I do not reenter the market on the long side until the moving averages indicate an up-trend with the 4wk avg>10wk avg>30wk avg.The rally this week might offer the last chance to get out or trim holdings. Then again, if this is a true bottom I will have plenty of time to get long again. Real up-trends last months. I never fight the tape. Look at this chart and see how nice it is to be long when the 4wk>10wk>30wk. The GMI=0. When GMI= 5 or 6 my long setups are more likely to work.
Dr. Wish,
Thank you for the GMI – I’ve been following it for a while and find it extremely useful.
I have a practical question about how to use it correctly:
When the GMI is between 1-3, is the right approach to simply hold existing positions, or should I be tightening stops / reducing size?
Is the transition back to fully invested (GMI ≥ 4) meant to be acted on immediately, or do you wait for confirmation?
Does a single week at GMI = 0 mean full cash, or do you look for consecutive weeks before exiting?
I want to make sure I’m applying your system as intended, not just my own interpretation of it.
Thank you for any guidance.
Roland – Practice risk management in stage 4 downturns (hopefully before). Don’t go all in (or in at all) when market isn’t in overall uptrend. “How to make money in stocks” by O’Neill, book in Dr. Wish’s sidebar, discusses establishing risk management techniques.
Thank you for your emailed posts, reminding us this 2 days rally is an opportunity to sell.