trend following

IMO, "the trend" doesn't exist as an absolute. Whether you have a trend or not depends on how you define and measure trend. It depends on timeframe under study and sensitivity of the trend following method. Maybe determining what you are after is a good starting point.
 
From 1995 to 2007, after the S&P 500 has dropped 3 days in a row, it has risen more than 4 times its average weekly gain over the next 5 trading days

PLUS

after the S&P 500 has risen 3 days in a roe , it has on average lost money over the next five trading days

trend followers? seems to be a disconnect with the idea of buying new highs....


This is based on thousands of statistically valid tests in real market conditions over the last 12 years by my friend Larry Connors.

Source-- Short term trading strategies that work--by larry connors
 
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