Thursday, August 15, 2013

Watch out, the broken clock brigade are about...

I read somewhere on the Twittersphere last week that there had been 48 new daily highs made on the US indices so far in 2013. Therefore it has been easy for those trying to pick the top of the market to lose a bundle of their equity.

Today, it appears that the trend has turned on some of the major indices as most have now given short signals (charts below).

It is a trend followers' job not to predict what will happen in the markets, but simply to observe what is happening and follow. It is a reactionary, not a predictive method, and a game of odds and probabilities. Given that, based on the above statistic, the win:loss ratio for those top pickers is 1:48, I will quite happily accept that they may be right this time, and let them have their moment in the sun - after all, even a broken clock is right twice a day.

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