Farewell and Adieu

The Cheetum Market Indicator was created three years ago, after the 2008 meltdown, as an alternative trading/investing method that would profit during market uptrends and downtrends. Three years of on-the-job experimentation has lead the CMI through a total of four versions. CMI 1.0 used a variation of the Arms Index in its market following decision making; CMI 2.0 was heavily influenced by relative strength and some other variations of Welles Wilder's methods; CMI 3.0 (the worst of the bunch and most extensively researched) included an amalgam of indicators from rate of change to put/call ratios. Conflicting indicators lead to late signals and poor results earlier this year.

The daily spikes and drawdowns produced by all of the CMI versions were a little more violent than I originally intended but even so, the hindsight biased, end of the year results shown in the chart below indicate that anyone willing to take every CMI signal from day one to present would have not only survived, but profited to some degree.



After a short, one-year test period, the best of each version was extracted and used to create the next version which has lead to version 4; the final and most simplistic of trend-following methods that combines ratio with price convergence and divergence. The secret to this method is that there is no secret. Any leveraged, sound, statistically-based trend following indicator used during a trending market cycle will produce positive results. Emphasis on the word 'sound'. Try one and you will see, provided that you have enough patience to wait for the next real trend.

I expect 2012 to offer better opportunities for a dedicated trend-follower. The market likes to shake the belief in trend-following systems before the next big trend can begin. As Ed Seykota once sang, "you get a whip and I get a saw, one good trend pays for them all". Good advice.

Happy trails and profitable trading to all.



http://www.youtube.com/watch?v=GVmeeYwEiQw

Related post: Here Lies the CMI