#78: Is Trading a Game?

S2N Spotlight

I recently shared a backtest based on drawdown. For months, I have wanted to add a more lightweight version of the historic performance that is probably much easier for readers to follow. Today I will showcase the table and just add one extra variation just for interest sake.

In the chart below, you can see how the SP500 performs 1, 3, and 6 months after a 10% drawdown from its peak. There have been eighteen 10% drawdowns since 1970. Performance over all time periods post-drawdown threshold is positive.

I now look at how the SP500 performs when there is a -10% down day. There have only been three occurrences since 1970, which makes it statistically unreliable, but interesting nonetheless.

To have a little fun, I looked at the performance of Bitcoin after a -10% down day. What is interesting is that there have been 74 such events, with an average of 56 days between events. It has been 579 days since the last -10% down Bitcoin day.

S2N Observations

The Fed continues to shrink its balance sheet. Last week, it dropped another $29 billion, shrinking more than $100 billion over the last month.

If you look at the futures performance on Friday, you can see it was a pretty brutal day. Silver dropped more than 6% on Friday, so I thought I would use my new tool.

Keep an eye on copper; it is also looking weak, which is not all that surprising as 30% of China’s copper consumption was related to real estate which is showing no signs of any pickup.

Finally, the biggest game in town. Roaring kitty is now meowing kitty after losing $200 million on Friday’s -39% day. Don’t cry for Kitty, as Keith Gill made $250 million the day before. You should know, if you don’t already, that this is not trading; this is nothing short of gambling with a master bluffer.

Performance Review

Chart Gallery

News Today

The post #78: Is Trading a Game? appeared first on Signal2Noise.