There have been important differences between the behaviors
of the ABC Indicator’s Buy and Sell signals during the above-referenced
period, as mentioned in a blog
post this month. Its Buy signals
have been right on 55 occasions, or 80.88 percent of the time, and wrong on 13
occasions, or 19.12 percent of the time, while its Sell signals have been right on 42 occasions, or 61.76 percent of
the time, and wrong on 26 occasions, or 38.24 percent of the time.
Meanwhile, I am unhappy (although neither shocked nor
surprised) to note the first public test of the ABC Indicator in forecasting
the short-term direction of the S&P 500 on a closing basis is posting its
initial unsuccessful result at J.J.’s
Risky Business, as the latest Sell
signal failed in its mission, with the index rising to 1,838.88 on Tuesday from
1,819.20 on Monday. This test will encompass 10 signals, and history suggests
they will be correct between six and eight times and incorrect between two and
four times. To this point in the test, they have been right three times and
wrong one time, which means the indicator is performing within its historical
parameters.
The first three ABC Indicator signals mentioned in the blog
posts linked below were successful, as follows:
• In the case of the Buy
signal on Dec. 20, the S&P 500 on a closing basis rose to as high as
1,848.36 on Dec. 31 from 1,809.60 on Dec. 19.
• In the case of the Sell
signal on Jan. 3, the index on a closing basis fell to as low as 1,826.77 on Jan.
6 from 1,831.98 on Jan. 2.
• In the case of the Buy
signal on Jan. 10, the index on a closing basis rose to as high as 1,842.37 on
Jan. 10 from 1,838.13 on Jan. 9.
I would like to say the ABC Indicator has never, ever in its
history whipsawed between Buy and Sell signals the way it has recently,
with three signals being generated during a period of four trading days. Alas,
I cannot say it because the same thing happened on three occasions in 2013, as
noted here:
• Aug. 7, Sell;
Aug. 8, Buy; and Aug. 12, Sell.
• Oct. 11, Buy; Oct.
15, Sell; and Oct. 16, Buy.
• Nov. 7, Sell; Nov.
8, Buy; and Nov. 12, Sell.
Importantly, the ABC Indicator also flashed an S&P 500 Buy signal on Nov. 14, which is
extraordinarily helpful in interpreting the subsequent short-term movement of
the index in each of the three cases of comparatively high equity-market
volatility last year.
Disclaimer: The opinions
expressed herein by the author do not constitute an investment recommendation,
and they are unsuitable for employment in the making of investment decisions.
The opinions expressed herein address only certain aspects of potential
investment in any securities and cannot substitute for comprehensive investment
analysis. The opinions expressed herein are based on an incomplete set of
information, illustrative in nature, and limited in scope. In addition, the
opinions expressed herein reflect the author’s best judgment as of the date of
publication, and they are subject to change without notice.
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