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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
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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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