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Moby Waller is a former CBOE Market Maker floor trader and off the floor London-based European Index Options Trader. He is co-Portfolio Manager of the ETFTRADR & Rapid Options Income ROI... More
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  • 2014 Preakness Picks & Analysis From

    Price Headley, CEO of The second leg of the Triple Crown happens this Saturday at Pimlico racecourse outside Baltimore, and my comments about California Chrome (Post Position 3, morning line odds 3-5) as a legitimate contender for the first Triple Crown in 36 years still stand. The horse was hand ridden to victory in the Derby and should be fresh for this race. His draw in the number 3 post position was also favorable.

    The race is 1-3/16 miles (1/16 short than the Derby) and the weather should be good Saturday for a fast track. The only pending question here in my view is who gets 2nd and 3rd. At 3-5 morning line odds, it's not worth betting Chrome to win, we need to pair him with other horses to get a decent payoff.

    Here's my assessment:

    I think there will be plenty of speed in this race with Social Inclusion and a couple of others battling on the front end. I expect this sets up for closers to finish well to get 2nd and maybe Social Inclusion can hang on for 3rd.

    I like the local horse Kid Cruz (PP 7, 20-1) as he won on this track in the Tesio stakes last month with a strong closing kick, and I figure he can pick up the pieces for 2nd place.

    I think Ride on Curlin (PP 10, 10-1) will also have a good closing kick, and Dynamic Impact (PP 1, 12-1) and Bayern (PP 5, 10-1) are wildcards that have an outsiders shot at 3rd or 4th. So here's my play on a model portfolio:

    $10 Exacta 3 on top of 7,10
    $2 Trifecta 3 on top of 7,10 on top of 7,10, 1, 5

    Good Luck!

    Moby Waller, Portfolio Manager at This year's Preakness is a terrible betting race, due to California Chrome being such a huge (and deserved) favorite. Price & myself both correctly picked Chrome to win the Kentucky Derby, but neither of us had the 2nd place longshot horse and that messed up our Exacta & Trifecta wagers.

    The Preakness is normally a race where closers do not win, and it often seems to run as a shorter race than its 1 3/16 length would indicate. However, there isn't nearly as much impressive speed in this race as there was in the Deby, so I think some late runners could finish in the money.

    There is a story out there about huge favorite Chrome having a cough, so take that for what it's worth --

    I put California Chrome (PP 3, 3-5) on top. In order to make the betting on this race somewhat potentially lucrative, I threw out the second betting choice of Social Inclusion, as the morning line odds of 5-1 were too low for this horse relative to the other contenders.

    Next I chose Kid Cruz (PP 7, 20-1), who can close, won last time out at the this Pimlico race course, and has nice odds.

    Then, Ride On Curlin (PP 10, 10-1) who also can close, has had consistent speed numbers, and ran a decent Derby despite a criticized Borel ride (new jockey this race).

    Next I looked at a lot of these horses, but settled on Dynamic Impact (PP 1, 12-1) -- won his last 2 races with decent speed times.

    Theoretical Wagers:

    $5 Exacta 3 with 7/10/1
    $2 Exacta Box 3 7 10 1
    $2 Trifecta Box 3 7 10 1
    $5 Win Place Show on 7,10

    May 16 11:47 AM | Link | Comment!
  • 2014 Kentucky Derby Picks & Analysis From

    Price Headley, CEO of

    It's time for our annual KY Derby selections and commentary. First, we'll start off with an updated table of past Derby winners, their speed ratings and final tune-up race. Our analysis of past data indicates that horses with strong 100+ speed ratings in prep races have a better probability of winning the big race.

    Derby Winner

    BRIS Speed Rating

    Last race (# weeks before Derby)


    97, 102

    Florida Derby (5 weeks)


    95, 102

    Santa Anita Derby (4 weeks)


    100, 89

    Turfway Spiral (5 weeks, poly)


    92, 94

    Arkansas Derby (3 weeks)


    96, 98

    Sunland Derby (5 weeks)


    106, 104

    Florida Derby (5 weeks)


    98, 101

    Bluegrass Stakes (3 weeks, poly)


    104, 104, 97, 97

    Florida Derby (5 weeks)


    100, 96, 98, 96

    Santa Anita Derby (4 weeks)


    105, 109, 101, 103

    Arkansas Derby (3 weeks)


    111, 103, 97

    Wood Memorial (3 weeks)


