Greetings, fellow Pro-fundity team members -
12-10-99 Page

This Week's Guidepost

1. Many questions continue to be raised as to the value of the Rolling Analysis and if the buy/sell levels are current recommendations. No! Let’s see why.
   
   

1. First case choose the time frame between 8/31/98 and 10/26/98 with a channel $2.60 to $3.80. We get two rolls and an APR return of 620%! Our rolling analysis selects buy/sell at $2.90/$3.51 for the greatest return.
2. Lets take advantage of the larger price rise and select a time frame of 9/28/98 to 12/7/98 with a price channel of $2.50 to $6.50. In this case the optimum buy/sell is $3.50 and $5.51 with only one roll and a return of 369%, about half that returned with the more narrow channel!
   
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1. First case choose the time frame between 8/31/98 and 11/09/98 with a channel $6.70 to $8.00.
   We get three rolls and an APR return of 472%! Our rolling analysis selects buy/sell at $7.00/$7.66 for the greatest return.
2. Next take the time frame between 10/05/98 and 11/30/98 to get more of the November increase with a price channel of $6.00 to $10.00. Now the optimum buy/sell is $7.00 and $9.01 with only one roll and a return of 316%, about 30% less!

1. For the first example on this chart we will choose a time frame between 9/2/98 and 11/18/98 giving us two rolls in a price channel of $2.55/$3.50. This returns 392% APR at $2.79 buy $3.27 sell.
2. Next take the time frame between 9/02/98 and 11/25/98 to get the big jump in November with a price channel of $2.00 to $6.00. The optimum buy/sell is now $3.00 and $5.00 with only one roll and a return of 597%!

1. We found in the first two examples a greater return when we pursued a modest path, the smaller channel with more rolls. That is an important message. The last example had a dramatic price increase that brought a greater return than the smaller channel.
2. The last example is the outlier, not the normal case. We cannot predict such a price jump.
3. In any case, what we have observed with these three examples is a play on history. It is easy to look at what has happened and predict with hindsight what would have been best. The optimum values in the Rolling Analysis are not recommended buy/sell signals going forward.
4. The value in the Rolling Analysis is the flavor, the color, the personality of how the stock has reacted in the past.
5. Going forward we take this flavor and couple it with entry and exit rules defined in the Rolling Stocks tutorial on the page to maximize our returns.

We provide TC-2000 tutorials to members. See the Member Login page.