Wednesday, November 23, 2011

Major market move??

This guy predicts that the market will blow in 2012. But he doesn't know if this means huge gains or huge loss.

So he suggests the following:
You're looking to capture a move from the average all the way out to an extreme
Set up a daily chart overlayed with two sets of Bollinger Bands - one with with a setting of 200, 3 (a 200-day simple moving average with bands 3-standard deviations above and below it) and the other with a setting of 200, 2.3.

On a day when price crosses and closes above the 200-day moving average, buy an ETF which tracks your chosen index higher.

Realize a portion (eg. 10-15%) of your gains each time price pierces the upper Bollinger Band at 2.3 standard deviations. Otherwise,

Sell your entire position if price moves back below the low of the day you bought. Occasionally raise the stop to just below a resistance point (a level to which prices fell, found support, then reversed back up and closed higher than the prior high. Position your stop order just underneath the low of that move.)

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