MarketTrak Question/Comment Message


Posted By: Neil   Date: Sat Jun 29, 2013

Title: 5 and 10 day trend.

Message:
  I'm a new subscriber. I have managed investments in the stock market evenly divided in the DOW and ASX. I am NOT a day trader. I currently have daily control of my portfolio, and when downward trends are indicated, I rely on my own judgement in transferring between cash and the market, with limited success. Your model gives me some optimism in calculating and timing this dilemma. On Mon July 1st the 1 day ANO position is LONG, yet the 5 day ANO position is negative. Does this indicate that gains are forecast on Monday, but the rest of the week indicates losses? In this example, working on the 5 day forecast, should I remain in cash for the whole of next week? With the 10 and 15 day forecast positive, should I re-enter the market for that period?
 
  Thank you, Neil
 

Response:
  The 1-day model does as you state. It gives a forecast of the direction of the market over the next trading day. A LONG signal simply means that the model is predicting that the market will close higher than the previous close. A SHORT signal means that the model is predicting that the market will close lower than the previous close. A CASH signal means that the direction is too close to call and that a cash position might be best.

 The 5-day, 10-day, and 15-day models forecast the trend of the market over the period indicated. By the trend, I mean the forward slope. The slope could be positive yet down days are possible. I suggest that you read the explanation of the 5-day model. It is given here. The 10-day and the 15-day models are identical to the 5-day model but their slope analysis covers more days. These models are still experimental and I have not given any details on how they would be used. But I would say that if the three agree in direction, then my confidence in the 1-day model results would increase if it was also in agreement.

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