Current SPX Position: Long at 1631.82
Next Action: Stop at 1626.74 (and rising)
System Score: 6=Bullish=Trend Score + Turn Score=10-4
Proposed New Score: 56%=Neutral=Trend Score + Turn Score=48+8
The System will no longer go short if 4hr support is broken, because the Score narrowly turned bullish late in the day. However, the Proposed New Score narrowly remains neutral, so we'll see how this latest discrepancy plays out. Remember, the new score is meant to be slightly more sensitive at turns which cost it 2 small losses that the current Score did not experience, but I am reserving judgment until the next significant 5%+ downtrend occurs. Due to the recent consolidation, the hourly technicals are in a state at which a 1% drop could easily make the Score wildly bullish and a small rally could get the Score back to neutral. Knife's edge. Good fortune.
Hi S2, if a mild 1% drop, which is a rare thing nowadays, manages to turn your system wildly bullish, it means your system will basically go on bullish mode forever ... together with the market !
ReplyDeleteKidding aside, a rally turns you neutral and a drop turns you bullish. Well we are having more than a small rally, does it mean the system may turn bearish instead of just "neutral" ?
Extrapolating in the future, we all know that at one point, this rally will have to stop for a reason or another and there will be either a correction or new downtrend. Is it something your system can pickup or will there be some "whipsaw" as you call it before it establishes itself short and remain short for a while ?
In other words, do you anticipate your system to be as accurate and uncanny in a downtrend as it has proved to be in this current uptrend ?
Best and keep up the great work !
A small 10pt drop would not always make the Score wildly bullish. My System uses various technical indicators with some consideration for time and level. Often after multi-day consolidations, it doesn't take as much as normal to move the Score. When the trend is solidly up, the Score tends to move between neutral and bullish as hourly indicators move. Vice versa when the trend is solidly down. When the trend is choppy over multiple weeks, the Score tends to swing between bullish and bearish more easily. The Score has 2 elements: trend and turn.
ReplyDeleteDuring the 10% SPX downtrend for September 14th thru November 16th, the System closed 8 winning trades and 2 losing trades for a total of 108pts (~8%). That's a much better performance than the average time period. Why? The System is trend-based, and downtrends tend to move faster than uptrends. Uptrends tend to have more back-and-fill and consolidation with 2 steps up and 1 step back. Of course, past performance yada yada, but it's logical that downtrends would produce larger winners and losers with more profits overall.