Like a crazed sex-poodle needing release of its 2nd chakra, the market has been begging for some affection.
It has been extended abnormally low to the downside, but the farther it is stretched, the farther it tends to snap back. What happens when we get a market abnormally stretched to the downside without a snap back? Well, to answer that, look at September and October of 2008.
It appears that for now, the myriad mean-reversion based buy signals that have been popping up over the last few days are being released, and a crash from over-sold conditions has been averted. Beware that as the rally has developed from a stretched environment, it may be a powerful release. Let’s just hope its not, uh, premature.
If only Al Gore could have been so lucky.
Best.
IBC Header.
Ever.
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I KNEW you would like it Jake! lol
Wood,
When you say the highest rank picks are the most volatile, is the highest,e.g., a 1 or a 3.
Thanks!
Hawaii, highest ranked are not necessarily the most volatile.
ATR percentage has nothing to do with the ranking.
I’m not sure what you are asking about re: 1 or a 3?
Wood,
In your your explanation, you say the highest ranked are the most volatile and you rank your picks as a 1, 2, 3, etc. So I’m asking if a higher rank is a one or a three. For example, sometimes people say he’s number 1, and imply that that’s the best or perhaps highest in grade, however a number 3 is a higher number,which might imply the higher rank.
So when you say the highest ranked, which way are you thinking of numbers: Would a 1 be higher than a 3 or a 3 be higher than a 1?
By the way, so far your systems knocking out of the park for me!
Hawaii, I am very happy about your success!
Yes, the highest ranked are the lowest numbered where a rank of 1 is the best. Keep in mind ALL of the picks have a positive expectancy and often when there are a large number of picks, say more than 5, the difference between the lower ranked and higher ranked picks may be very very small. However, for purposes of backtesting and replication of the strategy, we have to be able to rank the picks. If not, if you have 10 picks and only enough cash left for 3, the backtester would not know which 3 to buy.
Thanks Wood,
Lately I’ve been at my computer prior to the close so for the last couple of days, I’ve gotten out of the picks as soon as it hit the exit threshold. I’m not sure whether this will prove a better strategy as I don’t believe you’ve tested it that way. But it’s comforting to know I can do that, if I happen to be at my computer, as the success of the trade is certain.
I also like the fact that if I’m busy, it’s very easy to just show up for the e-mail and make a decision. I can already see that this will be the way I’m going to do it when we go to Vegas on our vacation in August.
Of course, I’m probably really biased right now because every trade has been a winner!
What a great system!!!!
Hawaii, it was backtested where if at the close the stock price had exceeded the exit threshold, the trade was closed at the close.
One thing you might try is anytime you are in a trade with a stock that has exceeded the exit threshold, set a stop-market at the exit threshold. If by the end of the day the stop hasn’t been hit, then you could close it at the close.
I really like how simple it is to trade the system once you understand how it works. It literally only takes minutes a day, and that time is primarily spent just entering in your buy/sell orders.