Frequently Asked Questions
The model is somewhat independent of individual stock selection. In other words, we could be long an inverse ETF if the model is on a sell signal, or long a normal ETF if the model is on a buy signal. However, there may be excellent stocks that are showing pocket pivots that could also be bought, or excellent short sale set ups.
The model is meant to catch intermediate term moves in the market by way of buying normal or inverse ETFs. In unusual situations, if enough top quality stocks are breaking out of sound patterns, we may decide to email out notifications that such stocks are buyable. In an actual example, the model was on a sell then a neutral signal in March and part of April 1996, yet some stocks were forming constructive patterns then breaking out. The best of these were bought even though the model was not on a buy signal.
Likewise, when the model is a buy signal, there may be stocks that can be shorted if they set up just right.