Hi all. I've been testing various ideas for a short S&P system. The purpose is, if you have a portfolio of stocks, you may want to hedge, at peaks, against market declines like this week. Ive tried CCI, RSI, ADX, DI+/- and ROC. Nothing really works. Perhaps the answer lies in market internals like advance/decline etc. Has anyone come across a good short system for catching peaks (not a day trading system), or any ideas? The idea is to be short for a day or up to two weeks at peaks. Thanks
I used a Bollinger band short signal followed by a fix number of days to cover. This worked out pretty well. As I remember the optimum number of days was around 5. I backtested on TradeStation.
For swing trading, you might want to look into finding what the IT trend is...and then trade with it. Most indicators are simply linear. The market is non-linear (meaning it's tough to trade with fixed values unless you have a good understanding as to what causes the SP500 to move from bear to bull market...got a decade?). With the S&P 500, it's often best to buy your sell signals and sell your buy signals (say....with using MACD or similar method). The S&P 500 does not trend well at all. Now I've said too much... D