Multiple Signals

In a previous article, I talked about how and why multiple signals are superior to stand-alone signals. By having more than one confirming signal, you increase the odds that the signal (and your trade) will be correct.

On Tuesday we had something I have never seen before, three Connors VIX Reversal (CVR) sell signals combined with a TRIN thrust sell signal and a Momentum Index sell signal. This many independent indicators signaling in the same direction was a huge tip-off to where the stock market was heading. The market (S&P cash) made new highs Wednesday morning, but then proceeded to get decimated as the March S&P futures lost 46 points from their highs over the next day.

There are never any "sure things" in this business. But when you see so many indicators telling you the same thing, it greatly increases the chance that prices are going to move in that direction.

Markets To Watch: Yesterday's big move in March soybeans [SH9>SH9] alleviated the low-volatility situation I mentioned Tuesday night. March Sugar [SBH9>SBH9] is beginning to look compelling, as it has multiple 6/100 readings under 50 percent.

Next article: Tuesday, March 2, 1999.

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