DATA MINING WITH SUPERALGORES

Old pots produce the best soup.

Science has always inspired indicator design. From physics to signal processing, many indicators use concepts from mechanical engineering, electronics, and probability. In Superalgos' Data Mining section, we've explored using thermodynamics and information theory to construct indicators and using statistical and probabilistic techniques like reduced normal law to take advantage of low probability events.

An asset's price is like a mechanical object revolving around its moving average. Using this approach, we could design an indicator using the oscillator's Total Energy. An oscillator's energy is finite and constant. Since we don't expect the price to follow the harmonic oscillator, this energy should deviate from the perfect situation, and the maximum of divergence may provide us valuable information on the price's moving average.

Definition of the Harmonic Oscillator in Few Words

Sinusoidal function describes a harmonic oscillator. The time-constant energy equation for a harmonic oscillator is:

With

Time saves energy.

In a mechanical harmonic oscillator, total energy equals kinetic energy plus potential energy. The formula for energy is the same for every kind of harmonic oscillator; only the terms of total energy must be adapted to fit the relevant units. Each oscillator has a velocity component (kinetic energy) and a position to equilibrium component (potential energy).

The Price Oscillator and the Energy Formula

Considering the harmonic oscillator definition, we must specify kinetic and potential components for our price oscillator. We define oscillator velocity as the rate of change and equilibrium position as the price's distance from its moving average.

Price kinetic energy:

It's like:

With

and

L is the number of periods for the rate of change calculation and P for the close price EMA calculation.

Total price oscillator energy =

Given that an asset's price can theoretically vary at a limitless speed and be endlessly far from its moving average, we don't expect this formula's outcome to be constrained. We'll normalize it using Z-Score for convenience of usage and readability, which also allows probabilistic interpretation.

Over 20 periods, we'll calculate E's moving average and standard deviation.

We calculated Z on BTC/USDT with L = 10 and P = 21 using Knime Analytics.

The graph is detrended. We added two horizontal lines at +/- 1.6 to construct a 94.5% probability zone based on reduced normal law tables. Price cycles to its moving average oscillate clearly. Red and green arrows illustrate where the oscillator crosses the top and lower limits, corresponding to the maximum/minimum price oscillation. Since the results seem noisy, we may apply a non-lagging low-pass or multipole filter like Butterworth or Laguerre filters and employ dynamic bands at a multiple of Z's standard deviation instead of fixed levels.

Kinetic Detrender Implementation in Superalgos

The Superalgos Kinetic detrender features fixed upper and lower levels and dynamic volatility bands.

The code is pretty basic and does not require a huge amount of code lines.

It starts with the standard definitions of the candle pointer and the constant declaration :

let candle = record.current
let len = 10
let P = 21
let T = 20
let up = 1.6
let low = 1.6

Upper and lower dynamic volatility band constants are up and low.

We proceed to the initialization of the previous value for EMA :

if (variable.prevEMA === undefined) {
    variable.prevEMA = candle.close
}

And the calculation of EMA with a function (it is worth noticing the function is declared at the end of the code snippet in Superalgos) :

variable.ema = calculateEMA(P, candle.close, variable.prevEMA)
//EMA calculation
function calculateEMA(periods, price, previousEMA) {
    let k = 2 / (periods + 1)
    return price * k + previousEMA * (1 - k)
}

The rate of change is calculated by first storing the right amount of close price values and proceeding to the calculation by dividing the current close price by the first member of the close price array:

variable.allClose.push(candle.close)
if (variable.allClose.length > len) {
    variable.allClose.splice(0, 1)
}
if (variable.allClose.length === len) {
    variable.roc = candle.close / variable.allClose[0]
} else {
    variable.roc = 1
}

Finally, we get energy with a single line:

variable.E = 1 / 2 * len * variable.roc + 1 / 2 * P * candle.close / variable.ema

The Z calculation reuses code from Z-Normalization-based indicators:

variable.allE.push(variable.E)
if (variable.allE.length > T) {
    variable.allE.splice(0, 1)
}
variable.sum = 0
variable.SQ = 0
if (variable.allE.length === T) {
    for (var i = 0; i < T; i++) {
        variable.sum += variable.allE[i]
    }
    variable.MA = variable.sum / T
for (var i = 0; i < T; i++) {
        variable.SQ += Math.pow(variable.allE[i] - variable.MA, 2)
    }
    variable.sigma = Math.sqrt(variable.SQ / T)
variable.Z = (variable.E - variable.MA) / variable.sigma
} else {
    variable.Z = 0
}
variable.allZ.push(variable.Z)
if (variable.allZ.length > T) {
    variable.allZ.splice(0, 1)
}
variable.sum = 0
variable.SQ = 0
if (variable.allZ.length === T) {
    for (var i = 0; i < T; i++) {
        variable.sum += variable.allZ[i]
    }
    variable.MAZ = variable.sum / T
for (var i = 0; i < T; i++) {
        variable.SQ += Math.pow(variable.allZ[i] - variable.MAZ, 2)
    }
    variable.sigZ = Math.sqrt(variable.SQ / T)
} else {
    variable.MAZ = variable.Z
    variable.sigZ = variable.MAZ * 0.02
}
variable.upper = variable.MAZ + up * variable.sigZ
variable.lower = variable.MAZ - low * variable.sigZ

We also update the EMA value.

variable.prevEMA = variable.EMA

Conclusion

We showed how to build a detrended oscillator using simple harmonic oscillator theory. Kinetic detrender's main line oscillates between 2 fixed levels framing 95% of the values and 2 dynamic levels, leading to auto-adaptive mean reversion zones.

