I have been thinking a lot this week about what I can do to help preserve profits/prevent losses better, and I now have my wish list: it’s one item long.
What I want may seem naive, although I hope not. But all I’m after is a number, ranging from -1 to +1, indicating the target amount of bearishness/bullishness for my portfolio.
For example, if such a number was 0.5, it would mean that I should have 1 bearish position for 3 bullish ones (assuming they are all equal). A number of 0 would mean 1 for 1. A figure of -1 would mean totally bearish. And so forth.
I already have the resulting number in my spreadsheet, which is based on all my positions, but what I need is something to drive that number. That is – – a target. Because bullish and bearish charts I have no trouble finding. It’s targeting the right “mix” day to day where I am having issues.
Now, I’m not that knowledgeable when it comes to indicators, but I went through every single indicator in ProphetCharts today, using the S&P 500 index as my price data, and I didn’t come up with any answers. There were some oscillators that were somewhat intriguing, like the Slow Stochastic, but there were two big problems I had with even the best of them:
(1) They were all lagging – – sometimes severely – – which pretty much neuters their usefulness.
(2) Even if they didn’t lag, it seems to me these are only useful during the range–bound market like we’ve had the past year. Using them, for example, during the meltdown of late 2008 would have been a total disaster, because most of them kept signaling the market had bottomed way, way too soon.
There may be no answer to this, given the complexities of the market, but there are a lot of smart people here, and I plan to leave this post up a good 18 hours or so to see what kind of comments it gets. Please “Like” any suggestions that you, umm, like, so they can bubble to the top.
Oh, and please, I’m after something not very complicated. Whenever I throw a question about indicators like this out there, it seems the answer is really, really complex. I’m a simple soul, and like I say, I’m just after one simple number. I would pay tens of thousands of dollars per year to the provider of such a number, if I knew it was reliable.