Stocks & Commodities V. 23:1 (10-13): Letters To S&C by Technical Analysis, Inc.
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TRADING SECTOR FUNDS USING STATISTICS
The October 2004 article by John Twardy, “Trading
Sector Funds Using Statistics,” piqued my interest,
and the sidebar on determining a trendline by least squares was very helpful. I do have a request for
a couple of clarifications. The gain/risk index is to be computed for each sector fund for the last 30 days. The next step is to “rank the funds according to this index.” Please explain how the ranking relates to 30 days of
gain/risk index computations. Is a 30-day average to be used? Also, there is reference to the value of the “sum of the gain/risk index values for all funds for any given day makes up the sector trend index. This gives you the overall trend of the market, which is helpful for this
short-term analysis.” How is this value specifically used when selecting the highest-ranking fund?