We haven’t had an oversold signal in months. For the year, the account I dedicated for the algo account returned 12%.
It has been very inactive due to no signals and solely dedicated to only OS signals. In 2023 that is going to change, as I intend to also include the overbought algos into my trading. It seems, and this is new for our algorithms, the bear market has produced actionable and profitable trading opportunities on the short side.
Here is the data for QQQ overboughts in 2022.
That’s an average loss on the QQQ of 4% following an overbought signal over the past 12 months. That’s enough for me to determine it’s worth a shot, using inverse ETFs to position into this periods of bullishness.
Overall, I suspect markets will be bludgeoned in 2023, which fits my world view and makes me feeeeeeel nice at night.
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Oversold will outperform overbought in 2023.