Wednesday, June 20, 2007

My Market Indicator

I have not been posting mainly because the market is boring for me right now. It is too extended to buy and too tricky to short. So in the meantime, I've been working on some new indicators that I've come across and making some pretty interesting discoveries.

I recently posted about how I reproduced the TD Ratio indicator invented by Tom DeMark. I did some visual backtesting and found a pretty good performance record. I was intrigued and went to the library to check out some of DeMark's books to learn more. I quickly became interested in his TDST lines and TD Sequential and TD Combo indicators.

The primary purpose of these tools is to identify periods of price exhaustion where the risk to long and short entries are minimized. I think I've made a nice improvement to the TD Combo countdown process and will give some examples of market tops and bottoms.

It should be no surprise that the market is signaling a top and should not be bought here.

I'm showing the lows of last summer and the buy signal generated by my indicator. I will present more tops and bottoms in the future.

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