Break-outs-01

[survivor]

For break-outs there are two questions:

1. First of all what is a breakout
   a. is it a 10 / 13 / 20 day time dependent ... or what?
   b. is it a b/o of 1 pt , 2 pts, 3 or 8.5pts?

2. What is it breaking out from?

   a. Any high or close ?
   b. of 3/10/20 days back?

   c. or is it breaking out from some sort of congestion?
      If it breaking out of a congestion as in this case
      a. How to un-ambiguously define a congestion?

For the purpose of this exercize item (c) is chosen and congestion is defined as:

i. Any day with a High /low within the max high lows of previous 4 days.
   or
ii. Any day with a close within the max high and low of previous 4 days.

So, now we have the answer to qns 2. What about Qns 1?

We simply assume that the b/o is if the
close Today is > the max high/low of the 'congestion' defined above.

So, we get 27 instances in the last four years,
with the expected gain of 10 pts with win loss of about 65:35
The entry is on the close of the breakout day and the
exit strategy on loss is 1/3 position on each losing day.
Otherwise hold untill 1-5 days.

Not such a useful analysis... but more details later.

[survivor]

BY THE WAY, The above analysis, is LONG ONLY with the usual caveat emptor.
We have been in a bull market since the start of the analysis.
{what prevents us from us being in a 20 year bull market....}

Nothing outstanding the next day after a 10 day break-out which has a high less than high of the break out day. The signal remains the same 2001-2005: 15 winners: 3 losers, 1997-2001: 8 Winners:6 losers

Note that above win:loss is only for those days where high less than high of the10 day break day.No further numbers but this sort of system will definitely not do well in the bear market for obvious reasons as it is a momentum based system.

Also how   to get out? besides the suggestion above?

Question is how do we know whether we are in a bear market or not based only on the KLIF prices.

Of course we cannot know when the damn thing starts, but very rough cut analysis is to go LONG on a 10 day break-out ONLY when the PREVIOUS 10 Day break-out has been exceeded!

What is previous 1 day / 2 day / 23 days back or 87 days back... is something to think about.
Numbers later.

[turtle]

For TA, 20% down from peak is officially BEaR. Or 20% up from lowest low is Bull.