Jim gave a indicator for a bull correction in a bear market using $nahl: check crossovers of the 13d
EMA above the 42d EMA, when the 13d EMA is negative. A 9 day version is used by a couple of us here.
Both have signaled
today (check the MACD which are based on EMA crossovers):
Jim gave a indicator for a bull correction in a bear market using $nahl: check crossovers of the 13d EMA above the 42d EMA, when the 13d EMA is negative. A 9 day version is used by a couple of us here.
It was intended for use after a serious, sharp, really major bottomā¦an early sign of when it might be safe to get back in.
In effect, itās trying to get you into the market early, during the usual strong rally before the more conservative NH-NL positive test can kick in.
Itās hard for NH-NL to be positive if the market is much nearer its one-year low than near its one-year high.
If the index is in the low end of the range, most individual stocks will be as well, so they wonāt generally be hitting new highs yet.
We donāt seem to be in that situation right now.
Though it may have other uses, I donāt know of any value to that test at other times.
(my version did not look for either value being negative or not, it was a simple crossover test)
ā(my version did not look for either value being negative or not, it was a simple crossover test)ā
You implied the 13d EMA was negative when you say itās useful when we are coming out of an ongoing bear market and,
āItās hard for NH-NL to be positive ā¦ā.
Once we are in bull mode (13d EMA>0), as you indicate, the test is no longer useful.
You implied the 13d EMA was negative when you say itās useful when we are coming out of an ongoing bear market and, āItās hard for NH-NL to be positive ā¦ā.
I use a different lookback for my āNH-NL positiveā test and my āNH-NL risingā crossover test.
I donāt look for anything to be negative in the āNH-NL risingā test, but sure, itās likely that both will be negative.
It did well in backtest to be long if either of those signals was bullish.
But the sting in the tail is that essentially all the gains from adding the āNH-NL risingā test were in a couple of specific historical stretches.
Sharp rebounds from very major bottoms.
For that reason, I donāt act on it any more, other than keeping an eye on it.
My bottom detectors have worked better for me.
Iāll go out on a limb with a prediction:
An index short opened now, closed on my next major bottom signal, will be nicely profitable.
Iām not sure what index would be best. Russell 2000 maybe? Itās at 2067.
R2k short is still a great candidate. Weakest of the US mkts, below 10m MA, In a bearā¦ but as you know Jim, there goes madness / max pain, but I suspect you have the trading chops there. And āmadness is like gravity - it just takes a little pushā
Jim - Iāll go out on a limb with a prediction: An index short opened now, closed on my next major bottom signal, will be nicely profitable. Iām not sure what index would be best. Russell 2000 maybe? Itās at 2067.
