No. of Recommendations: 11
Did you happen to look at adding in 99 day to the switching? I plan to look at it but thought I would ask. \No, I didn't check that.
The whole idea behind the 99 day is that market tops are pretty rounded...you usually have quite a while to get out of the market because it's not usually all that much lower even a few months after "the" top.
Changes in underperformance versus outperformance among gigacaps seem to be pretty sharp, more turn-on-a-dime thing, so the EMA seems to be more suited. An even shorter EMA might backtest even better in terms of CAGR discrimination on average, but nobody needs a signal that changes state too often.
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Speaking of market tops, has anyone else noticed the remarkable string of over 20 fresh all time highs lately on the Nasdaq Composite, while Nasdaq breadth has been solidly bad and deteriorating? The advance/decline line and new highs / new lows have both been negative for a while and on a weakening trend since about mid May.
https://stockcharts.com/h-sc/ui?s=%24NAHL&p=D&yr=0...I'm no good at identifying market tops at the time, but this divergence something that is very typical at major market tops. It's one of the few bad omens that would have saved somebody in 87, though taken by itself it would also have cried "the sky is falling" tons of times when the sky did not in fact fall.
But once things have started to look bad for a little while, it's easier to have an idea what's going on. It might be one of those years that the "no longer looks like a bull market" signal from the 99 day rule might be worth watching for. A timeout of 3 months is even more conservative/chicken.
Jim
