Forum Archive Index - April 2002

[Phaedrus <Phaedrus@techemail.com>]

Jeffley,
        You ask "how often are the indicators that made fbu seem like a good 
thing wrong?!  are you still positive about fbu?"
  I am never positive about anything. Fairly sure is about as high as I go!
  The FBU buy was based to a large extent on an RSI buy signal. How good is 
this indicator with this stock? Excellent, as good as it gets. Don't take my 
word for it though. Take a look at the chart below. On it is plotted every RSI 
signal ever generated by FBU, using only the default indicator values. (ie 
nothing has been optimised, or curve fitted in any way) Some are spot on, some 
are missed, some are early and some are late. Overall though, I am sure you 
will agree that every single buy or sell signal was at least approximately 
right. (The plot itself changes colour whenever the indicator becomes 
overbought (red) or oversold (green), giving warning of an an impending signal).
  The real proof of the pudding is in the eating. How well would you have done 
financially by blindly following these signals over the last three and a half 
years? Say you bought $10,000 worth of FBU at the close on 1/7/98, and kept 
reinvesting the proceeds. The following table shows all trades taken. The first 
opposing signal was always acted on, buying or selling at the close on the day 
of the signal. Brokerage was taken at the flat rate of $29.50 per trade. 
Dividends were ignored, as was any interest earned on the money when it was out 
of the market (about 60% of the time). The initial stake of $10,000 would 
currently be worth $32,929. By my standards, these are good results, and RSI a 
reasonably reliable indicator to use with this stock.

Shares  In   Out    Buy      Sell     Gain   Profit%
 3910   255  300  $10,000  $11,701   $1,701   17.0%
 5403   216  286  $11,701  $15,424   $3,723   31.8%
 6361   242  310  $15,424  $19,690   $4,267   27.7%
 8091   243  260  $19,690  $21,007   $1,316    6.7%
10385   202  229  $21,007  $23,752   $2,745   13.1%
12228   194  217  $23,752  $26,505   $2,753   11.6%
11124   238  300  $26,505  $33,343   $6,838   25.8%
11855   281 (278) $33,343  $32,929    -$415   -1.2% (Current trade)

Buying and holding would have seen your $10,000 grow to $10,840 in the same 
time. 

 So, do I follow RSI signals with FBU? Yes. Did I buy at 281? Yes. Am I 
sweating over a 3 cent drop? No. 
 I am fairly confident that as an entry point, 281 will prove to be at least 
approximately right. Time alone will tell.

     Regards,
              Phaedrus.


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