All Ords vs S&P500 Market Strength Comparison.
These 2 indices generally perform pretty much in tandem so any exception to this is a matter of some interest.
On 11/2/10 the SP500 turned green. Interestingly, on the very same day, the All Ords bottomed out and began to rise - although it was another 19 days before it too turned green.
Anyone buying back into the Aus market of the basis of the SP500 strength would have timed their re-entry to absolute perfection.
http://i602.photobucket.com/albums/t...llOrdsSP36.gif
A Matter for further Research and Development vs Ratkin's Rancour!
Quote:
Originally Posted by
ratkin
You consider it a good call that people were buying australian stocks when your system was deep in the red?
It was a good call because it worked and because the buy decision was quite logically based on the fact that the MSI system had the US indices clearly green. History tells us that the SP500 and the AllOrds indices generally turn at the same time, so Jess9 was quite reasonably counting on this relationship holding good. Which it did. It was a good call, based on a logical hypothesis. It was not a call that I would have made, but it was a good one nevertheless, providing a nice illustration of yet another way of utilising MSI signals to advantage.
Quote:
Originally Posted by
ratkin
If the market had gone down in the last few days instead of up, then you wouldnt of been saying it was a good call, you would of been pointing out to them where they went wrong
Dead right! I would have been saying that it was a bad call and that the AllOrds was always the best index to apply to the Aus market. I would be saying that this was evidence that the US indices demonstrably did NOT lead the way for the Aus market and that the 2 markets were essentially unrelated.
But that is not what happened is it?
As per usual, the AllOrds was led by the US indices. In this instance, the SP500 "buy" signal was much earlier. This finding identifies grounds for further study. Is it best to act on whichever signal comes first? Would using the SP500 across the board provide superior signals for the Aus market? Could the SP500 perhaps give the better entry signals but the AllOrds give the better exit signals? Is it in fact best, overall, to totally ignore the US indices?
Backtesting will give the answers to all of these questions.