Handling Short-Term Volatility with a Longer-Term Method
Another post from the road…
Every trading system has a time frame. What works for short-term trading may be completely wrong for longer-term methods. In the extreme volatility of the last two weeks, we are sure there are some traders who are buying every dip and selling every rally. This works fine in a volatile but range-bound environment. It will quit working when the trader unsuccessfully sells short at what appears to be a top.
Since the TCA system works on a longer time frame, it has picked up only one sector signal, IHF. Our extensive testing of the method tells us that we will be on the right side of longer-term moves.
Jeff will comment more if he gets the chance.