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 MarketTrak Question/Comment Message


Posted By: joe   Date: Wed Apr 1, 2009

Title: 2 questions

Message:
  1. What kind of stops do you use?
  2. When the model gives a buy or sell signal, does it take into account how overbought or oversold the market is? I'm asking because you said that you anticipate a buy signal tonight (4-1), but the market already seems a bit overbought.
  Thanks.

Response:
  We use a trailing stop. See the About page for details on this.

  I made the assumption that we would go long tonight because the ANO was very high. I wouldn't expect it to drop the distance required to go into the cash or short regions in a single day. I agree the market is overbought but this doesn't mean that it will immediately correct. The model seems to ignore short-term overbought conditions for this reason. The model has taken into account longer-term overbought/oversold conditions in the past.

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