Agree to Disagree

The last couple of days make me wonder what the Cheetum Market Index is thinking. Or better yet, how it thinks. I don't like to sit out on days that have this kind of downward (or upward) move but I am here to follow the CMI, not second guess it. The last six days have been down and I would think that the light volume, and the number of consecutive down days, would point to a rebound of sorts.

I will try to stay out until the next signal but by my calculations the next signal would probably be a 'buy the QID' on Wednesday. Unless the market gaps up tomorrow, I'll stay out until the CMI says go. If the market does gap up, I may jump in a little early in anticipation of the buy signal. Last time I did this it cost me 2% but whose counting.

Remember that the CMI relies on two main signals that have to agree. Looking back on past data, it is obvious that the last few months of unusual price swings may have caused the signal to be a bit jumpy, and in turn, caused the recents sell of the QID. Additionally, some of the most profitable signals over the last year and a half have occurred when the market was overbought or oversold at the wrong time. QID buy signals were given when the market was oversold and QLD buy signals were given when the market was overbought. This would indicate that the short term overbought/oversold signals do not have much influence on the outcome of a CMI trade. Hard to believe but worth further investigation.

If the CMI gives the buy signal for the QID on Wednesday, the short term stochastics would indicate this would not be prudent because of the extreme oversold condition. Based on history, I will probably ignore the oversold condition.