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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 671.910.0%Nov 14 4:00 PM EST
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To: donald sew who wrote (27441)9/28/1999 12:37:00 AM
From: Smooth Drive  Read Replies (2) of 99985
 
Hello Donald,

Thanks for that info. I previously said I'm experimenting with 3 high/low indexes and its actually 5. I'll post a bit about each one in the future.

Here's an update of one of the indexes I've previously discussed based on (New Highs/(New Highs + New Lows)) and then create a 10 day moving average. An article based on this indicator but used differently at Message 10028560.

I've gone back to 1980 with the high/low index data. (You might want to consider stopping in that area as well because prior to 1978 the New High and Low did not look back a full year but rather from the beginning of the year only.)

The results are placed on a bullish percent chart, with each box representing 2% and three boxes required for a reversal. I'm experimenting with different buy and sell requirements. Here, for example, is how it looks from the reversal up on 9/23/98 using a buy at 1) Bear Alerts (reversing up anywhere under 30); 2) crossing 50; and 3) double tops. Sell at 1) Bear Alerts (reversing down below 70); 2) Bear Bottoms; 3) crossing 50; and 3) double bottoms.

80
78                 X
76         X       X O
74         X O     5 O 
72         X O     X O 
70     X   X O     X O X 
68     X O X O     X O X O 
66     X O X O     X O X O
64     X C 1 O     X O X O 
62     X O X O     X O X O
60     X O X O     X O X O 
58     X O X O     X O X O
56     X O X O     X O X O
54     B O X O     X O 7 O
52     X O X O     X O X O
50     X O X O     X O X O
48     X O X O     X O 6 O
46     X O   O X   X O X O
44     X     2 X O X O X O
42     X     O X O X O   O
40     X     O X O X     O X
38     X     O X O X     O X O
36     X     O X O X     O X O
34     X     O X O X     8 X 9
32     X     O X O 4     O X O
30     X     O X O X     O X O
28     X     O X O X     O X O
26     X     O 3 O       O X O
24 X   X     O X         O X O
22 X O X     O X         O X O
20 X O A     O           O X O 
18 X O X                 O   O
16 X O X                     O
14 X O                       O
12 X 
10 X 
8  X 
6  9

This buy/sell system resulted in the following (shorting not considered):

BUY					        DOW
SELL	DATE	  DOW	     %	       TOTAL	TOTAL
					
B	9/23/98	  8154.41			
S	12/10/98  8841.58    0.0843		
B	12/29/98  9320.98			
S	1/14/99	  9120.93   -0.0215    0.0628 	
B	3/4/99	  9467.4			
S	5/17/99	  10853.47   0.1464    0.2092 	0.3309
B	6/30/99	  10970.8			
S       7/22/99   10969.22   0.00      0.2092   0.3451
B       8/19/99   10963.84
S       9/9/99    11079.40   0.0105    0.2197   0.3587

Although the above doesn't depict it (too lazy to type it back that far) this chart gave a sell signal on 5/19/98 -- so it acted as a leading indicator that time. The NYSE Bullish % gave its sell signal on 5/13/98 and it always leads.

You'll note that the bottom in 98 occurred at 6% on 9/3/98. It's also of note that a big drop in the Dow occurred on 8/27/98 (-417.88) when the above was at 12% and the biggest drop occurred on August 31 (-599.41) at 10%. It continued to drop for a few days and then reversed back up on 9/23/99. I guess the point is we can be very low on this chart and still have a good sell off.

Of Note: From 1980 to present, when this high/low index reverses up from these low areas, there have been some very good opportunities.

Take care,

Eric
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