Re: Bull and Bear Fear System

["Jeff Cobb" <jcob@xxxxxxxxxxxxxxxx>]

Hi Greg:

Thanks for you response.  If I understand correctly what you are doing
then, in addition to the B/B buy and sell signals you are applying an
oscillator such as this {Mov(C,5,S)-Mov((Ref(C,-5)),5,S)} and requiring
that the oscillator be positive, or current 5d MA > 5dMA of 5 days ago, to
buy or the opposite to sell.  Is that correct?  I wrote Walt Downs about
the system and his response is below in quotes.  Perhaps you can help me on
one point.  The DMI referred to by Walt is not the "Dynamic Momentum Index"
that is programmed into MS 6.5.  Do you know what he is referring to?

"Your correction of the "n" periods for the BB system
was very sharp! Actually, in the editing process of the
original article, TASC accidentally omitted the correct
period setting for the system, which was 28. :) Only
the oscillator uses a period length of 12.

I have found that the results you are having in stocks
can be smoothed throughout by adding complimentary
filters in markets that need them. This eliminates
a lot of the whipsaws. For example, you can try
only taking signals that are produced with
confirmation of such indicatros as DMI, which is
a combination of DI+ DI- and ADX. Also , only accepting
fear level penetrations which are made with increases
in volume, and possibly gaps, also can be of value.
Another filter I have used, is to accept only those
bars which penetrate on a closing basis, and Have a 
High greater than the Bull level and a Low less
than the Bear level along with increases in volume. 
Hence, an expansion bar with penetration on heavy 
volume. If the market gaps in your favor the next
day, the signal can be considered even stronger.

All in all, I like the use of these levels because
it keeps a trader on the right side of market
psychology."

If nothing else, Walt's letter points out the value in not accepting
everything you see in TASC at face value.

Peace
Jeff
----------
> From: Greg Harris <gregharris@xxxxxxxxxxxxxxx>
> To: metastock@xxxxxxxxxxxxx
> Subject: Re: Bull and Bear Fear System
> Date: Sunday, October 25, 1998 5:24 AM
> 
> I haven't done any in depth analysis yet, but when I changed the time
> periods to 24 (for no real reason) the indicator shows some real promise
> when coupled with a simple 5M/A crossover of the same M/A displaced 5
> periods.This is when applied to some stocks here in Australia.
> Good trading,
> Greg
> -----Original Message-----
> From: Jeff Cobb <jcob@xxxxxxxxxxxxxxxx>
> To: Metastock@xxxxxxxxxxxxx <Metastock@xxxxxxxxxxxxx>
> Date: Sunday, October 25, 1998 10:57 AM
> Subject: Bull and Bear Fear System
> 
> 
> >I have been exploring using the Bull and Bear Fear system written about
by
> >Walter Downs in the Aug. 98 TASC.  I've modified the system slightly as
> >I've found that a longer time period seems to perform better that the 12
> >given.  the following is the system.
> >
> >Enter Long:
> >
> >n :=27{Time periods};
> >
> >BullFear := (HHV(HIGH,n) - LLV(HIGH,n))/2 + LLV(HIGH,n);
> >
> >Cross(CLOSE,BullFear)
> >
> >Enter Short:
> >
> >n :=27{Time periods};
> >
> >BearFear := (HHV(LOW,n) - LLV(LOW,n))/2 + LLV(LOW,n);
> >
> >Cross(BearFear,CLOSE)
> >
> >This system seems to make sense and shows very impressive returns on the
> >following stocks: MSPG, RXSD, BBY, and MEH.  As with most systems I've
> >either developed or found (such as this one),  this one works well on
some
> >equities and not so great on others.
> >
> >Since I don't care to carry every stock on the NYSE, NASDAQ, or AMEX
(not
> >to mention foreing exchanges) on my limited hard drive I would be
> >interested to know if others have explored this system and what stocks
> >they've found that it works well for.
> >
> >Regards
> >
> >Jeff