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Someone from India was asking about the ASI--absolute strength index
so here's what I posted. Who knows if it's right. It sounds good.
Lets start with the question from the other site. How can I find the
ASI formula within the next thirty seconds because it predicts the
price of stocks tomorrow. All of them, I think.
Don't get your britches twisted in a knot. Look at the December 1991
issue of S&C. (Somebody sells a newsletter that uses something like
this.)
If I remember right ( and even if I don't remember right, this is a
really, really good tip), I think the ASI is simply a comparison of
the strongest stocks within the strongest sectors. A couple of people
call it proprietary because they've attached probablity numbers to
it. Hogwash!
Here's a simple way to do the same thing, if I'm on track here. (I
don't have my S&C from that far back. Most of you were in diapers
then, weren't you.)
There are ETFs for almost every sector. Find them. (Stick to the ones
with enough volume to make the comparisons accurate. And yes I know
you can define more sectors than there are ETFs. Less keep it simple
here, okay.) Then create folders of stocks that represent each ETF.
Yes, you can find the stocks that make up ETFs because that's part of
the definition of the ETF. Then compare each ETF on a relative
strength basis to the SPY. Half the time I can eyeball them, but if
you can't there's formulas and instructions floating around on how to
do it.
Pick the two or three ETFs that are performing better than the SPY,
and then compare the individual stocks that make up the ETF on
relative strength to each other . Normally, there's only a few that
are pulling up the entire ETF--sort of like the Dow--you know.
Those are the stocks that have the highest probablity of going up.
Imagine that.
Here's my probablity, and it's proprietary, too. If you can do all of
this without asking for more help, there's a 51% chance you will make
money on your trades--well some of them anyway.
Do you need a number or can you read your charts and see what's there!
Buy a newsletter subcription if you can't.
Do not send me an email asking me how to write an exploration to find
the better performing ETFs. You explore them the old fashioned way--
one at a time.
JO
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