Using the trading system pointed to in the upper right hand side bar successfully, comes with practice. As of today's date it should be understood that the market reversed in late March early April... from there it was a broad market down turn.... the doldrums through the summer to Early part of Sept was decidedly down and sideways. In true fashion, September should have produced a seasonal rally, but in this case did not.
The trading system was selective by my own choices, however the system worked true to form and spotted the doldrums continuation quite realistically... and as such for me I have been out of the market for most of the period.. I did not take on short positions but rather played the social life vacation.
If you had been aware of the downturn as illustrated in the system... it would have been the time (at the top of the down turn) to adopt the shorting strategy for a long hold short in top heavy stocks, in truly weak fundamental stocks and most importantly a broad market downtrend.
A broad market downtrend, tends to throw the baby out with the bath water... Looking for these babies is what you should be doing now... when shorting is being covered, you should be moving into a long position.
This late in the game, taking a short position is a profit diminishing strategy, as well attempting to go long buying the dips in a down market is still a risky strategy because the dips often lead to new lows and if you are not prepared to sell on the sell signals (the sells are short entry positions)... you will get caught in the down trend.
A person who had traded properly at the beginning (shorting), would be preparing (at this point) for a short cover and buy back into a long position with some profit to be on the right side of the market. They would not be trading often and if you're trading often, you are out of step with the system. So trading the system is easy to say, but hard to do if you trade emotionally. The system works best early in the cycle for either direction, long or short strategy applied.
The conclusion for today's post is that the system is tracking the extreme end of the down move and going long is not the strategy just quite yet... If the seasonal tax selling leads into the January effect, then it would be the timing to choose to look for a reversal to go long. Never underestimate how low a market or stock can go with sentiment trading as it relates to trend. If you're crystal balling... expect to eat glass. Select the buys as of this late date using caution and be extremely sensitive to the sells until the market reverses. Buying the buys cautiously and selling the sells aggressively will no doubt provide some profit and loss, but the average should be few points to the good side until one of the buys lands in the middle of the reversal.
Not the best way to really play the system, but if you covered a short or are just thinking on entering and have experience, you could pull it off. Just My Opinion.
GLTA Lostoutwest
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