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#1  Learn History's Lessons from our Peerless Stock Market Timing: 1915-2015


        
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                          Tiger logo in 1981. 
      Note Mission Bay roller coaster in background.

            #1   Protect Your Money:
Know When To Sell because the Overall Stock Market is to weak.

   When you look at the longest and deepest bear market, you will be struck by certain
   technical similarities.  Here "technical" is usually contrasted with "earnings/value/fundamental",
   "sentimental/ % AAII bullish or bearish" and "seasonal (the market usually goes up in the
   third year of the 4-year Presidential cycle".  Technical refers to the stock market's own statistics,
   as have been kept in the Wall Street Journal or weekly Barrons. 

   In pursuit of better technical analysis, back in 1981, I put 30,000
   pieces of data into an Apple II+ computer to see what I could learn.
   I discovered some important concepts, the most important being
   price bands, negative and positive non-confirmations at bands and
   the special helpfulness of the trend of the NYSE Advance/Decline Line

   In the 1981 Peerless, I showed how to use these tools and indicators to call
   market tops and bottoms.  Windows in 1993 allowed me to write software that
   produced Automatic Sell and Buy signals which occur when certain technical
   conditions are met that have in the past successfully called market tops and
   bottoms using the DJIA (Dow Jones Industrial Average).  

   On our charts an "S" represents a Sell and "B" represents a Buy. 
   The number shown afterwards distinguishes one signal from another.
   The most bearish is the Sell S9 and S9V.  But major bear markets have followed
   other Sells, particularly S12s.

   For the most important Peerless Sells, we watch for an overbought condition by the DJI
   at its upper band or when it makes new highs which are not confirmed by one or
   more of the key Peerless indicators.  :

                  Sell S9      P-Indicator is negative with DJI 2% or more over the 21-dma.
                  Sell S9V   V-Indicator is negative with DJI 2% or more over the 21-dma
                  Sell S12    IP21 (Accumulation Index) is negative with DJI 2% or more over the 21-dma. 

   Just as we get a Sell S9 when the DJI rises close to the upper band with the P-Indicator
   negative, we get a Buy B9 when the DJI falls close to the lower band with the P-Indicator positive.
   This is illustrated by the top before the mini-crash of 1978 and the bottom of the 1976-1978 bear market.


 



   Sometimes tops are quickly formed because of unexpected events.  We treat them separately. 
   What is so amazing to me is that when there is an invasion, an attack, a massive oil spill, a
   Presidential heart attack, an assassination or when the President suddenly pursues a dramatic change
   in policy that affects the Dollar, there often suddenly appears a head/shoulders.  This is our
   warning of a coming sell-off.  A Peerless S19 occurs when the "neckline"-support of the
   trading range is violated.
                http://www.tigersoftware.com/TigerBlogs/June-28-2009/index.html
                http://www.tigersoft.com/PeerInst-2012-2013/HS-SellS10/index.html    
  
   
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                                                     PAST MARKET TOPS
                                                     --------------------------------
       

                    There have been 20 bear markets since 1928, where the DJI declines
                    more than 15%.  (This is important, because is a blue chip stock
                    drops 15%, many other stocks will fall 30%.)  They are listed below.

                               What signals occur most often at major tops?

                    The most frequent top-callers are:                        
                                          15   Sell S9s or S9Vs
                                          12    Sell S4s
                                            9   Sell S12s
                                            5    S16s
                                            4   Sell S5s, S7s
                                            2    Sell S1s

  The BASICS of PEERLESS:

                                             Price Bands

   The first thing I learned was that DJI-30 prices tend  to follow a path which is 2 standard
   deviations away from a 21-day moving average.  In 1981, we  used 4% bands above and below
   the 21-day ma.  Now we use an automatic 3.5%.  The DJI daily highs tend to bounce back and forth
   within these bands. See how well the 3.3% bands work in most of 1966.   Normally, the upper band
   represents over-bought territory and the lower band represents an over-sold technical condition.



     
         Use NYSE A/D Lines To Spot Non-Confirmations

   The second discovery was that the importance of the NYSE A/D Line as a technical
   indicator.  This represents the continuing sum of the number of stocks rising minus
   the stocks falling on the NYSE.   Many of these stocks pay dividends.  So this is in good
   part a measure of where interest rates are expected to go, besides being a general measure
   of the broad market, not just the blue chip DJI-30. 
                  Example - If  today there were 1000 up and 2000 down an amount of -1000
                  would be added to a running sum.
                            ADL(i) = ADL(i-1) + ADVANCES (i) - DECLINES (i)

    See these plotted for the data for 2007.  If look at this chart we can see the NYSE failed to
    confirm the DJI highs of July and October.  There were bearish divergences at the upper
    band.  They tell us a decline is coming.  The DJI is moving up and has reached "over-bought"
    status but the NYSE A/D Line is lagging.  The new high is "false".  It comes about because
    there is too much buying in safer, blue chip stocks and not enough in the rest of the market.
        
