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Strategies & Market Trends : Why the markets will continue higher... -- Ignore unavailable to you. Want to Upgrade?

To: GROUND ZERO™ who wrote (537)	1/19/1998 3:48:00 PM
From: Kapusta Kid	Read Replies (2) \| Respond to of 745

GZ, I noticed you got into a discussion about the ARMS index over on the Mohan thread. I have never found it useful intraday, but then I don't play that game. However, intermediate term I find that the 5-day and 13-day moving averages give excellent signals, BUT you have to know the kind of market you are in. When the 5-day exceeds 1.35 and the 13-day is above 1.20, you've generally got a very low-risk buying point. Conversely, when the numbers are below 0.75 for the 5-day and 0.85 for the 13-day, you can usually sell with impunity. The caveat in both cases is to know what kind of a market you are in. During the bull run of the past years, the market has shown the ability to keep right on rising despite getting very overbought (on the ARMS). It did this often, a sign of the market's strength. And the ARMS rarely got oversold. 10/97, 4/97, 7/96 are the exceptions--but they were all good buying points. I have posted 3 charts at webspan.net In two, I show Dynamic Gann Levels for the SP500. The 3rd chart displays the SP500 vs. the 5- & 13-day ARMS. Notice that the 5-day has gotten oversold on the ARMS 3 times recently. To me, that shows that the character of this market is changing. I have data for High/Low/Advance/Decline/UpVol/DownVol going back for years and years (@1978). The ARMS didn't even get oversold this often in 1994! That's how I use it: as an indicator when it's a layup, but otherwise to interpret the market. BTW, the plot of ARMS in the chart is limited to a range of 0.65 and 1.40, else the scale gets screwed up. For 10/27/97-11/12/97, the actual range of the 13-day was between 1.74-1.84, while for 10/27/97-10/31/97, the 5-day had a range between 2.87 and 3.13--off the chart! Pete