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Get Ready Bulls: Here Comes The MagicT

August 7th, 2007

MagicT isn't to do with mushrooms or hot beverage. It is short for "Magic Trough".

It is a trading signal I developed as part of my TrendSensor trading system. It can identify very early when panic selling is exhausted and a new rally is kicking off. It catches the end of the nastiest, most precipitous declines and delivers a buy signal early in the new, strong rally that usually follows.

Interested in technical analysis of markets? (skip this paragraph if you're not!) OK, here's the nerdy stuff: MagicT uses time series analysis of price volatility, a statistical analysis of trend duration to identify excessively long trends, and a simple chart pattern to nail the start of a strong rally following panic selling.

The URL below will take you to a chart of the DAX Index (Germany) going back to 1993, and covering two bull markets and a bear market. The chart shows MagicT in action - those 16 buy signals, 15 of which are near the bottom of some nice troughs.

www.trendsensor.com/Charts/DAX-LT-MagicT.png

Aside from that errant first buy signal in 2002, you can see that MagicT really nails the lows of some sharp declines in the DAX.

I chose to show the DAX because it's primed to trigger a MagicT signal again soon, and it has more historical signals than most markets - 16 in 14 years. Many markets only serve up a MagicT buy signal once every two or three years. So the fact that right now I can identify 14 global stock markets or sectors that are primed to trigger a MagicT buy signal is remarkable and bullish. A few of these may not fulfill all the signal requirements within the time frame allowed, but there are 10 markets that appear very likely to throw MagicT buy signals within the next week or three. These 10 markets are evenly split between Europe and USA:

* Europe: ATX (Austria), BFX (Belgium), CAC40 (France), DAX (Germany) and FTSE100 (UK).

* USA: BIX (S&P Banking Sector Index), HGX (Philadelphia Housing Sector Index), NYA (NY Composite), SPX (S&P 500) and SXX (Philadelphia Semiconductor Sector).

When MagicT rides into town within the next few days, it probably signals the start of the last excellent buying opportunity within the US and European markets for a long time to come.

But right now, I know I'm going to get a few buy signals in the not-too-distant future, so this is a heads-up for my trading signal clients - and an invitation to catch those signals via my free 5 week trial offer for others reading this.

Article Source: Free Content Articles Directory

Murray Nickel is a mathematician, statistician, and professional trader. He offers a free trial of trading signals for market indices and index ETFs, spot Forex, and spot Gold. He also mentors traders aiming to excel at trading global markets.

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