We are safe... for Now. Backtested Dow Analysis
Have we topped out? Or are we just getting going?
From a fundamental perspective I feel much more comfortable today than I did in 2007; we don't have any major industry bubbles, P/E's are not to high and we seem to have passed the major congressional issues without sending ourselves back into a recession.
After testing the majority of available indicators I have isolated a trading system that has covers the major market moves. For the last two years 100% of the time ROC has broken below its 2.37 support the market pulled back, and 4/5 times Stoch hit its lower boundary the market rallied (the other time it came close... close only only counts in horses and hand grenades). Furthermore whenever Stoch went from being overbought to its normal purple trading range the Market also pulled back(in line with ROC). For the last few years this combination has proved highly effective, and lets hope it continues this way in the future.
So what now? For now it seems that we are safe. ROC has not broken 2.37 and the Stoch has not yet returned to its normal territory. How long this will last I can not say, but it seems that in the next few months we are at least due for a minor pullback, though given, the positive housing data I don't think it will be that bad.
From a fundamental perspective I feel much more comfortable today than I did in 2007; we don't have any major industry bubbles, P/E's are not to high and we seem to have passed the major congressional issues without sending ourselves back into a recession.
After testing the majority of available indicators I have isolated a trading system that has covers the major market moves. For the last two years 100% of the time ROC has broken below its 2.37 support the market pulled back, and 4/5 times Stoch hit its lower boundary the market rallied (the other time it came close... close only only counts in horses and hand grenades). Furthermore whenever Stoch went from being overbought to its normal purple trading range the Market also pulled back(in line with ROC). For the last few years this combination has proved highly effective, and lets hope it continues this way in the future.
So what now? For now it seems that we are safe. ROC has not broken 2.37 and the Stoch has not yet returned to its normal territory. How long this will last I can not say, but it seems that in the next few months we are at least due for a minor pullback, though given, the positive housing data I don't think it will be that bad.
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