All Ords Index.

[Phaedrus]

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.

[Footsie]

so what does this mean? if we had bought when you say then it would have been violating the rules of engagement???
ie NO BUYIng until green

[ratkin]

Anyone buying back into the Aus market of the basis of the SP500 strength would have timed their re-entry to absolute perfection.

They would also be flouting the rules of your system and buying in a downtrending (red) market

[macduffy]

Picky, picky, guys!

Phaedrus is merely making the point that the two indices appear to move uncannily in tandem.

[Phaedrus]

So what does this mean? If we had bought when you say then it would have been violating the rules of engagement??? ie NO BUYING until green

I now just report on the market strength, Footsie. What individual readers do with this information (if anything!) is entirely up to them. You will have to draw up your own "rules of engagement". People like Ratkin like to buy when the Index is red, for example. Contrarians like Dr Who see it as a good time to pick up "bargains". Cautious investors might prefer to wait for dark-green before buying. I wait for the light-green. We all have different approaches and different risk tolerance.

It is good to see that some of you, at least, are capable of independent thought - for example :-
"P's MSI of Dow and S&P were enough to entice me back into ASX today". Should I have censured this logical, intelligent use of the Market Strength Indicator simply because the AllOrds was still red? Of course not! This was someone thinking for themselves and making excellent use of the MSI.

They would also be flouting the rules of your system and buying in a downtrending (red) market

They were buying on the fact that the SP500 and Dow were both showing strength (green) and not unreasonably counting on other markets following their lead.
As usual.
Which they did.
Good call eh?

[ratkin]

Sounds like you are trying to distance yourself from your own system , maybe because this time it didnt give a very timely signal?
A typical chartist trick . Showing the S and P chart and somehow using it to justify buying aussie stocks (during a downtrending red ) is a typical smoke and mirrors chartists trick.

I would of thought more of you if you had just stuck to your guns , you dont have to try and be perfect everytime. We all know many trades fail etc. Its nothing to be ashamed of . No need to try and deflect attention away from your system onto another that worked better this time (buy aussie when S and P turns.) Thats just backfitting of the worst sort.

Im sure many who followed your system and have patiently waited for the buying signal will feel they have been short changed , and i cant say i would blame them

[STRAT]

Geez Ratkin,


Market Strength Indicator not
Market Buying system or
Market Trading System.

Indicator ( something that monitors, demonstrates or points out )

what does it point out?

Market strength.

Its been crystal clear to me that the purpose behind this tool is to assist in, not dictate trading behaviour or timing. Surely Im not the only one?

Phaedrus is fastidious with being literal and precise more than any other poster on this site that I can think of and yet time and time again hes pummelled with misrepresentation and misinterpretation. I cant remember how many versions there have been but I think most changes were to the wording regarding action to be taken in the various points in the chart for exactly this reason, in an attempt to avoid misinterpretation. All versions have said the same thing to me. For example "no buying permitted" was a recommendation, not an order or instruction. Why did I interpret it his way? Because its a Market Strength INDICATOR not a Market Trading System. Clearly because it was open to interpretation is the reason Phaedrus changed it.

Its seldom in this world you get something good let alone very good for free.

I use the DOW as an indicator for the ASX. Using trend lines I found the DOW, S&P and ASX all signalled change of direction at more or less the same time. If the MSI fired on the S&P early then this is an additional possible use for the tool if it is repeatable. Not a glitch in the system.

If yall want something that tells you when to buy and sell I would suggest a broker. Good luck with that course of action.

Phaedrus,
You have helped me with my trading so many times and in so many ways I dont know where to start. Doubt I could get better help if I was paying for it for which I am extremely grateful.
Please dont let the ankle biters send you into despair

[Phaedrus]

Sounds like you are trying to distance yourself from your own system .

Distance myself?..... from my own system? I am keeping to it! What part of "I wait for the light-green" don't you understand?

....maybe because this time it didnt give a very timely signal?

It most certainly DID give a timely signal. Even better than last time in fact. Can you demonstrate any better system?

I would of thought more of you if you had just stuck to your guns.

Ratkin, I am sticking to my guns. This is exactly the same MSI system as always. I simply compared its application to 2 different indices, drawing attention to the fact that, atypically, they had not moved in tandem recently. This may well be something worth looking out for in the future.

No need to try and deflect attention away from your system onto another that worked better this time.

For God's sake man, it's the same system!!!! You want to forbid intermarket comparisons? Outlaw the possible use of any future divergences? You think my system is so good that it cannot be improved at all? I don't!

Thats just backfitting of the worst sort.

Jess9 noticed the US signals and acted on them to advantage. I draw attention to the divergence and get accused of backfitting! ...... "of the worst sort" no less!!! Ratkin, surely even you must know that backfitting is where you alter indicator parameters to give better historical results. The MSI has no variable parameters and thus remains unchanged.

Im sure many who followed your system and have patiently waited for the buying signal will feel they have been short changed.....

Because the Australian buy signal lagged behind the US signal for once? Don't be ridiculous Ratkin - only a complete idiot would think that. You are shooting the messenger here - I don't control the markets!

.....and i cant say i would blame them

That's because you, alone, Ratkin, somehow haven't yet grasped what this system does. It provides an objective independent means of assessing market strength. No more, no less. The comparison chart highlighted just how closely linked these 2 Indices are. The recent divergence would have been of great interest to market followers.

Many people here on ST make good use of information like this, Ratkin - it seems a shame that you can't. A greater awareness of general market sentiment would help you a lot.

[ratkin]

They were buying on the fact that the SP500 and Dow were both showing strength (green) and not unreasonably counting on other markets following their lead.
As usual.
Which they did.
Good call eh?

You consider it a good call that people were buying australian stocks when your system was deep in the red?

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, and pointing out how marvelous your system was in comparison, while berating them for buying in a downtrend

[Phaedrus]

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.

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.