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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: bobby beara who wrote (82635)	2/8/2002 1:09:11 AM
From: Tom Pulley	Respond to of 99985

Bobby, re: <most IT models use some reversal parameters, such as moving average breaks or crossovers, reversal patterns, breaks of support or resistance> You're probably right, but for some reason whenever I tried to correlate any individual technical indicator movement to the market,it never seemed to work very well. So, I've tried to use the technical indicators in unconventional ways. And to evaluate their meaning differently depending on the movement of other parameters. As to why I shorted early in January and now covered, it is a combination of parameters. But, I'll give you a couple of indicators that impacted the model. The MACD and stochastics I use actually turned bearish in mid-December. In early January, the fast lines headed up and intersected the slow lines. In my model that is actually a bearish as opposed to a bullish event and in combination with some other indicators turned the technical part of the model bearish. As far as covering my 25% short position, my model doesn't stay short very long if the economic/fundamental indicators are bullish as they are now. Under bullish fundamental conditions, when short the equation is greatly affected by time short and % decline. In this case, the model had been short for a full month and the Nasdaq was about 10% off its recent high. Those two facts among others contributed to a reading on that model that indicating a short position is getting riskier. Once again, just because the model is looking good so far this year, don't assume it will be right all the time. If I could make a model that good, I wouldn't need to work for living..........but I do so I better go get some sleep. Tom