Forum: System: Schulenberg 2X-Hedged IWM (^IWM2)

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Subject:Market Timing Indicator and Prediction for 3/21/11
Posted by:Craig Schulenberg (Admin) ( C2 Score: 970)  New msg
Ignore user's posts for week month forever
When:3/20/11 (12:41) 
*** PREDICTION for the Next Trading Day:
For Monday we say: "The market will be unlikely to find traction on Monday; we expect a lot of volatility, but with the MTI staying well below the neutral value (it is currently 0.5814), current choppy conditions are liable to turn into a dip. We have an ORANGE Market Color Code for Monday, and this is our 'anything can happen' color, and we do expect to see quite a bit of seesawing on Monday. Techs (QQQQ/SMH) should be relatively stronger than, e.g., the Dow (DIA)."

*** Scoring of Previous PREDICTION:
For Friday we had said: "The market is probably going to try to build on Thursday's gains (mediocre, but still gains), and for that reason many of our signals have gone to Cash -- rather then risking a very short-term Long. We suspect that the market will be unable to hold any serious advance, and will thus end up mixed (with techs slightly stronger) or down slightly. Our MTI (Market Timing Indicator) is at 0.7035, still well below the neutral value of 1.0. Our Market Color Code has moved into the YELLOW (Caution) zone, and even if there is a bit of strength on Friday, we see increased weakness within the next few days".

How did we do? The Forecast for Friday was quite good; there was some strength at the Open that continued pretty much unchanged throughout the day. Thus, it didn't actually make much difference for the day whether our signals had switched to Cash or stayed Short.

*** Note 1: The MTI can range from about -2.5 to +2.5, with a 'neutral' value of 1.0. A value of 1.0 will generally be associated with a market that is either stable (holding its valuations) or rising slowly and erratically. Values greater than 1.0 signify a 'long' market, while values substantially below 1.0 (and especially zero or negative) signify shorting situations. Although the MTI is extremely useful (especially in the construction of equity-specific models), bear in mind that it has a reaction time of several days. It is thus not sufficient to use this indicator alone for trading specific equities on a day-by-day basis.
Schulenberg 2X-Hedged IWM (^IWM2)
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