Superalgos' Normalized Momentum data mine has the Kinetic detrender indication.

All the material here can be reused and integrated freely by linking to this article and Superalgos.

This post is informative and not financial advice. Seek expert counsel before trading. Risk using this material.

What quarterly bank earnings reveal

Big banks know the economy best. Unless we’re talking about a housing crisis in 2007…

Banks are crucial to the U.S. economy. The Fed, communities, and investments exchange money.

An economy depends on money flow. Banks' views on the economy can affect their decision-making.

Most large banks released quarterly earnings and forward guidance last week. Others were pessimistic about the future.

What Makes Banks Confident

Bank of America's profit decreased 30% year-over-year, but they're optimistic about the economy. Comparatively, they're bullish.

Who banks serve affects what they see. Bank of America supports customers.

They think consumers' future is bright. They believe this for many reasons.

The average customer has decent credit, unless the system is flawed. Bank of America's new credit card and mortgage borrowers averaged 771. New-car loan and home equity borrower averages were 791 and 797.

2008's housing crisis affected people with scores below 620.

Bank of America and the economy benefit from a robust consumer. Major problems can be avoided if individuals maintain spending.

Reasons Other Banks Are Less Confident

Spending requires income. Many companies, mostly in the computer industry, have announced they will slow or freeze hiring. Layoffs are frequently an indication of poor times ahead.

BOA is positive, but investment banks are bearish.

Jamie Dimon, CEO of JPMorgan, outlined various difficulties our economy could confront.

But geopolitical tension, high inflation, waning consumer confidence, the uncertainty about how high rates have to go and the never-before-seen quantitative tightening and their effects on global liquidity, combined with the war in Ukraine and its harmful effect on global energy and food prices are very likely to have negative consequences on the global economy sometime down the road.

That's more headwinds than tailwinds.

JPMorgan, which helps with mergers and IPOs, is less enthusiastic due to these concerns. Incoming headwinds signal drying liquidity, they say. Less business will be done.

Final Reflections

I don't think we're done. Yes, stocks are up 10% from a month ago. It's a long way from old highs.

I don't think the stock market is a strong economic indicator.

Many executives foresee a 2023 recession. According to the traditional definition, we may be in a recession when Q2 GDP statistics are released next week.

Regardless of criteria, I predict the economy will have a terrible year.

Weekly layoffs are announced. Inflation persists. Will prices return to 2020 levels if inflation cools? Perhaps. Still expensive energy. Ukraine's war has global repercussions.

I predict BOA's next quarter earnings won't be as bullish about the consumer's strength.

The Federal Funds Rate (FFR) is the target interest rate set by the Federal Reserve System (Fed)'s policy-making body (FOMC). This target is the rate at which the Fed suggests commercial banks borrow and lend their excess reserves overnight to each other.

The FOMC meets 8 times a year to set the target FFR. This is supposed to promote economic growth. The overnight lending market sets the actual rate based on commercial banks' short-term reserves. If the market strays too far, the Fed intervenes.

Banks must keep a certain percentage of their deposits in a Federal Reserve account. A bank's reserve requirement is a percentage of its total deposits. End-of-day bank account balances averaged over two-week reserve maintenance periods are used to determine reserve requirements.

If a bank expects to have end-of-day balances above what's needed, it can lend the excess to another institution.

The FOMC adjusts interest rates based on economic indicators that show inflation, recession, or other issues that affect economic growth. Core inflation and durable goods orders are indicators.

In response to economic conditions, the FFR target has changed over time. In the early 1980s, inflation pushed it to 20%. During the Great Recession of 2007-2009, the rate was slashed to 0.15 percent to encourage growth.

Inflation picked up in May 2022 despite earlier rate hikes, prompting today's 0.75 percent point increase. The largest increase since 1994. It might rise to around 3.375% this year and 3.1% by the end of 2024.

Market fraud

Due to its decentralized and fragmented character, the crypto market has integrity difficulties.

Cryptocurrencies are an immature sector, therefore market manipulation becomes a bigger issue. Many research have attempted to uncover these abuses. CryptoCompare's newest one highlights some of the industry's most typical scams.

Why are these concerns so common in the crypto market? First, even the largest centralized exchanges remain unregulated due to industry immaturity. A low-liquidity market segment makes an attack more harmful. Finally, market surveillance solutions not implemented reduce transparency.

In CryptoCompare's latest exchange benchmark, 62.4% of assessed exchanges had a market surveillance system, although only 18.1% utilised an external solution. To address market integrity, this measure must improve dramatically. Before discussing the report's malpractices, note that this is not a full list of attacks and hacks.

