Daily Speculations

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The Chairman
Victor Niederhoffer

06/19/2004
The Fugacious Market  
 

I often like to play markets as if they follow an "ABA" musical form with the main theme being broken by a bit of a secondary theme usually caused by the public or trend followers  being induced to do the wrong thing at B and  then accepting capitulation back at A.

But in the dollar, I noted a very simple jazz progression, with the chord going up one whole tone and then down one whole tone, back and forth and back and forth.

Using the ever popular bracket function of x, i.e., the highest integer that contains a number, so often used in solving difference equations, I tried to develop such a system for the euro. Just throw out all fractional prices!!!!  And then apply.

For example, 122.35 equals 122. Wait until there's a rise, to 123 (to be against the Sage), then sell. Maintain position until there's a drop of 1 from any subsequent price. Then buy. Repeat.

Remember to throw out all fractional prices.

Pardon me for posting something that gives a meal for a day. But I tested it with an adjusted z of 6. and sent it to my colleagues and nepotistic summer interns. They all tested it also, and assured me it's completely random. So in honor of the fact that I conclude that whichever way you trade the dollar the market will move the opposite way so the banks will take your money regardless, below is a musical offering in honor of Mr. C. from Greece.



From: G.C.
6/19

Interesting behavior in Euro-USD since last high, June 8. Could easily be a J.S. Bach fugue idea (taking at close, because intraday moves are well within range.



Before the fugue develops, I thought it might be interesting to note that whatever one does he loses. Try to play the range and chances are that it will break to a variation of the theme, whatever side you play. Try to play the breakout and the theme will repeat itself as a reminder of the idea.