MONEY FLOW DIVERGENCE
This package includes 3 similar systems: Two daily and on weekly system. All systems try to detect stocks with high money flow divergence. The premise is that the unwinding of the divergence will result in a breakout.
The main difficulty in designing a money flow divergence systems is to find the exact point of the breakout as divergence can exist for a long period.
Each system uses a different algorithm to detect divergence and trigger trades at the right time in order to minimize drawdown.
The first system (MF DIV3) uses Relative Strength (RSMK) indicator which filters out weak stocks (relative to the Index) and all systems use volatility indicators in order to block trades during high volatily periods.
The second system (MFDD) is using multiple time frame divergence and takes also into account overall market conditions.
You can purchase the Amibroker or Metastock version by selecting the appropriate tab from the menu at the left.
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EXAMPLE
The system detected Money flow divergence signals twice on Abiomed (ABMD) in 2022. The first time the stock was up 18% during the next month and the second time it was up 44% after a buyout offer by JNJ.
SYSTEM PERFORMANCE
This is how the systems performed during the last 10 year period until the 29th of November 2022.
To produce the test results I used Amibroker Pro with the following test parameters:
Max. Open positions: 10-11
Commissions: $0.01 per share
Volume filter: Limit position to 5% of trading volume
Entry & Exit next day at the open.