What is the “logic” in DynaLogic?
Learn how to use our daily buy and sell signals to minimize risk while maximizing returns
We built DynaLogic to help investors on their journey to financial security. It is not a tool for day traders, because it is not tracking intra-day prices or other short-term metrics. It is for investors who are on a life journey to build and manage wealth. We don’t know where you are on your journey, but we believe following our buy and sell signals through the ups and downs of the markets will lead to a positive outcome.
Markets move for a variety of reasons. Some we anticipated, and some we did not. No one knew that Netflix having a 200,000 decline in subscriptions would cut the stock price by 46% in just 8 days. Using Bloomberg analytics, on 4/19/2022 analysts’ ratings had 28 Buys, 19 Holds, and only 4 Sells, and these are supposedly some smart research analysts. Average target price was 467.62. (See Bloomberg chart below)
Last price on 4/19/22 was 348.61, NFLX closed on 4/27/22 at 188.54.
What DynaLogic does is distribute sell signals to trim positions as prices rise and distribute buy signals to invest in positions as prices fall. With individual equities especially, this trimming is critical because an individual equity can go to zero. Many of the dot.com stocks aren’t around anymore and there are many tech and biotech stocks today that have declined 60, 70, even 80% from a previous high. Having trimmed as securities were rising would have placed the investor in a much better position than riding the security down.
A sell signal is generated based on a percentage change in price from a previous sell. If we start out at a low point in the price of an underlying security, the sell signal is small, less than 1%. As the price of a security continues to rise, the sell percentages get larger and larger which can reach a maximum sell signal “to sell 3.5% of XYZ security, meaning 3.5% of a security that is at a much higher price. Think of it as “crawling away from the market, walking away from the market, running away from the market, sprinting away from the market” based on the strength of the sell signal. The logic being, the more something moves in one direction, the greater the probability of a counter move. If the original investment was $10,000 and a sell signal was to sell 1% that equals $100. If the rise from $10,00 was uninterrupted and we reached a sell signal 3.5%, the sell signal would be to sell 3.5% the underlying position. The underlying security would have grown from $10,000 to over $$27,000 and a 3.5% sale would be $950 or almost 10% of the original investment. In the NFLX example above, this means you would have sold a significant percentage of your position during the long ride up from 2019 to late 2021 and been able to use the cash to allocate elsewhere, thus diversifying your risk, or held it to be able to double down after the sudden recent plummet.
A buy signal is generated based on a percentage change in price from a previous sell. And the buy signal has a unique characteristic, the buy signal is based on end-of-day maximum value. Let’s assume the last sell of an underlying security was 100 and the buy signal is set at 95, if the security continues to trade higher, the buy price is moved up to maintain the percentage change in price. Buy signals are also progressive. Small in the beginning and progressively larger as the security continues to decline.
Here are the sell signals captured by the DynaLogic platform for NFLX leading up to 4/20/22
From early 2020 until end of October 2021 when NFLX price peaked there were 22 sell signals. Also notice during periods of price decline, there were no Sell signals. DynaLogic generated buy signals. Small in the beginning and progressively larger with each subsequent uninterrupted buy signal.
Assuming you have “sell” signals on underlying securities that DynaLogic follows, consider the quote “Concentration builds wealth, diversification preserves wealth.” Perhaps an investment in a broad index like the S&P, etc. with the sell proceeds would help preserve your wealth. Indices don’t go to zero.
DynaLogic’s platform is designed to manage risk based on what has happened, not based on what someone thinks might happen. We believe, the only way to truly prepare for a future market decline is to do it while the market is rising.
Our buy and sell signals are not a recommendation, but rather a statement of fact that a security has reached a price objective based on a percentage change in price. It that simple.
We hope you will want to subscribe to “Risk-Off-Powered by DynaLogic.”
DynaLogic-Where Logic and Technology Merge
(Note: DynaLogic provides to subscribers relevant and real time market movement information on a host of equity securities. Signals (sell or buy) are based solely on mathematical changes in the price of a security. No other methodology is used.
DynaLogic is not a registered investment advisor, and it makes no representation or recommendation concerning the purchase or sale of any security investment product; DynaLogic provides no advice or recommendation whether a subscriber should or should not act on any signal a subscriber receives, and it has no knowledge whether a subscriber, in fact, acts on a signal or any signal; DynaLogic maintains no portfolio account or other investment information on any subscriber.)