Over the last few months I’ve attempted to have you familiarize yourself with the Bradley siderograph but has it actually performed? And how does one incorporate these dates into a trading strategy? For what it’s worth, we just hit another Bradley date on 10/21 and one more is due 11/09.
Many traders/investors believe Psychology moves all markets be it equity, Forex, etc. and tens of thousands each day study the theory that people [markets] move in “herds” or cycles. Furthermore, they believe the psychology of the herd is affected by lunar and planetary shifts. Ever hear a trader mention “tomorrow’s a full moon”? Yes, some traders do heed the movement of the heavens. Predicting this behavior, the psychological shifts and swings based on lunar and planetary cycles, and not short term shifts based on news, is what Bradley is all about.
Understanding this helps you to understand the Bradley siderograph. It tells us, based on planetary and lunar movements, when we could expect to see shifts in the market; shifts not based on news but on the psychology of the herd. To the right you will see how Bradley performed in thus far in 2009. No, it didn’t predict the mass selling frenzy that took place in March but one must remember that that was news-related panic selling taking place; not a typical market shift. Once the FOMC announced quantitative easing in March, the market immediately went back on track and began to heal.
How I personally use the model is to set an alarm for myself on my trading platform [you could use Outlook or another such tool] for two weeks before a Bradley date. I then evaluate *if* there were a shift coming, should take partial profits, exit a weak position and/or where would I prefer to hedge myself. Should I move up my stops? If the market does swing, what stocks would I like to add to and at what price level?
The important thing to bear in mind is that the siderograph is NOT an indication of the strength of a move OR of direction. Just because the graph line is moving in one direction, the market could move in the opposite direction. Merely focus on the dates, set an alarm and wait for a *friendly flare* to light the way.