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Tom, using the Nasdaq slows down the response time and gets you out later,
and in later. Like you say, when the two coincide exactly the moving
averages converge much slower. So using the Nasdaq appears to give sup-par
results vs. the S&P or DJ-30. I don't think TC2000 is pushing one index
over the other any more, but can't be positive. I would never use this
indicator by itself, but to me its superior to traditional moving averages.
Apparently we can't send pictures over this mail server, but it's amazing to
see the side by side comparison of the relative strength averages to
traditional moving averages; far fewer false alarms but with good entry/exit
points.
Dave
-----Original Message-----
From: owner-metastock@xxxxxxxxxxxxx [mailto:owner-metastock@xxxxxxxxxxxxx]On
Behalf Of Tom Sprunger
Sent: Dec 28, 2000 4:00 PM
To: metastock@xxxxxxxxxxxxx
Subject: Re: TC2000 Relative Strength Moving Average
David, what would have been the result if you had used the Nasdaq as the
reference instead of the S&P? At one time Worden was pushing the use of
the Nasdaq as the reference. Which index is he pushing now?
Tom
----- Original Message -----
From: "David DeFina" <ddefina@xxxxxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: Thursday, December 28, 2000 4:00 PM
Subject: RE: TC2000 Relative Strength Moving Average
> RE: How does your testing work for the April 2000 Nasdaq drop and the
> Sept-Nov
> Nasdaq drop?
>
> Tom, I tested from September 1999 to present, and it avoided both the
March
> and September plunges almost entirely. I believe since the stocks I
tested
> were on the Nasdaq, they quickly under performed the S & P index during
the
> plunges, which caused the moving averages to cross soon after the drop
> began. It was primarily these two events this year that caused me to be
> impressed by this indicator set-up.
>
> This isn't a recent example, but I'm at the office. The top section has
the
> traditional moving averages (10 and 30 exponential) based on the stock
> price. The bottom section uses the same moving averages, but their based
on
> IBM's relative strength to the S&P 500. You can see the primary
difference
> in February - April 1999 where the stock whipsaws up and down, causing bad
> signals in the conventional moving averages. The bottom window shows the
> 10-day moving average coming and barely touching the 30-day moving
average,
> eliminating some of the noise.
>
> I've always hated moving averages because they lose all the money you made
> with them when a stock consolidates. This indicator comes closer to
solving
> that problem in my mind. It is also just as good or better at signaling
> changes in trends.
>
> I'll send current examples tomorrow.
>
> ddefina@xxxxxxxxxxxx
>
> -----Original Message-----
> From: owner-metastock@xxxxxxxxxxxxx
[mailto:owner-metastock@xxxxxxxxxxxxx]On
> Behalf Of Tom Sprunger
> Sent: Dec 28, 2000 10:35 AM
> To: metastock@xxxxxxxxxxxxx
> Subject: Re: TC2000 Relative Strength Moving Average
>
> I experimented with this and found a serious limitation in my opinion.
> Since its based upon the stock's price performance relative to an index,
it
> fails when the stock and the index are moving in the same direction at
about
> the same rate. I.E., if the Nasdaq is in free fall and the stock is
falling
> at about the same rate, this approach may show that all is o.k., when in
> reality you are losing your behind.
>
> I think it may work o.k in an exploration, but may fail applied to a
> specific portfolio that you may already have under conditions like
described
> above..
>
> How does your testing work for the April 2000 Nasdaq drop and the
Sept-Nov
> Nasdaq drop?
>
> Tom
> ----- Original Message -----
> From: "David DeFina" <ddefina@xxxxxxxxxxxx>
> To: <metastock@xxxxxxxxxxxxx>
> Sent: Thursday, December 28, 2000 10:26 AM
> Subject: TC2000 Relative Strength Moving Average
>
>
> > Anybody tried using TC2000's new moving average based on relative
strength
> > in Metastock?
> >
> > I developed a good indicator to identify trends in stocks, but TC2000's
> idea
> > of using a 10 and 30 day moving average of relative strength (vs. SP500,
> > NASDAQ, etc.), works as well or better than mine. Using moving
averages
> > based on the stocks relative strength to a broader market average
> eliminates
> > market gyrations from the equation and allows the moving averages to be
> > sensitive only to stock performance relative to the index. I programmed
> > this into Metastock by plotting a relative strength indicator in white
> > (making it invisible on white background), and created 2 moving averages
> > based on this indicator (10 and 30 exponential). When the 10-day
crosses
> > above the 30 day, this is assumed to be bullish, and you look to be
> bearish
> > when it crosses back below the 30-day line. Obviously, the two moving
> > averages can be any number, but these seem to work well.
> >
> > I tested this setup on many Nasdaq stocks by programming an expert with
my
> > indicators (not TC2000) and comparing the trend changes to mine
visually,
> > and saw that they were very similar. My system is very accurate for
> finding
> > trends, and entry points, so I'm assuming this TC2000 setup is as
> reliable.
> > I haven't found a way yet to program relative strength into a system
test,
> > so if anybody knows how I'd appreciate learning the secret. I used the
> > SP-500 as the comparison to Nasdaq stocks because it correlates well
with
> > the Nasdaq, but isn't as volatile.
> >
> > My trading system only uses the trend as one piece and several other
> > indicators for entry and exit, but I believe this indicator is as close
to
> > perfect for determining trends as you'll find.
> >
> > Dave D.
> >
>
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