Departing from our typical use of the PDQ to forecast ETF momentum, here’s a model that looks at MSFT in relationship to a group of stock peers and 2 tech ETFs: XLK and the Qs. This is another way of looking at my old series on the Three Finger Reverse setup posted 2 years ago: QQQQ Three Finger Leads. What’s of interest here is that the correct signal line for MSFT is the exact opposite of that which is noted in the Final Signal column.
Note that the trade excursion for comparison stocks is 3-4 days, while the excursion for the comparison ETFs is 14.5 days. Our goal here is to make money playing MSFT . . not the correlated stocks . . which is why paying attention to the relative performance of each side of the pair trade is critical. Later in the week I’ll explore some other variations of the PDQ using higher beta issues to forecast the momentum of correlated lower beta issues.
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