Trading by Systems


QUESTION: Can you trade with the Global Market Watch? Does experience count right now with what you call a Vertical Market?

DS

ANSWER: No. It is an alert to, not a trading tool. It will alert you to breakouts, waterfalls, highs, or lows. It is not a 100%. It is far better on the major markets than perhaps individual stocks.

Trading this kind of market is probably more dangerous for those who have trading experience. The reason why is they are used to trading normal markets. This is why they have tried to sell every high as it has been made. Their “experience” actually defeats them.

The 1987 Crash was the perfect example. They were hunting for the person who caused the crash. What they discovered was that they did use computer programs, but they did not follow them because the Dow was down 500 points and they thought there would be a bounce because there was no fundamental explanation. That is when it took out a rare set of Double Weekly Bearish Reversals and we had a gap down to 180 from 286.

 

The Reversals are the best tool, and then the cycles help to hone in on the turning points. The Global Market Watch is a pattern recognition model so it is really an alert system that tells you to the look at the detailed reports. We can judge the magnitude of possible moves by looking at the gaps in the Reversal system.

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