StillLearnin,
Thanks for this post. Shows you still learning and and thinking critically.
"Unless i'm looking at it wrong i see little value in using a rising/following NYSI by itself. I realize
you use other tools as well but reading this thread you would not expect to find the results i show
for trading NYSI alone."
Let me address that conclusion from your post.
First I have to say I've said over and over again that the NYSI is context for which side of the market to be on. You want the NYSI on your side whenever you trade, period. I would contend following the NYSI in that context is of great value. They may not want to admit it but ask anyone who has been short for or during the past 14 days. I would also contend the NYSI by itself may be of "less value" but not necessarily of "little value."
Second, you are looking at what to trade wrong. Do not trade SPY. I never have. And don't trade QQQQ, or even IWM. In my postings I've always cited 3X and sometimes 2X ETFs as the trading vehicles (and maybe mentioned SPX for comparison). You want as much leverage as you can get. Before the 3X ETFs were created, I traded baskets (still do sometimes) of high-high-beta stocks (the most dangerously volatile stocks I could find) on full margin to get the results 2X and 3X ETFs can now give automatically. You want trading vehicles that outperform any move in the market because you are only going to own it while the market is going up. We are swing trading here.
A couple of quick examples -- if you bought $1 million worth of SPY on every trade during the past year whenever the NYSI turned up and sold it every time the NYSI turned down, you would be up $12,000 at the moment on 20 trades, or 1.2 percent, so that is of "little value." If you traded TNA on the same 20 turns in the NYSI you would be up $170,000, 17 percent at this moment. Not all that fantastic but that's better than IBD signals and in the world of big hedge funds, that number year after year could make you a legend.
That's only one year since TNA is not that old. Let me give you the example of some stocks. If you trade $1 million (no compounding) on every trade for the past eight years (that's back to 2002) in SPY, you would be down $80,000 -- DOWN! In AAPL the same $1 million on every turn in the NYSI would have you UP $1.9 million, up 190 percent. AMZN up $723 thousand. CAT up $1 million.
Of course, picking the right stocks is an art onto itself (INTC would have you down nearly 100 percent). But picking them in context with the NYSI is of great value. Stocks that are bullish are more bullish with the market, measured by the NYSI, on their side (if any stock you pick that won't move with the market, when is it going to move?).
Let's go back to the index ETFs. As I've said again and again the NYSI lags -- it lags the upturns and lags the downturns. Given that, it is still context for trading with the NYMO. The NYMO can beat the lag on the NYSI -- go study the lows above lows (sometimes as divergences, and I've talked about them a lot) that come before the NYSI turns up and conversely the highs below highs before the NYSI downturns. TNA since the last low above a low before the NYSI turn (Aug 31, see the chart) is up more than 33 percent on the close today. And don't be afraid of taking a fantastic profit. You'll notice in my threads I often mention something like TNA is up 22 percent since the NYSI buy 14 days ago (I think I did say that today). If you have that 14-day profit, you might was to take it and wipe out your SPY test for the last...what...eight years?
There, I hope that clears up a lot, and helps. I would agree that the NYSI is of "less value" unto itself -- but, I repeat, of great value as context, and in context with the NYMO, it can be of fantastic value.
Keep testing and good trading to you.
"If you've heard this story before, don't stop me because I'd like to hear it again," Groucho Marx (on market history?).
“I've learned in options trading simple is best and the obvious is often the most elusive to recognize.”
"The god of trading rewards persistence, experience and discipline, and absolutely nothing else."