    109, 105, 88, 94

    Illinois Derby (4 weeks)


    108, 108, 106, 98

    Wood Memorial (3 weeks)


    110, 103, 100, 98

    Wood Memorial (3 weeks)


    104, 94, 94, 94

    Lexington (2 weeks)


    107, 103, 73

    Santa Anita Derby (4 weeks)


    102, 98, 105

    Santa Anita Derby (4 weeks)


    101, 102, 93

    Arkansas Derby (3 weeks)


    98, 103, 106

    Blue Grass (3 weeks)


    104, 105, 99, 100

    Wood Memorial (3 weeks)


    96, 85, 77

    Blue Grass (3 weeks)

    LIL E. TEE

    102, 96, 107, 100

    Arkansas Derby (2 weeks)


    109, 100, 99, 87

    Blue Grass (3 weeks)


    108, 101, 104, 98

    Blue Grass (3 weeks)

    My favorite in this year's race is California Chrome (Post Position 5, 5-2 odds). This is not a bold pick but he's by far the class in the field, having won his last 4 races by a combined 25+ lengths. He truly looks like the best chance at a Triple Crown winner in many years (remember we haven't had a horse win all three jewels of the Crown since Affirmed held off Alydar to win it all back in 1978).

    I would not be surprised to see the favorite go off closer to 2-1, which is very short odds in a 19-horse field. The Derby usually favors closers and horses that want the extra ground. Typically this doesn't show up on paper yet for these colts, as they've only gone 1-1/8 miles or less, and the Derby is 1-1/4 miles. That last 1/8 of a mile (also known as a "furlong" in the racing biz) is what separates the champions from the also-rans.

    We should have a beautiful sunny day with no rain at Churchill Downs for this year's Derby as well.

    With those thoughts in mind, here are my top challengers to California Chrome:

    Dance with Fate (PP 12, 20-1): Looking for value here among the horse that won their last prep race. Dance with Fate won the Blue Grass at Keeneland impressive, though his speed rating in that race was only 99. Keeneland has been one of those hard to judge preps because of the Polytrack surface, which makes this pick a high risk, high reward play. But given that Street Sense won the Derby off a similarly slow Blue Grass win, I like the value here for win bets.

    Wicked Strong (PP 20, 6-1): Awesome closing kick in the Wood Memorial win, now he's on everyone's radar as a logical second choice. The outside post position (the 20 horse just scratched) is not a huge issue for a closer, as he will settle in towards the back early and get a rail trip to save distance. Just not a super value here, but must consider in exotic bets.

    Samraat (PP 6, 15-1): Gets my vote for Mr. Consistency, ran a game second in the Wood but seems to lack the closing kick to actually win it. Like him to get on the board though in 2nd or more likely 3rd.

    Ride on Curlin (PP 19, 15-1): Closed strong in the Arkansas Derby behind longshot winner Danza. Gets the wily jock Calvin Borel (they call him "Bo-Rail" at the Derby for his savvy wins on longshot Mine that Bird and Street Sense). Something tells me Cal will be close at the finish. Call it a hunch play.

    So my theoretical bets on a sample $100 model portfolio look like this:

    $10 Win on 12
    $6 Win on 20
    $4 Win on 19
    $5 Exacta box 5,12
    $5 Exacta box 5,10
    $5 Exacta box 5,20
    $1 Trifecta 5 with 12 with ALL
    $1 Trifecta 5 with 20 with ALL
    $1 Trifecta 5 with 19 with 20
    $1 Trifecta 5 with 19 with 6
    $1 Trifecta 5 with 6 with 19
    $1 Trifecta 5 with 6 with 20

    Moby Waller, Portfolio Manager,

    We've had a lot of rain recently in Kentucky (and it's been cold here, like in most of the country), but the forecast for Louisville on Saturday looks fairly dry and warm - should be a fast track.

    Looks like there are a lot of front-running speed type horses in this year's Derby. A horse who can stalk a bit off the pace and/or close strongly is likely to win in my view.

    California Chrome (PP 5, 5-2) is the obvious favorite here, with 4 very strong wins in a row. I have to put the favorite on top in this case, as much as I would like not to. Jockey/horse would do better to stalk the pace rather than try to lead from early on.

    Wicked Strong (PP 20, 6-1) looks ready to run a big race and can handle the distance, but the far out post position could hinder.

