The NASDAQ continued to trend downward this week on low volume as the markets fretted over rising borrowing costs for Spain and the potentially disruptive effect of this Sunday's Greek election. Suddenly things looked less bleak on Friday as central banks, including the European Central Bank, said they were ready to inject extra capital if the Greek election outcome led to a run on the banks. The result was a surge on above average volume as traders reassessed their risk exposure more positively.

No new features this week.

Subscriber Strategy Analysis Redux

Last week we looked at a trading strategy based on

1. Buy stocks with an RS Rank >= 92 on breakout if BoP is above 8 day exponential moving average (EMA) and 21 day EMA.
2. Only buy if NASDAQ in uptrend
3. Sell at next open when 8 day EMA is lower than previous day in first decimal place

You can review the results in last weeks newsletter.

I suggested then that selling based on the 8 edma falling by a percentage amount may lead to better outcomes so I have rerun the analysis for several different sell stop options. Also, the subscriber who suggested the strategy, proposed that we require only that the 8 edma be rising, NOT that the breakout price be above the 8 edma.

With this change I ran the strategy again since January 2009 for all CwH breakouts with RS Rank >= 92 using a sell at open order if the 8 edma fell by 0.25%, 0.5%, 0.75% and 1%.

The average returns for each analysis were:

Sell When 8 edma Falls	Average Profit
0.25%	4.3%
0.5%	4.4%
0.75%	4.2%
1%	4.2%

As you can see, increasing the stop value beyond 0.5% didn't improve results. For comparison, the average return in last week's analysis was 3.9%, so using a percentage based stop did produce a better outcome, with the best stop value being 0.5%. This gave a profit improvement of 13%.

The average number of days a trade was held also went up from 10.3 days to 13.7 days. A scatter plot and histogram showing the profit distribution follow.