Tactical Solutions: The Trend Indicator Is The Answer
After 2008, market manipulation took on a whole new meaning. Every piece of financial data that could be manipulated was manipulated. Free market forces as we knew it, ceased to exist and because what would eventually come to be known as forever QE became the main support system for the economy and the stock market. Hence a new tactical solution would need to be found to deal with a market that no longer would follow the old way of doing things.
This tactical solution would have to focus on psychological indicators and price action only. It would be a waste of time to focus on fundamentals and as key factors such as EPS would be manipulated to the extreme and as a result, fundamental analysis would eventually be on par with rubbish. Fortunately, at the tactical investor, we had already been working on something like for years and the financial crisis of 2008 simply meant we would now have to complete this project in record time.
The Trend indicator identifies Market trends in advance of the event. In other words, it alerts us to when a market is about to experience a change in trend. Do not confuse this with timing the exact top or bottom of the market, such an endeavour would not qualify as a tactical solution, but would fall more under the lines of stupidity or a tactical blunder.
Tactical Solution: This Indicator Would Focus on Psychological Data
We wanted this indicator to utilize data that could not be easily manipulated. After the financial crisis of 2008, important data such as volume, market internals, the number of new highs or new lows, moving averages of new highs or new lows, advancing or declining issue and a host of other data that was being manipulated.
Volume is one of the key backdrops of most technical systems. Thus we wanted a system that would never have to rely on such indicators or any other data that could yield false signals. We wanted a tool that focused on price action and key psychological component, but one that was also extremely accurate; the trend indicator was the answer to this problem. Since being put to use the Trend Indicator has never missed a Major Market Top or Bottom. Back Testing it with 50 years worth of data, revealed that it had an accuracy of over 90%. Testing in real-time has yielded the same results.
See the Trend Indicator in action by visiting this page
There is a saying in Wall Street that bears win sometimes, and Bulls win sometimes, but pigs always get slaughtered. The point we are trying to make here is that our goal is not to spot tops or bottoms or fixate on trend lines and worry about when the stock might or might not top or bottom. Our goal is to enjoy the ride up and or down until the signal changes, and that is it. With this strategy in place, it makes investing an extremely pleasurable venture as one is in a position to identify market trends in advance.
Once again, we would like to reiterate, a Tactical Investor never attempts to time the exact top. If we do happen to time the exact top, we assign that to lady luck. Tactical Investing is all about getting when an asset class is hated or being ignored by the crowd and that given asset is trading in the extremely oversold ranges