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a post from the omega list.....
-------- Original Message --------
I have been paging down through this thread, but I guess it has been about
the Pitbull's Crash Index? If so, and it hasn't already been posted...here
is the formula. I found this posted on another web site last year. Easy to
program, even in Excel. Once I crunched the numbers, I found that
occasionally it could even be used as a contrarian bottoming
indicator....let alone historically being able to even beat buy/hold. If
you guys are talking about another Crash Index...excuse this post.
Pit Bull Crash Index:
The formula is
The numbers run from -10 to 10.....
that # is figured from the sum of two measures.
1. If the price (NYSE comp.) is up for the day, the day gets a +1, if down
it gets a -1
2. If the NYSE new lows is less than 40 (74 if using barrons or WSJ, due to
double counting of preferred shares) then the day is +1, if there are more
than 40 new lows, then the day gets -1.
Both of these #'s are summed for five days -by themselves, and then those
two #'s are added together to arrive at the crash index #.
When the Market Crash Index reaches a -10 exit the market of any risky
short-term long positions, and increase the number and size of short trades.
When the Crash Index then reaches a +6, it is then safe to start picking up
long positions again, and is time to reduce the number of short trades in
portfolio.
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