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Strategies & Market Trends : Ask DrBob -- Ignore unavailable to you. Want to Upgrade?

To: CookiePuss who wrote (58696)	5/5/2002 11:43:10 AM
From: Louis V. Lambrecht	Respond to of 100058

CP - Yes the NDX has more biotechs. Would there have been much change if the NDX had less biotechs and kept the XOXO, CMGI and other dogs?

To: CookiePuss who wrote (58696)	5/5/2002 4:30:00 PM
From: stan_hughes	Respond to of 100058

Cookie - Index re-arrangement makes comparisons a pain to be sure. A definite handicap when trying to make sense of data using the numbers instead of the Ouija board. About BPCOMP being a better bottom timing signal - could be AFAIK, I can't argue with existing charts. I occasionally look at the various BP values for clues but it's the divergences that interest me. When I first started looking at the current state of Naz divergence in detail, I wasn't looking at the existence of divergence as a timing signal unto itself so much as I was looking at the beta effect (observable in the degree of divergence) as a predictor of whether the overall Grandaddy trend was nearing an end. In other words, I wasn't looking at divergence as a means of identifying the numerous intermediate tops and bottoms within the trend, I was looking for a marker that might indicate the absolute top or bottom for purposes of trading the primary reversal - the holy grail, if you will. Believe me, I'd love to find the magic bullet for those intermediate moves too, but I don't think divergence offers much when formulating trading strategy except at points of extreme under or over valuation. Too imprecise to be of much use while inside the trend IMO, but a potentially invaluable confirmation tool for picking major tops and bottoms. The rule in the raw for Nasdaq as it stands now: Based on past tops where NDX achieved a positive divergence of X% over COMP, hopefully you will be buying the genuine bottom when NDX achieves a negative divergence of the same X%. Biggest flaw in the foregoing theorem: The indices could keep going down in tandem for a substantial period afterward while the divergence persists. To avoid this, ideally one would wait until the divergence began to shrink again, presumably to begin another cycle in the other direction. Easy to say? Yes. Too simple? Maybe. Will I use it? Absolutely.