Atin: First, we should probably invite the "flame throwers" to shut me up on the NasBar stuff and get back to the PB. Happy to oblige, cause I've really cluttered up this thread with non-Fordian noise for quite some time.
Until we get a show of hands on that, however, the graph on the NasBar page is first. The green arrows indicate the number of Kansas City Mini Value Line contracts they sold on the red bar indicator's stop placement after a handsome profit (around 7 fold on intial maring of $1500, I think). The blue arrows indicate where they added a contract based upon blue bar or purple bar indicators. Don't confuse these arrows with buy/sell indicators.
As far as the specifics of the "bars" and how they are generated, that's proprietary (and not my property to distribute, even if I had complete info). The best thing is to figure out how to follow O'Neill's "M". The NasBar is a computurized version of Chapter 7, more or less. The descriptions are not the best, but rather than trying to figure it out, it should suffice as confirmation of your own efforts to let the market show you when it's safe to buy, and best to short. That's how I try to use it, but I plan on not having it one day soon. You should too. When they begin running money, the site will change and may not be freely accessible, except to those of us who are shipping dough to be run.
To try and stifle any possible confusion, however, since I piqued your interest: Red bars and purple bars are straight out of the book. What is "adequate" price progress on a red bar that is not a reversal? Don't know what the current settings are by the Farmer, and this is clearly the hardest of O'Neill's concepts to interpret accurately. The blue bar is their effort to find the bottom, whereas O'Neill simply looks for a low and counts. The NasBar takes an intial position on the blue bar day after the cash markets close and adds on subsequent blue and purple bars. So, it's critical for the Farmer to find a consitent, predictable and low risk bottom to start accumulating futures contracts. Red bars dictate adjusted stop placement, which are ultimately hit and close out the open positions.
How do I use the bars? Like I said, mostly confirmation of my own "M" efforts. I would do nothing on the blue bars except count to 10. Purple bars would have me buying stocks that are leading the charge from proper bases into new high territory. Red bars would have me off margin, depending upon where I think we are in the current move up. If it occurs shortly after a purple bar, I would tend to ignore it, unless it is confirmed with another red. When we are starting to flatten out in the chart of the Nas Comp after a good run, red bars get would me off margin and looking for the exit, as quickly as I could without panicking.
For example, I found that the 10/8 red bar wasn't clear enough to me to get to cash, but when we bounced during the following 10 days and had a failed rally just before the crash, I had a great opportunity to get out. Actually, I made some additional dough by holding on for 10 more days. Probably not good practice, but nice to know that things generally don't deteriorate dramatically for a couple of weeks following "distribution".
Now, on shorts, if we are flattening out after a good run, a red bar would have me looking hard for the PB short candidates. A blue bar would have me covering some of those shorts, and tightening stops on the rest. If we had a purple bar, I'd cover all trying not to panick.
This is my current plan. Don't want you to think I've executed it completely and correctly, yet, however. And would never suggest that I can execute it completely correctly, but I'm gonna try. It appears to be the key to CANSLIM, for me. Last time we had a clear start of a significant leg up (end of April - the Farmer called it as did Chapter 7 analysis), I was so shell shocked and beat up by having fought the market over the winter (at great expense to my account and my head), that I couldn't hold on to the new leaders (MANU, MIND, ORBKF, ADEX, JBIL etc). I jumped around like a mad man anytime a powerhouse "corrected" but didn't really misbehave. If I'd just held the stocks that broke out to the lead after late April and sold them by early October (at the latest), my guess is my account would have increased between 200 and 300%. From late April until October most of those stocks doubled or tripled. Assuming some others that I owned didn't do so well(and they didn't), but recognizing a fully margined account during most of that 6 months, maybe those numbers are low. As it is, I did fine, but I'm determined to make the system work even better. "M" is key, IMHO.
On the short side, I missed it this time. But, what I'd like is to "see" the distribution days, and immediately glance over to my PB Short list, and buy puts while I'm closing out my longs. Now, wouldn't that be cool!! Easier said than done, of course.
Where does the PB Long fit in here for me? Seems to me a great tool for finding lower risk stocks during tough times, and some really great ones when the "M" turns. Maybe nows a good time to start some of those longs, just in case the "M" really does start a new intermediate run up. MIND and ORBKF are the best PB Longs I've ever seen, but they emerged after we had follow through.
Hope that's helpful to you, Atin.
Jeff |
