My 2 cents: model prediction for the current market trend

smallwonder said: "I am new to the forum, but I have been in the stock market for sometime. After the NASDAQ bubble burst on year 2000, a painful lesson for me, I decide to take a more “objective” measure of the market, so that I can make a more rational decision about my investment. After many years of struggle, I constructed a quantitative model. The testing results are shown in the figure for the “buy” part of the model for the last two years. The size is a little too big for this forum, so please go to [url]http://tinypic.com/90y96v.jpg[/url] to see the figure. (There is a “sell” part of the model that is slightly different from the calculation of the buy signal, not shown in the figure). I am quite excited about this model, so I would like to share with everybody here so that you may also profit a dollar or two from the model. First, some explanations about using the model: (1) A buy signal is generated when the number from the “buy model” is positive for at least two consecutive days, and one of them must be greater than 1.5; (2) A sell signal is issued when the number from the “sell model” is negative at least for two consecutive days, and one of them must be less than –1.2. For most of days, the “buy model” number is negative while the “sell model” number is positive. The model is tested to be more than 90% accurate when used according to the following rules: Buy (or sell) the SP500 index (SPY) at market close two days after the buy (or sell) signal, and hold it until the next sell (or buy) signal is generated. SPY at the buy point (or sell point) will be higher (or lower) than that at the next sell (or buy) point. So the model is for intermediate term trading, from a few weeks to a few months. Now turn to the current market. A strong buy signal was generated near the end of April. A sell signal has not yet issued since then. The buy model number today is at –1.2 (it was -1.7 yesterday), while the sell model number today is at 1.1 (was 0.26 yesterday). NO SELL SIGNAL FOR TODAY. The model suggests that the market’s up trend is still intact. That does not mean that the market will not fall. From my experience with the model, it usually means that if the market falls, it is going to be shallow (a few percents in SPY) or short lived (a few days to a few weeks), and it is difficult to profit from these pullbacks."

HappyHarry said: "Sounds like a decent indicator. But you're saying you've never had a sell indicator at all so far?"

smallwonder said: "The indicator had quite a few sell signals in the two year span. Since the buy signal at the end of April, the indicator has not had a sell signal yet. Today's buy model number is 0.26 (was -1.2 yesterday), and the sell model number is 2.66 (was 1.1 yesterday). NO SELL SIGNAL FOR TODAY (a qualified sell signal requires negative sell model number for two consecutive days, and one of them less than -1.2). We may get a few days of correction here. The correction is likely to be shallow and short lived."

StockFreak said: "So i guess the million dollar question is...whats the model?? The actual breakdown that is. Is it based on the menstrual cycle of the Inca Earth goddess Pachamama? Seriously tho, im open to anything, keep us updated on the signals and we will all critique it."

alhamid said: "yes, we're all waiting."