Pascal, this is a great initiative to harness the collective skills and creativity of members toward model improvements.

The establishing a robust oversold state of the lower panel sector-based oscillator is tricky. Making the indicator more "adaptive" than it already is (e.g. by normalizing with respect to recent market volatility or MF volatility or even oscillator range extremes) sounds sensible and is probably worth trying. However, any type of such normalization would be based on historical behavior and not necessarily represent the true reason why the indicator turned up prior to crossing the -70 threshold. Specifically to Dec 20 reversal, it feels as if a major intervention (stealth QE?) aborted what would have likely been a more common descent into deep oversold territory. If that is the case (however rare or frequent the occasion), making the indicator more adaptive is not likely to help and it points to a more fundamental deficiency of using an oscillator+threshold as a finite state machine for MDM decision making. In that view, it may be useful to look at alternative mechanisms to serve as OS state detectors.

Trader D