We exited the QQQQ at the open today at 45.58 for a profit of 9.56% from the 50.40 short entry on 1/3/08. Not bad for one month. Of course, we gave up some profit from the low, but this is the price that must be paid if we want to capture as much of the longer term trend as possible. We also went long the QQQQ at the open at 45.58 with the VLA System Buy Signal from 2/1/08. Anyone trading the system must be prepared for 2 or 3 whipsaws during this trend consolidation or basing period before the next trend is established. This is the price to be paid for not knowing. We may want to believe that we know based on this or that analysis whether it be elliott wave, chart patterns, sentiment, cycles, etc., but in the end we really do not know.
Please keep in mind that this exercise is for demonstration purposes here. I am not recommending the purchase or short sale of the QQQQ. Each trader must take responsibility for and make his own trading decisions.
Interestingly, the Cabot's Market Timing System presented yesterday, 2/3/08, has not given a short sale exit signal. The reason it did not was that even though more than 3 of the system indexes closed at or above their 25demas, the 25demas have not risen two consecutive days to confirm the signal. This may happen, but it hasn't yet. Even if it did, it would not be a signal to go long due to the long term trend being down based on the system parameters.