    Danza (PP 4, 8-1) finished the last race very well and looks to like the track here.

    Medal Count (PP 14, 20-1) can close and is bred for long distance, hasn't done much on dirt but seems to like the track.

    Suggested theoretical wagers (all exotics, based on having a favorite in there):

    $2 Exacta Box: 5, 20, 4, 14 = $24
    $2 Trifecta Box: 5, 20, 4, 14 = $48

    Others to put in for Exotics:
    Dance With Fate (PP 12, 20-1)
    Intense Holiday (PP 16, 8-1)
    Candy Boy (PP 18, 15-1)

    $2 Exacta Box: 5, 12, 16, 18 = $24

    Alternate Scenario Exotic:

    $1 Exacta Box: 1, 6, 10, 13, 19 = $20

    Total 4 Bets = $116

    From Forbes: "The Derby exacta payouts over the last five years have been (at the $2 increment): $981.60, $306.60, $329.80, $152.40 and $2074.80".

    May 02 11:26 AM | Link | 2 Comments
  • Strong Percent R Readings Indicate Further Market Upside - Revisted For 2014

    Once again, extremely strong momentum/trend readings for the broad market prove very bullish.

    We previously examined this in 2012 and here (as well as before then) - when the market gives an extremely strong Daily reading on Williams Percent R (using the BigTrends inputs and method for %R), it actually is usually a bullish signal for further upside to continue. This is logical given that a very strong reading on this indicator shows the strength of the current trend - but goes against many investors & traders out there who look for a reversal using "overbought" or "oversold" strategies - we know that overbought can go more overbought and of course "the trend is your friend".

    With both the Daily and the Weekly Percent R readings on the S&P 500 Index ETF (NYSEARCA:SPY) hitting 100.00 max readings on the last trading day of 2013, we did a new optimization of the S&P 500 Index (SPX) Daily chart over the past 10 years, January 1 2004 to January 1 2014. Previously we had found that daily close readings over 99 on Percent R were a good Buy signal over the next 17 trading days (a bit over 3 weeks). On the SPX over this particular time frame, the optimal reading was over 98.8 over 19 trading days (a similar result both on level and duration) - over the past 10 years, this system with these settings is 78.6% winners with a win/loss size ratio of 1.39 (33 winners vs 9 losers with winning trades about 1.4x as big as losing trades).

    In general the past 10 years has been a bullish one, but remember that we saw a giant plunge in the market from October 2007 to March 2009. A nice thing about this system is that it largely avoided the losses of that time period (because it didn't generate many Buy signals during that time frame). For example here is the year-by-year results:

    Percent R High Readings System Equity Curve
    (click to enlarge)

    You can see that there were only 2 down years for this system based on these settings (2008 and 2011), and both of those where very small losses - and there was only 1 signal in all of 2008, compared to as many as 8 in the strongest years of 2012 and 2013 (remember that this is on a 19 trading day holding period, basically a month - with no concurrent signals - so there is a maximum of about 12 trading signals a year).

    The Equity Curve of this system when compared to the market since 2004 shows the smooth nature of the gains and how it largely avoided the big losses/drawdowns that the market had:

    Percent R System Equity Curve, 2004 to 2014
    (click to enlarge)

    SPY 2004 to 2014 Chart
    (click to enlarge)

    Here you can see all of the signals for 2013 - also how we currently are in a "buy" signal in effect from 12/26/13:

    SPX Daily Chart
    (click to enlarge)

    The nice thing with the signals in strong years like 2012 & 2013 is that it kept you in the market much of the time during these strong bull runs. The only losing signal in 2013 was the most recently closed one and was actually basically a breakeven - Nov 14 to Dec 11, SPX was down 0.50 from 1782.75 to 1782.22.

    Also remember that a strong January (and we've tested this before, as well as the "First 6 Weeks" indicator), portends well for a strong year in general for the market ... (NYSEARCA:DIA) (NASDAQ:QQQ) (NYSEARCA:IWM) but that's another analysis/story that will unfold over the coming weeks.

    Bottom line is that extremely strong Daily Percent R (Williams %R) readings using the BigTrends method and inputs have been a good indicator for further market upside when we've tested this multiple times in the past over multiple time frames - and continued to work well in 2013. Don't be afraid of jumping on board a strong trend.

    Tags: SPY, QQQ, IWM, DIA
    Jan 03 1:40 PM | Link | Comment!
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