Given that this is my very first blog, please be kind to me and my machine. :)

I'm currently working on learning the Google Data API python interface in order to get The Machine's blog entries uploaded automatically. The Machine will eventually post daily updates on the latest news feeds affecting the international stock market, as well as the latest posts regarding The Algorithm's trading recomendations. For more information about The Man, The Machine, or The Algorithm, please visit my website at: http://www.wcoretech.com/

This blog is modeled after the book: "The Blue Nowhere," by Jeffery
Deaver, an excellent book detailing computer hacking and the emergence of the computer world. Definitely much better than Dan Brown's "Digital Fortress."