Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: HighTech who wrote (83658)	2/1/2003 11:33:31 PM
From: Tom Pulley	Read Replies (1) \| Respond to of 99985

HT, The model is made up of a combination of fundamental/economic indicators and technical indicators. The fundamental/economic part of the model uses such parameters as money supply growth, fed funds rate, inflation, AAA bond yield, unemployment claims, and market PE ratios. The technical analyis part of the model utilizes various moving averages and their slopes, MACD's, relative strength, Stochastic RSI, NYSE bullish %, OEX trends and deviation from trend measurement. What makes this model different from others might be that it does not signal based on a specific reading of each indicator individually; it signals based on relationships between multiple indicators. There are a total of 16 indicators utilized in the model. I believe that these relationships tend to identify periods of extreme sentiment or overbought/oversold conditions. For that reason, I'm usually confident of its calls when it is confirmed by extreme readings in the put/call ratio, bull/bear percentages and other sentiment type indicators. However, experience shows that the model is just as likely to be correct or incorrect regardless of what the sentiment indicators show. The market direction calls will not be correct every time, but the model should be correct at least 65% of the time over any given two year period. When it is right, the percentage gains on average should substantially exceed the losses when wrong. I've actually been working on various models since the 1980's. First, I tried to do a fundamental model to predict 12 months ahead. This idea came from a market timing book called Stock Market Logic by Norman Fosback and a timing book by Stephen Leeb (forgot the name). I was able to put together a model that was correct more often than not, but had some significant losses when it was wrong. Plus, it was difficult to have the patience to hold for a year to see if it was right. I later decided the way to be more profitable was to prepare a model that took advantage of shorter term swings. An initial very simple version of that was finished in 1994. This was gradually improved until this latest version was finished in 2001. It has taken a long time to get to this point, but it is just a hobby for me so I don't consistently spend time on it. I just work on it when I get an idea or have some free time on my hands. I hope that gives you a general idea of what this model is. Beyond the general information, it is my preference to keep the details to myself as long as it continues to provide returns significantly better than the market. However, I am happy to report the buys and sells as they occur and hope for all of us on this thread it continues to perform well. Tom