Don, re your nirvana trading hypothetical:
Message 27021865
Here's a simple method for taking advantage of the month-to-month saw-tooth pattern of the SOX:
1. Sell, in increments, whenever the SOX is setting new highs.
2. Buy, in increments, whenever the SOX is 10% or more off its highs.
3. At all other times, do nothing (this will be the hardest step to follow).
During 2010, this method would have resulted in:
Selling, in April (SOX 371 to 405), and in December (SOX 405 to 419).
Buying, in February (SOX 334 to 310), and May to August (SOX 364 to 306).
This will improve on BuyAndHold, which, for the SOX in 2010, is about +10% so far.
This method won't make as much as your "nirvana method", but it has the advantage of working when you are unable to predict the near future. This method will work in almost any bull market. Even in the strongest bull markets, there are multiple pullbacks of at least 10%, and these pullbacks tend to overlap previous highs.
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In 2010, there was more divergence between related stocks than usual. AMAT -4%, while NVLS +41%, is an example.
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