Like IBM the day before another tech bellwether Apple (AAPL) reported after the close yesterday and surpassed analysts estimates, the stock rose about 10% in after hours trade.

China said its fourth-quarter growth rate slowed to 6.8% from 9% in the third quarter, the slowest rate of growth in seven years but growth nonetheless.

Housing starts were released this morning at .550 million unit rate versus expectations of: 0.615 million-unit rate.  Jobless claims at 589K vs. expectations of: 610K.

Moving more in line with Wall Street’s performance yesterday overseas markets are mostly higher: Nikkei 225 -1.90%, Hang Seng +0.59%,  Shanghai Composite +1.00%, DAX +1.28% and the FTSE 100 +1.18%.

A few minutes after the Housing Starts and Jobless claims the futures are: Dow -82, S&P -8, Naz -4, Oil -$0.40, and Gold -$3.20.

On Tuesday January 13 and on Wednesday January 14 I ran a back test on the QQQQ utilizing a moving average crossover buy and sell methodology.  The eight day and thirty four day simple moving average’s crossings were utilized to issue buy an sell signals.  You can review those tests by scrolling back through the postings.

While I am generally not in favor of optimization of back testing methodologies it does have its place.  If, or instance you were interested in trading the 8/34 cross and noted the results (mediocre at best) wouldn’t you want to find out if another time period or two worked better?  Of course you would, enter the computers speed in looking at a myriad of combinations to determine which one is best.

For this optimization I’ve set the parameters in this manner for the fast moving average begin at 5 days and move up to 200 days in increments of 1.  For the slower moving average also begin at 5 days but move up in increments of 10.  If we wish to narrow further between two close performers we can do that later. Within these parameters the following combination of moving averages is the winner with a compounded annual return of 19.72%. While that return may look appealing you will need to look beyond the overall results.

The complete optimization results with the above parameters are contained in a Microsoft Excel Spreadsheet for your download and perusal.  Study all the statistical data provided – is this something you would like to trade? Remember this test is just against the QQQQ and is not applicable to any other vehicle.

Traders, rarely if ever, look beyond the 200 day moving average. Tomorrow we’ll carry this one step further and extend the slow moving average out to 400 days and against various fast moving averages and see what happens.
 

IBM to the rescue this morning, yesterday after the close IBM announced earnings which exceeded expectations and raised guidance for this year.  IBM is up around 3% in pre-market trading.  Later today, after the close, there will be more tech earnings with Apple (AAPL) and Ebay (EBAY).

The confirmation hearing for Timothy Geithner (Treasury Secretary) will be in the spotlight along with the performance of the Financial Sector which declined 17% yesterday.

Overseas markets are all on the downside this morning: Nikkei 225 -2.04%, Hang Seng -2.90%, Shanghai Composite -0.46%, DAX -0.62%, and the FTSE 100 -1.64%.

At about 8 AM the futures were pointing to a higher open: Dow +92, S&P +9.8, Naz +13.25, Oil +$0,67, and Gold +$2.90.