http://nuance.dhs.org/lbo-talk/0010/0654.html
On Oct 11 2000, with the NASDAQ composite at 3168.49, Rob wrote:
"I could no doubt sell it for millions, but I'm a good lefty, so I'm gonna let you in on it for nuthin'. It's called the Rob Schaap 350% theorem. It's called that, but the beauty of it is that's also all there is to it. According to my rough scrawlings, every boom cranks the market up 350%, and then unwinds it a good way in a hurry."
Well ..... if we take the local low point of the NASDAQ on 08 October 1998 as a base (1419.2), this would project a high of 1419 * 3.5 = 4966.5.
The NASDAQ topped out on 11 Mar 2000 at 5048.2, only 1.6% above Rob's target; by following the Schaap indicator you'd only have missed 1.6% of the whole movement. Obviously, since Rob was only looking at the Dow, he only told us about the indicator in October, by which time the NASDAQ had already fallen by 37.2%. However, by following the implicit sell call at 3168, you'd have missed a further 48.3% loss, taking you to the recent low of 1638.8. Even if you'd decided not to close out the short at this price (given that Rob was ambiguous about his re-entry signal), you'd still be 32.9% better off by following his advice.
Any further investigation results to report, guru?
d^2
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