What does the long-term Smart Money say?
Hard to believe it’s been 12 years since yours truly first coded the Smart Money trading strategy.
I had read a book from a well-known author on using the Commitment of Traders report to predict the stock market (and other commodities).
If you’ve been following my work for awhile, this won’t surprise you: the book was 100% wrong.
I mean…it wasn’t even close to a profitable strategy.
How is that possible?
As has been the case with at least 70 of the books I own on technical analysis, the author did not run his ideas through a computer.
Imagine if modern airliners were built without first simulating their design in a computer.
They’d be dropping out of the sky like anvils.
Our industry is awash in nonsense.
It’s just as bad if not worse than the vitamin industry.
Let me get down of my soapbox, as I’m sure you’d like to hear about what the Smart Money is saying…
Previously, the SMI had been in long-term bonds.
On Friday, the COT report signaled it was time to go to cash.
Avoid both the S&P 500 and bonds.
That’s not to say all my strategies are out of stocks. Quite the contrary.
If you were lucky enough to snatch up our strategy building platform, Portfolio Boss, it came with what’s called the ‘DB Transaction’ strategy built in.
(It’s no longer for sale, and I’ve retired from the advisory business).
I was pleasantly surprised to see one of the trades is up 90.8% this month (FOSL).
So there are profits to be made even when the overall stock market looks a bit vulnerable.
But if you’re going to trade…please please please do me a favor…make sure you run a simulation before risking your hard-earned money.
If your ideas don’t work in a computer, it’ll be hard pressed to work in real life.
It never ceases to amaze me that in 2018, there are endless numbers of traders that eyeball charts and make trading decisions.
Or they because masters of anecdotal evidence, and make their trading decisions based on how crowded their local mall is.
You might as well go to Vegas and blow your money with a stiff drink in one hand, and a babe in the other.
If you’re going to crash and burn, might as well be in style.
PS. The work we’ve been doing with supercomputers and pattern recognition tells me that all those chart patterns you hear about (wedges, head and shoulders, etc etc) are garbage.
Not surprisingly, they were hand tested decades ago, and then parroted by every Tom, Dick, and Harry would-be trader.
When we’re finished with the project (which has taken well over a year now and 7-figures), I’ll be sending you a special report on our findings.
Dan “Prince of Proof” Murphy