It has been a while since I have added a new market trend system to the current list of trend following systems in the System Tracker. (As a side note, the System Tracker and trend following systems that I present are for educational purposes only.) This week I am introducing a proprietary system that I am calling the Breadth Momentum System. This system incorporates three components: market breadth, market momentum, and market trend. When all three components are in agreement with positive breadth, positive momentum and positive trend, the market is in a confirmed uptrend. When all three components are in agreement with negative breadth, negative momentum, and negative trend, the market is in a confirmed downtrend. The system goes to neutral when the momentum reverses from positive to negative or from negative to positive depending on the initial trend.
On January 7, 2009 the system signalled a confirmed uptrend and went neutral on January 15, 2009. At present, we are just one down day away from a confirmed downtrend. I expect that there will be some whipsaws with this system, however, my backtesting shows that they generally occur in clusters and once the system gets going, it keeps you in the trend for a long time.
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2 comments:
Am NOT (yet) saying we will, but the ingredients are there for a bear trap; note how Q's are trading > 28.07 in after mkt.
SPY puts were being aggressively sold. Look at SZCNC (100 contracts was the last trade) & SZCNB; compare B/A to high.
Craig, you haven't liked the nature of this decline. It could be because we're going to get either a failed 5th, OR the bane of all wavers (IMO) an “X” wave.
don't remember whether i signed my name to previous comment about failed 5th or "X" wave.
Regards,
dave
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