           A Rally Confirmed by NYSE A/D Line New Highs
                           Tends To Continue.

    A rally by the DJI which is confirmed by the the A/D Line making new highs, tends to continue
    and only have minor pull-backs.  See the charts of 2006, 2009, 2012-2013 for example.  As
    long as the DJI does not tag the upper band and show an A/D Line NC (non-confirmation),
    prices will probably go higher.  "Probably" is the operative word here.  There are notable
    exceptions.  So, we have to look at other tools than the A/D Line's NCs at the upper band to
    predict big declines.  

    2006

     2009

     2013

     2014 ......

                    A/D Line Bearish Divergences and Market Crashes

       Any long rise in the DJI that is not confirmed by a matching broad market rally
       is dangerous.  But the longer the divergence, the more severe the market drop
       and often the longer the subsequent bear market.


                




 

                     AUTOMATIC SIGNALS: Sell S9 and Buy B9                            

    The third discovery I made was the P-Indicator.  This is an oscillator (goes up and down around zero)
     representing the A/D Line.  When the P-Indicator (PI) is red, it is negative.  When it is blue, the PI is
     positive.  Rallies close to the upper band with a red (negative) P-Indicator bring a Sell S9.  Declines
     close to the lower band with a blue (positive) P-Indicator produce a Buy B9. 

     You can see both a Sell S9 and a Buy B9 in the DJI's 1987-1988 chart.


                              The programming for this signal starts simply enough.  But as you go through the process
                  of testing each year,  you find conditions that should be ruled out a signal and these must
                  be added as additional conditions.  With VB you can use line numbers and GOTO statements,
                  So if the bullish month of December after the 15th should not be considered for a Buy
                  signal, I would add "IF MO(i)=12 and DA(i)>15 then 100"

                                                   VB CODE FOR A SIMPLE BUY B9

                            FOR I = 1 to RN   REM Produce Buy B9s on a DJI chart.
                                          REM    RN is the number of day records in a sequential file, i = the day)
                                           REM LA(i) = DJI's high for the day.
                                          REM LA(i) = DJI's Close, MA(i)= 21-day MA of DJI for this day i.
                               IF MO(i)=12 and DA(i)>15 then 100 REM Statement is not allowed in MSFT's Visual Net.
                                IF LA(i)/MA(i) <.980 and P(i)>0 then PLACE-B9ARROW-ON-GRAPH
                                IF LO(i)/MA(i) <.970 and P(i)<0 then PLACE-B9ARROW-ON-GRAPH
                  100   NEXT I
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                                                 VB CODE FOR A SIMPLE BUY B9
                                      Note that the Sell S9 is not allowed in the year before the
                                      Presidential Election  from January to May.                                           
                     
                             ZERO = 0
                             FOR I = 1 to RN    REM Produce Buy S9s on a DJI chart.
                                          REM    RN is the number of day records in a sequential file, i = the day)
                                          REM LA(i) = DJI's Close, MA(i)= 21-day MA of DJI for this day i.
                                         REM LA(i) = DJI's high for the day.
                                SKIP = ZERO
                                IF (YR(i)/4+1) = INT (YR(i)+1)/4 and MO(i)<6 then SKIP=1
                                         REM No simple Sell S9s allowed in year before a Presidential Election from Jan to May.
                                IF HI(i)/MA(i) > 1.030 and P(i)<0 and SKIP<>1 then PLACE-S9ARROW-ON-GRAPH
                                IF LA(i)/MA(i) >1.020 and P(i)<0 and SKIP<>1 then PLACE-S9ARROW-ON-GRAPH
                              NEXT I  

                   The fourth discovery I made was "IP21" or as I call it now, the Tiger Accumulation Index..
                  Its formula is proprietary until you buy our software or get the Hotline. 

                  It is an oscillator like the P-Indicator is.  It also produces Sell signals, a Sell S12, when
                  the DJI approaches the upper band if it (IP21) is negative.  This is a most helpful Sell signal
                  as there are some cases when a big decline starts without a non-confirmation by the NYSE
                  A/D Line or the P-Indicator. 

                 In addition, there are cases where we both type of these non-confirmation Sells.  The declines
                 where there are both S9s and S12s tend to be deeper and swifter.
                

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           More:
                            2) Watch the Insiders with TigerSoft.  Buy the stocks they are buying...

                            3) Watch the Insiders with TigerSoft.  Sell the stocks they are selling...

                            4) Time These Stocks with Tiger's Professionals' Closing Power and Tiger's Automatic Buys.

                            5) Think for yourself.  Don't trust Wall Street, Washington or the talking heads on TV.  
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