Friday, February 26, 2010


AIG is in the news this morning, the nature of which is inconsequential for our trading.  Here is a Daily chart of AIG with its Trend Model:

  AIG Daily Trend Model

Today's price action will likely generate a fresh Sell on the chart. The question presented is whether it will be too late to Short AIG today, i.e. is this signal the beginning of a tradable decline?  

The whole reason to use an objective, rule-based trading system is not to ask such questions.  Any one signal can be the exception to the rule, but over the longer term and across a diverse set of tradables, the trend will always win out.  This is part of the discipline of trend following, identifying a trend and then following it.  All other issues are moot*.  

*Of little or no practical value or meaning; purely academic; Simon Cowell

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