Emotions are what they are.

Speaking of which, Matt, can you peek into the future and tell us what the system is looking for?  In other words, are there levels, pivots, etc. that would cause it to sell on a rally?

Yes, those are my thoughts.  Robustness is hard to measure, but one measure is to use different insruments.  

My one major fear is the tinkering approach to the system.  The same sort of thing was done with the GDX system, resulting in a plethora of rules.  I think that the new, simplified GDX system should be kept unchanged so that we can see how it works.  The same holds for the SPY system.  If the system undergoes constant tinkering, then it will always remain in backtest/optimization limbo and we'll never know how good it is.  The system needs to be finalized and then left to trade.  That's why I think that adding options as hedges is a good idea.  As Vida says, it will increase the cost basis, but it ultimately help the system by providing counter-trade insurance without having to be stopped out.  But, my point is that adding hedges won't require code tinkering, so we can still use April as the point from which to judge the system.  

This is actually a great idea.  Using options for insurance won't affect the integrity of the system (since you're not selling or buying outside of signals).  Matt, you might want to consider this rather than using stops.

Why, exactly, would Karl Popper disapprove of this application of the notion of falsifiability?  A stock market system is a theory about how the stock market operates. In other words, it's a theory that says that the application of a certain code with certain values is likely to be in synch with the market and therefore produce profits (because it has isolated a pattern in stock market behavior).  As opposed to those on this board who want the system to work so badly they "trust" it or have "faith" in Matt, I simply said that all systems can fail when they are applied to real markets.  Consequently, I asked Matt to discuss the specific definition of failure in this context, in other words, what would have to happen for the system to be deemd a failure (for example, that the system underperforms the market by a certain percentage, that it fails to produce profits, that it doesn't match its backtested performance, and if so, by how many percentage points, that its profit curve starts to move sideways or down, etc.).  

I suggest that all purchasers of black box anything ask the seller this question.  

Again I agree with you.  But I think that Matt should have waited longer to introduce the system.  He should have waited until a year or so of live trading had occurred to see what realistic expectations for the system should be.  The problem is that, even after this trade, there are subscribers who talk about the system's "history" as if it contains real trades before April.

The Aroon Oscillator on Marketguy's long term chart is now bearish.  The 50/200 emas haven't crossed yet, though.

Be careful with Renko charts.  They change after the fact.

So ask yourself this:   Who really planned this CHAOS???   

That is the wrong question, because it implies that there was a planner.  Some people see planners everywhere, others are more content with reality, which is usually messy.

But, even if there was a planner, I ask you a simple question:  who has the most to gain from the current "chaos", the party in control of the White House or the opposition?

Steve, I may have missed it, but could you tell me where you indicated that the short term trend of the SPX was on a sell?  

Top two cliches regarding the SPY system:

1.  Don't get emotional.

2.  It is what it is.

What does "3rd & 4th entries on the SPY" mean?  Is this some kind of Bilderberg code?  Please explain.

If it is, then it will appear rational in hindsight.

Pop-quiz time:  what do the SPY system and Popeye have in common?

I agree about not being able to judge a system by so few trades.  However, I think that the system's performance so far is beginning to make it clear to people that backtested results aren't the same as historical results.  They may turn out to be, but the only way to know that is to see how the system behaves in real time.

Well, I just looked at the futures and I'm getting emotional.  Can't help it, evolution has made my nervous system respond that way to impending disaster.

Yeah, it sounds like you're grateful for losing less money than you might have.

The chart does not appear to have made it to your post.

Me too, John.  Except I'm not even very good at making market calls.  Couple that with horrible timing and you have a recipe for insolvency.

Which is why I just trade mechanical systems these days.  Doing this doesn't remove the opportunities for self-immolation, but it makes a little more difficult for me to sabotage myself.

Chartboy, 

According to your logic there is not need for this forum (how to trade this system:  just do it).  I tend to agree with that.  I think that this forum itself may be a mistake, since it creates the opportunity for people to vent.  Without the forum, they might me more hesitant, since sending a pm is somewhat more daunting (to me, at least) than simpy posting on a board.

As to implying that Matt should share his proprietary information:  I don't know to whom you're responding.  Certainly not to me, since I said nothing of the sort.

What I did say is the sellers of black box systems should be prepared for a certain amount of emotion from their subscribers during rough times.   I'm not condoning such behavior, I'm simply saying that it's inevitable and part of the cost of doing business.  

Part of the reason for this is that there are no mechanical systems.  People will always try to second guess a system, deciding whether or not to take a trade.  If you don't believe that, look at the posts on this board.  Again, I think this is a mistake, but if I were selling a black box system I would be prepared for it since I think that it is going to happen given human nature.  

I also repeat my request for the developers of the system to outline how they would quantify the conditions for its possible failure (which I hope never happens).