On Feb 29th I published Mosaic and Dow Theory. This is a follow up to that post adding a Conditional clause to the entry signal that specifies a day of week that signal will fire. For purposes of this study we’ll just consider the difference between entering the trade of Friday’s close as opposed to entering the trade on Monday’s close. The title of the post says it all.
Above are the results when we only enter 3 Finger Lead signals on Friday’s close. See Monday’s results below:
Above are the results when we only enter 3 Finger lead signals on Monday’s close. Although this study only spans back 16 months, longer term studies confirm a similar disparity in performance. Here’s another surprise.. QQQ has a different day of week optimization than SPY and TLT has a different one than either SPY or QQQ. Conclusion…paying attention to the day of week to execute your trades can make a difference. Where this really gets to be fun is when you consider a weekly rotation model where the optimum day of each to trade each component is different. In that case, when the rotate signal fires it may actually pay to wait for the day of week optimum to occur before executing the component trade.
