Neutral Zones : Between 3.45 AND 4.6%
Bullish Zones : Below 3.4%
Yield Data:
http://online.barrons.com/mktlab
2) Stocks are bullish when S&P earning yield at 95% or more than the average yield of 90-day tresury bills and 10 years US government notes.
Neutral to Bullish : between 85% to 95%
Negative Zone :Less than 85%
3) Combine Model :
- Buy Condition #1 : Remain invested if both Baa bond method and US Government Bond method lie within their most bullish zone.
- Buy Condition #2 : Remain invested if either Baa bond method and US Government Bond method lie within their most bullish zone.
Stay clear when both model lie in most negative zone.
4) Stock market is likely to perform well during periods in which # of stock advance in price exceed # of decline.( Advance/Decline line )
http://online.barrons.com/public/page/9_0210-trddiary.html
Example :
| Market Advance/Decline Totals | |||||
| Week ended last Friday compared to previous Friday | |||||
| | |||||
| Weekly Comp. | NYSE | Alternext | Nasdaq | ||
|---|---|---|---|---|---|
| | |||||
| Total Issues | 3,229 | 681 | 3,041 | ||
| Advances | 1,653 | 396 | 1,415 | ||
| Declines | 1,527 | 227 | 1,549 | ||
| Unchanged | 49 | 58 | 77 | ||
| New Highs | 19 | 13 | 40 | ||
| New Lows | 7 | 0 | 48 | ||
| | |||||
Next step : calculate the six week expontial MA.
Smoothing constant =6 weeks +1 divide by 2 is 0.286.
Start with 6 weeks moving average, e.g
1. Multiply .286 times this weeks actual price e.g 60 , minus previous week 55. x0.286 * 5 ( 60-55 ) = 1.43.
2. add 1.43 to 55 = 56.43 new EMA
3. Next week 61, 0.286* 4.57 ( 61- 56.43) + 56.43 = 57.73
Buy or hold when 6 weeks EMA above 0.25 or 25%
SEll when the EMA decline to -0.5 (-5%)
Combine Model
1. Buy when either modles in most bullish zoen with EMA above 25%.
2. Unteill EMA decline to -5% and bond model fallen below most nullish zone or both modles in most bearish zone.
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