4-26-2013 before the open

[Harry]

Good morning Mike,

Hope your trip went well - looking forward to any posts you share regarding last weekend!

I am trying to learn the MEM model and have a question regarding current exposure. Last night the NAS closed above the marked high and Jerry posted the count is now +4. However, I believe according to your last post and my understanding of the rules, the restraint switch still on limiting count to +2 or 55%. Is this correct?

Thanks,
Harry

[Mike]

Good morning Mike,

Hope your trip went well - looking forward to any posts you share regarding last weekend!

I am trying to learn the MEM model and have a question regarding current exposure. Last night the NAS closed above the marked high and Jerry posted the count is now +4. However, I believe according to your last post and my understanding of the rules, the restraint switch still on limiting count to +2 or 55%. Is this correct?

Thanks,
Harry

Harry, as it turns out you are correct and IBD says they made a mistake in commentary made on Friday. They reported that the restraint would come off because of a possible B4 signal and close above the marked high. We got the B4 trending above the 21-day signal yesterday. Restraint is lifted under two conditions: moving above a FTD by 1.25% or more or with a B4 signal. It was my (and their) mistake to believe that the restraint is also lifted with a B4 signal when the buy switch comes on with a failsafe rally (closing above a marked high). This is not the case. We need to move up 1.25% above yesterdays close in order to lift restraint. The exposure count is +2.

[Harry]

Mike,

Thank you for the detailed response. Honestly, I got it right by accident because I wasn't aware of these extra rules - thanks for sharing.

Harry