CHAPTER 4
Finding Indexes with the Most Relative Strength
When the major indexes are in smooth and steady uptrends or downtrends, the broad-based exchange-traded funds (ETFs) can be very efficient trading vehicles. To profit in a smoothly trending broad market, you only need to identify which of the broad-based ETFs have the most relative strength and then initiate positions in the same direction as the trend. Over the course of an average year, the major indexes are not trending steadily a significant percentage of the time, but the top-down strategy works effectively either way.
If the major indexes are stuck in range-bound periods, avoid new trade entries in the broad-based ETFs. Attempting to trade them in such conditions will inevitably ...
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