Quote:
Originally Posted by AltonKelsey
We also had someone claim that a buy signal was 5% away and nothing should be bought before then . Let the price get away from you , THEN buy!
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Not sure if you're referring to someone's post about a particular stock or if you're posting about my post about stock market timing/momentum indicators.
In case you were referring to me, I want to clarify my point...
My post was actually about the buy signal being a 4% rise from a recent bottom -- assuming that at some point the market had fallen 4% from a previous top.
This is a Martin Zweig indicator. He did pretty well for himself and I have had good results using his indicators...
I use the value line index.
So for example, let's say you're just starting out as an investor, the market has been weak, and the index is at 100. If the indicator rises 4% to 104 a buy signal would be triggered. Since 104 is the new high, you would go long the market and stay long until a sell signal is triggered. A sell signal would be triggered if the index fell 4% to 99.84.
The beauty of this indicator is that you can update it every Friday afternoon at the market close and be fairly in touch with the market's direction.
You'll get similar results using the S&P, but it is not quite as sensitive as the Value Line. You can also use it with individual stocks. I have a feeling Jesse Livermore probably used something along the lines of a 4% model. Zweig favorably mentioned Livermore's trading methods in his book.
As I mentioned before, you might get whipsawed on occasion as this headline from today states:
https://finance.yahoo.com/video/u-st...184159973.html
