I've picked two stocks for my strategy this morning with a rule - buy at the open.
Seems not too effective, as they tanked along with the market. But look at this correlation.
Notice that little green candle with a huge tail? They appeared on two stocks that have nothing in common.
One tanked 1.5%, the other one was down ~7%. The candle appeared at the same time on both charts.
I think of the two possible ideas from this fact:
1. For every pick, correlation with R2K and NASDAQ should be studied. There is no reason to get down even 1.5%, if the market is going down.
2. Buy at the open seems not too reasonable in terms of the risk. For automated system, buy at the close seems safer. For a semi-manual system, it might be buy 10/60 sma cross, buy with market re-bound or something like that. Stochastics could be used.
UP:
Just looked at the RUT chart - 10/60 sma cross was HIGHLY bearish. Should have taken that into consideration with entering a position. Definitely another component in this problem.
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