Both Monday and Tuesday were reversal days, however, they were sort-of lackluster. Take a look at this 60-minute chart of the futures (click to enlarge):

The futures peaked overnight Monday and Tuesday. The market bottomed and reversed Monday and Tuesday afternoon. However, both daytime sessions failed to approach the overnight highs, and were somewhat lacking in spirit. (The blue lines connect the overnight peaks to the closes of the daytime sessions.)

The shorts selling those peaks made more money than the longs buying those dips. Both made money, but we might wonder if the dip-buyers are happy with their meager gains, and willing to step up and buy the next dip. If they go to the sidelines, we could have a downtrend day.

I wrote this back here:

“Imagine IBM rolling across America, buying up smaller software companies, firing all the American programmers and shipping the jobs to India.”

…and IBM has just taken over two more software companies.

Note to SPSS and Ounce Labs employees: get your resumes in order because your jobs are going to India.

Note to American college students: forget about studying computer science. IBM will see to it that the investment that you make in yourself will have a market value of zero.

God save the global economy!

Here is a CNBC story with the most egregious lies and propaganda I have ever seen. Everybody knows that hemlines go up during good times and down during hard times. And now CNBC is trying to tell us that the opposite is true; that one-piece, retro swimsuits replacing bikinis in Miami Beach is a “return to happier times.”

Ridiculous. Blatant lies and propaganda.

The ladies are covering up to look more conservative so that they can land the “marrying kind” of man. They think that the marrying-kind likes a less flirty type of girl because she will be more faithful. Why do women want the marrying-kind? Because he has a job, and such things are scarce these days.

Happy, prosperous ladies with well-paying jobs do not go to the beach in gigantic, frumpy, one-piece swimsuits from the 1930′s. Seeing Brazilian bikini-makers doing land-office business in “cover ups” should send a chill down your spine.

This is not cause for celebration. This is a frightening social trend, and CNBC needs to broadcast a retraction.

Last week, the SPX hit resistance in the 979 area and then closed at 979.26. And that was only 0.02 points away from the 979.22 Fibonacci level that I calculated back in the Box of Miracles almost two months ago. How’s that for accuracy? Since the market is still respecting those Fib levels, the next three should prove important also if the SPX continues to rally.

I let Ziggy, my futures scalping program, trade with real money this afternoon. I turned it loose in my account around 1:30pm and let it run until the end of the day. It had full authority to make trades and didn’t ask me if I approved or not.

Ziggy made 9 scalps with 6 wins and 3 losses in a nearly flatlined market, and made a total profit of $66.10. So it made $26.40 per hour, which is much better than minimum wage. And that was with one ES contract. With 10 contracts the profit would have been $661, and if I had sold my condo and given it 100 contacts to trade, it would have been $6,661.

So, we have proof of concept: Ziggy will work in the real world. But a problem has surfaced. Should Ziggy use market orders or limit orders? Good fills are very important for a scalping program like Ziggy because it is like a discount retailer: working on razor-thin margins and making it up on volume.

At first glance, you would want to use limit orders to get the price that you have calculated to be a bargain for the recent price action. But limit orders also guarantee that you will miss trades, especially when the market is moving fast and runs away from your price. Market orders will always get filled, but the prices that you get will often be slightly worse than with limit orders. The good thing about the futures market is that I have never seen a bad tick. The ES never trades at some absurd price for one tick like you see SPY doing frequently, especially outside of regular trading hours. Because of that, you can use market orders with futures and not worry about getting pole-axed.

The frustrating thing is that back-testing and optimization can’t help your with making the limit-or-market order decision because no back-testing technology can precisely simulate a real market.

So, I think I will have Ziggy use market orders for now. The results it achieves will be less than those projected by my back-testing. However, I continue to make improvements and the back-testing results keep getting better and better, so while Ziggy’s transition into trading with real money won’t be completely smooth, I’m confident that it will be profitable.

(Note: I am not ignoring your comments, but I am pretty much coding around the clock and barely have time to read my own blog. So, don’t feel like I’m ignoring you.)