Clean Trading

An investor buys and sells concurrently to increase the asset's price. Centralized and decentralized exchanges show this misconduct. 23 exchanges have a volume-volatility correlation < 0.1 during the previous 100 days, according to CryptoCompares. In August 2022, Exchange A reported $2.5 trillion in artificial and/or erroneous volume, up from $33.8 billion the month before.

Spoofing

Criminals create and cancel fake orders before they can be filled. Since manipulators can hide in larger trading volumes, larger exchanges have more spoofing. A trader placed a 20.8 BTC ask order at $19,036 when BTC was trading at $19,043. BTC declined 0.13% to $19,018 in a minute. At 18:48, the trader canceled the ask order without filling it.

Front-Running

Most cryptocurrency front-running involves inside trading. Traditional stock markets forbid this. Since most digital asset information is public, this is harder. Retailers could utilize bots to front-run.

CryptoCompare found digital wallets of people who traded like insiders on exchange listings. The figure below shows excess cumulative anomalous returns (CAR) before a coin listing on an exchange.

Finally, LAYERING is a sequence of spoofs in which successive orders are put along a ladder of greater (layering offers) or lower (layering bids) values. The paper concludes with recommendations to mitigate market manipulation. Exchange data transparency, market surveillance, and regulatory oversight could reduce manipulative tactics.

Follower count, earnings, and more

I created my 7th TikTok account six months ago. TikTok's great. I've developed accounts for Amazon products, content creators/brand deals education, website flipping, and more.

Introverted or shy people use faceless TikTok accounts.

Maybe they don't want millions of people to see their face online, or they want to remain anonymous so relatives and friends can't locate them.

Going faceless on TikTok can help you grow a following, communicate your message, and make money online.

Here are 6 steps I took to turn my Tik Tok account into a $60,000/year side gig.

From nothing to $60K in 6 months

It's clickbait, but it’s true. Here’s what I did to get here.

Quick context:

I've used social media before. I've spent years as a social creator and brand.

I've built Instagram, TikTok, and YouTube accounts to nearly 100K.

How I did it

First, select a niche.

If you can focus on one genre on TikTok, you'll have a better chance of success, however lifestyle creators do well too.

Niching down is easier, in my opinion.

Examples:

• Travel

• Food

• Kids

• Earning cash

• Finance

You can narrow these niches if you like.

During the pandemic, a travel blogger focused on Texas-only tourism and gained 1 million subscribers.

Couponing might be a finance specialization.

One of my finance TikTok accounts gives credit tips and grants and has 23K followers.

Tons of ways you can get more specific.

Consider how you'll monetize your TikTok account. I saw many enormous TikTok accounts that lose money.

Why?

They can't monetize their niche. Not impossible to commercialize, but tough enough to inhibit action.

First, determine your goal.

In this first step, consider what your end goal is.

Are you trying to promote your digital products or social media management services?

You want brand deals or e-commerce sales.

This will affect your TikTok specialty.

This is the first step to a TikTok side gig.

Step 2: Pick a content style

Next, you want to decide on your content style.

Do you do voiceover and screenshots?

You'll demonstrate a product?

Will you faceless vlog?

Step 3: Look at the competition

Find anonymous accounts and analyze what content works, where they thrive, what their audience wants, etc.

This can help you make better content.

Like the skyscraper method for TikTok.

Step 4: Create a content strategy.

Your content plan is where you sit down and decide:

• How many videos will you produce each day or each week?

• Which links will you highlight in your biography?

• What amount of time can you commit to this project?

You may schedule when to post videos on a calendar. Make videos.

5. Create videos.

No video gear needed.

Using a phone is OK, and I think it's preferable than posting drafts from a computer or phone.

TikTok prefers genuine material.

Use their app, tools, filters, and music to make videos.

And imperfection is preferable. Tik okers like to see videos made in a bedroom, not a film studio.

Make sense?

When making videos, remember this.

I personally use my phone and tablet.

Step 6: Monetize

Lastly, it’s time to monetize How will you make money? You decided this in step 1.

Time to act!

For brand agreements

• Include your email in the bio.

• Share several sites and use a beacons link in your bio.

• Make cold calls to your favorite companies to get them to join you in a TikTok campaign.

For e-commerce

• Include a link to your store's or a product's page in your bio.

For client work

• Include your email in the bio.

• Use a beacons link to showcase your personal website, portfolio, and other resources.

For affiliate marketing

• Include affiliate product links in your bio.

• Join the Amazon Influencer program and provide a link to your storefront in your bio.

$60,000 per year from Tik Tok?

Yes, and some creators make much more.

Tori Dunlap (herfirst100K) makes $100,000/month on TikTok.

My TikTok adventure took 6 months, but by month 2 I was making $1,000/month (or $12K/year).

By year's end, I want this account to earn $100K/year.

Imagine if my 7 TikTok accounts made $100K/year.

7 Tik Tok accounts X $100K/yr = $700,000/year