This year lets us learn and apply the most imortant
Rules for Making Money with No Automatic Signal
and for correctly
Using The Extreme Bearish Peerless Mode
Trading Without Automatic Signals.
The recovery about 50% of what was lost in the decline from 380 to 200
in the Crash of 1929. A recovery ensued. But it falters badly.
1) The recovery should have been more than 50% to make the possibility
of a resume bear market become an unlikely possibility.
2) The DJI forms a classic head and shoulders pattern. This should have
been construed as very bearish in this context. We advise selling and
selling short on the apex of the right shoulder and when the neckline
is broken.
3) The break in the A/D Line uptrend occurred as the DJI was making
its recovery high. This shows breadth was poor, a bearish sign.
4) Well-tested NYSE A/D Line trend-lines should be traded, especially
in conjunction with other evidence.
5) Sell on clear failures of the DJI to get past its 65-day ma.
6) Sell when the 65-day ma turns down or up, with supporting evidence,
such as a bearish divergence by the A/D Line from price or a head and
shoulders pattern.
7) Respect that the DJI is below a falling 65-dma. Trade mostly in the
direction of that trend: A/D Line trend-breaks and price pattern trendlines.
This signals shown below would have gained 57% long and short.
Normal Peerless Mode - These signals work poorly here because of the
extreme weakness. The DJI was down fell more than 40% from its September 1929
high at 383 within 10 months. That should make us use the Extreme Bearish Mode
when the DJI falls below this 40% down line at 229. See the 1929 chart again,
just below.
Above that lebel, we can switch to the regular mode. The critical level
should be used for a year. After that, re-establish a new 40%-down point.
By this rule the Buy signals below 229 would not have been properly applied..
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