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The Zomma Directional Algorithm On Square

|About: Square, Inc. (SQ)

Algo Rules:

1. When the yellow line crosses above the green cloud, buy.

2. When the yellow line crosses back in to the top of the green cloud, sell.

The algo's goal is to go long when stocks are trending up and to move to cash before stocks trend down.

The algo is not designed to incorporate short signals. Just long and cash.

Square (SQ) is a great example of a stock where applying an algorithm to it would have saved a large amount of drawdown, heartburn, and capital.

Half the battle is staying out when things are trending down. The most innovative hedge funds may have strong fundamental views on individual stocks, but increasingly, are applying algos as a timing tool for entry and for exit. Those that do not are dinosaurs. 

We will monitor it to see if it goes long. Every merchant I've spoken to likes them. But for entry and for exit of an expensive growth stock, you need a strong algo.

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