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I wanted to share the idea of combining groups of simple technical
systems based on price and breadth to trade the SP500 or rather
preserve capital. We have traded this strategy since the beginning
of 2000. Firstly I will point out ..that at times we will under
preform the market... but believe we stand a good chance of avoiding
major draw downs...
All the concepts are in the public domain...actually I wrote about
this in Stocks and Commodities Magazine in 1999.
The idea is using moving averages... anything from a 50 and a 200
period moving average...put those together with simple rate of
change ideas... swing systems... ie ...if the market sells off more
than x % ( we use 4)...then go to cash.... put simple breadth ideas
together...such as the McCellan osciallator along with simple
concepts that measure new highs and new lows... as well advancing
volume and declining volume....such as
Buy
This system uses a 10 day moving average of the NYSE advancing
volume...and the 10 day moving average of NYSE declining volume
compared to the total volume of the NYSE.
When the down volume is less than 30% of the total volume a buy is
issued.
SELL
When the up volume is less than 30% of the total volume a sell is
issued.
There is no magic system but rather mixing systems that are based on
price and breadth...dailies and weeklies an investor increases his
odds in avoiding major draw downs....
Andrew Abraham
Abraham Bedick Capital
www.AbrahamBedick.com
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